"After consulting with the workforce and the unions, we have come to the conclusion to close the remaining two production lines at Kurri Kurri. We will shortly start shutting down pots, and will do this in a safe and proper manner," says Hilde Merete Aasheim, executive vice president of Hydro's Primary Metal business area.
|(Photo: Halvor Molland)
The decision is a response to the weak macro-economic environment, with low metal prices, uncertain market outlook and overcapacity in the aluminium industry, in combination with a strong Australian dollar.
One potline was already curtailed in February. The process to close the remaining two potlines will start shortly and is expected to take up to three months. More than 300 people will be made redundant as a consequence of the decision to close the plant.
Following the decision, Hydro expects to recognize an expense of about NOK 200 million related to redundancies and an impairment charge of about NOK 1.2 billion in the second-quarter results. Both items will be excluded from underlying EBIT. Cash effect from redundancies will be more than offset by release of working capital.
Hydro remains confident that customer commitments will be served through its global metal products supply system.
Kurri Kurri, fully owned by Hydro, has three production lines with a total annual production capacity of 180,000 metric tons.
Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.
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