The aluminum industry in Pará has deferred ICMS on intra-state purchases expiring on July 17, 2015. Hydro Paragominas, Hydro Alunorte and Albras are subject to ICMS tax on diesel and, since February 1, 2015 2014, also on fuel oil, since the state of Pará replaced the ICMS collection point of the distributor located in the state for refineries located outside Pará. Currently the tax paid is around R $ 250 million per year. < br />
Due to the new tax treatment, valid for 15 years, Hydro Paragominas and Hydro Alunorte will continue to pay ICMS on diesel and fuel oil, while other intra-state purchases will have the deferral renewed for the period. Albras will pay ICMS on a 50 percent basis for electricity purchases, while other intra-state purchases will have a deferred renewal for the period. The ICMS paid by Albras on electricity may be offset by the increase in sales of primary aluminum in the domestic market, with a sales price including ICMS.
Hydro will continue to support verticalization along the aluminum value chain, contributing to the region's development and acting as a facilitator for the sustainable growth of the state of Pará. The bauxite mined at Hydro Paragominas is refined at Hydro Alunorte, alumina refinery. Hydro Alunorte's alumina is used as a raw material in the primary aluminum plant Albras, a joint venture between Hydro and the Japanese consortium NAAC (Nippon Amazon Aluminum Co. Ltd.). Hydro also expands this value chain locally through the annual sale of 50,000 tons of liquid aluminum from Albras to the cable producer Alubar. Hydro and Albras will increase domestic sales volumes by 84,000 tonnes / year, in terms of the market, attracting new value-added industries in the state. Albras will also have a new special aluminum alloy production line in its portfolio, with an annual production capacity of 40,000 tons, for sale in the domestic market.
Through the "from B to A" improvement program, Hydro has, over the years, invested efforts to reach the production capacity of Hydro Paragominas (9.9 million tons) and Hydro Alunorte (6 , 3 million tons), reducing costs and improving operations. Nominal capacity has been reached at Hydro Paragominas. Hydro Alunorte continues to increase production, seeking to reach its nominal capacity. During the process of stabilizing and increasing production, Hydro Alunorte identified measures capable of raising production beyond nominal capacity, reaching up to 6.6 million tons.
The CAP alumina refinery project is a joint venture between Hydro and Dubal Holding LLC. This project is currently on hold due to market conditions. CAP will undergo a technical review to assess the possibility of starting the licensing of the implementation works in 2018, if market conditions are more favorable. The project will require the expansion of the Paragominas mine to 14.8 million tons.
Hydro Paragominas has a nominal production capacity of 9.9 million tons of bauxite per year. Hydro Alunorte, 92% controlled by Hydro, has a nominal capacity of 6.3 million tons of alumina per year and is the largest alumina refinery in the world. Albras, controlled 51% by Hydro and 49% by the Japanese consortium NAAC, has an annual production capacity of 460,000 tons. The CAP project, owned 81% by Hydro and 19% by Dubal Holding LLC, is expected to have an initial capacity of 1.9 million tons of alumina / year. All operations are located in the state of Pará.