The company said CAP's board of directors had decided to delay building the refinery because of uncertainty over the global economy as well as short- and medium-term aluminum supply & demand balance.

The new alumina refinery was scheduled to start production in 2015 using bauxite from Hydro's expanded mining operations at Paragominas.

"The decision to postpone the CAP project does not reflect any changes in our long-term faith in the market for alumina and aluminium or the CAP project. Economic developments in a number of countries, not least in Europe, have led to lower production volumes than expected at our customers," said Executive Vice President Johnny Undeli, who is also head of Hydro's bauxite and alumina operations.

Hydro holds an 81% stake in CAP, with the remaining 19% held by Dubai Aluminium Company.