Norsk Hydro’s NHY.OL Alunorte refinery in Brazil has started ramping up alumina production to full capacity after reaching a temporary agreement with its gas supplier, the Norwegian company said on Thursday.
The refinery, located in Brazil’s northern state of Para, had reduced output to 50% of capacity earlier this week after gas supplier CELBA informed about disruptions in availability. It has the capacity to produce 6.3 million metric tons of alumina per year.
The cut exacerbated concerns over global aluminium supplies already strained by constricted Middle East shipments and low inventories in LME warehouses, driving prices to their highest in seven weeks.
The production loss is estimated to be 100,000 to 120,000 tonnes, Hydro said, adding that Alunorte has reached an agreement with CELBA regarding temporary terminal access.
The company has also recently received approval from Brazil’s oil regulator to become a self-importer of gas and is pursuing a long-term solution for its gas supply, it said.
The Iran war has caused gas prices to spike, while efforts to reopen the Strait of Hormuz, which carried a fifth of global oil and liquefied natural gas shipments before its access was blocked, remain complicated.
The reduced production and purchasing gas above the contract price would result in a potential financial impact of $75 million to $100 million, Hydro said.
(Reporting by Abu Sultan in Bengaluru and Kanjyik Ghosh in Barcelona; Editing by Shilpi Majumdar)
