2010 marks a significant improvement in underlying operating results for Hydro. Having weathered the financial storm, the company has emerged stronger, with leaner operations, and is ready to embark on a new era as a resource-rich and fully integrated aluminium company.
Transforming transaction
Following a decade of restructuring and consolidation, last year marked another turning point in Hydro's industrial development. On February 28, we concluded an agreement to take over the majority of Vale's aluminium business in Brazil. Combining Vale's aluminium assets with Hydro has resulted in a stronger company, fully integrated into bauxite, with a long alumina position and a preferred standing in a more consolidated market. We have acquired premier assets, including substantial ownership interests in one of the largest bauxite mines in the world, the largest alumina refinery in the world and significant expansion opportunities in this critical part of the value chain. We have also acquired a majority interest in one of the largest aluminium smelters in South America. The acquisition is expected to lower the operating break-even point for Hydro and improve our overall cash-cost position.
To partly finance the transaction, support the company's investment-grade credit rating and improve our capacity to implement future projects, Hydro completed a rights offering strengthening its equity by NOK 10 billion in July 2010. The transaction and the rights issue are expected to enhance our growth potential through new expansion projects and a stronger balance sheet.
The Vale aluminium acquisition represents a transforming transaction that will significantly reshape Hydro in 2011 and the years to come. We see exciting opportunities and potential in the new business portfolio. Hydro's long-standing strategic partnership with Vale, the world's second-largest metals and mining company, will be extended through Vale's 22 percent equity holding in Hydro.
