December 26, 2009 Grow & Prosper

Volume 12 | Issue 4

Nestled within the Amazon forest, Brazil’s Alunorte has access to some of the world’s most abundant supplies of bauxite. Yet as Michael Somm

On the eve of its 14th anniversary, Alunorte’s history can be summed up by one word: growth. Initially, it took a while for the Brazilian company, created in 1978 with the financial backing of mining giant Companhia Vale do Rio Doce (today known as Vale), to get up and running. In fact, it wasn’t until 1995 that Alumina do Norte do Brasil first began producing alumina, drawing on the vast reserves of bauxite in the northern Brazilian state of Pará.

GREAT EXPANSIONS
Strategically located in Barcarena, some 25 miles from Pará’s capital of Belém which lies at the delta of the Amazon River, Alunorte is connected to two major sources of bauxite via pipeline and river transportation. In fact, the Para state has such a wealth of primary resources at its disposal combined to the increase of alumina´s market that, within five years of its inception, the company was obliged to enlarge its refinery.

Completed in 2003, the first expansion, which increased Alunorte’s production capacity from 1.6 million to 2.5 million tons a year – transforming the company into the largest alumina refinery in Latin American and the fourth largest in the world – caused international clients and shareholders alike to sit up and take notice. Indeed, aside from majority stockholder Vale and Norway’s Norsk Hydro, the company’s roster of investors also includes Brazil’s Companhia Brasileira de Alumínio and Japan’s NAAC, Jaic, Mitsui and Mitsubishi.

Flush with capital and primary resources, and with plenty of room to expand, Alunorte continued enlarging its facilities at breakneck speed. Two new production lines were added in 2006, and another two lines were completed in 2008, bringing the plant’s total constructed area to 39 million square feet. According to industrial director Daryush Khoshneviss the company is now so comfortable with its size that it has given a rest to any further expansion plans. “Actually, we can’t expand anymore,” he laughs. “We’re already so big that we’ve reached our physical limits.”

Yet this doesn’t mean that the company plans to stop growing. Far from it. “Our growth over the last few years has been enormous,” points out Khoshneviss. “When initial plans were drawn up for the refinery, expectations were for a production capacity of 1.1 million tons a year. Well, within five years, we’ve multiplied that number six-fold: Today, with seven production lines in operation, we have a capacity of 6.3 million tons, which we hope to reach by the end of this year.”

“EYES OF THE WORLD”
Although the mammoth scale of its facilities have garnered it the title of largest alumina refinery on the planet (in terms of actual production levels, it ranks third behind the U.S.-based Alcoa and Russia’s Rusal), Alunorte also places great emphasis on technology. Proof is that its installations are among the most modern in the world with pride of place given to a centralized control center, rare in an industry that is entirely digitalized, which greatly enhances communication. The company has also invested heavily in cutting-edge equipment to increase the efficiency of its production processes. A case in point is technology made by Italy’s Giulini that allows mud deposits to be stored in solid instead of liquid form. As a result, not only can more material be stocked (and piled to greater heights), but a smaller area is required to store the same quantity. Moreover, if so desired, the deposit area can easily be reforested at a later date.

Unsurprisingly, due its location in the midst of the world’s largest and most controversial tropical rainforest, environmental concerns are of paramount importance to the company. “The eyes of the world are upon the Amazon, and as a result we have an obsession with safety and environment,” confirms Khoshneviss. “We train all our employees (the company currently employs 3,000 workers) to respect the environment. We have also invested considerable amounts in environmental safety, particularly in terms of air quality and the treatment of effluents.” In terms of the latter, Alunorte possesses a center that treats 20,000 cubic feet of effluents per hour. It also boasts robust security and quality control systems. Aside from having earned ISO: 9001 ISO: 14001 and OHSAS 18001 certifications, last year the company also received SA8000 certification for social accountability.

A DRIVING FORCE
“We have some of the best technology in the world,” declares Khoshneviss. “And we’re always updating our equipment in order to improve our productivity and cut our costs.” However, in terms of the product itself, since alumina is a commodity and subject to the whims of universal price fluctuations, Alunorte has found that the best way to keep clients happy is to focus on quality. Of course, alumina’s quality depends upon the quality of the source, and in this respect, Alunorte is blessed by proximity to bauxite that is renowned for its superior properties. Yet, just as important as the primary material is the consistency with which it is processed and delivered to clients.

“More than anything, our clients desire regularity,” emphasizes Khoshneviss. “They don’t want a product that’s inferior or superior. They want alumina that consistently meets the specifications of their own products’ requirements. Our clients are very grateful if they can count on a product that falls within certain physical-chemical parameters because then they can plan their operations without any concern. Of course, these requirements are somewhat flexible and, within these parameters, we also seek to give clients not just what they might expect, but what they would ideally like to receive.”

After going through the refining process, around 15 percent of Alunorte’s alumina is sent to a Barcarena-based smelter, Albras. Brazil’s first largest producer of aluminum. Ultimately, 85 percent of alumina produced by Alunorte is exported overseas to Asia, Europe, and North America. According to Khoshneviss, revenues are generally around 12.5 percent of the world price of aluminum, yet as production rates have soared over the past few years, business has kept pace, growing by 20 to 30 percent every two years.

Due to such accelerated growth, in a short time, Alunorte is on track to achieve its principal goals: to be among the top three of refineries in the world in terms of production costs, security, and environmentalism while – in a sustainable manner – supplying alumina to its clients and generating profits to its shareholders. “These guiding principles determine all of our decisions and actions,” says Khoshneviss. “They permeate the entire company and make us what we aspire to be: a driving force in the industry.”

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