Skip to content
EN / DE / FR / NL

Lifting profitability, driving sustainability

In 2019 we embarked on our new strategic agenda: “Lifting profitability, driving sustainability.” My aim is to position Hydro as a robust and profitable industry leader, based on innovation and sustainability.

Hilde Merete Aasheim

Safety of our people remains our top priority. On December 11, I received the worst possible call a CEO can get, from our joint venture in Qatar. A contractor tragically lost his life during a heavy storm while at work for Qatalum. Our most important job is to make sure our employees come home from work safely. Our overall performance on safety improved in 2019, but still short of our ultimate target of an injury-free work environment.

Trade wars, Brexit uncertainty, weak markets and the embargo in Alunorte have weighed on our financial result in 2019. In addition, a malicious and sophisticated cyber-attack hit us hard last spring. I am immensely proud of how our people and organization handled the situation working day and night to recover.

The lifting of the 19-month embargo on our alumina refinery Alunorte in Brazil was a long-awaited milestone. We can only succeed if we have trust in the local communities, and we have stepped up our infrastructure investments as well as community dialogue, social investments, education and competence building. Our responsibility is as important both on the inside and outside of the fence.

Profitability

On our 2019 Investor Day, we announced ambitious targets to lift profitability and drive long-term shareholder value. We launched a NOK 7.3 billion improvement program to be delivered by 2023, including a strategic review of the Rolled Products business area, and a capital returns target of 10 percent over the cycle (RoaCE). I am pleased to see that all business areas are making progress towards their 2023 target, under challenging market conditions.

Our new strategic agenda is based on cost-competitive assets, operational excellence, strong market positions, innovation and differentiation on sustainable processes and products. A clear capital allocation framework is established based on different strategic modes for each business area.

In my view we cannot achieve profitability in the long run without operating and producing in a sustainable way. I see it as an ethical responsibility, but also as a business opportunity, to make the carbon footprint of our products a competitive edge.

In August 2019, we launched two new greener brands: Hydro REDUXA with one of the world’s lowest carbon footprint (less than 4 kg CO2 per produced kg aluminium) and Hydro CIRCAL produced on minimum 75 percent post-consumer scrap.

I am happy to see that Hydro CIRCAL already is sold to more than 60 building projects in 16 countries in Europe, the Middle East, and the US. This is a small, but promising illustration that there is a willingness to make greener choices in the marketplace when alternatives are offered. And this is only the beginning.

In my opinion it should be as obvious and easy for decision-makers to consider the carbon footprint of different materials and consumer products, as it is to read the fat content on a milk carton at the grocery store.

Technology and innovation are key to profitability and sustainability. We have to be in front in order to succeed in the world championship every day. In electrolysis technology we are first tier, producing the world’s most climate and energy-efficient primary aluminium at our Karmøy Technology Pilot plant, with average 2019 numbers for energy consumption in line with the target values of 12.3 kWh per kilo aluminium – and 11.7 kWh per kilo aluminium for the six ULTRA cells. Innovative technology elements from the pilot are already implemented in our upgraded production line at Husnes, reopening in first half of 2020.

In material technology we unite our expertise with researchers and product designers to develop tailormade alloys that expand the use of our material into new applications in transportation, building and construction, packaging, electronics, marine and offshore.

Based on our expertise in energy and metallurgy we also consider new opportunities for how to use and expand our core competencies into interesting areas like batteries and recycling.

Sustainability

Hydro's sustainability agenda rests on three pillars: Climate, environment and social responsibility. We have a good starting point: A century-long history of sustainable industrial development, using hydropower to produce products that the world needs in a responsible manner. 70 percent of the electricity used in our primary aluminium production is from renewable sources.

Our new climate strategy – “30 by 2030” – calls for reducing our gross CO2 emissions by 30 percent throughout the value chain. We will do this through greener sourcing and greener production. We are also helping our customers reduce their footprint through our greener products.

The energy mix at Alunorte is crucial for our climate ambition. Changing from oil to gas in the calciners will reduce CO2 emissions by 600,000 tonnes per year by 2025. Switching from coal boilers to renewable power will cut another 2 million tonnes a year by 2030.

The ambition of Primary Metal is to reduce specific greenhouse gas emissions by another 8 percent by 2030 from an already first-tier level. Through digitalization and big data, we make use of simulations and predictions to optimize and get more out of less. Toward 2050, we need to go even further. Through R&D we will explore potential paths towards low- or zero-carbon emissions, like carbon capture, carbon-free processes and use of biocarbon in anodes.

More renewable power in our energy mix and operational improvements will contribute to further reductions in carbon footprint. Hydro is one of the largest corporate buyers of long-term renewable energy contracts in Europe. By committing to long-term contracts, we not only improve our own footprint, we also support and enable more renewable energy projects to be realized and financially viable.

In our new environment strategy towards 2030 we will address the industry's key challenges. This will include continued rehabilitation of forest at our bauxite mine in Pará, Brazil, reducing our tailings and bauxite residue footprints, recycling our spent pot lining and halving our non-greenhouse gas emissions to air (SO2, NOx and particulate matter).

Through our social responsibility strategy, we emphasize community dialogue, social investments and targeting education and capacity building for 500,000 people by 2030, spanning programs for children and trainees, our suppliers as well as local stakeholders in Pará, Brazil and other communities Hydro is part of.

Engaging with a range of international organizations, we work to improve industry standards for human rights, transparency and responsible production. Hydro is a signatory to the UN Global Compact, and included on the Dow Jones Sustainability Indices, the UN Global Compact 100 and the FTSE4Good list.

Hydro became the first member of the Aluminium Stewardship Initiative (ASI) to have an unbroken chain of certifications throughout the entire value-chain, from mine to end-products. As of 1 March, 40 Hydro plants have been ASI certified, and we aim to reach 60 before year-end. I am confident that more customers want materials from certified suppliers.

The Hydro Way

Based on our values care, courage and collaboration, we will meet the challenges and seize the opportunities in the market through safe, compliant and efficient operations, portfolio optimization, restructuring and improvements, a robust balance sheet, selective capital allocation and strict capital discipline.

We will position our metal, our products and solutions for the future by demonstrating responsible and sustainable conduct in all parts of the value chain, minimizing the footprint of producing it, while maximizing the benefits of using it and bringing post-consumer scrap back into the loop.

I am confident that we have set the right agenda for the company, and I am confident that our people have what it takes to embark on the opportunities ahead. We have the competence, engagement and dedication to deliver and transform Hydro into a profitable and sustainable company with a promising future.