Alunorte’s Production Restrictions Lifted

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With production restrictions at Brazil’s alumina refiner Alunorte lifted, the company’s caustic soda demand is likely to increase gradually. Alunorte’s increase in demand was expected to lead to a more balanced market following a period of caustic soda length in the region, the company’s restrictions on alumina refining since early 2018, and the general decline in caustic soda consumption.

However, the balance between supply and demand for caustic soda, as well as the market outlook in Brazil and the Americas, is clouded by an announcement from Brazilian petrochemical company Braskem that it started to suspend salt extraction and operations at the chlor-alkali and ethylene dichloride (ECD) plants in the eastern state of Alagoas following seismic events.

The company said it was also assessing the impact on the polyvinyl chloride (PVC) plant in Alagoas and the Camacari Petrochemical Complex in Bahia state, which are both integrated into the production chain.

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Braskem said the Brazilian Geological Service (CPRM) reported that a geological phenomenon in Maceio, the Alagoas state capitol, stemmed from destabilization of cavities during sodium chloride extraction, which reactivated existing geological structures, sinks and deformations in the Pinheiro, Mutange and Bebedouro districts. The instability in the Pinheiro district was aggravated by the erosive effects of stormwater runoff in pre-existing fractures in erodible soil, accelerated by the lack of adequate stormwater runoff drainage and adequate basic sanitation, amid other factors.

Meanwhile, Alunorte issued a statement saying it was allowed to bring production back to normal levels after the federal court in Belem, Brazil, on May 20 lifted the production embargo that was in place under a criminal lawsuit. The company had been running at 50 percent capacity for more than a year, producing alumina and consuming caustic soda at the reduced levels. A decision on the embargo on the DRS2 new bauxite residue disposal has not been taken.

On May 21, the board of directors at Albras, the second largest aluminum producer in Brazil, reached a decision to resume normal aluminum production at its primary aluminum plant, after reducing production by 50 percent, or 230,000 metric tons, in April 2018. The process to resume normal production at Albras will start immediately, but full capacity is not expected until the second half of the year. Norwegian aluminum giant Norsk Hydro is the co-owner of the Albras plant as well as the parent company of Alunorte.

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Albras is using the state-of-the-art press filter DRS1 reservoir, which Alunorte estimates has a remaining lifetime of 8-18 months, while the DRS2 bauxite residue deposit remains under a federal embargo.

The following table with values from ClipperData shows that caustic soda imports sourced from the US by Alunorte declined by 590,000 liquid metric tons in 2018 from 2017. Brazil’s total imports, however, declined only by 44,000 liquid metric tons for the same period.