Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (2016)
13 slides from Norsk Hydro Asa's investor day presentation, 2016
Slide 1: Bauxite & Alumina
Bauxite & Alumina Eivind Kallevik Simon Storesund Capital Markets Day 2016
Slide 2: Hydro is Brazil's #1 aluminium company
Hydro is Brazil’s #1 aluminium company Hydro owns 5% of Brazil’s largest bauxite No.1 in MRN mine and 86,3% of Brazil’s second largest Alunorte bauxite CAP Albras bauxite mine Paragominas Hydro owns 92.13% of Brazil’s and the world’s largest alumina refinery No.1 in alumina Hydro owns 51% of Brazil’
Slide 3: Bauxite & Alumina: Accelerating performance
Bauxite & Alumina: Accelerating performance Participation in Barcarena Paragominas awarded as Commissioning of press filters Urban Development Plan best Brazilian mine by EXAME at Alunorte CMD CMD 2015 2016 All-time low implied Vale/Hydro negotiations on Ball mill and Highest 12-month average alumin
Slide 4: Bauxite & Alumina strategic priorities
Bauxite & Alumina strategic priorities Aiming for operational and commercial leadership • Strive for an injury free environment • Secure and develop resources • Further improve organizational for future decades capabilities and HSE performance • Continue operational improvement drive, ensure world c
Slide 5: Improvement program ahead of 2016 plan, 2019 target unchanged
Improvement program ahead of 2016 plan, 2019 target unchanged Strong progress on operational and commercial efforts Better Bauxite & Alumina Improvement categories Improvements in NOK million BNOK 1.0 Alunorte 1000 Fixed • Debottlenecking Alunorte to above 900 cost nameplate capacity 800 Commercial
Slide 6: Paragominas: Supporting production above nameplate capacity
Paragominas: Supporting production above nameplate capacity Paragominas production annualized, in milion mt 11.7 11.7 10.9 10.8 YTD 2016 production up 5% from strong 2015 10.6 10.4 10.2 9.0 9.1 9.5 9.1 9.0 • Successfully implemented Bauxite & Alumina Business System 8.7 8.3 7.1 • Improved equipment
Slide 7: Alunorte: Record run-rate production above nameplate capacity
Alunorte: Record run-rate production above nameplate capacity Alunorte production annualized, in milion mt 6.3 6.5 6.4 Significantly improved production stability 6.2 6.1 6.1 6.0 5.8 5.8 5.9 5.9 5.8 5.9 • 6.3 million mt last 12 months production at nameplate capacity 5.5 5.0 5.2 • Improved equipment
Slide 8: Competitive alumina cost position
Competitive alumina cost position Alumina cash cost curve, USD/mt Implied alumina cost and margin, USD/mt 1) BOC in USD per mt 400 35 300 350 56 36 250 300 200 250 150 252 100 217 204 200 Alunorte 50 150 0 Q3 2014 Q3 2015 Q3 2016 100 Price2) 287 273 240 50 LME%3) 14.7% 16.5% 14.7% 0 Implied EBITDA c
Slide 9: China driving alumina prices up
China driving alumina prices up Key factors: Chinese smelter restarts on higher metal prices and seasonal inventory build-up Raw material costs going up – lifting the floor Increased volatility from the Chinese market Coal prices, USD per mt PAX & China (Shanxi) domestic alumina price, USD per mt 80
Slide 10: Pricing alumina and bauxite on own fundamentals
Pricing alumina and bauxite on own fundamentals Platts alumina index well established as the common pricing mechanism Hydro alumina sales exposure to index pricing 35% 50% 65% 75% 75% 85% Alumina 100% • New contracts: 100% sold on index, except Hydrate and short-term 80% contracts, normal terms 2-10
Slide 11: Strong commercial organization maximizing the value of B&A assets
Strong commercial organization maximizing the value of B&A assets Strategic sales and purchases to capture long-term value Utilizing China domestic entity • Secure LT-sales contracts • Established in May 2015 (Index & CIF terms) • Improved market intelligence and customer • Increased focus on the Hy
Slide 12: Two key focus areas for commercial in 2016
Two key focus areas for commercial in 2016 Pursuing attractive market opportunities to lift margins Hydrate alumina market (chemical grade) Utilizing China domestic entity • Hydrate - alumina before the calcination process • Gaining market intelligence and customer insight • More stable hydrate pric
Slide 13: Bauxite & Alumina mid-term goals
Bauxite & Alumina mid-term goals Creating shareholder value through efficient and commercial use of raw materials Ambitions Target Timeframe Progress1 Status • Improve safety performance, strive for injury free environment TRI <2 2020 1.42 • Realize ongoing improvement efforts Better Bauxite&Alumina