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Brazil's Albras to halve aluminum production due to Alunorte alumina supply cut

Sao Paulo (Platts)--10 Apr 2018 127 pm EDT/1727 GMT


Brazilian aluminum smelter Albras will curtail 50% of its production due to a lack of alumina supply from Alunorte, forced to halve its own production in March due to environmental issues, Norsk Hydro, which owns both Brazilian entities, said Tuesday.

The process to reduce halve production at Albras, which produces 460,000 mt/year of primary aluminum, will be initiated shortly, Norsk Hydro said in a statement.

Albras sources all its alumina from Alunorte. Norsk Hydro on March 2 declared a force majeure on shipments from the alumina refinery after a a reported residue leak from its waste deposits through clandestine tubes in February.

Norsk Hydro owns 92.1% of Alunorte and 51% of Albras -- with the remaining 49% controlled by Nippon Amazon Aluminium.

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"We aim to mitigate potential negative impact on customers," said Norsk Hydro spokesman Halvor Molland, adding that it was too soon to decide on Albras sourcing primary aluminum from third parties. Norsk Hydro's stake at Albras output will focus on serving the domestic market.

The decision brings an additional pressure to a market already dealing with tight domestic supply, higher premiums, and limited quota for imports at zero tariff.

Albras aims to restart production only when Alunorte resumes full production -- which remains uncertain.

"Our main concern is our employees at Albras, as well as our customers who will be affected by this decision," said Albras Chairman Einar Glomnes in the statement. "We will maintain a dialogue with the unions to evaluate any effect on employees."

Albras is located in the municipality of Barcarena, Para state, next to the Alunorte alumina refinery.

Alunorte is the world's largest alumina refinery, with a nameplate capacity of 6.3 million mt/year and typically turns out about 5.8 million mt/year. Its run cut is expected to remove about 242,000 mt/month of alumina from the global market.

--Adriana Carvalho, adriana.carvalho@spglobal.com

--Henrique Ribeiro, henrique.ribeiro@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com




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