Workers at the Bell Bay aluminium smelter, part of the Pacific Aluminium business that Rio Tinto is looking to sell, are worried 600 jobs could be lost. However the company said no decision had been made to axe jobs or shut the smelter.

Some potlines could be closed while conditions remain tough, but the company declined to confirm a report in the Australian Financial Review that workers had been told shutting the plant in two years was an option.

Rio Tinto is negotiating a new power supply contract with Hydro Tasmania for Bell Bay from May 1 that would be key to helping cut costs at the plant, which produced 181kt of aluminium last year.

The plant has been the focus of a loud campaign over the past year by the Australian Workers Union, which claims Bell Bay workers are paid less than workers at other aluminium smelters in Australia. The company has said the smelter pays competitive rates.

Alarm at Bell Bay rose over the past week after BHP Billiton announced it was suspending production and conducting a review at its TEMCO manganese alloy smelter, near the Bell Bay plant, as the strong currency and rising operating costs have made the business uncompetitive.