Brazil authorities question Hydro move to halt Alunorte operations

RIO DE JANEIRO (Reuters) - The Brazilian state of Para on Thursday said it was surprised when Norsk Hydro decided a day earlier to halt operations at Alunorte, the world’s largest alumina refinery, and asked for a report explaining the decision.

Brazilian regulators in February ordered Hydro to slash output by half at the refinery after the company admitted to making unlicensed emissions of untreated water during severe rains.

Last month, Hydro signed two deals with Brazilian authorities that it described as an important step toward resuming full operations at the plant, which accounted for 10 percent of global alumina output outside of China last year.

But on Wednesday the company said it would close the plant indefinitely and lay off 4,700 workers since the refinery’s waste deposit area was close to full capacity and the ongoing dispute is preventing Hydro from using a new facility.

In a statement Thursday, the Para government questioned the decision, noting that Hydro had received a preliminary report from a consultancy in September suggesting the existing waste deposit area would have sufficient capacity to receive waste through May, 2019.

That called into question Alunorte’s suggestion that a separate report on Sept. 28 pointed to a probable dam break at the deposit site if it continued putting waste there, Para authorities added.

“We need to technically evaluate the reason for the paralysis,” Para’s environmental secretary said, according to the statement, adding that the state had sent its own team to the site to probe it.

Hydro did not immediately respond to a request for comment.

Hydro shares plunged and the price of aluminum, the product made from alumina, slumped on Wednesday following Hydro’s announcement.

Reporting by Marta Nogueira and Alexandra Alper; Editing by David Gregorio