Hydro's main objectives are:
- Implement improvement programs in all business areas
- Use attractive positions along the entire value chain
- To maintain a strong financial position
- To raise unsatisfactory returns to a competitive level
In all business areas improvement programs are currently being carried out, which are tailored to the conditions in every stage of the value chain from bauxite to rolled products and are based on well-established production systems in every area. True to the corporate culture of striving for continuous improvement, the Primary Metal business has decided to launch a new program for its joint ventures, while the $ 300 program is in the final stages. The Bauxite & amp; Alumina has again confirmed that the improvement targets for 2015 set in the From B to A program will continue to apply despite some setbacks this year.
“We are of course very pleased that we can complete the $ 300 program as planned. But more importantly, at the moment, we can reaffirm our goal of making improvements in the order of a billion crowns with the "From B to A" program. And this was only a few months after we had production problems at Alunorte, "says CEO Svein Richard Brandtzæg.
"We can already see that our efforts and measures are paying off because the average production in the first two months of the fourth quarter at Alunorte rose to 5.6 million tons on an annual basis."
Primary Metal has successfully implemented the $ 300 / tonne improvement program at Norwegian smelters, which are wholly owned by Hydro, thereby significantly improving the smelter's competitive position and viability. A separate program has been launched for the joint ventures, which provides for an average improvement of $ 180 per tonne by the end of 2016.
Rolled Products attaches great importance to high customer satisfaction and strives to occupy a leading position in innovations worldwide. The business area pursues the goal of increasing added value by optimizing the product range, strengthening the position as preferred partner for customers and increasing competitiveness through innovations. The market for rolled products is benefiting from the fact that aluminum is replacing other materials, especially the use of aluminum in the automotive industry is causing demand to increase.
Energy has successfully completed several new projects. This and the takeover of Vigelands Brug AS as well as an improved operating procedure and higher rainfall have led to an increase in electricity generation in the business area from 9.5 TWh to 10.0 TWh per year. Energy also supports the other business areas in energy procurement, for example when a new electricity supply contract for the Slovalco joint venture was negotiated and signed this year.
“In an economic sector such as the aluminum industry, it is extremely important to maintain financial strength in order to be strong and flexible in an economic downturn. The current price level for many of our products continues to be a challenge and does not bring sustainable returns, "says Brandtzæg.
"The aluminum price weighs on both bauxite & amp; Alumina as well as primary metal, even if strong premiums somewhat offset the effects on primary metal. This shows how important it has been that we have been able to maintain a solid financial position in the past few years. "
Global demand for aluminum outside of China is expected to grow by 2 percent in 2013 and 2-4 percent in 2014. The market conditions for aluminum remain thanks to the many positive properties of the metal, including the light weight and recyclability, promising. Annual growth in the global aluminum market is estimated to be 4-6 percent over the next decade.
The production of primary aluminum requires a lot of energy, but the good properties of the metal during the use phase and the possibility of recycling it an infinite number of times without loss of quality are decisive for the fact that it is from the climate protection point of view for many products and applications is the preferred material. Hydro has set itself the goal of making full use of the climate potential of the metal and becoming climate neutral from a life cycle perspective by 2020, based on the following factors: higher energy efficiency in the production phase, advantages in the use phase and an increase in recycling capacity, and more Feed metal back into the circuit.
Investments (capex) for 2014 are estimated at around NOK 4.3 billion, an increase compared to NOK 3.1 billion for 2013. Maintenance investment is expected to increase from 2.9 billion this year to 3.9 billion in 2014, in part due to the accounting implications for Rolled Products and more relining than normal Primary Metal. NOK 3.5 billion is earmarked for long-term maintenance investments and NOK 0.4 billion for growth investments.