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Norsk Hydro reaches agreement with Brazil to resume Alunorte at full capacity

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Norsk Hydro reaches agreement with Brazil to resume Alunorte at full capacity

Norsk Hydro ASA said Sept. 5 that it signed two agreements with the state government of Pará to resume normal operations at the Alunorte alumina refinery in Brazil.

The company noted that the agreements do not establish a timeline to resume full operations at the refinery. However, the move is seen as an important step toward restarting operations and preserving jobs at Alunorte, as well as the Paragominas bauxite mine and Albras aluminum plant.

Alunorte has been operating at 50% capacity since March after environmental authorities forced the aluminum producer to slash production, suspecting a leak at the site.

The company disputed the rumors regarding the leak, saying reviews by its internal task force and a third-party environmental consultancy confirmed no indications of contamination.

The cutback at Alunorte resulted in Paragominas slashing bauxite output by 50%, and Albras plant halving its aluminum output to 230,000 tonnes per annum.

Norsk Hydro later admitted that it released excess rainwater from Alunorte using a canal, but maintained that there were no leaks or overflow at the site. The company committed to a 500 million Norwegian kroner investment to upgrade the water treatment system at the plant.

A technical term of adjusted conduct agreed with the government includes audits and studies, improvements in water treatment system and increase in its capacity, with costs estimated at around 60 million Brazilian reais. The company will also distribute 65 million reais worth of food cards to the community around the Murucupi River, and pay around 33 million reais in fines related to the event of February 2018 and 2009. The company will provide a financial guarantee of 250 million reais to ensure fulfillment of the deal terms.

A committee, with participation from civil society, will monitor the implementation.

Under the social term of commitment, Norsk Hydro will invest up to 150 million reais to support sustainable urban development around Alunorte. This comes on top of the previous commitment of 100 million reais for local community investments through the Sustainable Barcarena Initiative.

John Thuestad, executive vice president and head of Hydro's Bauxite & Alumina business, said the initiatives "will support continued safe operations at the plant."

CEO Svein Richard Brandtzaeg said in late July that Norsk Hydro remained uncertain about resuming full output at Alunorte, but there is a possibility that it could do so between October and mid-2019.

As of Sept. 5, US$1 was equivalent to 4.16 Brazilian reais and 8.41 Norwegian kroner.