Based on a request from public prosecutors in the state of Pará, Brazil, a regional court issued a ruling on Wednesday, February 28, demanding Hydro to cut production by 50 percent at its Alunorte alumina refinery, over worries that a rainstorm had led to leakages from Alunorte into the nearby river and causing contamination.
The court further ruled that Alunorte shall halt operations at the DRS2 bauxite residue disposal, and that operations must not resume until the integrity of DRS2 has been fully verified and an operational license has been issued. Alunorte currently has an installation license, covering the construction and commissioning of DRS2.
Hydro is currently reviewing the implications of the court's decision operationally and financially, as well as for its customers and employees of Alunorte, located in the region of Barcarena in the state of Pará.
Earlier on Wednesday, the federal Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) also issued a notification ordering Hydro to discontinue operations of the Alunorte alumina refinery's bauxite residue disposal DRS2.
The notification from IBAMA, a federal agency under the Brazilian environment ministry, and the court ruling came after the Secretariat of Environment and Sustainability of Pará (SEMAS) on Tuesday ordered Alunorte to cut production of calcinated alumina by 50 percent. SEMAS also required Hydro to stop using one of two tailing dams at its Paragominas bauxite mine, located around 250 km west of Alunorte.
Just hours before SEMAS issued its order, Brazilian Minister of the Environment Jose Sarney Filho urged IBAMA to suspend Alunorte operations.
Hydro continues to collaborate with all regional and federal authorities, and established on February 24 a fast-working expert task force to conduct a full review of Alunorte, reporting directly to President and CEO Svein Richard Brandtzæg.
Hydro is South America's biggest aluminium company after acquiring Brazilian mining company Vale's aluminium assets in the state of Pará in 2011. Alunorte is the world's largest alumina refinery, employs around 2,000 people and has a nameplate capacity of an annual 6.3 million tonnes. Hydro owns 92.1 percent of Alunorte.
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Cautionary note
Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investments, divestments, curtailments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, and (i) qualified statements such as "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream businesses; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.