Norsk Hydro ASA said Feb. 27 that the Secretariat of Environment and Sustainability, or SEMAS, in Pará, Brazil, plans to order a 50% cut in production at the company's 92.1%-owned Alunorte alumina smelter for violating environmental regulations.

SEMAS on Feb. 23 instructed the smelter to reduce the water level in the DRS1 bauxite residue deposit, after heavy rainfall Feb. 16-17 led to regional flooding and speculation about a leak at the smelter site.

The secretariat will also impose daily fines of about 1 million Brazilian reais until the refinery meets the required water level.

Norsk Hydro said that while it is too early to fully determine the size and impact, the resolution could have significant operational and financial effects.

The company is evaluating statements by Brazilian Minister of Environment José Sarney Filho calling for a possible suspension of operations at Alunorte and is working on meeting the environmental requirements with the formation of a task force to lead a review at the smelter.

SEMAS also plans to order the suspension of operations at one of two tailings dams at Norsk Hydro's Paragominas bauxite mine in the region.

As of Feb. 26, US$1 was equivalent to 3.24 Brazilian reais.