The world's best alumina

Alumina markets are currently challenging, with high raw material prices and alumina prices trading well into the cost curve. In such circumstances it is very comforting to have the worlds largest alumina refinery, producing the best alumina in the world, based on bauxite mining using the cutting edge of sustainable mining practices.

Producing ingot and value-added products from South Americas largest smelter, based on renewable energy, soon including solar in the mix, also helps.

I spent the last week visiting our Bauxite and Alumina and Aluminium Metal operations in Brazil, for the first time since 2019. And it was very impressive to see how they have worked structurally over the latter years, to reduce the footprint of the Paragominas mine, through the implementation of the tailings dry backfill technology, reducing the footprint and sustaining capex of mining activities. Also observing the 1:1 rehabilitation, recovering as much of the original forest ?structure and biodiversity as possible, and even contributing with planting my own couple of trees.

The bauxite from the Paragominas mine is transported through the world’s only bauxite slurry pipeline, reducing the footprint of transport compared to ship, to the Alunorte alumina refinery. Alunorte sits on the 30th percentile of the cost curve, but will soon shift downwards at current spot prices, as fuel oil and coal is replaced by natural gas and electricity through an LNG fuel switch project and the installation of electrical boilers. With the completion of these initiatives, we will reduce the emissions of CO2 substantially, a significant contribution to strengthening our position in low carbon aluminium, allowing the sale of lower and lower carbon aluminium at a higher and higher premium.

A large share of the alumina produced is used at our Albras JV smelter, a smelter which has grown it share of value added products, PFA, sold at a higher margin than standard ingot, and with further growth ambitions within the area. Albras also has an impressive track record of very limited waste going to landfill, ensuring that its waste streams are put to better use.

In addition to positive contributions within climate and environment, Hydro’s social agenda in Brazil over the latter years has been impressive. We had the pleasure to visit the newly built peace house in Belem, a place where the local community can come and attend classes and build competence within a broad range of subject matters, including arts, cooking, programming, sports, dancing and many more. We also visited a technical school which we have built in Barcarena, supporting the development of our local community, and providing local employees for our plants in the years to come. Big steps to being a good neighbor has been made over the latter years.

Finally, being responsible for Finance, I of course also had the pleasure to spend some time with the local controllers from Paragominas, Alunorte, Albras and also the Global Business Services. Impressive developments within digital finance, capex control and a lot more. In addition, the teams have the highest engagement scores across Hydro, and very low turn-over, a very impressive finance organization!

So, even though current alumina markets are challenging in the short-term, we will address this with the levers available, while also ensuring that we are continuing to improve and develop the world’s greatest bauxite and alumina organization, the backbone of our ambitions to strengthening our position in low carbon aluminium, further improving our industrial leadership within the area!

Until next time Brazil!