(Adds company comment, background on refinery)
SAO PAULO, May 1 (Reuters) - A Brazilian federal judge on Tuesday upheld a state court decision handed down in February that forced Norsk Hydro ASA to cut output at a major alumina refinery, the latest blow for the Norwegian company's operations in Brazil.
In February, a court in Pará, the northern state where the Alunorte refinery is located, ordered the refinery to reduce its output by 50 percent, following allegations by prosecutors of a waste spill at one of Alunorte's bauxite refuse deposits.
The company has since admitted it discharged untreated rain and surface water into a river, which it called "unacceptable," but has denied significant parts of prosecutors' allegations and has said there was no evidence of a lasting environmental impact.
Alunorte is the world's largest alumina refinery, transforming bauxite to alumina, which is turned into aluminum at huge smelters. Founded in 1995, Alunorte produces 5.8 million metric tonnes of alumina a year, according to Norsk Hydro's website.
In his decision on Tuesday upholding the lower court's ruling, federal Judge Arthur Pinheiro Chaves said that failure to honor the conditions set by the courts would result in a daily fine of 1 million reais ($285,000).
A spokesman for Norsk Hydro said the company had not formally been notified of the decision and would analyze the case before issuing comment. The spokesman added, however, that the company was already complying with the state court decision and was open to dialogue with stakeholders at the municipal, state and federal levels.
In April, the company sued state prosecutors in Para in a bid to spur a new study to assess the spill.
Reporting by Gram Slattery and Flavia Bohone; Editing by Leslie Adler and Peter Cooney