Facts about the situation in Brazil

(Updated April 10, 2018) In just 12 hours during February 16–17, the city of Barcarena, home to our Alunorte alumina refinery, was hit by an extreme rainfall, flooding the region. Following the rainfall, an internal task force and the Brazilian environmental consultancy SGW Services have performed reviews of Alunorte. The main findings of these reviews were presented April 9 and confirm that there was no overflow from the bauxite residue deposit areas, as well as no indication or evidence of contamination to nearby local communities from Alunorte as a result of the heavy rainfall in February.

Background

  • More than 200 mm of rainfall was recorded in a 12-hour period February 16 and 17, 2018.
  • As large parts of Barcarena are not asphalted, rain water turned red due to the characteristics of the soil in the region.
  • After the recent rainfall, surveillance authorities inspected Alunorte’s alumina refinery and surrounding areas, following reports of possible leakage and water contamination.
  • The surveillance authorities which conducted the inspections included the Secretariat of Environment and Sustainability in the Brazilian state of Pará (Semas), Municipal Secretary of Environment and Economic Development of Barcarena (Semade), Municipal Secretary of Environment of Abaetetuba (Semea), Civil Defense, Fire Brigade, and the federal Brazilian Institute of Environment and Renewable Natural Resources (Ibama).
  • Though no proof of spill from the bauxite residue deposits at Alunorte has been found, our main focus is to protect and ensure that people feel safe and secure, both employees at our plants and people around our plants. We are fully prepared to do everything in our power to restore safety and stability for the people of Barcarena.
  • Surveillance authorities identified rainwater from a pipe without direct connection to the deposit areas of Alunorte. The pipe in question was originally used during the construction of that area in Alunorte, but has not been in use since then. Hydro immediately resealed the pipe, when the inspection pointed this out. Hydro estimates that the rain water entered this pipe during February 16 and 17, and that the total amount that escaped the area through the pipe was very limited. Inspections revealed four more pipes. These are inspected and found to be adequately sealed.
  • Instituto Evandro Chagas, a non-profit Brazilian public health organization, has reported that drinking water to certain local communities is contaminated. Hydro communicated February 24 that an expert task force has been established to lead a comprehensive review of Alunorte, reporting directly to the President & CEO. Our clear intention is to get all facts on the table and to implement any necessary measures to meet the high expectations to our contribution to sustainable growth in Pará.
  • Alunorte is an important employer in Barcarena, with 2000 hard-working and committed employees, who are also affected by the situation.
  • The national congress of Brazil has established a commission to investigate the Alunorte situation.
  • On February 26, Semas issued a statement stating it will order Alunorte to cut production by 50  percent due to non-compliance with a resolution to achieve a freeboard of 1 meter in the bauxite residue deposit DRS1. In addition, SEMAS said it would order the Paragominas bauxite mine to suspend operations at one of two tailing dams at the plant. SEMAS also said it would introduce daily fines of around BRL 1 million until Alunorte reached a freeboard of at least 1 meter at DRS1.
  • On February 27, Semas formally notified Alunorte to cut the production of calcined alumina with 50% and requested the reduction to be completed within March 1. Alunorte will receive a daily fine of approx. BRL 500 000 if the production has not been reduced in time. Alunorte reported that the 1-meter freeboard requirement was met on February 27
  • Based on a request from public prosecutors in the state of Pará, Brazil, a regional court issued a ruling on February 28, demanding Hydro to cut production by 50 percent at its Alunorte alumina refinery. The court further ruled that Alunorte should halt operations at the DRS2 bauxite residue disposal, and that a new license could not be issued until the integrity of DRS2 has been fully verified.
  • Earlier on 28 of February, Ibama also issued a notification ordering Hydro to discontinue operations of the Alunorte alumina refinery’s bauxite residue disposal DRS2.
  • Ibama has also fined Hydro a total of BRL 20 million, split between two fines of BRL 10 million each. The fines relate to conducting potentially polluting activity without a valid license at the bauxite residue disposal DRS2, and a drainage pipe at the Alunorte industrial area. The drainage pipe referred to relates to a disused pipe from the construction of Alunorte refinery, discovered during inspections following the heavy rainfall in February.
  • Following orders from both state and regional authorities in Brazil to reduce production by 50 percent, Alumina do Norte do Brasil SA issued a force majeure notice on March 2 due to the production cut and current lack of clarity into what measures it would take to return Alunorte to normal operations. As a result, Hydro Aluminium International SA and Hydro Aluminium AS issued on March 5 a force majeure declaration to its customers, as the Alunorte force majeure may affect Hydro’s alumina and hydrate deliveries to its customers.
  • On March 5, Hydro's CEO Svein Richard Brandtzæg appointed CFO Eivind Kallevik as interim head of Bauxite & Alumina with immediate effect, replacing Silvio Porto, in response to the challenging situation at the Alunorte alumina refinery. Kallevik will at the same time remain in his position as CFO.
  • Hydro has also communicated that the Brazilian environmental consultancy SGW Services is commissioned to perform an independent review of the water treatment and effluent management systems at the Alunorte alumina refinery in Barcarena, northern Brazil. SGW will report its preliminary conclusions during the first week of April.
  • Hydro has further announced measures to assist local communities in Barcarena, and established a project to review and consider further strengthening the robustness of the water treatment at Alunorte, to be led by former head of Bauxite & Alumina Silvio Porto.
  • On March 11, Hydro announced that to release excess rainwater from the factory area, Alunorte drained rainwater through the Canal Velho water canal. The announcement was followed up on March 13 with preliminary findings from the internal task force, stating that additionally there was discharge of water from the adjacent waste-water holding pond into the internal open drain. Also, a release of diluted caustic soda inside the process area had taken place due to a power failure in relation with the heavy rainfall on February 17. This was mixed with rain water from the factory area before entering the waste-water holding pond, with overflow into Canal Velho. Hydro further announced that an inspection detected cracks in a pipeline, leading effluent from the DRS1 deposit area to the water treatment station. Current information indicates that the effluent was contained in a dedicated containment box. Hydro was ordered by the public prosecutor of Pará to within 48 hours take measures, including repairing the cracks and to block the entrance to Canal Velho. Corrective actions were taken within the deadline.
  • On March 15, Hydro provided an update of the situation in Barcarena through a press brief at the company’s headquarters at Vækerø, Oslo. Information material from the presentation is available on hydro.com.
  • 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.
  • Following more untreated rainwater discharges from Alunorte, Hydro announced on March 19 that the company expands the scope of the ongoing independent review of Alunorte by SGW Services to include all interfaces with areas adjacent to the refinery operation. In addition, Hydro’s Internal Audit will conduct a full review of all licenses, complementing SGW’s review of Alunorte’s permits and relevant legislation.
  • On March 20, an open community meeting was arranged in Barcarena, where neighbors were invited, and Hydro listened and committed to change. To become a trusted partner in the region, Hydro has developed a new CSR strategy over the past year, aiming to create engagement and partnerships with local communities, authorities, universities and civil society. The strategy will be the company’s roadmap forward. In addition to long term plans for solving the situation in Barcarena, short-term measures will be implemented in the communities around Alunorte to help address societal challenges. The meeting gathered 85 people from 25 organizations and communities.
  • On March 27, Alunorte was in dialogue with the public prosecutor, Ministério Público, on the proposed term for an agreement. Alunorte is also in dialogue with the environmental authorities of Pará, Semas, on the terms and conditions to resume normal operations.
  • On April 9, the main findings from the internal and external reviews of Alunorte were presented. The main findings from the internal task force and the third-party review from Brazilian environmental consultancy SGW Services, confirm that there were no overflows from Alunorte’s bauxite residue deposit areas, no indication or evidence that Alunorte has contaminated local communities of Barcarena and no indication or evidence of any significant or lasting environmental impact to nearby rivers. The reports also included improvement proposals in the following areas: water management and treatment capacity, preventive maintenance and upgrades and emergency preparedness plans and training.
  • On April 10, Albras’ Board of Directors decided to curtail 50 percent of aluminium production at the Albras aluminium plant. The curtailment represents 230 000 tonnes on an annualized basis and is a result of the Alunorte alumina refinery not being able to supply more than 50 percent of Albras’ alumina needs, following Alunorte’s forced production cut.

Facts about Alunorte:

  • Alunorte is the world’s largest alumina refinery, and employs around 2,000 people, mostly citizens of Pará.
  • Alunorte is using modern technology to reduce the liquid content of bauxite residue.
  • The water treatment plan is designed to endure exceptionally heavy rainfall. The water is treated before released to local rivers according to environmental requirements.
  • Alunorte has two deposit areas, DRS1 and the newer DRS2. DRS2 is preparing for full scale operation with an installation license that includes hard commissioning, valid until the end of 2018. On February 28, a regional court ruled that Alunorte should halt operations at the DRS2 bauxite residue disposal, and that a new license could not be issued until the integrity of DRS2 has been fully verified.
  • Drainage system, water treatment plant monitoring and emergency preparedness plans were updated after an overflow incident at Alunorte in 2009.

Updated: March 9, 2018