July 23 (Bloomberg) -- Rio Tinto Group, the world's second- largest aluminum producer, said its Anglesey Aluminium Metals Ltd. venture in Wales probably will close if the company can't secure a new power contract.

Under a current agreement, the Nuclear Decommissioning Authority will supply power from the Wylfa nuclear power plant to the 148,000-ton smelter until September 2009. Wylfa is due to be decommissioned at the end of 2010. Rio owns 51 percent of Anglesey, and Kaiser Aluminum Corp. holds the remainder.

``If we can secure energy it will continue to run, and if we cannot secure it, it is likely to close,'' Dick Evans, chief executive officer of Rio Tinto's aluminum business, said yesterday in an interview in Montreal. ``It's not untypical of what's happening in Europe today when power contracts run out.''

Rio and other aluminum companies have replaced production facilities in Europe with new plants in countries that offer cheaper power, such as Iceland. Electricity accounts for about a third of the cost of producing aluminum. Alcan Inc., the Canadian aluminum company Evans led before it was purchased by Rio Tinto, closed plants in Switzerland and France after failing to obtain new power contracts.

New market-based power in Europe costs as much as $100 a megawatt hour, compared with an ``industry average'' of prices in the $30s and $40s, Evans said.

Rio rose 10 pence, or 0.2 percent, to 5,100 pence in London trading. The shares have declined 4.1 percent this year. Foothill Ranch, California-based Kaiser gained $3.42, or 6.9 percent, to $53.19 as of 12:20 p.m. in New York Stock Exchange trading.

`Economic Viability'

Rio, which is restarting one partially closed potline at Anglesey after a June 12 blaze, is assessing the ``economic viability'' of restarting a second line, which was closed completely, Evans said. While the company is ``likely'' to restart the line, the expiration of the power contract next year gives ``an added dimension'' to the decision, he said.

``The first priority is to determine if the electrical system is reliable enough to support it,'' Evans said.

Alcoa Inc., the world's third-largest aluminum company, is idling about 120,000 metric tons of aluminum production a year at its Rockdale smelter in Texas because of power-supply problems.

The fire at Anglesey forced the smelter to run at one third of its full capacity. The company didn't say how much output was lost.

Anglesey Aluminium production last year made up about 0.4 percent of world aluminum output, which was about 38 million tons in 2007, according to an estimate by Societe Generale SA, the French bank that helped finance Rio's acquisition of Alcan. The plant supplies metal mainly to customers in the U.K. and Europe.

Russia's United Co. Rusal is the world's largest aluminum producer.

Source: Bloomberg