Update: Cyber Attack at Aluminium Producer Norsk Hydro Causes Production Outages
Norsk Hydro ASA, one of the world’s biggest aluminum producers, suffered production outages after a cyber attack affected operations across Europe and the U.S.
The company said it was still working to contain the effects of the ransomware, a kind of malicious software that typically blocks computer access unless a ransom is paid, and called the situation “quite severe.” Hydro said it has cyber insurance and plans to restore systems using back-up data.
It couldn’t detail how much output had been impacted, but said it had isolated affected plants. Some plants where metal is fashioned into finished products for use in construction, cars and other manufactured goods were temporarily stopped. The so-called potlines, which process molten aluminum and need to be kept running 24 hours a day, had switched to manual mode where possible.
“The majority of our plants are operating as normal, producing customer orders and delivering according to plan,” Chief Financial Officer Eivind Kallevik said in an interview in Oslo.
Hydro doesn’t know the identity of the hackers, but believes the attack originated in the U.S. The company hasn’t made contact with the perpetrators and no specific ransom demands have been made, Kallevik said.
The shares slid 0.9 percent to 35.51 kroner as of 4:02 p.m. in Oslo. Aluminum futures on the London Metal Exchange rose in line with other metals.
The attack is the latest to hit the commodities sector, where disruptions can quickly cascade down the supply chain. Prior to Norsk Hydro, companies from zinc smelter Nyrstar NV to Saudi and Russian oil giants Aramco and Rosneft PJSC, shipping company AP Moller-Maersk A/S and agriculture trader Archer-Daniels-Midland Co. had been also hit by cyber attacks.
Hydro is a leading supplier of aluminum products in North American and European markets, providing specialized parts to industrial customers. Making those finished products 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 the company’s 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 lines, Hamilton said.
Potlines usually have multiple redundant systems to operate, including in many cases full manual back-up operation, as the furnaces can not be turned off while the hot metal is inside.
The cyber attack on Hydro began late Monday, escalating during the night, according to the Norwegian National Security Authority, which is assisting the company now. Hydro is focusing on finding “a cure” to the virus as further deliveries will depend on it, according to Kallevik.
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 25 percent 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 percent in Europe and 23 percent in North America.
Hydro also this week announced that Hilde Merete Aasheim will take over as its new chief executive officer on May 8.