Norwegian aluminium group Norsk Hydro plans to shut down a plant in Jamaica and lay off 80 employees in its home market, saying it did not rule out further output cuts in a stubbornly tough market.

The company has been hit hard by falling demand for its products from customers battered by the economic slump, notably in the auto and construction industries, and has announced several production cuts.

Norsk Hydro's 35 percent-owned affiliate Alumina Partners of Jamaica (Alpart) said on Thursday it expected production at the plant to be suspended for at least a year following a further downturn in demand, with the loss of 900 jobs.

Alpart, a bauxite mining and alumina processing company operating in Jamaica under government licence, had announced in January it would reduce production by 50 percent.

The plant, which will now be shut down completely from May 15, is 65-percent owned by Russian aluminium giant UC Rusal, and has a production capacity of around 1.65 million tonnes of alumina per year.

Norsk Hydro previously announced plans to slash primary aluminium production by 400,000 tonnes per year by the end of April. It has reduced planned 2009 investments, excluding a plan to build a smelter in Qatar, by 40 percent from the 2008 level.

Earlier this month, the group said it would cut 250-300 jobs aimed at saving 700-800 million crowns ($107.6-$123 million), with most of the effect from the first quarter of 2010.


One analyst said more production cuts are now needed.

Demand for aluminium moving forward does not look good, said the analyst -- who asked not to be named -- adding that stocks were high and production is outpacing demand.

In reference to possible further cuts by the group, Norsk Hydro spokesman Halvor Molland told Reuters: What we have said ... is that we cannot rule out that things will happen, but these are ongoing evaluations.

In Norway, Norsk Hydro said it would lay off 80 of its 400 plus employees at the Holmestrand plant, which services the auto industry, from April 15.

The last few weeks, the order situation has developed in such a way that we can no longer avoid layoffs, the head of the plant, Martin Sagen, said in a statement.

Norsk Hydro said it was not planning any further layoffs at the Norwegian plant. But in the current situation, no guarantees can be made, said spokesman Ole Johan Sagafos.

Norsk Hydro shares rose 4.3 percent to 23.80 crowns by 1150 GMT against a 3.4 percent rise on the Oslo bourse .OSEBX.

(Additional reporting by Ole Petter Skonnord and Joachim Dagenborg; Editing by Will Waterman, John Stonestreet) ($1=6.503 Norwegian Crown)© Thomson Reuters 2009 All rights reserved