Good afternoon and welcome to this update on the situation at Alunorte. As we have announced today that the plant is preparing for full curtailment of its operation. We will start with a short introduction by President and CEO, Svein Richard Brandtzæg, followed by a Q&A session. With that, I leave the word to you, Svein Richard.
Good afternoon. Today, we have unfortunately had to announce that Hydro's alumina refinery, Alunorte in Brazil, is preparing for full curtailment of its operation. This decision was taken as the bauxite residue deposit area 1, what is called DRS1, is close to reaching its capacity as a result of the embargo on the press filter technology and the newly developed bauxite residue deposit area DRS2. As you know, Alunorte has been running 50% production since March following embargoes from Brazilian authorities. The embargoes have prevented Alunorte from utilizing the newest bauxite residue deposit area DRS2 which was under commissioning in February this year, as well as the state of the art press filter technology that we have invested in.
The press filter is the most modern and sustainable technology for depositing bauxite residue, reducing the required storage area and environmental footprint, as well as increasing safety. Alunorte has since the embargo made efforts towards authorities from permission to utilize the press filter as well as DRS2 without success. Due to the embargo, Alunorte has been forced to operate only DRS1, which was originally planned to be phased out. DRS1 is therefore approaching its end of life faster than anticipated. This has forced Alunorte to take the responsible decision to temporarily curtail 100% of its operations. This will have immediate effect on the bauxite mine, Paragominas, which also shut down 100% of its operation. Both Alunorte and Paragominas have initiated the shutdown process.
It is too early to determine the full impact, but the decision to close Alunorte and Paragominas will have significant operational and financial consequences, potentially also for Hydro's primary aluminum portfolio, including Albras. It is important to stress once again that internal and external reviews confirm that there were no overflow from the bauxite residue deposits and no harmful spills from the February rain event. We are continuing our dialogue with authorities seeking solutions to resolve the situation in order to protect jobs and affected communities, customers, and suppliers.
Thank you, Svein Richard. Operator, we are now ready for questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. Please state your name before posing your question. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will now take our first question from Menno Sanderse of Morgan Stanley. Please go ahead. Your line is open.
Good evening, Svein Richard. A couple of short ones for me. First of all, are the agreements signed on the 5th of September in any way affected by this? Secondly, what led to the dramatic change in the engineering consultant's view with respect to the capacity of DRS1? I understood the beginning of the year that DRS1 could be safely used until next year at a 50% production rate. Secondly, finally, sorry. On processing of Chinese alumina, what is Hydro's experience in its smelter portfolio with processing Chinese alumina?
Okay, thank you, Menno. With regard to the agreements that we have signed the 5th of September, the terms of adjusted conduct and the TAC and the TC, they will not be affected. We are still continuing to follow up what has been agreed there. That is not going to be affected. With regard to the change in the view of the geomechanical consultants, the geotechnical expert, that is something we of course are going to go deeper into. It was a clear recommendation from them that it was not prudent to continue using DRS1 and therefore suggesting immediate closure.
The decision has been done from a operational point of view, and it is based on the input from and the conclusion from the geotechnical expert.
Thanks.
Yes.
Is it the same, is it the same geotech experts that have done DRS2, or is it a different group?
It is the same. We have in fact, these are very well recognized. I think it's one of the best geotechnical companies you can get for these questions. We all have asked about. With regard to evaluation here, they have come to that conclusion. They know the DRS1 very well because they have been working there for quite some time. As I said, there is no indication of that DRS1 is unsafe. This is now that they are strongly recommending now that we are not going to continue using DRS1 with the bauxite residues that has been handled in the drum filters. As you know, we are not able to operate the press filter.
This is the state-of-the-art technology and as long as we cannot operate that, we aren't able to continue operation in total. In fact, the DRS2 is also part of the embargo here, so we have not been able to use DRS2 and the press filter since the embargo started in the beginning of March.
Yes.
With regard to the Chinese question and Chinese alumina, we have tested many different qualities of alumina during since the embargo. What we see is that we get some higher energy consumption and lower current efficiency. It is maybe it looks like we are now promoting Alunorte alumina. In fact, the Alunorte alumina that we are using in our plants, with that alumina we have in fact lower energy consumption, higher current efficiency than with the alternatives. The problem with the Chinese is that it's not only about energy and current efficiency, but also a lot of it's a question of environmental issues because it's very dusty. It has to be handled in a special way.
You can use it if necessary, or do you say look, after your test-?
Yes.
You rule out the Chinese alumina?
No, we can use the Chinese definitely, but with some operational issues.
Okay.
It is of course, better than nothing. It's also a matter of getting used to operate with the dusty alumina, and that we will be able to do after a while. The problem with China now is that it's far away and it will take some time before cargos from China is reaching Norway.
Sure. Understood. Thank you.
We will now take our next question from Wolfgang A. Oberer from AMAG. Your line is open. Please go ahead.
Mistake. Hello?
Yes, hello.
Oh, hey, sorry. It's Dan Major from UBS. According to your previous statement, nothing to do with the change in the negotiating process, around the lifting of the embargo and an entirely technical factor, due to the reassessment of the capacity.
Have experts in geomechanics. We feel that the best experts is outside, and that's why we are using consultants on, in this field. This is a very important area to know how the safety is secured. With regard to the DRS1 mine, the recommendation was very clear or the conclusion was very clear from the geomechanical and the geotechnical experts. It's based on the external recommendation or external conclusion, and we will not in a way stretch the risk here. We feel it's the right decision to do now. We do a stock company that is operating with risk on these things.
That is why we now also taking the conclusion as we have done, although it's quite dramatic.
Okay. Just to be clear, It's the same external consultants that previously put the capacity at 12-18 months and now giving that recommendation. It's not a change in consultant. Is that correct?
No, it's the same experts that we are still using.
Okay. Thanks.
They have spent quite a lot of time on it. We had, also in the consulting company, they have really, used all the resources available, to come to that conclusion. There's, we don't see any reason to question what they have concluded on here.
Okay. Thanks. Very clear. two very quick follow-ups. What's the, what's the estimated ramp-up time for the capacity, for the refinery now, assuming it closes or shuts down on a 100% basis in the coming months?
As we said previously, to restart Alunorte, it will take two to three months.
No change?
We will stay nowadays the same as we have talked about previously when we are doing the curtailment, and we will start all lines at the same time. It will be two to three month, three months operation with lower efficiency or lower yield. There is no extraordinary maintenance costs involved in the restart. In fact, while we have been under this embargo, we have utilized the time now to do maintenance. The plant is in fact in very good shape today. That is the situation with the office restarts.
Okay, perfect. Just final one. How much inventory do you have of alumina, now you've taken out all of Alunorte? How long before you have to go into the market to buy alumina to keep the smelters going?
We have now covered our own need until end November. We need cargoes in October to be able to fill up the silos for the remaining year. Albras will be curtailed very shortly due to this situation because Albras doesn't have any alternatives on alumina supply. Albras will be curtailed within the next week. We expect it will be running still a couple of days, and then it will be curtailed in two steps.
Okay, great. Thank you very much.
We will now take our next question. Please go ahead, caller. Your line is open.
Yes, hello, everyone. It's Johannes here from Handelsbanken. A couple of question, how should one think about fixed costs now in Alunorte and the BMA division? I mean, if you produce basically zero in the division, how much cost are you running at on an annual basis here? I can imagine that the EBITDA, for instance, in the division here will be, you know, heavily negative once you produce zero.
Yeah. Of course, with this situation we are now entering, we would be able to reduce fixed cost more compared to the standby scenario we had until now. We are evaluating all available measures to reduce labor cost by also reducing contractors and of course, service and services and materials will also be reduced significantly. It will have a big impact on manning. As we speak, Paragominas is now on the way to be totally curtailed. It will take some more days for Alunorte because that is a process that will go over some weeks. We are talking about a fairly high number of people that will be affected now.
Okay. I think you have shown a number from Alunorte only that the fixed cost is NOK 2.2 billion on an annual basis. Is it fair to assume like a run rate of about NOK 2 billion-NOK 3 billion here in total for the division? I mean, theoretically, if you're not produce anything, that is the sort of run rate on an annual basis of cost.
15%-20% of Alunorte cost are fixed. 60%-70% of the cost in Paragominas are fixed. The fixed cost will now be reduced due to the fact that we are now reducing manning significantly.
Right. Right.
There are very few people left, after the curtailment has been executed.
Yeah. Perhaps a little bit of a, of a accounting question, but you're running per quarter with NOK 600 million in depreciation cost in the BMA division. Will those be zero when you don't produce?
There will be no significant effect expected on the depreciation.
Right. Right. Then I wondering in of possible indirect effects on the primary metal. It sounds that you're having a positive view that you can find the feed in the market and from China. Could you perhaps give some more color on that? What is the risk that you will miss out a lot of volumes here in the first months of 2019 because of the issue in Brazil?
If we start with the Albras, that is the first one that we are going to curtail. We have fairly well covered alumina in our silos in the Norwegian system. The Qatalum smelter is well covered. We need more cargoes. That will of course take some time. If we now, this is something we are now going through, of course, and we are securing cargoes as far as we can. Now we are securing cargoes as we speak now. We are also implementing or we have started to implement emergency plan also for the smelters. The first step is in fact to reduce amperage in our smelters and also take out old cells.
That.
Right
What we know, because that doesn't cost very much. This is a very important step that will save quite a lot of alumina, meaning we also then also reducing aluminum production, but then we keep our lines, you know, full operation.
Right. Right. Right. A final question from my side. From the court decision in Brazil, I know you can't guide on any date, but, I mean, can you give us any sort of indication? Should we think about weeks of a final decision from the court in Brazil, or is it rather a decision that will come in the beginning of next year, or how should we think about the timeframe?
I cannot speculate on that. This is impossible to say. It's clear that this situation also is creating some urgency in Brazil. It is quite a dramatic situation for Hydro, but also for the power state. There are already scheduled a lot of meetings during today and tomorrow and the coming days. We'll see what happens there now.
Okay. Thank you.
We will now take our next question. Please go ahead caller. Your line is open.
Hi, good afternoon. Jatinder from Exane BNP Paribas. A couple of questions. Can the courts actually lift embargo before the audits are concluded? Related to that, do you think DRS2 embargo can be lifted in isolation while rest of the process is still underway? Just a second question on the economics. Would you run primary metal even if you're loss making procuring spot alumina given the time and cost required to suspend and restart? Thank you.
With regard to the question about DRS 2, this embargo on DRS 2 and press filter, of course, can in theory, be lifted in isolation. This is again a question for the judge, but also there is the judge has to decide on it and then also the environmental agency. That depends. With regard to the question I understand, Jatinder, that you asked about if we will run it, primary is loss making. Of course, this is also another question that we are looking at. The alumina price will of course be expected to go up now.
If the metal price is not moving more, it has moved today, but that remains to be seen. We will also, of course, look at that. The problem with smelters is that it costs also some money to restart the smelters. We estimate around $100-$150 per ton to restart the smelter. That is also part of the equation there.
Sure. Would you look to change your hedging strategy that you sell forward for the quarter?
pardon me. I didn't get that one, Jatinder.
The forward selling of primary aluminum for next quarter, would you look to change those committed volumes? Typically, you do 50% sales.
We are not changing the hedging strategy here.
Okay. Thank you.
We will now take our next question. Please go ahead, caller. Your line is open.
Hi, this is Kirtania from HSBC. I had just couple of questions. When do you have to declare force majeure on alumina sale to external parties? What is the volume on which will you'll have to declare force majeure? Second, while you cannot comment on the timeline of court lifting embargo, is there possibility of giving any update on the discussions which is undergoing?
There will be a force majeure, of course, on this situation so that is clear. With regard to the court decision, again, we cannot give you any timeline here. There is, of course, an election in Brazil now. I'm not sure if that is directly impacting it, but it may be that is an indirect impact. Again, it is impossible for me to give you any indication of timing for this process to lift the embargo of Alunorte.
Right. In terms of the force majeure, what is the volume of alumina on which you have to declare a force majeure? What will be the likely timing considering the stocks at hand for declaring force majeure on alumina?
With regard to the volumes, that is something we have to come back to. In 2017, 4.5 million tons was sold externally. Of course, this is there are different numbers now, the final numbers that we have to come back to later. The force majeure situation is of course a very important one here.
Sure. Thanks.
We will now take our next question. Please go ahead, caller. Your line is open. Please go ahead, caller. Your line is now open.
Hi, it's Evan from DNB. Can you hear me?
Yes.
Perfect.
Yes, we can hear you, Evan.
That's good. Just a follow-up question on your comment on reducing the amperage and closing old cells. Do you have any estimate on how that will affect primary production in terms of tons? You have previously stated in one of your quarter reports that you are evaluating or your accountants are evaluating a write down in Alunorte on the back of what has happened. How can you elaborate with on the details of that?
Mm.
What has the feedback from the relevant authorities been after you announced this curtailment this morning?
Yes. Evan, with regard to the amperage, We have the opportunity to reduce amperage with 10%-20% if we want to do that. We're also talking about taking out old cells that can reduce the production even further. Normally, the cathode lifetime is around seven to eight years. When they are approaching seven, eight years, they are not producing as well as younger cells. We are then looking at taking out the old cells. If you don't take one to seven or one to eight, let's say 10% of the production could be taken out if you take out the seven years, seven to eight years old cells, approximately.
Then we could swing the amperage or take down the amperage with about 10% to up to 20%. There are some opportunities that we are now looking closer at again, to maintain the operations or lines. Anyway, save the resource cost as alternative to the payment. This is something we are evaluating. With regard to the feedback from authorities, I indicated already that this has created some urgency, and there is a lot of meetings now ongoing and also as we speak. This is meetings with the authorities that have been in a way that we have been waiting for response from.
That doesn't immediately mean that we are seeing solutions here, but at least it's good to see that there are just quite a high activity now. There, there's been several meetings that has been arranged already, and there are also very important meeting now ongoing with the government authorities as we speak. With regard to the a lot situation on write downs, Eivind, maybe you can comment on that.
Sure. What we will do, of course, in Q3 is the same as we did in Q1, and the second quarter, is to run new impairment analysis, in particular on Albras and Paragominas. Now, the outcome of such evaluations, of course, is too early to conclude and will very much also depend on the line of sight we have in terms of restart as well. We will have to come back to that in Q3.
Okay. Thank you. Just very quickly follow up on the production reduction in aluminum in primary. How would that impact your additional sourcing needs? To ask the question in other way, I know this is a dynamic question, but how much more would you expect to go out and source alumina in the market?
Yeah. If you think about the... If you're reducing our Norwegian production with 10% or 20%, that has a direct impact on the need for alumina. We will reduce alumina with 10%-20%. This is in a way helping out the situation temporarily. The next part of the question that was related to... What was that, Eivind? What did you say?
How much, Eivind, that you will likely look on this?
Oh, yes.
Reducing the amperage and taking out cells.
Yeah.
How much-
We will. Yeah, it will affect the need for alumina, definitely. How we will execute on this is very much dependent on what is now happening during next weeks. As I said, we have alumina until end of October, and to November, I mean, until November. We need cargoes in October to be supplied to November. That is something we are working with now. If we get the cargoes in place, then we don't need to reduce production.
Okay. Thank you.
We will now take our next question. Please go ahead, caller. Your line is open.
Hi. Martin Norn from Carnegie. Do you hear me?
Yes, I hear you, Martin.
Yeah. Regarding those, volumes that can be, on force majeure, how do you view your possibility that you are really able to claim force majeure on these, external contracts?
Well, we have the same arguments now as we had in the beginning of the year when we initiated this. This is again, the situation that is based on the curtailment or the what's sent to the. It's the same message to the customers today as we are updating situation and we will have a more comprehensive letter to our customers later. It will be using the same arguments this time as it was for the initial 50% embargo.
Okay.
The force majeure issued on the partial curtailment is still valid.
Okay.
We will now take our next question. Please go ahead, caller. Your line is open.
Hi. Can you hear me?
Yes.
Okay. This is Enrique from Platts. I have a couple questions. First one about specifically about the Albras smelter. You said that it, that you plan to curtail it very shortly within the next week. I wanted to ask how many inventories or how many tons do you have in inventory in Brazil to supply existing contracts in the case of Albras? The second question is about the agreement with the authorities announced last month. Did you already hire an audit firm to inspect Alunorte's safety as expected in that agreement? Did that audit already begin? How long could it take?
Thank you, Enrique. With regard to the Albras smelter, we are talking about one to two weeks inventory here. They are 100% depending on Alunorte. That's why we are now starting planning the curtailment of the Albras smelter. With regard to the agreement on the with authorities, this is in place, and this agreements and the content of the agreements will be followed up as normal as according to what we have agreed to, of course. With regard to the audits and the audits that you are probably indicating here is a part of the terms of the adjusted contract. This is we are working on this according to the agreement.
This is ongoing. But the decision that was made now to curtail Alunorte hundred percent was based on the external geomechanical experts. This is I would say a separate report and was an report from a company that knows the bauxite residue reserves very, very well. They know the geomechanical properties, and they know what they have done. And as I said, there is no, there's no indication of a unsafe situation for DRS1, but they have just concluded that we cannot continue. We should have the press filter on full operation now, and we should also have DRS2 in full operation.
This is the safest way to handle the red mud deposit. That is something that is now under embargo, and then we have to stop it.
Okay. The audit work has already started?
Yes, there are several audits. One is the environmental audit, that is...
Mm-hmm
...is very important, of course. This is now started according to the agreement. Again, this curtailment is not based on these audits. It's based on a, on a separate report from technical analysis and the recent field tests.
Okay. Okay. Sorry, I'm not sure if I got it right. You said that in the case of Albras, you have one or two weeks of inventory. Is that correct?
Yes. Of alumina, yes.
Of primary aluminum at Albras.
Oh, they did. No, sorry. It is one to two weeks inventory of alumina, aluminum oxide.
Okay. That's for Alunorte. What about for Albras? Do you still have?
No. This is-
...inventory.
Yeah. It is one to two weeks inventory of alumina at Albras. Not Alunorte.
Oh, okay.
At Albras.
Okay.
Yes.
Okay. To keep smelting it into billet fancy, right?
Yeah. that will be used at.
Do you
Meaning within next-
Okay.
One to two weeks, that will be fully curtailed.
Would you consider importing either alumina or primary aluminum to meet the existing contracts at Albras until the end of the year or any specific period?
No, this is Albras only have one source of alumina, which is Alunorte.
Mm-hmm
There is no alternatives there.
Not even importing primary aluminum, finished primary aluminum?
No, this is, it's not going to be done now.
Okay. Okay. Very clear. Thank you very much.
Thank you.
We will now take our next question. Please go ahead, caller, your line is open.
Hello?
Hello?
I would like to know. Yeah. I would like to know, you said that you have one or two weeks of alumina in inventory. How will you split this alumina within your buyers? Will you take all this alumina for Hydro, or you split it proportionally and or what's your plan?
What I said about one to two weeks, alumina inventory was the inventory in Albras. We have a small inventory in Albras smelter, which is in neighbor smelter from Alunorte, and only one to two weeks inventory there. With regard to the inventories of the smelter system, in a way in general, outside the Brazil, we have now alumina until November.
Okay. This mean that you will load all the ships that were supposed to load until November for your own need and for the external, your external customers?
No. The, I cannot speak for what is the inventory among our external customers, but for the Norwegian smelter system, except for Albras, we are well covered until November. That is due to the fact that we have filled up the silos in September quite well.
Okay. The situation in Alunorte, do you have enough alumina in the silos to fill up the ships that are waiting in Alunorte or?
Now of course the, we don't have any alumina inventory as such. There is a, there's a few cargos going, but beside that, when we are done curtailing the production, there will be no available alumina from Alunorte.
Okay, thank you.
We will now take our next question. Please go ahead, caller. Your line is open.
Hey, good afternoon, everybody. This is Lucas Pipes from B. Riley FBR. I wanted to follow up a little bit on the press filter. Is that really the embargo on the state-of-the-art press filter, is that really what forced the issue here?
Well, in fact, we are not able to operate the press filter. With the press filter in operation, it could be possible to operate Alunorte further.
Mm-hmm.
Both the press filter and the DRS 2 is under embargo. We need to get the embargo lifted there. Due to the also due to the geomechanical exploits and the report we have received now, it is also a question how long time we could operate DRS 1 with the press filter. The concern from the from the consultants was very much related to the continued operation with the drum filter and DRS 1. Of course, we are now looking into alternatives, with DRS 2 in operation and press filter in operation, we could easily go back to 100% full operation.
These are the state-of-the-art technologies, and there is no, in a way, logical reason as we see it at least from a environmental point of view or any other point of views that this should be part of the embargo. We are working with authorities on that, of course.
How long have you known about that embargo of the state-of-the-art press filter?
It was a part of the embargo that was initiated in beginning of March after the heavy rainfall in February, the 16th, 17th of February. It was the early March that we were informed that this is now a part of the embargo.
Got it. Okay. This is very helpful. I appreciate it. Thanks. Good luck.
Thank you.
We will now take our next question. Please go ahead, caller. Your line is open.
Hello?
Hello.
Hi. Yes, this is Chris Valentine from Trafigura . Just wanted to ask.
Hi.
All else equal, what is the timeline we'd be looking at for the curtailment to go from 50% utilization down to zero?
Okay. With the way we are doing it now, first of all, Paragominas was running at 50% up to today, with one of two beneficiation lines in operation. The beneficiation plant in Paragominas is now stopped, meaning that we are now not feeding any more bauxite into the pipeline from Paragominas to Alunorte. There is still some bauxite in the pipeline, and that will be processed during next few days. To curtail the full alumina refinery will take some weeks. The production will be gradually shut down during after five to seven days of normal operation. Thereafter, we are emptying the lines and preparing for restart. The production, you can...
If you asking how many days of production do we have left, we are talking about five to seven days. Thereafter, we are emptying the lines and cleaning up. We are making the plant ready for restart, and the restart will take two to three months as we have said previously. We will restart all lines at the same time when we get the embargo lifted.
Thank you very much.
We will now take our next question. Please go ahead, caller. Your line is open.
Hi, can you hear me?
Yes.
Hello?
Hello, I can hear you.
Can you hear me? Okay, perfect. This is David Gagliano from BMO. You just answered one of my questions. I just want to clarify one thing. You did say if the embargo is lifted, for example, tomorrow, it would take two to three months to restart. Is that correct?
No. If the embargo will be lifted tomorrow, we will let them ramp up from 50%- 100% as soon as possible. That will take from 50%- 100% will take still three to four weeks from now.
Three to four weeks.
We are more than willing.
Okay.
We are more than willing to do that.
Okay. Perfect. The other question I had, you mentioned earlier that this is obviously up to the Brazilian courts. You may have covered this previously, but I missed it if you did. The decision today, when you go through the entire supply chain, how many people does this affect within your stuff? How many people from an employment perspective?
Okay. With regard to the people, in, first of all, with the, with Paragominas now already stopping production and we stopped the beneficiation plant today. There will be still some cleanup operations there. Within the next few days, we are talking about at least 1,700 people that will be affected directly. We have about 2,000 people in Paragominas, so we will still keep some people there, still for some smaller work, some maintenance and cleanups. With regard to Alunorte, we are talking about in total 3,000 people, then I'm talking about contractors and our own people.
There is about 4,000 people in Alunorte. 3,000 of them will be affected. That is including contractors. We are taking the manning from 2,000 in Paragominas to 1,700 in Paragominas and in Alunorte from about 4,000- 1,000, approximately.
Okay. That's helpful. Thank you very much.
Once again, if you would like to ask a question, please press star then 1. We will now take our next question. Please go ahead, caller. Your line is open.
Hi. Yes, thanks for the call. This is Tyler Broda from RBC Capital Markets. Just one quick question just to clarify. If you were to receive the embargo being lifted on the filter press and the DRS2 , that you could then go up to 100% capacity, that would be effectively the entire embargo at this point? Would there be allow you to get back up to 50% with other parts of the environmental stoppage in place?
First of all, there is embargo on the press filter and the DRS II. That is one part of it, and there is embargo on Alunorte. Even with if we tomorrow have a situation where we see that the embargo on the press filter and DRS2 is lifted, we can continue at 50%, not 100%. We could operate at 100% if we also get the second embargo lifted, the production of Alunorte. We need also that in place to be back at 100% production.
Perfect.
Again, we, as a first step, we will be happy to see the press filter on DRS II be in operation because that can at least. We can continue at least at 50%. With that in operation, we can also handle 100%. We need to also have the other part of the embargo lifted, that which is the production of Alunorte to back to 100%.
If that, if the press filter and the DRS2 was lifted, getting Paragominas back up and running would be just a matter of days. Is that fair?
Yeah. That is well, it's almost the same day.
Okay.
That is, it will take, from the day we start, the beneficiation plant and we start to fill the pipeline again with bauxite, it takes a bit more than 24 hours before it reaches Alunorte.
Okay. No. That's very helpful. Thanks very much for the call once again.
We will now take our next question. Please go ahead, caller. Your line is open.
Svein Richard .
Yes.
It's Patrick Jones, just out of JP Morgan. Just one slight clarification. Who is it that has to who could agree to restart or to use the DRS 2 and the press filter? How is it, what person or a court or... How quickly could a decision like that be made?
Yeah. Hi, Patrick. With regard to this decision, first of all, it has to be lifted by the judge, and then it has to be also lifted by or decided by the judge that this can be lifted. It is SEMAS in coordination with IBAMA, and I think in the end, it will be SEMAS, the local environmental agency, that has to lift the embargo for DRS 2 and the press filter. With regard to timing, it is impossible to say.
To what extent is the political sort of worries about people being unemployed, et cetera, impacting on the sort of the judicial process? I mean, are the two things separately influenced?
Yes. It is, of course, concern for us and also for the authorities that this will result in thousands of people outside without jobs. Of course, when we are curtailing, we do it in a temporary way, so we try to take good, as good care of all people as we can. As I also said previously, this has created quite some urgency, and we are now seeing that there will be meetings with the authorities that we have been waiting for quite some time, and we hope that this can also result in some good conclusions in the end. It's still impossible to say and give you any timeline now.
Just a sort of a slight nuance there. The pressure now is on to get the whole thing sorted, do you think, or just to get the DRS2 and the press filters online?
Of course, we would like to have the full problem sorted. Of course, we will also be happy if we can start to use the press filter and DRS2 because then we can continue with 50% production. We are working every day to in a way to make sure that we can be in a situation to have the embargo lifted, and our target is to come back to 100% production as soon as possible.
Okay. Thank you very much.
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It's Aiden from DNB. All my questions are answered. Thank you.
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Hi, this is Andreas Hommert from Ospraie Management. Were the Brazilian authorities aware that the decision to close Alunorte was pending or imminent, or were they as surprised about this as most people in the market were?
Andreas, it's difficult to say, but I think they also were surprised about it, I think. We have always kept them informed about the situation that there is a limited time we can operate DRS1, and without press filter on DRS2 in operation we could end up in this situation. I think they were surprised that it was coming now also. I think they were also surprised.
Okay. Thank you very much.
It appears there are no further questions at this time. I'd like to turn the conference back to you for any additional or closing remarks.
Thank you, Operator. As there seems to be no further questions, we can end this call. Thank you all for joining us today. If you have any follow-up questions, please do not hesitate to contact us. Thank you, and have a nice evening.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.