Norsk Hydro NHY.OL said on Tuesday its Alunorte alumina refinery in Brazil has cut output to 50% of capacity due to a reduced supply of natural gas, helping to send aluminium prices to a seven-week high.
The Alunorte plant, located in the northern state of Para, has capacity to produce 6.3 million metric tons of alumina per year. Approximately two tons of alumina, a substance refined from bauxite, are needed to produce one ton of aluminium metal.
The Norwegian company said it had implemented contingency measures to mitigate the impact on operations at Alunorte after being informed of disruptions to availability by its gas supplier, CELBA.
“Measures include purchasing spot gas volumes, requesting direct access to the Barcarena LNG receiving and regasification terminal, and temporarily reducing alumina production to 50%,” the Norwegian company said in a statement.
The potential financial impact in the third quarter from the reduced production and of purchasing gas at prices above the contract price may be $75 million to $100 million, Hydro said.
“Alunorte will begin ramping up to full production as soon as gas availability normalises,” it added.
Benchmark three-month aluminium CMAL3 prices on the London Metal Exchange, already elevated due to dwindling inventories and disruption to supply from the war-hit Middle East, rose as much as 2% to $3,382.50 a ton on Tuesday, the highest since June 22. MET/L
(Reporting by Terje Solsvik; additional reporting by Tom Daly; Editing by Elviira Luoma and Keith Weir)
