Brazil's Alunorte Refinery Cuts Production Amidst Geopolitical Tensions

Norsk Hydro's Alunorte alumina refinery in Brazil has cut its production capacity by half due to natural gas supply disruptions, adding uncertainty to global aluminum supply. The plant, which has a designed annual capacity of 6.3 million tons and is the largest outside of China, is implementing emergency measures to alleviate production pressure.

Hydro estimates that the Group's bauxite and alumina businesses may incur a financial loss of $75 million to $100 million in the third quarter due to the dual shock of production cuts and high-priced spot natural gas purchases. The supplier for this gas crisis, CELBA, is affiliated with New Fortress Energy, an company currently undergoing financial restructuring.

The sudden issue with alumina supply from Brazil coincides with continued geopolitical risks in the Middle East, including a renewed confrontation between Iran and the US. If shipping through the Strait of Hormuz cannot be restored, Hydro warns that the global aluminum supply gap this year could exceed 900,000 tons.