The company, which is 43.8 percent owned by the Norwegian state, has been accused of leaking toxic mining debris that has contaminated several communities in Barcarena in the Brazilian state of Pará, as well as using a "clandestine pipeline to discharge untreated effluent", according to Brazilian media.
The state government has now demanded the company halve production, reports Exame.
That followed a recommendation on Friday last week by federal and state prosecutors that the factory immediately suspend activity at one of its bauxite refuse deposits, Reuters reported on Monday.
Photographs posted on social media show a change in the colour of the river, reportedly due to waste spillage from the company's Alunorte alumina refinery in the state.
So good that Norsk Hydro has reached such great results. Just don't forget to tell the stakeholders about the severe environmental crimes in the Amazon forest Norsk Hydro is being investigated for in Brazil. Nice if they know how their money is being used. https://t.co/mXaij6J8qF— Ricardo N C Monteiro (@castro_monteiro) February 24, 2018
Hydro denied there had been a spill from its works.
"Internal and external inspections have not found proof of overflow and leakage from the bauxite residue deposits at Hydro Alunorte," the company wrote in a statement on its website on Sunday.
"The water has been collected, channeled and treated in the industrial effluent treatment station as normal," Hydro said, adding that it had formed a task force to establish the facts and would continue to cooperate with authorities.
But Pará State attorney general Ricardo Negrini said on Friday there had been "no doubt" a spill to the environment had taken place, according to Reuters' report.
There was as yet no data on the causes and the scale of the consequences of the incident, Negrini added.