
After being forced to reduce alumina production substantially under a judicial order last month, the Alunorte refinery in North Brazil, owned by Norway’s Norsk Hydro, has to now start closing down half of its alumina capacity in the next two weeks to preserve equipment, said two people familiar with the matter on Tuesday.
Some anonymous sources further reported that the company will be forced to completely shut down three of its seven alumina lines in case the judicial order is not lifted.
{alcircleadd}
The steep reduction in alumina production after the company declared force majeure has already led to a hike in alumina prices. They increased by about 13 per cent last week to close at US$438 per tonne, according to the MB pricing.
Analysts are of the opinion that the possibility of a protracted outage is now dawning on the tight market for alumina. The mineral reacts with the atmosphere, leading producers to keep minimal stocks.
"Alunorte is a big deal," said Sydney-based UBS analyst Dan Morgan. "I would expect as this outage continues you would see anxiety on the part of consumer. While it's out, you'll see alumina above US$400 per tonne."
Adding to this, Hydro spokesperson Halvor Molland said that Alunorte did everything possible to avoid a complete shutdown because closing down completely and then again restarting is a time consuming process. Hydro even said that even though the company is currently rotating production between the seven production lines at the factory to keep them all warm, it is not a permanent solution.
Confronting the allegations from Brazilian authorities regarding the contamination of water supplies, Hydro said that the integrity at the plant remained intact, with no indications of leakage from its bauxite depositories.
However, on receiving a counterproposal for a settlement with public prosecutors in Brazil, Hydro said that the company would reveal conclusions on 9th of April, 2018 after its internal review and review from environmental consultancy SGW Services.
Responses







