Norsk Hydro: Hydro to upgrade water treatment system at Alunorte

Hydro decided on Friday, March 16, to initiate a NOK 500 million investment to the water treatment system of the Alunorte alumina refinery in Barcarena, Brazil, increasing capacity by 50 percent and improving the robustness of the plant to withstand future extreme weather conditions.

"Recent events show that further strengthening of Alunorte's water treatment system is necessary to ensure the plant's future environmental robustness," says President and CEO Svein Richard Brandtzæg.

Following a period of extreme rainfall in mid-February in the Barcarena region, authorities ordered several measures against Alunorte over concerns that flooding had led to harmful spills into surrounding areas, including the nearby Pará river. Among these measures, Alunorte has been ordered to reduce production by 50 percent and suspend the commissioning of its new press filter and DRS2 bauxite residue disposal.

"We are now in constructive dialog with relevant authorities concerning these matters, but also acknowledge that the pressure on Alunorte's water treatment system most likely will increase in the years ahead because of a trend of more extreme weather. That is why we take this immediate step to bring Alunorte up to a new environmental standard," Brandtzæg says.

The ambition is to finalize the planned upgrade within first quarter 2019.

Hydro's lessons learned
"Among many issues that have emerged for us these past weeks, Hydro acknowledges that people in Barcarena are genuinely concerned about water contamination. The local communities have not received the information they deserve, and they have not found us trustworthy. For that, I apologize," Brandtzæg says.

"We accept that to build trust, we will have to make changes in our own attitudes, in our actions, and in our ways of working with the local communities," he says.

So far, no spills or leakages have been detected from Alunorte's bauxite residue deposits after the extreme rain event in February.

As a precautionary measure to alleviate pressure on the water treatment plant, Alunorte discharged rainwater from within the refinery through the Canal Velho. Due to a power failure on February 17, a release of diluted caustic soda from within the plant was mixed with rain water from the factory area before entering a water holding pond, with overflow into Canal Velho. Alunorte had applied for a license to use Canal Velho in extraordinary circumstances. However, at the time of the discharges, the plant did not have a license for such an activity, and has notified authorities about the discharges.

Comprehensive reviews
Hydro has commissioned Brazilian environmental consultancy SGW Services to conduct a fully independent review, in addition to a review by an internal expert task force. Both are expected to report their conclusions and recommendations on April 9.

"Regardless of the conclusions from the reviews, we are already committed to working with authorities, neighboring communities and local partners, investing in proper water supply," says Brandtzæg.   

Hydro is South America's biggest aluminium company after acquiring Brazilian mining company Vale's aluminium assets in the northern state of Pará in 2011. Alunorte is the world's largest alumina refinery, employs around 2,000 people and has a nameplate capacity of an annual 6.3 million tonnes. Hydro owns 92.1 percent of Alunorte.

Investor contacts
Stian Hasle
+47 97736022
Stian.Hasle@hydro.com

Press contact
Halvor Molland
+47 92979797
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.

No assurance can be given that such expectations will prove to have been correct.  Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.