Hydro’s ambition to improve earnings from its wholly owned smelters by USD 100 per tonne is now being increased to USD 300 per tonne. The measures aim to improve the aluminium smelters’ competitiveness and restore profitability to a sustainable level.
In the autumn of 2009, Hydro launched a cost improvement program in order to reduce operating costs by USD 100 per tonne of primary aluminium produced by the end of 2011, compared to the 2009 level. The program is on schedule.
“We must make the smelters more robust. Competition is hard in the aluminium industry, and with a continued uncertain market situation, we need to take the necessary steps to improve our long-term competitiveness,” says Hilde Merete Aasheim, executive vice president and head of Hydro's Primary Metal business area.
“We will now increase our ambitions and implement measures which will help improve our cost position by a further USD 200, mainly by the end of 2014," Aasheim says.
The autumn 2009 program to reduce costs by USD 100 per tonne has been focusing on operational improvements, where a more stable operation of aluminium production means lower production costs.
The existing improvement program will now be extended, and Primary Metal will improve efficiency, implement improvements and reduce costs in areas such as purchasing, logistics, technology, manning and organization. In addition, the aim is to obtain a further improvement from margins on metal products from the smelter casthouses – in total, USD 300 per tonne in improvements when all measures are identified and implemented.
The improvement program will focus on costs we are able to influence, mainly so-called conversion costs, in Hydro’s wholly owned aluminium smelters. The improvements do not include the effect of somewhat higher energy costs in coming years, or fluctuations in raw material prices and other input factors.
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