Sustainability in the aluminium industryJørgen C. Arentz Rostrup, Executive Vice President and CFOCRU’s 16th world alumini...
Hydro, an integratedaluminium producer
A transforming transactionParagominas, bauxite mine        Bauxite licenses    Alunorte, alumina refinery• Capacity: 10 mi...
Strong positions across aluminium value chainThe integration of Vale Aluminium is transforming Hydro                      ...
Key operational prioritiesMillion tonnes  10                                                       • Integration of Alunor...
Attractively positioned, global reach                                   Norway                                   •   900 0...
Strategy for further value creationBauxite & Alumina                        • Improve operations                        • ...
Fantastic opportunitiesfor aluminium
The big challenges of our generationGrowth must be sustainable  Millions climb out of      Increased energy   Climate chan...
Significant aluminium demand growth expectedDemand for semis                                                World outside ...
Aluminium is the metal of the future• Lightweight                                      • Formability  • 1/3 density of ste...
Innovation drives aluminium demandHydro aims at forefront position Minimum thickness for maximum protection       Power ho...
A sustainable industry?
Aluminium weakest performer among basemetalsCommodity prices, indexed                                                    P...
Total shareholder returns for aluminiumcompanies low compared to other industriesAverage annual TSR, 2005–2009 ()         ...
Low returns permeates the whole value chainEBITDA margin downstream businesses, percentage                    Low   High  ...
Encouraging developments                     • Development of more liquid                      bauxite and alumina markets...
Responsibility          The world needs aluminium                    AbilityAluminium is a fantastic material to meet mark...
www.hydro.com
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Sustainibility in the aliminium industry

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Jørgen C. Arentz Rostrup, Executive Vice President CFO. CRU's 16th world aluminum conference, June 2011

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Sustainibility in the aliminium industry

  1. 1. Sustainability in the aluminium industryJørgen C. Arentz Rostrup, Executive Vice President and CFOCRU’s 16th world aluminium conference, June 2011
  2. 2. Hydro, an integratedaluminium producer
  3. 3. A transforming transactionParagominas, bauxite mine Bauxite licenses Alunorte, alumina refinery• Capacity: 10 million tonnes CAP alumina • Capacity: 6.3 million tonnes• Ownership: 60%, 100% refinery project • Ownership: 91% from 2015 • First quartile cash cost position including Paragominas bauxite MRN bauxite purchase agreement Competence Albras, aluminium smelter • Capacity: 460 000 tonnes • Ownership: 51% • Upper second quartile cash cost position
  4. 4. Strong positions across aluminium value chainThe integration of Vale Aluminium is transforming Hydro Recycling Rolling Bauxite Alumina Energy Primary Casting Products Extrusion Recycling
  5. 5. Key operational prioritiesMillion tonnes 10 • Integration of Alunorte and Paragominas 9 • Operational improvements 8 Alunorte Paragominas • Improve efficiency to achieve nameplate production 7 capacity 6 5 • USD 300 cost improvement program 4 3 2 • Qatalum ramp-up 1 0 • Responsible aluminium player in HSE and CSR 1995 1998 2001 2004 2007 2010
  6. 6. Attractively positioned, global reach Norway • 900 000 tonnes hydro-powered aluminium production Continental Europe • Technology centre, R&D for next-generation smelter • Leading mid and downstream position • Hydropower developments • New recycling centreNorth America Asia• Alouette aluminium smelter in Canada • Growing metal marketing position• Leading position in US Extrusion • Extrusion expansion in China• Growing metal marketing positionBrazil• World-class operations and resource base Middle East• Bauxite and alumina growth projects • Qatalum 1 in production Australia• Albras aluminium smelter • Qatalum expansion opportunity • Primary aluminium production
  7. 7. Strategy for further value creationBauxite & Alumina • Improve operations • Integrate • Expand • CommercializePrimary Metal • Reposition – 300 USD/t program • Qatalum top quartile operation • Expand in high-class assetsEnergy • Develop current asset base • Implement global approach to power sourcingMid- and downstream • Continue proven high-end product strategy • Pursue profitable life-cycle investments: recycling, energy-efficient building systems, aluminum in transport • Expand in emerging markets
  8. 8. Fantastic opportunitiesfor aluminium
  9. 9. The big challenges of our generationGrowth must be sustainable Millions climb out of Increased energy Climate change poverty demand
  10. 10. Significant aluminium demand growth expectedDemand for semis World outside China ChinaMillion tonnes110 +80% 4890 367050 22 53 4430 3410 2010 2015 2020-10 Fight for raw materials to continue Resource-constrained worldSource: CRU
  11. 11. Aluminium is the metal of the future• Lightweight • Formability • 1/3 density of steel • Extrusion, rolling, casting • Low melting point vs. steel• Recyclability • 5% of original energy consumption • Excellent conductivity • 75% of all aluminium produced still in use • Thermal – electrical• Corrosion resistant • Alloying technology • Gives wide range of physical properties • Oxide layer Properties lead • Aluminium intensive urbanization and infrastructure to increased • Climate challenge – aluminium as part of the solution market share • Recyclability more important with high energy prices
  12. 12. Innovation drives aluminium demandHydro aims at forefront position Minimum thickness for maximum protection Power house 10µm 600:1 10µm Aluminium tubing
  13. 13. A sustainable industry?
  14. 14. Aluminium weakest performer among basemetalsCommodity prices, indexed Premium above 90th percentile cash cost Aluminium Copper Lead (1990-2005), percentage Nickel Tin Zinc900 Copper 34800 Iron Ore 33700 Zinc 29600 Gold 28500 Uranium 27400 Tin 26300 Nickel 20200 Bauxite 17100 Coal 17 Aluminium Average 4 0 jan. jan. jan. jan. jan. jan. jan. jan. jan Aluminium, 8 03 04 05 06 07 08 09 10 11 ex. ChinaSource: McKinsey, CRU, Reuters
  15. 15. Total shareholder returns for aluminiumcompanies low compared to other industriesAverage annual TSR, 2005–2009 () High120 Industry weighted average 106100 88 Low 8180 71 67 67 6260 51 50 41 42 3940 33 30 1620 18 12 12 10 9 7 4 4 4 4 0 1 0 -1 -2 -2 -2 -10 -7 -13 -10 -10-20 -14 -14 -19 -17 -16 -24 -24 -26 -23-40 Mining and Machinery and Utilities Retail Transportation Aluminum Travel and Pulp and Materials Construction and Logistics Tourism Paper Chemicals Consumer Technology Automotive Pharmaceuticals Multibusiness Media and Goods and Telecom- and Supply and Medical Publishing munication TechnologySource: Boston Consulting Group
  16. 16. Low returns permeates the whole value chainEBITDA margin downstream businesses, percentage Low High Average15 %10 % 5% 0% -5 %-10 % 2005 2006 2007 2008 2009 2010Source: Company reports. 8 core companies
  17. 17. Encouraging developments • Development of more liquid bauxite and alumina markets • Bauxite, a fight for cost efficient resources going forward • Technology and application development • Continued strong demand in overseas market for advanced technology products
  18. 18. Responsibility The world needs aluminium AbilityAluminium is a fantastic material to meet market needs ProfitabilitySustainable return is the premise for developing aluminium’s full potential
  19. 19. www.hydro.com
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