UPDATE 1-Norsk Hydro to cut Australia aluminium plant output

Norwegian aluminium producer Norsk Hydro will close one of three production lines at its Kurri Kurri plant in Australia, taking 60,000 metric tonnes a year off the weak metals market, the company said on Wednesday.

"Kurri Kurri is in a tough spot, and we need to take swift actions to reduce losses," Hilde Merete Aasheim, an executive vice president of Hydro, said in a statement.

"Operation under current conditions is not sustainable," she added. "Curtailing one line gives some relief to the situation, but we need to consider whether this is enough."

Kurri Kurri, fully owned by Hydro, has three production lines with a total annual production capacity of 180,000 metric tons of aluminium. Located near Newcastle in New South Wales, it employs about 500 people.

The company said it was forced to act because of "the weak macro-economic environment, with low metal prices and uncertain market outlook."

It also said the Kurri Kurri facility was suffering from a strong Australian dollar relative to the U.S. dollar.

The production line to be closed is called "Potline 1", commissioned in 1969, the company said, and the cost of idling it will be about $20 million.

Norsk Hydro said last week that it was considering the curtailment.

The company said the decision to shut down the production line followed a consultation process with local employees, and that it would take six to eight weeks to end the operation.