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Operating in the Brazilian Amazon

Aluminium is the metal of the future, a key building block for the low-carbon, circular economy that contributes to a modern and viable society. Nonetheless, as with all materials, it also comes with a footprint. We see it as our responsibility to minimize this footprint when producing it, while generating value to society.

rainforest canopy

In order to tackle such challenges, and based on our belief that sustainability can drive profitability, we are investing in advanced technologies and harnessing sustainable initiatives to make our operations more responsible and safer. The most important source of information about our sustainability performance in Brazil is our Sustainability report for Hydro's operations in Brazil.

We recognize the impact of our operations and acknowledge the importance of continuously minimizing our environmental footprint and mitigating potential impact to people, while creating value to our end users, to local communities and to society.

We believe there is a way of conducting responsible, more sustainable and safe operations in the Amazon region. We welcome dialogue to discuss openly the challenges as well as the opportunities that can drive our efforts in the right direction.

Our operations

To improve our competitive position and secure access to the raw material for aluminium production, Hydro made the strategic move to buy the aluminium assets from Vale, a Brazil-based mining and metals company, in 2011. Hydro has had a presence in Brazil since the late 1970s through an ownership stake in the bauxite mining company Mineração Rio do Norte (MRN) and an ownership share in Alunorte alumina refinery since the mid-1990s. Today we have operations throughout the aluminium value chain in Brazil, from bauxite mining to finished extruded products and solutions, as well as energy and renewables.

Hydro’s bauxite mine, Paragominas, and alumina refinery, Alunorte, are located in the state of Pará in Northern Brazil and are connected by a 244 km bauxite slurry pipeline. Located next to Alunorte is the primary aluminium plant Albras, where Hydro has a 51 percent ownership. In addition, Hydro has three aluminium extrusion plants in Southern Brazil. Hydro employs around 6,000 permanent employees and 8,000 contracted workers (full-time equivalents) in Brazil in total. In addition, Hydro has a 5 percent ownership interest in MRN and off-take agreements with Vale for a further 40 percent of the bauxite volume produced by MRN.

Hydro Operations

Bauxite reserves are widely distributed around the world, particularly in tropical and subtropical regions. Guinea, Australia, Brazil, Vietnam and Jamaica hold over 70 percent of the world’s known bauxite reserves.

Bauxite mining is a form of surface mining, known as strip mining. It involves the removal of vegetation, topsoil and overburden in order to get to the underlying bauxite deposit. The process is then repeated on the subsequent strip. As a result, bauxite mining operations tend to disturb relatively large areas. Hydro’s mine is in an area that is recognized as the deforestation belt around the central Amazon region. In the municipality of Paragominas, there has been a reduction in forest area of more than 60 percent over a period of 30 years. Within the mine itself, a number of the areas were exposed to selective logging and clear cutting before the commencement of bauxite mining operations in 2007. Reforestation and wildlife management at Paragominas are core elements of our sustainability strategy.

The Barcarena region, where the Alunorte alumina refinery and Hydro’s Albras smelter is located, ranks below the Brazilian average on the Human Development Index (measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living). Basic services, such as education, safety and sanitation, are challenging. While the these are public services, we play our part in the sustainable development of the full region by investing technical and financial resources in education, skills development and empowerment of local communities.

Hydro Bauxite & Alumina, including the alumina refinery Alunorte and the bauxite mine Paragominas and Hydro’s Albras smelter, is certified according to the Aluminium Stewardship Initiative (Performance Standard and Chain of Custody), which is a leading standard for responsible production in the Aluminium sector.

Managing our environmental impact

Hydro’s environment strategy for 2030 addresses the industry's key environmental challenges. Our goal is to mitigate emissions to land, water and air, restore impacted biodiversity and reduce waste production. To achieve this, we monitor, identify and mitigate environmental risk throughout the lifetime of our operational sites.

Our most significant impact on biodiversity is at our mine in Paragominas. A rehabilitation program is in place to monitor the local flora and fauna and rehabilitate the mined areas. We target a 1 to 1 rehabilitation of available mined areas (i.e. those mined areas not used by or reserved for long-term mining infrastructure).

Environmental Impact

To increase our knowledge and secure a science-based approach to rehabilitation, the Biodiversity Research Consortium Brazil-Norway (BRC) was established in 2013. The consortium is a partnership between research institutions from the State of Pará, the University of Oslo and Hydro. It performs research on biodiversity to improve rehabilitation, generating new data on fauna and flora for local researchers.

Our operations in Pará have state-of-the-art technology for the treatment and disposal of residues from the production of bauxite and alumina. Residue is generated through the aluminium production process and at all stages of the value chain. Our waste management approach focuses on the mitigation hierarchy: finding ways to avoid, minimize and recycle waste rather than sending it to landfill. Hydro’s mining and refining operations generate significant amounts of residue which are stored in large engineered storage facilities.

The mined bauxite must be washed before further processing, which generates tailings that are stored in dedicated tailings dams at our mining operation. In 2019, we initiated tests of the “Tailings Dry Backfill” methodology at the Paragominas mine, a novel approach to minimize the amount of tailings stored, by excavating dried tailings from the storage facility and returning it to the mined areas before they are rehabilitated. The methodology eliminates the need for continuous construction or upgrade of new permanent tailings dams. The pioneer application represents the end of the use of large dams for permanent storage of bauxite tailings. In 2020, we secured a license to start implementing the methodology full-scale within our operations.

Our tailings storage facilities at our bauxite mine Paragominas are monitored on a regular basis (using instrumentation) and are audited on an annual basis, including an international best practice audits by the external international geo-mechanical consultants Norwegian Geotechnical Institute and Geomecanica (2016 & 2019). Our bauxite tailings storage facilities at Paragominas differ significantly from those of iron ore mines, primarily due to the drier nature of our tailings and the more robust nature of the construction method in our tailings storage facilities.

Bauxite residue is a waste-product of the alumina refining process. This is filter pressed and stored in dedicated bauxite residue storage areas at our alumina refinery Alunorte. Alunorte uses an enhanced dry-stacking concept for handling bauxite residue. The use of modern press filters, built in connection with the new bauxite residue deposit DRS2, results in a bauxite residue with a very low moisture content (22 percent) which can be more efficiently stored. This new approach means that, per ton alumina produced, our bauxite residue now occupies only one fourth of the surface area in DRS2 than it did in our historical bauxite residue deposit (DRS1).

In addition to operating one of the largest water treatment systems in Brazil, Alunorte has invested R$675 million to increase storage capacity from four to six times the size of an Olympic pool per hour – aiming to keep operations well prepared to manage rainwater volumes also due to climate changes. This system is currently in place to ensure that all effluent is properly treated before discharging to the external environment, in accordance to local regulations.

In the world, only 3% of the 150 million tonnes of bauxite residue is recycled annually, which is still a very low rate. As part of our commitment to minimize operational impacts, we understand we need to push R&D activities further to re-use bauxite residue. As part of our efforts, earlier this year we started a local partnership with Senai Institute of Innovation in Mineral technologies (ISI-TM) to study the reuse of bauxite residues and the decrease of storage area. We will invest R$5 million in these studies up to 2022 and have set a target to utilize 10% of our bauxite residue output by 2030.

 

Managing our social impact

We recognize the importance of being a good neighbor to the local communities surrounding our operations, especially in the Amazon region. We have learned that we can only succeed as a company if the communities around us also succeed, which is why we strive to respect human rights, make a positive impact and support social change in alignment with the UN Sustainable Development Goals of education, decent work and economic growth, peace, justice and strong institutions.

Communities

Human rights

We acknowledge the many challenges related to human rights in the Amazon region. We recognize that businesses have a responsibility to respect human rights. We also recognize that business can have an important role in supporting and promoting human rights. You can read more about Hydro’s approach to human rights here, including stakeholder dialogue, grievance mechanism and remediation, and our main risks. In 2020, we conducted more than 800 social dialogues, meetings and plant visits. Covid-19 prevention protocols were followed.

To better understand our human rights impact, we have recently performed a human rights impact assessment with action plans to be followed up the next years. More information can be found here.

Our human rights policy underlines the importance we place in protecting the rights of vulnerable groups, including:

Wir respektieren die UN-Erklärung zu den Rechten indigener Völker und halten uns an die Konvention indigener und Stammesvölker (IAO-Konvention 169). Wichtig ist, dass wir das Recht der indigenen und traditionellen Völker auf Selbstbestimmung, auf Land, das sie traditionell besetzen, auf ihre Bräuche, Traditionen und Institutionen sowie auf freie, vorherige und informierte Zustimmung (FPIC) anerkennen.

Mehrere traditionelle Quilombolas-Gemeinden leben in den örtlichen Gemeinden neben unseren Betrieben. Wir führen einen regelmäßigen Dialog mit den Gemeinden sowie den Verbänden von Quilombolas. Wir arbeiten auch daran, soziale Programme und andere Initiativen zur Einkommensgenerierung zu etablieren, einschließlich der traditionellen Landwirtschaft. Vor kurzem haben wir mit Partnern zusammengearbeitet, um die Governance und Kapazität mehrerer Quliombolas-Verbände zu stärken.

Wir respektieren ihre Rechte auf freie Meinungsäußerung, Vereinigungsfreiheit und friedliche Versammlung und protestieren gegen unser Geschäft und unsere Geschäftstätigkeit.

Wir führen einen regelmäßigen Dialog mit Arbeitnehmervertretern und Gewerkschaften. Hydro hat ein globales Rahmenabkommen mit internationalen und nationalen Gewerkschaften in Brasilien.

Wir bemühen uns besonders, sicherzustellen, dass Menschenrechts- und Umweltverteidiger in unsere Dialoge einbezogen werden und dass wir auf ihre Bedenken hören.

In Paragominas und Barcarena arbeiten wir daran, die Kapazität und den Lebensunterhalt von Abfallsammlern zu verbessern und die Gründung und Entwicklung ihrer Verbände zu unterstützen. Zu diesem Zweck haben wir in Zusammenarbeit mit den örtlichen Behörden Sozialprogramme eingerichtet, das Sustentar Barcarena-Programm in Barcarena und das Cooperacamare Strenthening-Programm in Paragominas.

 

Community development

To encourage sustainable development in the regions where we operate, Hydro is involved in initiatives that increase income for people in communities where access to decent work is limited. We see entrepreneurship and income generation as tools for local development and reduction of inequality. We seek to contribute by strengthening local job offerings, employment networks and labor institutions. As example of our ongoing efforts, 76% of our workforce in Pará are born within the state. We also support sports, cultural activities and education for vulnerable children and young people.

In the state of Pará we have more than 10 community development programs, and more than 700 employees are involved in volunteer actions. Some of our community programs are linked to mining license requirements, while others are voluntary commitments. The programs target education, economic growth, decent work, capacity building and strengthening of institutions. A few examples include:

  • Embarca 360 Project – Support 300 young entrepreneurs from Barcarena and Abaetetuba
  • Amesa Project – Support family-based farmers to sell to local private markets
  • Todos pelo Trabalho – Insertion of local professionals in multiple economic sectors in Barcarena
  • Sustentar Barcarena Program – Organization and qualification of waste collectors; implementation of a recyclable solid waste sorting unit; environmental education for the municipality of Barcarena
  • Minera Startup – Fostering local start-ups to harness innovation and achieve results

We have established initiatives to train community leaders in leadership and administration in the communities where we operate. Furthermore, we started a technical training program for community members along the pipeline to strengthen their job opportunities. You can read more about the programs in the Sustainability report for Brazil.

We initiated the Sustainable Barcarena Initiative in 2018 and have continued developing it in 2020. The initiative is an independent platform for sustainable development in Barcarena in Pará state. The overall aim is to bring local stakeholders together to discuss challenges and opportunities, strengthen capabilities and ultimately invest in the social initiatives they plan and develop together.

In 2019, we established the Hydro Sustainability Fund (FSH), which serves as a financing mechanism for the Sustainable Barcarena Initiative. Hydro, Alunorte and Albras committed BRL 100 million to the FSH over a 10-year period. In 2020, the FSH established partnerships with USAID and the Partnership Platform for the Amazon’s Solidarity initiative to strengthen initiatives in the Amazon region. In response to Covid-19, the FSH together with these partners are financing income generation projects for local production of face masks, as well as strengthening of existing social projects for local farmers through the pandemic. In addition, a partnership between FSH, the Mitsui Fund and Instituto Peabiru is allocating BRL 1.3 million to provide microfinancing for local family-based agricultural initiatives. FSH launched its first round of financing through a call for projects in December 2019. Based on set criteria, BRL 765 000 are currently directed to projects that support local associations, building their capacities in terms of managing community businesses and promoting cultural events.

In Pará state we also engage with regional initiatives to preserve the Amazon. We run several programs to develop local suppliers, enhance entrepreneurship and strengthening of traditional livelihood. You can read more about the programs in the Sustainability report for Brazil.

 

Managing our climate impact

We are working systematically to reduce our greenhouse gas emissions and our operations in Brazil are key to reach Hydro’s global target to reduce carbon emissions by 10% by 2025 and 30% by 2030.

One of our most important ambitions is to secure a greener energy mix at Alunorte, which is among the world’s largest and one of the most energy-efficient alumina refinery. In this respect, Alunorte is already an industry leader in Brazil at 0.7t CO2e per ton of aluminium oxide compared to the industry average of 1.2t CO2e.

Currently there are three active projects which will further reduce emissions to 0.5 t CO2e by 2025 and help us reach the 30% carbon emissions reduction target by 2030:

  • Installation of a new electrical boiler in 2021 and two additional electric boilers in 2023
  • Replacing all heavy fuel oil with natural gas by 2024
  • Refinery energy efficiency

Sourcing responsibly

Hydro’s supplier and business partner requirements regarding social and environmental responsibility are, as stated in our global directives and procedures, an integral part of all stages of the procurement process. The requirements cover issues related to environment, human rights, anti-corruption and bribery and working conditions, including work environment. These requirements set out in Hydro’s Supplier Code of Conduct are based on international standards, including UN Global Compact, the ILO core conventions, UN Guiding Principles on Business and Human Rights and other UN documents and instruments. Find more information about responsibility in our supply chain here.

Developing and strengthening suppliers is an important pillar to our approach. We work to improve supplier performance through corrective action plans or supplier development programs. In Brazil, the Supplier Development Program has reached almost 200 local businesses. You can read more about the program in the Sustainability report for Brazil. Over the last 10 years, we have invested more than BRL 10 billion in Brazil, and in 2018 alone, more than BRL 3 billion were invested on the purchase of goods and services in addition to BRL 662 million in paid taxes.

Joint ventures in the Amazon

In the municipality of Oriximiná in Pará, Brazil, where the MRN bauxite mine is located, there is an ongoing dispute between Quilombola communities and Brazilian authorities regarding title to land inside National Parks owned by the federal government. MRN is not a legal party in this conflict, but indirectly, the territory claimed by these communities encompasses certain areas that are planned to be mined by MRN in the future.

Concerns have been raised about traditional peoples’ rights during the process for the mine expansion. Hydro engages with MRN through its board of directors and committees to request that the environmental and social impact assessment (ESIA) and Quilombola consultation processes for the expansion project comply with local, national and international standards. MRN is currently engaged in understanding and responding to local stakeholder expectations regarding concerns over the impacts of current and future operations on local communities.

MRN is engaged with stakeholders and supports the Sustainable Territories Program, a social program to promote long-term development of traditional communities in Oriximiná. In 2020, MRN put in place measures to reduce the spread of Covid-19 including providing medical equipment and food to local Quilombola and other traditional communities.

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