March 15, 2019 / 4:04 PM / 2 months ago

UPDATE 1-Norsk Hydro says Alunorte problems, higher raw material costs led to 2018 underlying EBIT fall

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By Barbara Lewis and Nerijus Adomaitis

OSLO, March 15 (Reuters) - Aluminium producer Norsk Hydro said its 2018 underlying earnings before interest and tax fell by 2.15 billion crowns ($251.61 million) due to higher raw material costs and reduced operations at Brazil’s Alunorte plant, it said on Friday.

The world’s largest alumina refinery has been running at half its capacity after Hydro admitted it had to make unlicensed emissions of untreated water in February last year because of severe rainfall.

“Hydro’s underlying EBIT decreased to NOK 9,069 million from NOK 11,215 million for 2017. The decrease reflects negative effects relating to the production curtailment at Alunorte and increased raw material costs,” Hydro said in its 2018 annual report published Friday.

The negative effects were partly offset by a higher all-in metal price and alumina sales price, it said, as well as the positive impact of taking full control of Sapa, a manufacturer of semi-finished aluminium products.

Hydro is awaiting permission from Brazilian authorities to resume full output at the facility, which can sustain annual aluminium production of more than 3 million tonnes.

“Once the embargoes are lifted, it is expected to take around 2 months to reach 75-85 percent of Alunorte’s nameplate production capacity,” Hydro said in the report.

Following the production embargo at Alunorte, the world alumina market outside China fell into deficit last year, and China became an exporter of alumina, the partly processed bauxite used to make aluminium, for the first time, Hydro said.

“The shortfall was balanced by Chinese alumina exports, which was unprecedented, as China has historically been an importer of alumina,” said Hydro.

$1 = 8.5449 Norwegian crowns Writing by Gwladys Fouche, editing by Louise Heavens

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