MANILA, Oct 9 (Reuters) – Shanghai zinc rallied nearly 4 percent to a 3-1/2-month peak on Tuesday, as production cuts at Chinese smelters dragged down stockpiles to the lowest in more than a decade. Aluminium in London weakened further after Norsk Hydro said it expects to resume production at the world’s largest alumina refinery in Brazil at half capacity within two weeks. The most-traded November zinc on the Shanghai Futures Exchange rose as much as 3.6 percent to 22,745 yuan ($3,289) a tonne, its loftiest since June 21. It was up 3.2 percent at 22,675 yuan by 0252 GMT. Stocks of the metal used to galvanise steel reached 29,204 tonnes at Shanghai Futures Exchange warehouses at the end of September, the smallest since 2007. Production cutbacks at China’s zinc smelters due to tighter environmental checks and weaker profits had tightened supply, said Dina Yu, analyst at CRU consultancy in Beijing. “Traders or smelters are also reluctant to deliver the metal to ShFE warehouses. They prefer to sell the metal on the physical market at higher prices,” Yu said, citing premiums of around 100-500 yuan per tonne over ShFE zinc cash prices in the physical market. Three-month zinc on the London Metal Exchange rose 0.6 percent to $2,629.50 a tonne.

* ALUMINIUM: LME aluminium slipped 0.4 percent to $2,058 a tonne, falling 9 percent since touching a 3-1/2-month peak of $2,267 on Thursday. Norsk Hydro said its Alunorte alumina refinery in Brazil has agreed with a Brazilian environmental agency to resume production under its supervision.

* Norsk Hydro said on Saturday that it had been granted a permit in Brazil to use new technology to extend the life of a disposal area for its refinery, days after it said it would halt production and lay off 4,700 people.

* CHINA TAX REBATES: China will increase export tax rebates from Nov. 1 and quicken export tax rebate payments to support foreign trade, as a trade war with the United States escalates.

* VALE COPPER EXPANSION: Vale is close to approving a $1 billion expansion of its Salobo copper mine, two people familiar with the matter said, as the world’s top iron ore miner seeks to diversify and take advantage of growing international demand for the metal.

* CODELCO SALES: Codelco is in talks to sell up to 60,000 tonnes of copper a year to China Minmetals from 2019 to 2021, marking a change in the sales strategy at Chile’s state-owned miner which typically made deals on an annual basis, industry sources said.

* OTHER METALS: LME copper rose 0.7 percent to $6,220 a tonne and lead gained 0.6 percent to $1,983. In Shanghai, copper rose 0.7 percent to 50,370 yuan and aluminium climbed 1.2 percent to 14,540 yuan.