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Qatalum restart imminent, full production expected by end-Q1

Qatalum is preparing for an imminent restart of primary aluminium production, following a power outage in early August this year. The plant is expected to reach full capacity by the end of the first quarter 2011.

The clean-out of the 444 cells that were affected by the power outage is well underway, and the planned restart is expected to commence by mid-September.

The primary aluminium production in the Qatalum plant has been shut down since a power outage on August 9, lasting for nearly five hours, halted primary production. The Qatalum organization has since, with the strong support of both owners, focused on preparing the cells for a safe and secure restart, investigating the causes and effects of the incident and implementing mitigating actions.

According to external and internal experts investigating the incident, the long-lasting outage was due to unexpected technical difficulties in restarting the power plant after it was closed down by an external earth fault, which also disrupted Qatalum’s connection to the national grid in Qatar.

Despite strong efforts to restore power supply, the duration of the outage caused the cells to cool down and the liquids to solidify. The primary aluminium production was subsequently shut down.

The root causes of the incident have been identified and are being rectified.

“I am pleased that Qatalum now is in the position to resume production shortly. It is of course most unfortunate that such a setback should hit us now, as we were in good progress of ramping up the plant towards full production. At the same time we are glad that the events did not lead to any injuries,” says Abdulla Salatt, Chairman of the Board of Directors.

"Our prime objective is to prevent similar incidents in the future, and I am confident that we have technical solutions and routines in order to achieve this. The Qatalum organization has put in a tremendous effort in mitigating the consequences of this unfortunate incident. Internal and external resources have been mobilized to ensure a safe and quick restart. Regional smelters provided support and shared expertise, equipment and materials," says Qatalum's CEO Jan Arve Haugan.

"Qatalum, supported by Hydro as responsible for marketing of Qatalum’s products, has been able to meet the bulk of the planned August shipments to customers in Asia, both for foundry alloys and extrusion ingots," Haugan says.

"The Qatalum cast house has stepped up remelting of cold metal sourced from external suppliers, while Hydro has postponed planned maintenance and increased production at other plants.”

Qatalum's insurance coverage related to the incident is considered robust.

"We have insurance related to property damage and loss due to business interruption and we are in a constructive dialogue with our insurers to determine the financial impacts of this incident," Haugan says.

Qatalum is a 50-50 joint venture between Qatar Petroleum and Norsk Hydro ASA. When complete, it will be one of the most modern, energy-efficient and environmentally high-performing aluminium plant in the world, with an annual production capacity of 585,000 tonnes of aluminium. The plant has a total of 704 cells.


Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro’s markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by “expected”, “scheduled”, “targeted”, “planned”, “proposed”, “intended” or similar statements.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty.  Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized.  Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro’s key markets and competition; and legislative, regulatory and political factors.

No assurance can be given that such expectations will prove to have been correct.  Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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