Norsk Hydro Bracing for $210 Million Hit from Alunorte Gas Disruptions

Norsk Hydro (OTCMKTS: NHYDY) has warned of a potential financial loss of up to $210 million due to disruptions in natural gas supplies at its Alunorte refinery in Brazil. The company has had to purchase gas at higher spot-market prices after its supplier, CELBA, failed to deliver contracted volumes since August.

The Norwegian firm estimates a $75 million to $100 million impact on its bauxite and alumina business in the third quarter, attributed to reduced production and elevated gas costs. A further $90 million to $110 million hit is expected in the fourth quarter due to ongoing gas arbitrage expenses at Alunorte.

Hydro noted that CELBA had informed Alunorte in August about the gas supply disruptions, forcing the refinery to operate without its usual contracted gas volumes. Alunorte had previously scaled back production to 50% capacity but resumed full capacity after reaching a temporary agreement with CELBA.

The company expressed confidence that no further interruptions are expected and is collaborating closely with CELBA to resolve the issue. However, the ultimate financial impact remains uncertain and will depend on gas price fluctuations, contractual developments, and progress toward a long-term solution.