The Board of Directors of Companhia de Alumina do Para (CAP) has decided to postpone the planned construction of a new alumina refinery in Barcarena, near city of Belém in the state of Para, Brazil. CAP is owned by Norsk Hydro (OSE:NHY, 81%) and Dubai Aluminium Company Ltd aka. Dubal (19%). Hydro is a majority owner of nearby Paragominas bauxite mine. Its Alunorte alumina refinery is also not far at all.
The main reason for postponement is uncertainty in regards to both aluminium supply and demand and the overall development of the world economy. Two days ago when Hydro spoke of a difficult year for bauxite and alumina, it hinted there is such a possibility as the market risk a situation of oversupply in the next few years.
Hydro says that this decision does not reflect a change in the company’s view for long-term positive prospects in alumina and aluminium market. Hydro is trading near parity for the day. The decision to build the Barcarena refinery was made in 2008 and it was initially scheduled to come online in 2011. The initial planned production capacity has been 1.86 million tonnes per annum on two 930 tonne production lines but further extension are possible. Hydro still views this project as one of the most attractive in industry. It is now slated to start production in 2015.
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