Norsk Hydro: ICMS tax to impact bauxite and alumina business
Norsk Hydro ASA's alumina refinery Alunorte in Brazil will be subject to ICMS
taxation on fuel oil starting February 1, following a decision by the Brazilian
state of ParÃ¡ to change the collection point of the ICMS tax on fuel-oil
Assuming that the decision is upheld, the estimated effect on Hydro will be an
increased cost of approximately BRL 60 million (NOK 150 million) per quarter,
which will be charged to Hydro's Bauxite & Alumina business area.
"We are concerned about the sudden changes in tax legislation in ParÃ¡, and we
are doing what we can to try to get the decision reversed, in dialogue with ParÃ¡
legislators," says Executive Vice President and head of Bauxite & Alumina Johnny
Undeli. "Hydro's ambition is to develop robust and viable operations in ParÃ¡ and
to be an enabler for sustainable growth for this resource-rich region. In order
to pursue that ambition, we need stable and predictable framework conditions."
ICMS is a tax on goods and services, collected by Brazilian states. The
aluminium industry in ParÃ¡ has an ICMS deferral, which needs to be renewed by
July 2015, resulting in an exemption on intra-state purchases of goods and
services. However, the recent changes on fuel oil will move the collection point
of ICMS from distributors to the oil refineries, which are located outside the
state of ParÃ¡.
The decision is similar to one made in 2012, when Alunorte temporarily paid ICMS
taxes on fuel oil for three quarters. The decision was later reversed.
In addition, Hydro and its supplier of electricity have accepted to pay ICMS
taxes on the purchase of electricity by Alunorte and the Paragominas bauxite
mine in the period following the closing of the Vale transaction on February
28, 2011. The settlement amounts to NOK 280 million, consisting of NOK 170
million relating to ICMS taxes on electricity purchases for the period and NOK
110 million relating to tax penalties.
The obligation to pay ICMS taxes on electricity was previously disputed by the
companies, but in light of a recent unfavorable court ruling between an
electricity supplier and state authorities, it was accepted to make the payment,
thereby enabling the electricity supplier's participation in the ParÃ¡ state tax
amnesty. The amnesty gave the opportunity to settle the tax case with
significantly reduced penalties.
Going forward, ICMS charges will be charged on electricity purchases at a rate
of BRL 8 million (NOK 20 million) per quarter, mainly increasing the cost at
Penalties will be treated as items excluded in the fourth quarter 2013 results,
while the ICMS charge will be included in underlying results of the same
ContactÂ Â Â Â Rikard Lindqvist
CellularÂ Â Â +47 41751199
E-mailÂ Â Â Â Â Rikard.Lindqvist@hydro.com
ContactÂ Â Â Â Halvor Molland
CellularÂ Â Â +47 92979797
E-mailÂ Â Â Â Â Halvor.Molland@hydro.com
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â *********
Certain statements included within this announcement contain forward-looking
information, including, without limitation, those relating to (a) forecasts,
projections and estimates, (b) statements of management's plans, objectives and
strategies for Hydro, such as planned expansions, investments or other projects,
(c) targeted production volumes and costs, capacities or rates, start-up costs,
cost reductions and profit objectives, (d) various expectations about future
developments in Hydro's markets, particularly prices, supply and demand and
competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk
management, as well as (i) statements preceded by "expected", "scheduled",
"targeted", "planned", "proposed", "intended" or similar statements.
Although we believe that the expectations reflected in such forward-looking
statements are reasonable, these forward-looking statements are based on a
number of assumptions and forecasts that, by their nature, involve risk and
uncertainty.Â Various factors could cause our actual results to differ
materially from those projected in a forward-looking statement or affect the
extent to which a particular projection is realized.Â Factors that could cause
these differences include, but are not limited to: our continued ability to
reposition and restructure our upstream and downstream aluminium business;
changes in availability and cost of energy and raw materials; global supply and
demand for aluminium and aluminium products; world economic growth, including
rates of inflation and industrial production; changes in the relative value of
currencies and the value of commodity contracts; trends in Hydro's key markets
and competition; and legislative, regulatory and political factors.
No assurance can be given that such expectations will prove to have been
correct.Â Hydro disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Norsk Hydro via GlobeNewswire