The Secretariat of Environment and Sustainability (SEMAS) in Brazil's northern state of Para has given notice it will fine Hydro 500,000 reais ($153,789) per day unless Alunorte completes the work on time, the company asserted.
Hydro had previously been given notice it would have to stop the production in order to safeguard the local environment, but had not set a date for the shutdown.
Alunorte is the world's biggest alumina refinery, transforming bauxite to alumina. Later, alumina is turned into aluminium at huge smelters.
The regulator's decision followed recent claims by Brazilian federal and state prosecutors. They put forward a waste spill at one of Alunorte's bauxite refuse deposits after heavy rain. Hydro has said it found no evidence of such pollution. On Tuesday, Brazil's national environment watchdog Ibama said it would prosecute an inspection to assess if the damages match the reports given by federal and state prosecutors. A Hydro spokesman said water levels at the refuse deposit had been reduced accordingly with requirements, but added it was unclear what the company ought to do to be able to continue full production at Alunorte.
"We continue our dialogue with authorities," Hydro spokesman Halvor Molland said.
($1 = 3.2512 reais)