The Norwegian owned Norsk Hydro company is now the dominant force in the aluminium complex in Brazil, following the decision of the Vale
mining company to sell its share in the MRN bauxite project, writes Patrick Knight. Both Alcoa and Novalis have ceased making primary aluminium, and Brazil’s giant Votorantim company has cut output at its Brazilian Aluminium Company, CBA subsidiary.
Until a few years ago, two Brazilian companies, Vale and Votorantim, owner of the Brazilian Aluminium Company, CBA, dominated the aluminium industry in Brazil, although American giants Alcoa and Alcan, now Novalis, had an important presence.
Vale had a stake in the huge Alunorte alumina plant, in Para state, and near the mouth of the Amazon river, in which it had a 50% share, as well as being a leading shareholder in the Albras smelter. This is located near Brazil’s second-largest hydroelectric power station,Tucurui, and is close to where Brazil’s main reserves of bauxite are found.
Vale also owned the relatively small Valesul smelter close to Rio de Janeiro, and was a founder member of the consortium which 40 years ago, developed Brazil’s largest bauxite complex, MRN, the Trombetas plant, on the river of that name, along with CBA and American companies. Over the years,Vale has gradually sold all its assets in the aluminium sector to Norsk Hydro. Brazil now houses the largest of Norsk’s operations. Norsk employs more than 5,000 staff, and owns six plants in Brazil. These include a share in the Alunorte alumina mill, and 500,000 tonnes capacity, a 50% share, of the aluminium produced at the Albras smelting plant. Norsk is now negotiating to buy the 40% share in the MRN bauxite mine that Vale still controls, although the approval of all the other shareholders in the project are needed for this sale to be completed.
CBA’s smelters are all close to the city of Sao Paulo. During the past 20 years, CBA it had steadily increased smelting capacity to 475.000 tonnes, making it the country’s leading single producer of primary aluminium. CBA made a point of being as close to self- sufficiency in electricity as possible, and also had as a policy exporting at least a third of its output. The company has now closed several lines, and will make only 325,000 tonnes of primary aluminium this year. CBA made almost as much money from the sale of surplus electricity as from primary aluminium last year. Until now, CBA has obtained the bauxite it needs from its mines in Minas Gerais state. But the rising cost of mining there, and the difficulty of transporting the bauxite to its processing plants — which involve a devious railway journey, made by a train each day — means the CBA plans to increase bauxite production at the ‘Rondon’ project it owns in Amazonia. The reserves are close to Paragominas, where Norsk Hydro also has mines. CBA is considering building a large alumina plant at Paragominas, but is concerned that demand for alumina is stagnant worldwide at the moment.
Virtually all of the manufacturing industry in Brazil has been badly affected by the fall in demand caused by recession. The worst hit, the motor industry, the most important single market for primary aluminium, is selling a third fewer vehicles this year than in 2015 and the smallest number since 2008. Numerous car plants are in danger of having to close down. Companies from all parts of the world were attracted to Brazil by the fact that per capita ownership of cars there is relatively low, but many are now losing money. Things are little better in the white goods sector, as with unemployment rising, wages falling, and with many Brazilians having difficulty in paying their debts, the situation is unlikely to improve in the near future. Following plant closures by Alcoa and cuts in output by other companies, the total amount of primary aluminium produced in Brazil totalled only 770,000 tonnes last year, compared with the 1.3mt (million tonnes) of 2013.