Norsk Hydro granted permission in Brazil; to use technology for extending life of disposal area

Norsk Hydro has been granted a permit in Brazil to use new technology to extend the life of a disposal area for its troubled Alunorte alumina refinery, the world's largest, which should lead to the restart of operations at 50 per cent, the firm said on Saturday.

The decision came on Friday, two days after Hydro said it would halt production and layoff 4,700 people at Brazil's Alunorte, which has been operating at half capacity since March due to an environmental dispute.

"Hydro's alumina refinery Alunorte was granted an exceptional authorization... which will extend the life of its DRS1 bauxite residue disposal area and allow Alunorte to continue operations on safe conditions," it said in a statement.

The authorisation was granted by Brazil's federal environmental agency IBAMA and it allows the utilisation of a press filter technology that provides stackable residues with considerably less water content than the drum filter.

Hydro will now work with Brazil's Secretary of State for Environment and Sustainability (SEMAS) to get a second authorisation that will permit the use of the technology in Alunorte's DRS1 bauxite residue disposal area.

"After receiving this (second) authorization, Alunorte will be able to re-start the operation at 50 per cent of capacity," said the firm.

Resuming 50 per cent production at Alunorte would also allow Hydro's bauxite mine Paragominas and its joint-venture primary aluminium smelter Albras to continue operating at half capacity, rather than being shut down, its Bauxite and Alumina head, John Thuestad, said.

Three days ago, when Hydro said it would halt production at Alunorte, shares fell 12 per cent to a 21-month low, making it the worst performer in the European STOXX 600 Index. The price of aluminium, the product made from alumina, climbed 5.5 per cent to its highest since June.

Closures of Alunorte, Paragominas and Albras would have "significant operational and financial consequences" Hydro said at the time.

The decision to halt all production had been taken as the refinery's waste deposit area is close to full capacity due to an embargo on the new press filter and as an ongoing dispute with Brazil's authorities had been preventing Hydro from using a newly created residue facility, the firm said on Wednesday.

On Thursday, a day after Hydro's decision to halt operations at Alunorte, the Brazilian state of Para said it was surprised with the move and asked for a report explaining the decision.

Alunorte made 6.4 million tonnes of alumina in 2017, about 10 per cent of global production outside China and enough to make some 3 million tonnes of aluminium. Its partial shutdown earlier this year drove up market prices for alumina and aluminium.

(With inputs from agencies.)