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Brazil tax law revisions to lift Norsk Hydro’s costs

Keywords: Tags  Norsk Hydro, ICMS tax, alumina, aluminum, bauxite, Johnny Undeli, Carolina Guerra


SÃO PAULO — New tax laws in Brazil’s Pará state will increase costs for Norsk Hydro ASA’s alumina and bauxite business by about 60 million real ($24.8 million) per quarter, the company said Jan. 29.

The increase stems from Pará’s decision to change its collection point of the ICMS tax, which is levied on goods and services and collected by Brazilian states, on fuel oil purchases.

The aluminum industry in Pará has an ICMS deferral, which needs to be renewed by July 2015, that provides an exemption on intrastate purchases of goods and services, Oslo, Norway-based Norsk Hydro said. However, the recent changes on fuel oil will move the collection point of ICMS taxes to oil refineries, located outside the state of Pará, from distributors, the company added.

Norsk Hydro’s Alumina do Norte do Basil SA (Alunorte) alumina refinery is in the state and will be subject to the ICMS tax starting Feb. 1.

"We are concerned about the sudden changes in tax legislation in Pará, and we are doing what we can to try to get the decision reversed in dialogue with Pará legislators," Johnny Undeli, Norsk Hydro’s executive vice president of bauxite and alumina, said in a statement.

Alunorte temporarily paid ICMS taxes on fuel oil for three quarters in 2012 before the decision was reversed.

Norsk Hydro and its electricity supplier have agreed to pay ICMS taxes on the purchase of electricity by Alunorte and the Mineração Paragominas bauxite mine, also in Pará, in the period following Feb. 28, 2011, Norsk Hydro said, referring to the date it closed its purchase of Vale SA’s bauxite and alumina assets in Brazil ( amm.com, Feb. 29, 2011).

ICMS will be charged 8 million real ($3.3 million) per quarter for electricity purchases, mainly increasing the cost at Paragominas.

A version of this article was first published in AMM sister publication Metal Bulletin.


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