Hydro aims to include recycling in its primary aluminum production in Norway

Announced the sale of the rolling business to KPS Capital Partners for €1.38 billion. The transaction is part of the Group's strategy to improve profitability.

 
 
"We are currently testing this innovative solution at our Høyanger plant. After this testing, we aspire to apply this approach in all our Norwegian smelters - with the initial ambition of adding 10 percent to our total primary production in Norway through post-consumer scrap," says Hydro Aluminium's head of primary production Ola Sæter. "This would allow us to offer our more climate-conscious customers a new and better alternative in their sustainability efforts," Sæter says.
 
LOW-CARBON CIRCULAR ALUMINUM
 
The Group says it has detected growing demand for its green products, Hydro CIRCAL® and Hydro REDUXA®, and expects higher demand in 2021. In October 2020, Hydro signed an agreement with Lyse, a Norwegian power company, to merge part of its hydropower plants to create a stronger renewable energy hub, thus ensuring long-term clean energy supply for its industrial operations. Following the growth in global demand for green aluminum, Fastmarkets launched differential quotations for primary aluminum and value-added products with a low carbon footprint, to bring more transparency to the market. Fastmarkets announced the first quotation for low-carbon aluminum on March 5, with a differential premium of $5-15 per tonne (Europe). Going forward, quotations will be set on the first Friday of each month. Because Hydro's aluminum production in Norway is entirely based on renewable energy, its average CO2 emissions are already only 25 percent of the global average and are available to customers as Hydro REDUXA-certified low-carbon primary aluminum. Introducing post-consumer scrap into the primary aluminum production process would further improve its climate performance. 
 
"In Norway, we have the expertise, capabilities and deep technological understanding to be a leader in our global industry, driving the development of circular economy solutions and combining profitability and sustainability," says Sæter.
 
Hydro produces primary aluminum based on renewable energy at five plants in Norway, representing an annual capacity of about 1.2 million tons of value-added products of Hydro's total global primary production of just over 2 million tons per year. From Hydro's network of recyclers, Hydro already produces Hydro CIRCAL with a guaranteed content of at least 75% recycled post-consumer aluminum scrap.
 
 
 
PROFITABILITY AND SUSTAINABILITY
 
Norsk Hydro has sold the rolling business for €1.38 billion. "We had initiated a strategic review of this business area in 2019, along with other measures for profitability and sustainability," said Hydro President and CEO Hilde Merete Aasheim. "The assessment is complete and now the rolling business will continue to develop under new ownership. This is a good solution for both Hydro and the employees involved, who will continue their commitment to a new company specializing in downstream processing."
 
The agreement covers seven plants, an R&D center, global sales networks and approximately 5,000 employees, 650 of whom are in Norway and the rest primarily in Germany. In 2020, Hydro's Rolling segment contributed about 24 billion kroner ($2.8 billion) in sales, accounting for 17 percent of Hydro's total revenue. Sales totaled 864,000 tons of aluminum laminates for numerous end-use applications, including cans, thin foil, automotive and general engineering. "Hydro's ambition is to increase profitability and promote sustainability while creating value for all stakeholders. The divestment of the lamination business will support this strategy, strengthening our position in low carbon footprint aluminum and facilitate our growth in areas where our capabilities match global megatrends," said Aasheim.
 
KPS Capital Partners is a global private equity firm with a history of significant holdings in metals and automotive companies. "We spent three months on due diligence and were very impressed with the high profile of the management team. We look forward to working with them and the entire team to invest in and grow the business," said Michael Psaros, co-founder and co-managing partner of KPS Capital Partners. The transaction is under review by antitrust authorities and is expected to complete in the second half of 2021. Hydro will seek to strengthen its position in low-carbon aluminum, as laid out in its 2025 Strategic Plan. 

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