Norsk Hydro (OTCMKTS: NHYDY) said on Monday it could take a financial hit of up to $210 million as it continues to buy gas at spot-market prices following disruptions to natural gas deliveries at its Alunorte refinery in Brazil.
The Norwegian company estimates a $75 million to $100 million impact to its bauxite and alumina business in the third quarter due to lower production and purchase of gas above contracted prices.
It expects a further $90 million to $110 million hit in the fourth quarter from gas arbitrage costs at Alunorte.
Hydro said gas supplier CELBA notified Alunorte in August that gas availability had been disrupted. Since then, the refinery has not received its contracted volumes and has been buying gas at spot prices.
Alunorte had begun ramping up alumina production to full capacity after reaching a temporary agreement with CELBA in August. The refinery, in Brazil’s northern state of Para, had cut output to 50% of capacity earlier that month due to disruptions.
Alunorte does not expect further supply interruptions stemming from the current situation, and is working closely with CELBA, Hydro said.
The ultimate financial impact remains uncertain and will depend on gas prices, contractual developments and progress toward a long-term solution, the company added.
(Reporting by Rishabh Jaiswal in Bengaluru; Editing by Shailesh Kuber and Diti Pujara)
