Strategy and targets

bauxite mining

Bauxite and alumina

Delivering on its ambitious improvement program, From B to A, will be a key priority for Bauxite & Alumina in the coming year. Focus on safe, cost-effective and stable operations will continue. Optimizing and enhancing the commercial value of our attractive product portfolio will be an important item on our agenda.

2013 targets

  • Continue to improve production stability with the ambition to reach nameplate capacity
  • Deliver approximately NOK 500 million on From B to A improvement program
  • Implement CSR stakeholder engagement and action plan
  • Further HSE improvements based on continued reinforcement of safety culture

2013 results

  • Temporary production set-back at Alunorte triggered by external power outages
  • Contribution From B to A significantly below target due to Alunorte production issues
  • Good progress in implementation of CSR stakeholder engagement and action plan
  • Reduction of recordable injuries for own employees and contractors

2014 targets

  • Reduction of recordable injuries by 20 percent for own employees and 30 percent for contractors
  • Accelerate operational improvements
  • Deliver From B to A contribution of NOK 600 million
  • Complete the implementation of the CSR stakeholder engagement and action plan as well as further development of social projects

Ambitions going forward

We are strongly committed to safety and to eliminating high-risk incidents in our operations. Going forward, we intend to capitalize on our strong position in bauxite and alumina in a resource constrained world. This will increase our attractiveness as a partner in new ventures and our ability to exploit other opportunities which may arise.

aluminium ingot molds

Primary Aluminium

A key ongoing strategic focus for Primary Metal is the continuous improvement of the efficiency of our smelter system, while constantly addressing the cost challenges facing our business. In order to secure the viability of our operations over time, we intend to focus on business opportunities that enhance our cost position. We will also maintain our technological leadership, which contributes to lower operating costs, reduced emissions, and ensures our attractiveness as a partner for world-class projects within an industry with sound long-term fundamentals.

2013 targets

  • Safe and efficient operations
  • Complete USD 300 cost reduction program and maintain strong cost discipline in all smelters
  • Increase improvement efforts within joint venture operations
  • Further streamlining and cost optimization at Qatalum
  • Optimize casthouse operations through further integration of sales and production organizations
  • Continue strong capital discipline; capital expenditure and net operating capital

2013 results

  • TRI further improved compared with 2012
  • USD 300 cost reduction program completed
  • Global joint venture improvement program in place and partly executed
  • Qatalum cost and operational stability achieved
  • Casthouse operations integrated with commercial organization and joint strategies established
  • Capital expenditure within budget. Net operating capital further reduced

2014 targets

  • Continued effort to improve safety performance
  • Strong cost discipline in all smelters with further improvements to offset cost inflation
  • Continue focus on operating capital
  • Further progress on joint venture USD 180 per mt improvement program
  • Maximize Qatalum cash generation and secure first-decile business operating cash cost position

Ambitions going forward

Hydro has an ambition to expand its upstream activities while maintaining a strong emphasis on sustainable cost development. We will continue to focus on lean smelter operations, operational excellence and safety. The ongoing development of next-generation technology, HAL4e, will provide a strong technological basis for continued organic growth, increased efficiency and lower emissions.

aluminium ingots

Metal Markets

Hydro's flexible and extensive multi-sourcing system enables us to rapidly adjust our remelt production to market demand. We intend to capitalize on this flexibility going forward to secure our market position and create additional value on top of LME for our primary capacity. We will also exploit this competitive advantage to optimize our casthouse utilization and increase our premium margins. Global optimization of Qatalum sales volumes continues to be key priority.

2013 targets

  • Safe and efficient operations with further reduction of TRI rate
  • Further integration of production and market organizations for improved value creation
  • Optimization of regional and global metal balances to exploit market opportunities and improve margins
  • Realization of increased volumes from new high purity aluminium products contracts

2013 results

  • Stable safety performance following significant improvements in 2012
  • Aligned production and market organizations enhancing potential to deliver on market ambitions
  • Increased margins through improved optimization of global metal balance
  • Successful implementation of new high purity aluminium product contracts

2014 targets

  • Safe operations with a return to reduction trend in TRI rate
  • Strengthen capability for use of post-consumed scrap
  • Full-scale testing of Adjustable Flexible Mould technology (AFM) to target automotive sector in sheet ingot market
  • Shifting product mix towards higher premium alloy mix
  • Maintain strong focus on risk management and capital discipline

rolls of aluminium

Rolled Products

Securing increasing returns for our Rolled Products business operations continues to be a key priority. Margins will remain in focus, and measures aimed at increasing efficiency and reducing costs will continue. At the same time we will pursue innovative product development in close cooperation with our customers.

2013 targets

  • Continue to improve HSE performance
  • Continue to defend margin levels within challenging market environment
  • Further operational performance improvements with focus on productivity and cost efficiency
  • Drive cost programs in all plants
  • Improve inventory turnover rate despite market uncertainty
  • Maintain strong focus on counterparty risk

2013 results

  • Despite numerous ongoing initiatives TRI rate below target
  • Average margin maintained on 2012 level
  • Positive productivity and cost development, harvesting from continuous development and plant cost programs
  • Inventory turnover rate further improved from 2012 level
  • No significant counterparty default

2014 targets

  • Reduction of TRI rate by 20 percent compared to 2013 level
  • Manage margin and shipment level in uncertain Euro-zone and macro environment
  • Deliver targeted improvement in the Climb program through product portfolio development, efficiency improvements and cost reductions
  • Further performance enhancements in delivery reliability and lead time
  • Capitalize on innovation capabilities achieving one step change during 2014

waterfall

Energy

Hydro is the second-largest power plant operator in Norway, with more than 100 years of experience in hydropower production. We intend to develop the value of our Norwegian assets and to use our extensive energy competence to secure competitive energy sources for our global activities. Operational excellence will continue to be a key priority to secure cost effective, safe and reliable production.

2013 targets

  • Continued operational excellence and strong focus on safe operations
  • Cost and improvement focus in operations and projects
  • Continue maturing new equity growth options supported by electricity certificates
  • Continued work on securing competitive energy sourcing for aluminium operations
  • Development of strategic options and energy solutions in Brazil

2013 results

  • Stable and efficient operations however two recordable injuries
  • Maintenance projects on power stations on track
  • Improvement projects within commercial activities fully implemented
  • Acquisition of Vigeland power plant completed
  • Energy sourcing secured for aluminium operation in Slovalco
  • Active contribution to improve robustness of Energy supply in Brazil

2014 targets

  • Continued strong focus on safe operations with target of zero recordable injuries for 2014
  • Cost and improvement focus in operations and projects, including capturing value potential in physical markets
  • Enhancing value potential from the Vigeland acquisition
  • Continue maturing new equity growth options supported by electricity certificates
  • Continued work on securing competitive energy sourcing for aluminium operations
  • Contribute to improved energy solutions and strategic options in Brazil

worker

Viability

2013 targets

  • No fatal accidents. Total recordable injuries per million hours down by 16 percent to 2.85
  • Stabilize at above 90 percent capacity utilization in recycling
  • Emission of 1.58 mt CO2e/mt aluminium from production
  • Revise Hydro's climate strategy and develop new long-term ambitions. Finalize biodiversity strategy for the Paragominas mine
  • Develop grievance mechanisms for Hydro's activities in Barcarena, Brazil as a pilot for a corporate-wide solution

2013 results

  • One fatal accident. Total recordable injuries per million hours 3.4 and the same as in 2012. Target not reached
  • Emissions of 1.59 mt CO2e/mt aluminium from production. Target not reached
  • 96 percent capacity utilization in recycling
  • Hydro's climate strategy updated. Launch of ambition to be carbon neutral in 2020. Biodiversity strategy for the Paragominas mine completed
  • Grievance mechanisms for all Hydro's activities in Pará (including Barcarena), Brazil developed

2014 targets

  • No fatal accidents. Total recordable injuries per million hours down by 16 percent to 2.85
  • Emission of 1.56 CO2e/mt aluminium from production
  • The two main recycling projects in Germany and Luxembourg shall both be within schedule and total cost estimate
  • Grievance mechanisms for Hydro's activities in Pará, Brazil fully implemented
  • Roll-out of "My Way," the revised people performance and development process to 35 percent of all employees

Strategic goals 2018-2020

  • No serious accidents. Total recordable injuries per million hours below 2
  • Become climate neutral by 2020
  • Recycling of 250,000 metric tons post-consumed scrap and increasing the share of recycled metal in our production
  • New mining areas equal reforested areas by 2017. The long term ambition is no net loss
  • All high-risk suppliers are committed to comply with Hydro's CSR principles
  • Hydro scores in the top 25 percent on the employee engagement index in Hydro Monitor

 

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013


Updated: September 15, 2016