Hydro Alunorte announces full curtailment of its refinery and mine operations

As announced by a press release from Norsk Hydro dated October 3, it’s alumina refinery Alunorte in Brazil is preparing for full curtailment of its operation. The decision, according to the press release was taken as the bauxite residue deposit area 1 (DRS1) is almost in its full capacity, due to the ban on using the state-of-the-art press filter and the newly developed bauxite residue deposit area (DRS2).

Alunorte has been running at 50% capacity since March, following bans from Brazilian authorities. Though environmental authorities confirmed that there was no spill or overflow from the residue areas, the ban prevented Alunorte from utilizing the newest bauxite residue deposit area (DRS2), which was under commissioning in February, and the state-of-art press filter technology.

The expansion needed an investment of more than BRL 1 billion. Alunorte’s effort to convince Brazilian authorities for permission to utilize the press filter, as well as DRS2 failed and the refinery had to decide on full curtailment, the press release said. 

DRS1, which the refinery has been utilizing so far was originally planned to be phased out with the commissioning of the new one. DRS1 is approaching its end of life faster than anticipated due to overcapacity, forcing Alunorte to take the decision to temporarily shut down 100% of its operations. The closure will also shut down 100% operations at the bauxite mine Paragominas. The release said that both Alunorte and Paragominas have initiated the shutdown process safely.

“Our people have been working hard during the last seven months to maintain safe operations and preserve jobs. This is a sad day because we have the world’s most advanced technology available to continue safe operations, which we are prevented to use, and this will impact jobs, communities, suppliers and customers”, says John Thuestad, EVP Bauxite & Alumina.

The company statement also said that though it is too early to determine the full impact, the decision to close Alunorte and Paragominas will have significant operational and financial consequences and will also affect operations at Hydro’s primary aluminium smelters.

“We will continue to work constructively with the authorities to lift the embargo and to resume operations in order to re-establish Alunorte as the world’s leading alumina refinery”, says Thuestad.

The announcement has sent the Hydro shares down by 11 per cent.