Aluminum Producer Hydro Says Cyber Attack Hit Operations

Aluminum Producer Hydro Says Cyber Attack Hit Operations

Aluminum supplier switching to manual production processes

Norsk Hydro ASA, one of the world’s biggest aluminum producers, is suffering production outages after a cyber attack affected operations across Europe and the U.S.

Some operations, such as primary production potlines, have moved to a manual mode where possible, according to spokesman Halvor Molland. Other operations such as extrusion plants have been temporarily stopped. The company is doing everything possible to fix the problem, but isn’t ready to give any forecasts yet, he said by phone. Aluminum futures were little changed on the London Metal Exchange.

Hydro is the largest supplier of extruded aluminum products in North American and European markets, providing highly-specialized parts to customers in sectors including aerospace and auto-making. Aluminum production processes can be highly automated, and involve extensive digital monitoring to ensure product quality, according to Colin Hamilton, managing director for commodities research at BMO Capital Markets Ltd.

“They’ll probably have to halt pretty much everything in the short term as they work on a back-up plan,” Hamilton said by phone from London. “Operationally, this is distinctly challenging.”

While a sustained outage at its downstream plants could cause turmoil for customers in end-use markets, prices are unlikely to react unless there’s a disruption to the supply of metal from the company’s primary production potlines, Hamilton said.

Cyber Threat

Cyber attacks have become a major threat to the highly integrated global supply of metals and minerals. Zinc smelter Nyrstar suffered a major intrusion targeting processing and mining operations earlier this year, while A.P. Moller-Maersk A/S, the owner of the world’s biggest container shipping company, lost about $200 million to $300 million because of a cyber attack in June.

The cyber attack on Hydro began late Monday, escalating during the night, a spokeswoman for the Norwegian National Security Authority said by phone. The state agency is helping the company and sharing information with international bodies, yet it’s too early to comment in detail, she said.

The attack comes as Hydro is in a protracted struggle to restart its Alunorte alumina refinery in Brazil amid claims of environmental damage after flooding. The disruptions have weighed on the company’s shares, which are down 26% over the past year.

Norsk Hydro has more than a dozen aluminum facilities in Europe, from Norway to the U.K., including those producing primary metal or using aluminum extrusion, which is a technique used to transform an alloy into specialized parts. The company’s market share in the extrusion segment is around 20% in Europe and 23% in North America.

Hydro shares slid 1.1% to 35.45 kroner as of 10:15 a.m. in Oslo.

Hydro also this week announced that Hilde Merete Aasheim will take over as its new chief executive officer on May 8.

By Elena Mazneva, Jonas Cho Walsgard and Mark Burton

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