Qatalum on target
The new 585,000-tonne Qatalum smelter in Qatar, which we are building with our partner Qatar Petroleum, was about 60 percent complete by the end of 2008, on schedule and within its budget frame for start-up around the end of 2009. Once on stream, Qatalum will be one of the most cost-efficient smelters in the world, positioned within the first decile on the industry cost curve. The total estimated cost of the Qatalum project is USD 5.6 billion, of which Hydro’s share is USD 2.8 billion. All site preparation work, building foundations, and related work were complete and the main ongoing activity consists of the construction of buildings, storage silos and harbor facilities. By the end of 2008, there were about 16,300 people working at the site.
Corrective measures in response to market situation
Hydro has made wide-ranging adjustments in response to the severe drop in aluminium markets, and has announced reductions in its primary aluminium production of 23 percent, representing about 400,000 tonnes per year of our higher-cost production capacity. These measures will improve the average cost of our smelter system. Production of remelted metal at Hydro’s casthouses has been cut by 45 percent, or around 500,000 tonnes per year. Alumina production at the part-owned Alpart refinery in Jamaica has been reduced by 50 percent. Hydro has also taken out significant capacity in its downstream operations through shift reductions and has implemented cost-cutting measures throughout the company.
|Amounts in NOK million unless other unit indicated||2008||2007|
|Corporate and Eliminations||(290)||(647)|
|Net income 1)||(3,267)||9,158|
|Underlying return on average capital employed (RoaCE), percent||6.8%||16.2%|
|Share price year-end, NOK||27.80||77.60|
|Dividend per share, NOK||-||5.00|
|Number of employees, year-end||22,634||24,692|
|Recordable injuries, per million hours worked||3.8||4.1|
|Greenhouse gas emissions, million tonnes CO2e||4.1||4.4|
Hydro's results for 2008 were significantly impacted as the global financial crisis led to a dramatic fall in world demand for primary aluminium and aluminium products toward the end of 2008.
The major growth investments in 2008 were the development of the Qatalum primary aluminium plant in Qatar, the third expansion of the alumina plant Alunorte in Brazil which was completed in the third quarter and the Aluminium Products acquisitions of Expral and Alumafel in Spain.
Due to demanding markets and low forward visibility in both the aluminium and financial markets, Hydro's Board of Directors proposes to forgo a dividend payment for 2008.
The reduction in number of employees is primarily a result of the divestment of Hydro Polymers and Hydro Production Partner. Almost 500 employees were added through acquisitions in Extrusion and Building Systems.
We achieved a 7 percent reduction in the total number of personal injuries per million hours worked. Our target was a 20 percent. We had three fatal accidents related to our business in 2008.
Hydro has continuously reduced its greenhouse gas emissions. The reduction comes as a result of systematic operational improvements, the introduction of new technology at our metal plants, and in recent years also closure of plants and process lines.
1) Excluding discontinued operations