Norsk Hydro shares jump after Brazilian state lifts Alunorte embargo

OSLO (Reuters) - Norsk Hydro ASA on Wednesday said the Brazilian state of Para had lifted a production embargo on Hydro’s Alunorte alumina refinery there, sending shares in the Norwegian aluminum maker higher on hopes it is closer to resuming full output at the plant.

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Shares in Hydro rose by 5.3 percent in early Oslo trade to a six-week high of 41.6 Norwegian crowns.

The world’s largest alumina refinery has been operating at half capacity since early last year after Hydro admitted making unlicensed emissions of untreated water during severe rains.

While Para state’s lifting of its embargo is a positive development, Hydro said full production would not resume until a Brazilian federal court follows suit.

“It supports our expectation and a forecast that production can resume in the second half of 2019,” said brokers DNB Markets who hold a buy recommendation on Hydro’s stock.

At full capacity the plant can produce some 6.4 million tonnes of alumina, or 10 percent of the world’s capacity outside China.

Para’s Secretariat of Environment and Sustainability (SEMAS) issued a note lifting its embargo and saying normal operations can resume, Hydro said in a statement.

“We will continue the dialogue with the authorities pursuing full resumption of production,” said John Thuestad, Hydro’s executive vice president for bauxite and alumina.

“Alunorte will inform the (Brazilian federal) court about SEMAS decision,” Hydro said.

Hydro CEO Svein Richard Brandtzaeg told Reuters last week that he expected full operations could restart within “weeks or months”.

Reporting by Ole Petter Skonnord and Terje Solsvik in Oslo; Additional reporting by Kanishka Singh in Bengaluru; editing by Sonya Hepinstall and Jason Neely