Entering a decade throughout the value chain in Brazil
Brazil has been one of the largest ventures in our history and offered a steep learning curve that has shaped the way we do business around the globe.
In 2021, it will have been 10 years since Hydro acquired the mining company Vale’s aluminium assets in the state of Pará in Brazil, strengthening the company’s strategic position in the region and globally. The move improved our competitiveness by securing access to the raw materials for aluminium production – bauxite and alumina. As part of the deal, Hydro also bought Vale’s 60% stake in one of the world’s largest bauxite mine, Paragominas.
A number of new employees joined Hydro, adding valuable experience and operational know-how to an already global company. Hydro completed the acquisition of Vale’s remaining shareholding in 2016.
Hydro has had a presence in Brazil since the late 1970s through an ownership stake in the bauxite producer Mineração Rio do Norte (MRN) and an ownership share in Alunorte alumina refinery since the mid-1990s. Today, Hydro has operations throughout the aluminium value chain in Brazil, from bauxite mining to finished extruded products and solutions, as well as energy. This means we can address sustainability challenges across the full value chain.
Operating in Brazil has given us a lot of insight that we have learned and improved from, but there is still a lot of work to be done. We continue to learn and improve, especially in terms of developing new technology and safer operations, identifying new opportunities for social development with local communities and in the region, and to minimize our environmental and climate impact.
Our Brazilian history
These are some of our main events so far:
- 2011: Acquired aluminium assets from Vale
- 2011: Started collaboration with Danish Institute for Human Rights (DIHR)
- 2012: Membership in REDES, a supplier development network in Pará
- 2013: Established the Biodiversity Research Consortium Brazil-Norway
- 2013: Established a biodiversity strategy for Paragominas and 1:1 reforestation target
- 2013: Started implementation of a an intersectoral forum in Barcarena between local stakeholders, the municipality and Hydro’s operations
- 2013: Formation of an intersectoral forum with local stakeholders and Barcarena municipality
- 2014: Established grievance mechanisms for Hydro’s activities in Brazil
- 2014: High level Human rights observations of Hydro’s Brazilian operations by Danish Institute for Human Rights
- 2014: Started construction of the new bauxite residue deposits DRS2 and new press filters at Alunorte
- 2016: Completed the acquisition of the Paragominas bauxite mine
- 2017: New tailings management system in Paragominas completed
- 2017: Acquired Sapa and three extrusion plants in Southern Brazil
- 2017: Human Rights mapping of Hydro’s global operations, including Brazil, by Danish Institute for Human Rights
- 2018: Alunorte rainfall event and embargos on 50% of production and DRS2
- 2018: Established the Sustainable Barcarena Initiative
- 2018: Closing the historical rehabilitation gap in Paragominas reached, two years ahead of plan
- 2018: Reorganization of Hydro’s social responsibility work and implementation of new social responsibility strategy
- 2018: Social responsibility target established to reach 500,000 people globally with quality education and capacity building
- 2018: Published first sustainability report for Hydro’s operations in Brazil
- 2019: Production and DRS2 embargos lifted
- 2019: ASI certification of Bauxite & Alumina including Alunorte and Paragominas
- 2019: 200+ community dialogues
- 2019/2020: Started conducting a Human rights impact assessment and due diligence review
- 2019/2020: Established the Hydro Sustainability Fund
- 2019: Tailings dry backfill: Industry pioneering project eliminating the need for new large dams for storage bauxite tailings
- 2020: Donated BRL20 million to different initiatives to support communities through Covid-19
Value creation from the aluminium value chain in Pará
- Creating value from an integrated value chain: Supporting verticalization of the aluminium value chain contributes to development in the region and acts as an enabler for sustainable growth in the state of Pará. Hydro also extends the value chain through selling liquid aluminium annually from our joint venture aluminium plant Albras to a local cable producer, and to many other customers in the manufacturing industry in Brazil
- Employment: 14,000 including 6,100 own employees and 7,900 contractors
- Investments: Total investment in Brazil of 18 billion NOK since 2012
- Tax: BRL 517 million in taxes and fees to Brazilian authorities in 2019.
- Supplier development program: Supporting local supplier development and entrepreneurship initiatives. The Hydro Supplier Development Program has reached almost 200 local businesses.
- Social investments: Supporting the local communities through social programs across the seven municipalities where we have operations, in addition to initiatives related to education, skills development and capacity building. Hydro and Albras are also financing the Hydro Sustainability Fund, a financing mechanism for the Sustainable Barcarena Initiative. Hydro is contributing BRL 100 million to the fund over a 10-year period.
Resolving and learning from the Alunorte situation
In February 2018, the region around Barcarena in northern Brazil experienced flooding following two days of heavy rainfall. The areas flooded included Hydro’s Alunorte alumina refinery, which refines bauxite into the alumina used to produce aluminium. Communities around the alumina refinery were concerned that flooding could have resulted in overflows or leaks from Alunorte’s bauxite residue deposits into surrounding areas. There were local reports that the floods had affected the residue deposits and rumors circulated that they had overflowed into the surrounding area and contaminated local communities.
Since then, several investigations and inspections have confirmed there were no leaks or overflows from Alunorte’s bauxite residue deposit. More information about the Alunorte situation is available here.
However, the Alunorte situation taught us that we need more trust, better dialogue and collaboration with our local communities and stakeholders. This is something we have worked to improve since 2018, including expanding our support to local communities and community dialogue near the refinery.
Reducing greenhouse gas emissions, minimizing our environmental impact and being a good neighbor
Our operations in Brazil, especially mining, refining and primary aluminium production, are very energy intensive and have a considerable footprint in terms of land use, waste management and emissions. We are addressing the industry’s key environmental challenges with the goal to mitigate emissions to land, water and air, conserve biodiversity and reduce waste production:
- 1:1 rehabilitation of available mined areas, continuously within two years
- Eliminating the need for new tailings dams by implementation of the Tailings Dry Backfill methodology
- Utilize 10% of bauxite residue output by 2030
- Recycle 65% of Spent Pot Lining (SPL) by 2030
- 50% reduction in non-GHG emissions by 2030 (applies to sulfur dioxide, nitrogen oxides and particulate matter, from a 2017 baseline).
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 tasks in Brazil is to secure a greener energy mix at Alunorte, the world’s largest and most energy-efficient alumina refinery. This is a key enabler for the 30% carbon emissions reduction target in 2030.
Hydro can only succeed as a company if the communities around us and our business partners also succeed. Therefore, we strive to assess and mitigate any adverse impact to people, and to make a positive impact. We support social development in alignment with the UN Sustainable Development Goals of education, decent work and economic growth, peace, justice and strong institutions. In 2018 and 2019, we reached over 16,700 people through our social investments in Brazil.
Strengthening community relationships continues to be a top priority in Brazil. Considerable effort has been put into this and we have constructive dialogue with local communities and other key stakeholders on a regular basis. In addition, when the Covid-19 restrictions allow, we will reopen our doors for representatives from the communities to visit the plants and to better understand the operations, environmental and social processes.
Stepping into the future
Brazil has been of major strategic importance to Hydro since 2011 and will be a key part of our future. This is Hydro’s main source of the important raw material bauxite and where we have built up a strong organization with broad operational and leadership experience throughout the value chain.
Moreover, Hydro Renewable Growth unit will focus renewable projects and solutions in Brazil going forward including wind, solar and hydro power projects. It also includes developing behind-the-meter energy solutions to reduce or optimize our plant’s power consumption.
Looking to the future, Hydro aims to develop our solid foundation to make operations better by improving the way we work, minimizing our environmental impact, further collaboration and support with local communities and utilize our strong competence base to explore new business opportunities within the energy space.
As we enter a new decade in Brazil, our goal of maintaining and developing a safe, sustainable and profitable businesses remain guided by our mission to create more viable societies.
- More details of our sustainability performance, impact and challenges in Brazil are available on Hydro’s website and in the Sustainability report for Hydro’s operations in Brazil - 2019. The report is available in Portuguese and English.
- In Hydro’s annual report there are details on our strategy and performance targets for Brazil
- Information about tax including direct taxes on income, profit and production are available in the “Country by country report”
- “Operating in the Brazilian Amazon”