Norsk Hydro expects its Alunorte alumina refinery in Brazil to incur a $90–110 million cost impact in the fourth quarter of 2026 as it continues to purchase natural gas at spot-market prices following disruptions to contracted gas supplies from Centrais Elétricas Barcarena (CELBA), Hydro said.
CELBA, part of New Fortress Energy (NFE), supplies natural gas to Alunorte through the Barcarena LNG infrastructure in Pará. NFE and Hydro signed a 15-year gas supply agreement in 2021, under which NFE agreed to supply approximately 29.5 TBtu of natural gas annually to Alunorte.
The Barcarena LNG terminal became operational in February 2024 and uses the Energos Celsius floating storage and regasification unit. The terminal has LNG handling capacity of around 6 million mt/year and was developed to supply Alunorte as well as other industrial and power-generation customers in Pará.
Relations between Alunorte and CELBA have faced difficulties since 2025, with the companies discussing amendments to the gas supply agreement. Alunorte has also initiated arbitration proceedings related to gas-supply issues and sought legal relief in Brazil concerning performance of the agreement.
In August 2026, CELBA notified Alunorte of disruptions to natural gas availability, forcing the refinery to temporarily reduce alumina production to 50% of capacity. Alunorte subsequently purchased gas from the spot market and sought direct access to the Barcarena LNG terminal. Following regulatory approval for Alunorte to act as a self-importer of gas, the refinery reached a temporary agreement with CELBA for access to the terminal and began ramping production back toward full capacity.
Hydro said in its latest update that Alunorte has still not received its contracted gas volumes and continues to purchase replacement gas at spot-based prices. Hydro is seeking a long-term gas supply solution on competitive terms while taking measures to protect its contractual rights under the existing agreement. The company does not currently expect another interruption to gas supply.
Alunorte's importance to the alumina market
Alunorte has a nominal alumina production capacity of 6.3 million mt/year, making it one of the world's largest alumina refineries outside China. The refinery is integrated with Hydro's Brazilian bauxite operations. Part of its alumina output is supplied to the nearby Albras aluminium smelter, while the remainder is exported.
Brazil exported about 7.4 million mt of aluminium oxide in 2024, according to WITS/UN Comtrade data. Canada was the largest destination at about 3.55 million mt, followed by Norway at 1.93 million mt, the US at 853,000 mt, Iceland at 665,000 mt and Argentina at 246,000 mt. India received about 31,500 mt. Canada, Norway and the US together accounted for roughly 86% of Brazil's aluminium oxide exports in 2024.
Market impact
The continued gas-supply issue has not yet resulted in a sustained production disruption, but it has increased uncertainty around Alunorte's operating costs and future supply stability.
The refinery's 6.3 million mt/year capacity represents a significant share of global non-China alumina supply. A prolonged disruption could therefore tighten the seaborne market, particularly in Europe and North America, where Brazilian alumina is an important source of supply.
For now, however, the market impact is likely to be more pronounced on refining margins than on physical availability. Hydro is maintaining production by purchasing gas at spot prices, meaning higher energy costs are being absorbed rather than immediately translating into a reduction in alumina output.
The situation could become more significant if the CELBA-Hydro dispute remains unresolved and spot gas prices stay substantially above the contracted price. Any renewed production cut at Alunorte would remove additional tonnage from the seaborne market and could provide upward pressure on alumina prices and premiums, particularly for Atlantic Basin material. Conversely, a stable long-term gas agreement would reduce the supply-risk premium currently associated with the refinery.
