Norway-based Hydro said it will focus on low-carbon aluminum production and expand its portfolio to recycling, renewables and batteries by 2025.
“We generated cash, reduced costs and made significant operational improvements across the company, providing a solid foundation for our growth program,” said President and CEO Hilde Merete Aasheim. “Now we are raising the bar, setting an ambitious new improvement target for 2025, combined with a clear strategy to make Hydro a profitable and sustainable industry leader. “
Over the past year, the company said it has focused on “turning the wheels, maintaining a healthy and safe working environment” while also working to position the company for the future. Hydro’s improvement program remains on track to meet its 2020 goal of $ 456 million, with the company adding that all lines of business have “exceeded” their cost ambitions. The improvement program, accompanied by a net release of working capital and reduced investments, contributed to greater cash generation in 2020.
Hydro says one of the main drivers of its improvement in 2020 has been the ramp-up and “increased operational robustness” of its bauxite and alumina operations in Brazil. Alunorte is on track to deliver alumina volumes at approximately 90% of its nominal capacity in the fourth quarter of 2020.
“Our Brazilian organization has made good progress in increasing the integrity and robustness of assets while maintaining a focus on health and safety during the global pandemic,” Aasheim said.
Hydro affirms its overall goal of reducing CO emissions2 by 30% by 2030 remains on track. The company adds that it is committed to replacing fuel oil with natural gas at the Alunorte refinery and then electrifying the coal-fired boilers at Alunorte. Hydro adds that it has signed intentional agreements to develop solar and wind energy projects to provide renewable energy at an attractive cost.
The company said it also plans to strengthen its position in low-carbon aluminum by 2025. Several of the global megatrends are supporting increased demand for aluminum, Hydro said, citing forecasts from CRU, based. in London, that the demand for aluminum in the vehicle sector is expected to increase. of 6.2 million metric tonnes by 2030. CRU also expects demand for aluminum cans inventory to increase by 3 million metric tonnes by 2030. Total seedling demand is also expected to increase by 32 million metric tonnes by 2030, according to CRU.
Over the past year, Hydro said it has seen an increase in demand for low-carbon Hydro Circal and Hydro Reduxa, and demand is expected to increase further in 2021.
The second pillar of its 2025 strategy diversifies and extends Hydro’s portfolio towards recycling, renewable energies and batteries. Growth in these areas allows Hydro to capitalize on the growth of key megatrends such as sustainability, electrification and urbanization, according to the company.
“We will expand into areas where our capabilities match the megatrends, primarily in recycling, renewables and batteries,” says Aasheim. “Our capabilities and our unique low-carbon position are catalysts for growth in these areas. Our current recycling portfolio is a solid foundation for future growth, and Extruded Solutions is shaping demand through innovative solutions combined with a strong and diverse asset base.
Hydro currently has a portfolio of 29 recyclers and an annual consumption capacity of 2.6 million metric tonnes of aluminum scrap. Ambition 2025 includes a doubling of Hydro’s current use of post-consumer waste, which could result in an increase in profits ranging from $ 114 million to $ 171 million, according to the company. A strategy has been established “along the recycling value chain” within the primary metal, rolled products and extruded solutions, the company says.
In renewable energy, Hydro has created a new unit, Renewable Growth, designed to leverage its industrial footprint and energy skills to take positions in renewable energy projects, primarily in the Nordic countries and Brazil.
The company claims to have also implemented a new battery unit as part of Hydro Energy. Hydro has already made several investments in the battery value chain in recent years. The strategy to 2025 includes additional investments with battery partners in what it calls “attractive areas of the value chain,” resulting in potential pro-rated profits of $ 68 million to nearly $ 80 million. corporate dollars invested.
“Hydro remains committed to delivering long-term value for our shareholders, and I am pleased with the generation of cash during the past difficult year,” said Pål Kildemo, Chief Financial Officer of Hydro. “Going forward, we have reconfirmed and extended the roadmaps towards satisfactory profitability for each of our business segments by 2025.”