Norsk Hydro: Hydro to build the Karmøy technology pilot

Hydro has made a formal build decision for the planned full-scale technology pilot at Karmøy, Norway, aiming to verify the world's most climate and energy efficient production of primary aluminium. Total costs are estimated at NOK 4.3 billion, consisting of net project costs of NOK 2.7 billion and around NOK 1.6 billion in support from Enova.

First metal from the technology pilot is expected during the second half of 2017.

"After several successful improvement programs, the next steps in our efforts to further strengthen our cost curve position will increasingly rely on our ability to advance our industry-leading position in technology and innovation," says Hydro president and CEO Svein Richard Brandtzæg. "The Karmøy technology pilot will play a key role in realizing this ambition, ensuring that the Norwegian technology cluster remains the global leader in sustainable aluminium production." 

With the pilot project, Hydro aims to industrialize the world's most climate and energy efficient aluminium electrolysis technology. The ambition is to reduce energy consumption by around 15 percent per kilo aluminium produced compared to the world average, with the lowest CO₂ footprint in the world. In addition, the implementation of technology spin-offs to existing production lines are expected to improve productivity in the current primary aluminium portfolio, contributing to Hydro's capacity creep ambition of an additional 200,000 tonnes per year by 2025.

The technology pilot is designed with an annual production capacity of approximately 75,000 tonnes, consisting of 48 cells with 12.3 kWh/Kg HAL4e technology and 12 cells with 11.5-11.8 kWh/kg HAL4e Ultra technology. Total costs are estimated at NOK 4.3 billion, consisting of net project costs of NOK 2.7 billion and around NOK 1.6 billion in support from Enova. The project costs are adjusted for Inflation and currency developments since the investment decision was announced in February 2015.

An overall power solution in Norway includes new competitive power contracts for Hydro's existing portfolio and the Karmøy pilot, and a pending decision from Norwegian authorities regarding industrial ownership of power within the current consolidation model. This would enable private minority shareholders in power production companies to take out dividends as physical power offtake, rather than being limited to just receiving financial dividends.

Hydro's investment in the Karmøy technology pilot is the largest, single investment in Norwegian mainland industry outside the oil and gas sector since Hydro expanded the Sunndal aluminium plant in 2002-2004.

Investor contact
Contact Pål Kildemo
Cellular +47 97096711
E-mail Pal.Kildemo@hydro.com

Press contact
Contact Halvor Molland
Cellular +47 92979797
E-mail Halvor.Molland@hydro.com

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.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.