Hydro's Alunorte Faces $90-110 Million Q4 Cost Hit from Gas Supply Dispute

Norsk Hydro has revealed that its Alunorte alumina refinery in Brazil faces a $90-110 million cost hit in the fourth quarter of 2026 due to ongoing gas supply disputes with Centrais Elétricas Barcarena (CELBA). The refinery has been forced to buy natural gas at higher spot-market prices since August 2026, after CELBA disrupted contracted supplies. The issue stems from a 15-year gas supply agreement signed in 2021, which has been under strain since 2025. Despite regulatory approval allowing Alunorte to self-import gas, the refinery continues to operate at a financial disadvantage.

Alunorte, one of the world’s largest alumina refineries outside China, has a production capacity of 6.3 million metric tons per year. The refinery supplies alumina to both local smelters and international markets, with Brazil exporting 7.4 million mt of aluminium oxide in 2024. The dispute has raised concerns about supply stability, as Alunorte accounts for a significant share of global non-China alumina supply. While production has not been sustainedly disrupted, the uncertainty has already impacted refining margins.

The market impact could intensify if the dispute remains unresolved, particularly if spot gas prices stay elevated. A prolonged disruption could tighten the seaborne alumina market, especially in Europe and North America, where Brazilian alumina is a key supply source. Conversely, a stable long-term gas agreement could ease supply-risk premiums currently affecting the refinery.