Corporate Update on Norsk Hydro’s Alunorte Alumina Refinery Gas Supply Disruption

Alunorte, Brazil – Norsk Hydro ASA has issued a detailed update regarding a recent disruption in natural‑gas supply to its Alunorte alumina refinery, a key asset within the company’s Bauxite & Alumina business unit. The interruption, first reported by the refinery’s gas supplier CELBA in early August, has led to shortfalls in contracted deliveries, compelling the refinery to source gas on the spot market at prevailing prices.

Nature of the Disruption

  • Source: CELBA notified Hydro in August of intermittent gas outages that prevented the fulfilment of contracted volumes.
  • Immediate Response: Alunorte has been procuring natural gas on the spot market while actively negotiating a new long‑term supply agreement on competitive terms.

Operational Impact

  • Production: Hydro’s internal assessment indicates that the gas shortfall is expected to result in a measurable loss of alumina output for the third quarter of 2026.
  • Financial Consequence: The Bauxite & Alumina unit anticipates a monetary loss proportional to the reduced alumina production, with a cost differential that will widen in the fourth quarter as spot prices remain volatile.

Strategic Mitigation Efforts

  • Supply Negotiations: The refinery remains in continuous dialogue with CELBA and relevant regulatory bodies to secure a stable, long‑term gas supply.
  • Alternative Sourcing: Spot‑market procurement continues as a temporary measure, with a focus on minimizing exposure to price spikes.
  • Legal and Contractual Safeguards: Hydro is exploring legal avenues and other mechanisms to protect its contractual rights under the existing agreement, ensuring compliance with industry standards and regulatory frameworks.

Broader Economic Context

  • Market Volatility: The natural‑gas market has experienced significant price swings due to global supply constraints and shifting demand patterns, underscoring the importance of diversified supply strategies in the aluminium value chain.
  • Industry Implications: Similar disruptions have been observed in the aluminium sector globally, where energy costs constitute a substantial portion of operating expenses. Companies that have secured flexible, multi‑source gas contracts are better positioned to absorb short‑term supply shocks.

Outlook

  • Short‑Term: Alunorte does not anticipate further supply interruptions at this time and remains engaged with CELBA and regulators to resolve the current issues.
  • Long‑Term: The financial impact remains uncertain, contingent upon future gas price movements, the successful negotiation of a permanent supply solution, and the effectiveness of legal measures to uphold contractual obligations.

Hydro’s update is intended to keep investors informed of the operational and financial ramifications associated with the gas supply disruption and to highlight the proactive steps being undertaken to mitigate adverse effects on production and profitability.