Strategy and targets


Hydro's mid-term strategic goals:



Target  Timeframe 



Improve safety performance, strive for injury free environment TRI<2 2020 No fatal accidents. TRI 2.6  
Realize ongoing improvement efforts Better BNOK 2.9 2019  1.4 BNOK  green bullet
Secure new competitive sourcing contracts in Norway post 2020 4-6 TWh 2020 1 TWh  green bullet
Lift bauxite production at Paragominas 11 mill mt/year 2018 11.1 mill mt/yr  green bullet
Lift alumina production at Alunorte 6.6 mill mt/year 2018 6.3 mill mt/yr  green bullet
Shift alumina sales to PAX-based pricing >85% PAX 1) 2020 50% PAX 3)  green bullet
Extend technology lead with Karmøy technology pilot Start production Q4 2017 ~70 % complete  green bullet


Ambitions  Target  Timeframe 



Realize technology-driven smelter capacity creep  200,000 mt/year  2025  35,000 mt  green bullet

Lift equity bauxite production

 19 mill mt/year 2)  Long-term   Negotiations halted  amber bullet

Increase nominal automotive Body-in-White capacity

 200,000 mt/year  2017 Trial production started  green bullet

Complete ramp-up of UBC recycling line

 Ramp-up completed  2017   Started, delayed ramp-up  red bullet


Ambitions Target Timeframe



Become carbon-neutral from a life-cycle perspective 

Zero 2020 On track green bullet

Increase recycling of post-consumer scrap 4)

 >250,000 mt/year  2020 138,000 mt amber bullet
Deliver on reforestation ambition 5) 1:1 2017 180 ha rehabilitated red bullet

Bauxite and alumina

Delivering on its ambitious improvement program, "Better Bauxite & Alumina", reducing cost and increasing safety and efficiency continues to be a key priority for Bauxite & Alumina in the coming year together with maintaining record high production volumes of alumina at Alunorte and bauxite at Paragominas. We will also work towards securing and developing bauxite resources for future decades. Optimizing and enhancing the commercial value of our attractive sales portfolio will continue to be an important item on our agenda. We will also continue our proactive approach to regulatory challenges by ongoing systematic dialogue with key stakeholders in Brazil.

Further optimize operating costs and deliver significant cost savings

Bauxite & Alumina well exceeded their “Better Bauxite & Alumina" improvement ambition of NOK 500 million in improvements for 2016. The improvement program is on target to achieve NOK 1 billion of annual improvements by the end of 2019. During the coming year we will continue to focus on maintaining high production levels, higher productivity, lower operating costs and our commercial operations.Our Bauxite & Alumina Business System (BABS) ensures best practices and operating efficiencies across our portfolio.

Reinforce safe and sustainable business practices

Important HSE initiatives for the coming year include process safety, increased risk awareness, safeguarding the environment, best practice sharing and improved training. In the CSR area we focus on strengthening the dialog with all major stakeholders. Hydro has signed a Memorandum of Understanding (MoU) with Shell Brasil Petróleo LTDA, and also a Letter of Intent (LoI) with the state of Pará with the aim to replace a major part of our current fuel oil consumption at the Alunorte alumina refinery with more climate and cost efficient natural gas.

Improve the commercial value of our attractive product portfolio

We will continue to optimize our global bauxite and alumina positions including sourcing arrangements aimed at reducing logistical costs and improving margins. We also intend to continue increasing our share of alumina sales volumes at index pricing as old legacy LME indexed contracts gradually expire.

Expand our bauxite and alumina capacity

Hydro has attractive positions enabling the potential expansion of low-cost alumina refining. These include the CAP joint venture for a potential new alumina refinery and possible expansion of the Paragominas mine. Further development of these projects is mainly dependent on ongoing developments in the balance between industry production capacity and market demand. Hydro and Brazilian mining company Vale ended negotiations on the possible acquisition of Vale’s 40 percent interest in Brazilian bauxite producer Mineração Rio do Norte (MRN). The two companies entered into a letter of Intent (LoI) regarding the possible transaction in October 2015, but have not been able to agree on commercial terms. Hydro will continue to own 5 percent of MRN, as well as to purchase bauxite from Vale under commercial agreements entered into in 2011. The put/call option for Vale's remaining shares in Paragominas has been exercised, the transaction was completed in the fourth quarter of 2016. Operational improvements in both Paragominas and Alunorte resulted in record production during 2016 above nameplate capacity.

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. Reducing our impact on the local environment is also an important objective going forward, including continuing to reduce the gap between clearing for mining operations and rehabilitation.


Primary Metal

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.We have a strong commitment to ensuring a safe work environment and a highly motivated and engaged work force.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.

Maintain our focus on safe, sustainable business operations

Primary Metal focus on key activities to ensure safe and efficient operations including systematic HSE training of operators and managers, and regular risk assessment of operator tasks and the work environment. We monitor and continually strive to reduce greenhouse gas emissions and waste to landfill. As part of our strategic workforce planning, we aim to recruit competent resources to secure future requirements for managers and technical specialists.

Further improve our average smelter-cost position

Primary Metals core strategy has been the continuous improvement of our smelter portfolio. The USD 180 per mt improvement program for our global joint venture smelters was completed by the end of 2016. We are targeting annual savings for our entire smelter portfolio of NOK 1 billion under the "Better Primary Metal" improvement ambition by the end of 2019, compared to baseline 2015. This includes increasing production capacity at our existing smelters through proven technological developments in addition to continuous operational improvements, and fixed and variable cost reductions.

Optimize our position in alumina, power, carbon and other key raw materials

Primary Metal source the majority of its alumina from Bauxite and Alumina’s equity position and Energy’s captive power position with roughly two-thirds of our electricity usage based on hydro-power. We are continually working to secure competitive power arrangements as long-term contracts expire.We will also continue to focus on the procurement and supplier portfolio for carbon and other key raw material requirements.

Advance our operational excellence and technological leadership

Primary Metal focus on extracting measurable benefits from the application of our Aluminium Metal Business System (AMBS), a methodology designed to ensure best practices and operating efficiencies across our portfolio. AMBS is a key enabler underlying our improvement efforts and incremental increases in our production volumes. Primary Metal is also developing new proprietary smelting technology with the aim to improve our cost competitiveness, strengthen our environmental standards and support our long-term growth ambitions. This includes the construction of a 75,000 mt pilot plant utilizing our next generation technology, HAL4e, targeting an energy consumption of 12.3 kWh/kg. Experience gained from the pilot is expected to contribute to further incremental capacity increases in our existing portfolio and productivity improvements.

Focus on selective growth projects

Primary Metals growth ambitions are directed toward projects with the potential to improve Hydro's cost position and smelter portfolio, and at the same time, maintain a strong focus on sustainable development. The Karmøy pilot project is on schedule to produce its first metal during the fourth quarter of 2017. The pilot plant can serve as basis for a potential future expansion of primary production in Norway.There is also potential to expand the low-cost Alouette smelter in Canada from 600,000 mt to 950,000 mt (100 percent basis. Hydro share, 20 percent). Investments in these projects are dependent on ongoing developments in the balance between industry production capacity and market demand, as well as favorable framework conditions both in Norway and Canada.

Ambitions going forward

Hydro has the ambition to continuously strengthen its smelter portfolio 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 plant

Metal Markets

Hydro's flexible and extensive multi-sourcing system enables us to rapidly adjust our remelt and recycling production to market demand. We intend to continue capitalizing on this flexibility to secure our market position and create additional value on top of LME for our production capacity. We will also exploit this competitive advantage to optimize our casthouse utilization and margin contribution. By increasing sourcing and recycling of post-consumer scrap we will improve our profitability and contribute to reaching our ambition to become carbon-neutral in 2020. Global optimization of Qatalum sales volumes continues to be key priority.

Metal Markets mid-term strategic goals are included within Primary Metals mid-term strategic goals.

Focus on margin management

Optimizing product premium margins in our primary casthouses and stand-alone remelters will continue to be at the top of our agenda. This includes shifting production toward higher premium alloys, optimizing remelting activities in response to market developments, shorter duration premium pricing and global optimization of product sales towards stronger markets. We will also focus on implementing key product strategies including strengthening our technical resources and enhancing our market team and key account approach.

Grow recycling capabilities

We have built a strong position in the metal products markets to optimize the capacity of our integrated casthouses and stand-alone remelters offering value-added products to the marketplace. Our ambition is to take a strong position in aluminium recycling to improve our cost base and reduce our carbon footprint. To increase our recycling capacity we acquired a scrap shredding and sorting company in St.Peter, Dormagen, Germany in 2015 and have introduced additional recycling capacity in our Clervaux, Luxembourg facility during 2015 and 2016. We plan to further increase our capability and capacity to use post-consumer and other types of contaminated scrap and identify new sources of raw materials. With implementation of our global scrap network we will improve communication and cooperation between the regions, generating synergies in our operations. We also plan to continue to increase sales of recycling friendly alloys from our remelters.

Risk management

We will continue to secure the value of our commercial portfolio by hedging price risk exposures within our group upstream and downstream businesses, mainly resulting from time lags between our manufacturing process and the pricing of products to our customers.

Ambitions going forward

Our vision is to be the preferred partner for casthouse products and services. We will strengthen our focus on enhancing product premium margins by utilizing the flexibility of our multi-sourcing system to manage our global product portfolio in an optimal way. We will continue our strong focus on safety and risk management, and maintain firm discipline on operating costs and capital expenditures.

rolls of aluminum

Rolled Products

Maintaining our strong market position and increasing returns continue to be key priorities in our Rolled Products business operations. Differentiation through innovation in products, processes and services is an important means to grow our market share and margin contribution. Measures aimed at increasing efficiency and reducing costs will continue together with efforts to reinforce safe operations and sustainable business practices.

Building on our strong market position

Differentiation is a key element of our strategy, striving for solutions to best serve our customers. In close cooperation with our customers we work on quality and service improvements. For one of our customers in lithographic sheet for example, we were able to reduce plate cracking in their printing shop by 90 per cent by developing a new alloy. For our US lithography customers, we have run an initiative that reduced lead time from 11 to 6 weeks, thus defending our position as global market leader in lithographic sheet. In cooperation with Aachen university institutes ika/fka, Hydro has developed a full-aluminium car body that satisfies industry benchmarks on safety and stiffness, while reducing the weight by around100 kg compared to the traditional steel car body. In special products we strengthened our solid position in Europe through high-grading our product portfolio supported by our local technical customer service and our central research and development center. We regularly survey our customers’ perception of us and in 2016 were recognized with awards from customers, associations and other industry bodies.

Based on the strong demand growth in the automotive Body-in-White market segment, we have finalized a new production line to lift our nominal capacity for aluminium car body sheet to 200,000 mt per year. The line includes a dedicated skin pass mill for special EDT surfaces for enhanced formability of the material. Trial production commenced in October 2016 and the project has been executed on time and budget.

As a major step in our recycling activities, the new Used Beverage Can (UBC) Recycling Line was opened in our Rheinwerk smelter in Neuss, Germany. The line is part of our unique aluminium cluster and is offering economically attractive low grade scrap sorting by using the most advanced sorting technology available. Ramp up is still ongoing, full output is expected in the second half of 2017.

Strengthen our performance in Environment, Health and Safety

Rolled Products is a key contributor to Hydro’s overall carbon-neutrality ambition. Through the reduction of energy consumption in Rheinwerk smelter and an energy efficiency program for our rolling mills we are reducing emissions and increasing efficiency. The targeted increase in volumes sold to the automotive market as well as numerous other flat rolled products in use contribute to maximizing ‘use-phase benefits’. Finally, our new UBC line contributes to increasing recycling post consumed scrap.

With strong focus on risk reduction and leadership combined with training schemes to increase awareness, the safety performance improved significantly in 2016 with a reduction in the TRI rate for own employees by 37 percent and contractors by 46 percent, achieving the target we had set for 2016. To improve safety performance, we will continue our efforts on risk management, supporting a further reduction in accident severity. A safety and leadership academy has been established and rolled out for all line management functions. Further lifting our operational performance is based upon our Rolled Product Business System (RPBS) implemented in all plants. Improvement initiatives comprise measures to reduce energy consumption, scrap and claim rate and also to improve on overall cost level, productivity and safety.

Achieve targeted improvements

Our improvement ambition, "Better Rolled Products" with the goal to generate annual revenue and cost improvements of NOK 900 million by 2019 compared to revenue and cost levels at the end of 2015 is progressing. Operational improvement, portfolio high-grading and recycling are central elements in addition to supply chain management. In 2016 improvements amounted close to NOK 200 million, somewhat less than planned mainly impacted by a delay in the UBC Recycling line. Rolled Products still expect to achieve our full program target by 2019. Significant contributions will come from the new Body in White automotive line, which will begin to contribute from 2017.

Ambitions going forward

Renew, a cultural enhancement program to lift cooperation and engagement to enable us to achieve our Better – Bigger – Greener targets was launched in 2015 and continued in 2016. This increased focus on cooperation and engagement lead to an 8 percent increase in the people engagement index for the Hydro Monitor employee survey in 2016. We are committed to a safe working environment and to eliminating accidents in our operations. We aim to increase the returns of our business operations, concentrating on operational excellence and involving all employees in continuous improvement. We intend to develop and improve our market share by leveraging our preferred supplier position in the market. With a focus on our strong position within lithography, foil, beverage can, automotive and special products, we will continue to emphasize the quality of our products and services to our customers. We will pursue growth opportunities and keep our focus on innovation and technology to sharpen our competitive edge.



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 for our global activities. Operational excellence and on-going improvement continue to be a key priority to secure cost effective, safe and reliable production.

Develop our captive power capacity

Our ambition is to continually increase Hydro's share of captive power from renewable sources, and further explore opportunities within our existing concession areas in Norway. Securing and increasing the value of our energy assets is a key priority, based on our normal equity power production of 10 TWh.

Optimize power asset management and operational excellence

We are continuously developing our expertise in optimizing power production and market operations. Our objective is to minimize the cost of industrial sourcing and maximize the value of our production assets, including active participation in power markets. We have made significant cost and safety improvements in our hydropower plant operations during the last decade, and we will continue to pursue further performance improvements. Safe, reliable, environmentally conscious operations remain among our top priorities going forward.

Sourcing competitive energy for our global operations

Access to competitive energy is a major success factor in our value chain. We have large energy exposures on nearly every continent. Hydro is engaged in a number of initiatives to identify and secure competitive energy supplies for Hydro's operations. In 2016, we entered into a contract with Nordic Wind Power DA to source 1 TWh of renewable energy for a 15-year period beginning 2021, and 0.7 TWh for the period 2035-39 in order to enable continued competitive aluminium production in Norway. During the year, power contracts were also entered into that fully supplied our smelter operations in Germany up to 2025. In 2016 Norsk Hydro Energia Ltda is in its second year of operation continuing as a vehicle for power market operations in Brazil. We are actively involved in promoting a responsible energy policy in the regions where we operate.

1)Based on sourcing volume of app. 2.3 million mt per annum

2)  Provided the acquisition of the 40 percent stake in MRN from Vale

3)  Based on sourcing volume of ~2.5 million mt for 2016

4)  Includes Hydro's share of recycling in Alunorf

5)  We rehabilitated in total 180 hectares (ha) in 2016, while 181 ha were made available for rehabilitation. The communicated target for 2016 was 325 ha. We will review our rehabilitation definitions and evaluate to define a new target that will more efficiently address our main challenges going forward. The 2020 target of closing the current rehabilitation gap remains unchanged.

Green light: green bullet Ambition on track and on target; Amber lightamber bullet Ambition behind plan, but on target; Red light: red bullet Ambition might not meet the target 

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

  • Annual report 2016

Updated: January 25, 2017