Hydro to exit Utkal project

(Dec. 17, 2001) Hydro Aluminium has informed its partners in Utkal Alumina International Ltd. that it wishes to exit the project.

Hydro's decision is based on an assessment of the future market for alumina, as well as positive developments at the company's alumina production facilities in Brazil. The Utkal alumina project's lack of progress is also part of the decision.

Alumina, also known as aluminium oxide, is an important raw material for production of primary aluminium. Hydro has equity production of alumina in Jamaica and Brazil. The Brazilian Alunorte refinery is undergoing an expansion that will substantially boost Hydro's alumina production capacity.

A balanced alumina market with a variety of suppliers is envisaged for the coming years. This will allow Hydro to pursue its strategy of alumina supply through a combination of own production, alliances and long-term contracts.

The shareholders agreement for Utkal Alumina gives the remaining partners pre-emptive rights. The legal process required for Hydro to leave the partnership has been initiated.

Utkal Alumina has not started any construction within the planned project area. Based on partnership policies, some socio-economic development work is ongoing. There is also continuous dialogue between the company, the government and the local population. The project's proposed host community, Kashipur, Orissa, is in dire need of social and economic development. Mining and industrialization, when implemented in a careful and responsible way, may contribute to sustainable development in the area and provide opportunities for thousands of people living below the poverty line.