Norsk Hydro: Alunorte signs agreements with Government of Pará and Ministério Público

On September 5, Alunorte signed two agreements representing a milestone to resume normal operations at the alumina refinery in Pará, Brazil. Alunorte has operated at 50% capacity since March.

The agreements include a technical Term of Adjusted Conduct (TAC) signed between Alunorte - Alumina do Norte do Brasil S.A, Norsk Hydro do Brasil Ltda, the Ministério Público Federal (MPF), the Pará State Ministério Público (MPPA), the State Government of Pará, represented by the Secretariat of State of Environment and Sustainability (SEMAS). In addition, a social Term of Commitment (TC) has been signed between Alunorte - Alumina do Norte do Brasil S.A and the State Government of Pará.

"This is a milestone towards resuming normal operation at Alunorte. We are fully committed to the initiatives defined in the agreements with the Government of Pará and Ministério Público, which are complementing the measures under implementation at Alunorte. This will support continued safe operations at the plant," says John Thuestad, Executive Vice President and head of Hydro's business area Bauxite & Alumina.

The TAC regulates certain technical improvements, audits, studies and payments for food cards to families living in the hydrographic area of the Murucupi River. The TC addresses additional efforts and investments related to the social development of communities in Barcarena.

Alunorte is currently subject to embargos imposed by the authorities and has been operating at 50% capacity since March. Neither of the agreements signed include provisions or establishes a timeline to resume normal operations at the refinery. However, Hydro consider the agreements as an important step towards resuming operations and preserving jobs for Alunorte, as well as Paragominas and Albras.

Internal and external reviews confirm that there was no overflow from the bauxite residue deposits or harmful spills from the February rain event.

By signing the agreements, Alunorte reaffirms its commitment to the sustainable development of Barcarena, seeking engagement and partnerships with communities, authorities, academia and civil society.

"Our commitment to local communities have been strengthened through dialogue and an open-door policy. We are committed to contributing and making a positive difference in the society we are part of and being a partner for local development," says Thuestad.

Main points of the agreements:

Term of Adjusted Conduct

The TAC includes audits and studies, improvements of the water treatment system and increase of its capacity, a study of the drainage system, among others. The implementation of the initiatives will be monitored through a committee, with participation from civil society.

Alunorte estimates that investments and costs related to the improvements and audits defined in the TAC are BRL 60 million.

In addition comes payment of BRL 65 million for food cards for families living in the hydrographic area of the Murucupi River. 

According to the agreement Alunorte will also pay fines related to the event of February 2018 and the 2009 event, totaling about BRL 33 million.

The combined investments, costs and fines are estimated at BRL 160 million. Alunorte will also present a financial guarantee of BRL 250 million to ensure fulfillment of the terms of the TAC.

This comes in addition to the already announced and ongoing investment in Alunorte's water treatment system, improving the robustness of the plant to withstand future change in weather conditions.

Term of Commitment

Alunorte commits to invest up to BRL 150 million in projects supporting sustainable urban development in defined communities nearby Alunorte. The Government of Pará and Alunorte will develop project plans for housing and urban infrastructure. Alunorte will construct and donate housing and related infrastructure to the State of Para, which will be responsible for further allocation and handling.

This comes in addition to the already announced BRL 100 million commitment in local community investments through the Sustainable Barcarena Initiative.

Link to TAC and TC in Portuguese and English will be published on hydro.com when available

Background

On February 16-17, the city of Barcarena, including Alunorte alumina refinery, was hit by an extreme rainfall, which continued in the following days. The rainfall caused flooding in the region.

Internal and external reviews confirm that there was no overflow from the bauxite residue deposits or harmful spills from the February rain event.

Since March 1, Alunorte has been operating at 50% of its capacity, following orders from SEMAS and the court system. Consequently, Paragominas bauxite mine and Albras aluminium plant have also reduced production by 50%.

Both Alunorte and Paragominas have granted collective vacations to around 1,000 employees to preserve jobs and mitigate the impacts of the reduced activity. In July, Paragominas temporarily suspended work contracts for 80 employees and terminated 175 contractors.

Alunorte is the world's largest alumina refinery, with around 2,000 direct employees and an annual nameplate capacity of 6.3 million tonnes. Hydro owns 92.1 percent of Alunorte.

Investor contact
Contact Stian Hasle
Cellular +47 97736022
E-mail Stian.Hasle@hydro.com

Press contact
Contact Halvor Molland
Cellular +47 92979797
E-mail Halvor.Molland@hydro.com

Cautionary note
Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investments, divestments, curtailments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, and (i) qualified statements such as "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream businesses; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of Inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.

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