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Norsk Hydro asks Brazil court to lift Alunorte embargoes

Increase font size  Decrease font size Date:2019-04-18   Views:323
Norwegian aluminum producer Norsk Hydro is awaiting word from a federal court in Brazil on whether embargoes that have limited production at its massive Alunorte alumina plant in Brazil for more than a year will be lifted.

Norsk Hydro and a Brazilian public prosecutor submitted a petition late last week, asking a federal court to lift remaining embargoes that limit the 6.3 million mt/year plant's production and prohibits operation of a second bauxite residue deposit area, or DRS2. The DRS2 was undergoing commissioning when concerns about contaminated leaks after heavy February 2018 rain prompted federal and state authorities to shut it down and order the company to halve the plant's output as of March 1, 2018.
Brazil is the top export market for US caustic soda, a key feedstock for alumina. Alunorte's rate cut reduced its demand by half to 25,000 mt/month. US International Trade Commission data show that Brazil received more than 2 million mt of US caustic soda exports in 2018, down nearly 21.7% from 2.59 million mt in 2017.

That reduction in demand came amid high chlorine operating rates in the US that ranged from 92% to 94% from May to August 2018, according to industry statistics. Caustic soda is a by-product of chlorine production, and those high rates built inventories amid reduced flows to Brazil. Rates fell below 90% from September to November, then rebounded to 91% in December.

US export caustic soda prices fell more than 47% to $340/mt FOB USG from May through November 2018, S&P Global Platts data showed, its lowest level since reaching $330/mt FOB USG on September 13, 2016. Prices rebounded to $380/mt FOB USG by mid-December and briefly reached $410/mt FOB USG in March, but have since retreated to a range of $330-$340/mt FOB USG, according to market sources.

Internal and external reviews found no overflow from the plant's bauxite residue deposits, though an unlicensed spill of untreated water was found. The company amplified protections against heavy rainfall ahead of the 2019 rainy season, including increased water reservoir capacity by the end of 2018 and a water cleaning system.

"The matter of lifting Alunorte's production embargoes is now with the federal court for a decision," Norsk Hydro said in a statement released Friday. Norsk Hydro had no timeline for when the Alunorte plant may be allowed to resume normal operations.

The company last week also announced that its first-quarter 2019 earnings release would be delayed to June 5 from April 30 as a result of a cyberattack last month that affected "certain systems and data to produce the quarterly report." The company also said last month that its Brazilian alumina operations were not affected by that attack.
 
 
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