Hydro will take the further steps necessary to secure and expand on the improvements achieved in the past year and position the company to take full advantage of the new business opportunities inherent in the Vale transaction including:
- Improving Hydro's safety performance
- Ensuring the Vale integration process and improving performance
- Finalizing the ramp-up and stabilizing operations at Qatalum
- Executing the extended smelter cost-reduction program of USD 300 per mt by end of 2013
- Capturing opportunities midstream and downstream
- Increasing the value of our energy assets and competence
- Developing our alumia business through expansion projects in Brazil
- Maintaining the viability of our Norwegian and global smelter portfolio
- Maintaining firm capital discipline
Our TRI rate (total recordable injuries per million hours worked) increased by 27 percent to 3.7 in 2010. As a result, we did not reach our targeted reduction of 20 percent. We had no fatal accidents in our consolidated operations in 2010, but suffered two fatal accidents in our partly owned activities. In January 2011, we experienced a fatal accident during installation work at a plant under construction in France. We have targeted a TRI rate of 2.7 for 2011. Safety performance is considered a key operating objective and is a factor in determining compensation for our management, including the President & CEO.
We have for several decades monitored our impact on the environment as part of a holistic approach to value creation. Our climate strategy includes a set of priorities to reduce the environmental impact of our production activities as well as to take advantage of business opportunities by enabling our customers to do the same. Since 1990, we have reduced specific greenhouse gas emissions from our primary production by more than 60 percent. Our goal is a specific direct emission of 1.52 mt CO2e/mt aluminium in 2013. In 2010, we achieved more than our intermediate target.
Successful integration of the Vale acquisition will be Hydro's top priority in 2011, building a foundation for secure and profitable operations and a basis for extracting value through improving efficiency and operational excellence. A main focus in the coming years will be related to capacity utilization and efficiency of operations, including the level of integration between the bauxite mine and alumina refinery. Safe, sustainable practices will be at the core of our activities, promoting responsible and cost-effective operations. As we integrate the new operations, we will also emphasize social responsibility, including working conditions, combating corruption and engaging with stakeholders as we do in our existing operations. Hydro will implement appropriate HSE and CSR strategies reflecting our new, major presence in Brazil based on our core values reflected in The Hydro Way.
We have a solid track record of repositioning our smelter system, including closures of higher-cost and less-competitive operations and our investment in Qatalum, which is expected to be among the most efficient smelters in the world. The temporary set-back due to the power outage at Qatalum was a disappointment in 2010. However, the rapid and effective response by the local organization, in collaboration with Hydro and Qatar Petroleum, succeeded in minimizing losses and securing the ongoing ramp-up of the plant. Finalizing Qatalum will be a key priority in 2011, followed by a continuing focus on efficient operations and cost control. It will also be at the top of our agenda to follow through with the tougher targets for sustainable cost reductions within our fully owned smelters. By the end of 2010, we achieved a reduction of roughly USD 50 per mt. We aim to achieve around 60 percent of the total targeted savings in 2011.
We plan to utilize the flexibility in our metal markets and downstream businesses to capture opportunities following the market recovery, and to secure the profitability of these operations through effective management of operating margins and continued focus on costs. The successful execution of our marketing plan for the full production volumes of Qatalum will be an important priority in 2011. We intend to increase our aluminium recycling activities in line with our position as the leading supplier of casthouse and semi-fabricated products. We will continue to evaluate selected growth opportunities within our high-performance downstream sectors. Our building systems activities have gained market share despite the significant slowdown in southern Europe and we are at the forefront in the development of energy-efficient buildings. We will continue to expand these operations.
Maintaining and increasing the value of our energy assets is an important priority for Hydro. Our main focus in 2011 will be the successful execution of several significant upgrades and expansions in our project portfolio including Rjukan, Holsbru, Herva and Vasstøl.
Hydro is committed to maintaining the viability of its global smelter system, which is heavily dependent on securing adequate supplies of competitive priced energy. We have a history of substantial investment during the last decade including expansions, upgrading and research and development. This includes roughly NOK 18 billion in our aluminium and energy business in Norway (excluding petroleum activities). Identifying opportunities for long-term, competitive energy sourcing to protect and develop our portfolio, taking into consideration license reversion in Norway and increasingly onerous emission legislation in general is an important priority for Hydro.
We aim to provide our shareholders competitive returns compared to alternative investments in peer companies, and are maintaining our dividend policy of paying 30 percent of net income in ordinary dividends over the business cycle. We will continue to focus on securing our financial position through exercising firm capital discipline to secure an optimal level of operating capital, and to maintain a sustainable level of capital expenditures safeguarding our operating portfolio. Sufficient cash generation and preserving our investment grade credit rating will be key priorities.
