HOUSTON (ICIS)--US exporters of caustic soda may need to find another destination for several dry metric tonnes (dmt) of material if a Brazilian alumina refinery complies with an order to reduce capacity.
Norsk Hydro’s Alunorte alumina refinery is the largest facility of its kind in the world and the largest single consumer of US exports of caustic soda. It is facing an order by environmental regulators in Brazil to cut production by 50% to prevent bauxite residue from overflowing and contaminating local water supplies.
The plant, near Bacarena, Para state, was ordered on Friday to reduce water levels in one of two retention ponds or increase the height of dams surrounding it after heavy rains in mid-February caused flooding in the region.
The plant has the capacity to produce 5.8m tonnes/year of alumina. It consumes more than 630,000dmt/year of caustic soda, all of which is imported from the US, according to US market sources. That amounts to about 52,500 dmt/month.
A reduction to 50% of operational capacity could represent 26,000 dmt of US caustic soda if the reduced output is ordered and continued for as long as a month.
The initial order to secure the retention ponds came from the Secretariat of Environment and Sustainability in the Brazilian state of Para. But on Monday, the Brazilian environmental minister Jose Sarney Filho called on the National Institute of Environment and Natural Resources to join the effort.
Tuesday’s action requires the company to get water levels at least one meter below the top of the dams and to pay fines equal to more than $300,000 per day until it meets the requirement.
While Brazilian authorities said they would order the company to reduce output by 50%, it was unclear Tuesday whether the order had actually been given.
“We have taken considerable measures to meet the deadline at Alunorte, and will continue with full force to make sure that we comply with expectations and requirements,” says Hydro CEO Svein Richard Brandtzæg.
Oslo, Norway-headquartered Norsk Hydro owns more than 92% of the refinery, which converts bauxite into alumina, the first step in the manufacture of aluminium.
Brazilian authorities say that overflow has threatened the water supply of the nearby town of Bacarena.
But Norsk Hydro said there is no proof that there has been any leakage from the bauxite residue deposits.
“While it is too early to determine the size and impact of the resolution, it could potentially have significant operational and financial consequences,” the company said.
A US caustic soda producer said on Tuesday that, because Alunorte is the largest employer and taxpayer in the state of Para, it is unlikely that it would ultimately order a cut in production that would affect its own revenues so sharply.
Brazil is the largest destination of US caustic soda exports, taking about 3.25m dmt in 2017, according to data from the US International Trade Commission (ITC).
Occidental Chemical (OxyChem) provides about half of Alunorte's caustic soda requirements. Westlake Chemical and two trading companies provide the rest, according to market sources.
Major US producers of caustic soda include Olin, Occidental Chemical, Westlake Chemical, Shintech and Formosa Plastics.
Image above shows effluent from the alumina refining process. Source: Norsk Hydro
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