The boss of Hydro: – I am actually very optimistic

"It's no exaggeration to say that 2018 has been an eventful year for Hydro.

At Hydro Capital 's annual Capital Markets Day, neither commodity prices nor the aluminum market played the leading role. Commander-in-Chief Svein Richard Brandtzæg presented a message to investors and analysts about a crisis that affected the entire group. Ten months after the start of the crisis, which had begun to halve its production after the floods and emissions emitted by the giant Alunorte Hydro in Brazil, the bill is still a "work in progress".

billion drains

Here's what the bill and the losses look like for the Hydro boss:

• Hydro now confirms that the company has spent $ 50 million on lawyers and consultants only in the case of Brazil.
• This comes in addition to the NOK 65 million that the company paid in fines this year. Fines were imposed this year, as well as back in 2009 after a previous accident.
• Halvert's production results in significant revenue losses. Hydro now estimates an annual loss of NOK 5 billion, provided that production has never been interrupted. Corrected for sharp fluctuations in commodity prices, after the Alunorte case sent its prices, the company estimates a loss of $ 4.5 billion.

• The company put NOK 2.5 billion on the negotiating table with the authorities. It includes both food vouchers for locals, construction of local infrastructure and major investments in Alunorte Alumina Refinery.

– We have no particular comment about it. It's just a cost we have to assume, "said Halvor Molland, director of information at Hydro, about the $ 50 million bill paid by lawyers and consultants.

In total, the crisis in Brazil cost Hydro $ 7 billion and has been impacted by the cost savings achieved under the ongoing savings program, "Better," which is expected to end. next year with three billion savings.

Among the most important investments made by the company in Brazil are the modernization of the water treatment plant and the construction of a brand new giant basin. This basin will absorb 3.5 times more rainfall than when parts of the Alunorte water treatment collapsed in February and large amounts of rainwater containing caustic soda and particulate matter were sent to the Pará River by an old canal.

"With the new water basin, we can absorb huge amounts of rain and avoid what happened in February, when Canal Velho was used to evacuate rainwater, for example, to protect the water treatment plant, filled with water from bauksite waste areas, said Brandtzæg to analysts and investors in London on Thursday.

Go to court

Brandtzæg hopes that the pool and improvements will be safe for the Brazilian authorities and for lifting the embargoes imposed by Hydro in February.

Although Hydro has made progress and obtained approval from the Ibama Public Environmental Agency to use its newest waste disposal facility for so-called red sludge from refining, these barriers remain:

• A court decision prohibiting the use of the latest red blood deposit
• Court ruling outlaws more than half of production at Alunorte
• A decision of the local environmental agency Semas banning more than half of production at Alunorte.

Hydro's strategy is to get support from the authorities before the courts for the withdrawal of court decisions. On Thursday, the company announced that it had sent a request to the court asking for the lifting of the first of three prohibitions in order to start using the new red blood field. We do not know when the decision will come.

optimistic

DN wrote this week that the Hydro crisis in Brazil could last a long time in 2019. The reason is that the driest months of the year in Brazil are soon over. In December, the rainy season begins.

Asked if the rainy season means the authorities are fighting to support production now, Brandtzæg has shown significant investments that will make Alunorte safer.

"We have to be careful about speculation about how the authorities think, but it is obviously important for us and for them that we can conduct our business safely."

– The rainy season starts soon and usually increases in the next few months. One may wonder if the water tank needs to be in place before the bans are lifted and how much it is necessary to do demonstrations from our side to find out if it's raining during the rainy season, has he declared, while asserting that he was optimistic.

"There are limits to how long we can maintain production as it is now with shift production." The reason we're doing it again is that we're optimistic, we're seeing things evolve in the right direction, slowly but surely.So, I am actually very optimistic, I think we should get it.

"I am convinced that we will return to full production someday, but I can not give you an exact date.(Conditions)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our business using a link directly to our pages. The copy or any other form of use of all or part of the content may only be done by written authorization or as permitted by law. For other terms please see here.