Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Metal Bulletin Bauxite and Alumina Conference 2017
18 slides from Norsk Hydro Asa's conference presentation, Mar 15, 2017
Slide 1: Opportunities and challenges in the global B&A market
Opportunities and challenges in the global B&A market Silvio Porto, EVP Bauxite & Alumina Metal Bulletin Bauxite and Alumina Conference, Miami, March 14-16
Slide 2: Hydro – a fully integrated aluminium company
Hydro – a fully integrated aluminium company World class assets, high-end products and leading market positions Raw materials Primary aluminium production, Aluminium in products processing and energy marketing and recycling Bauxite Energy Primary Metal Metal Markets Rolled Products Sapa JV (50%) & A
Slide 3: Hydro in Brazil: Uniquely positioned as #1 in aluminium in South-America
Hydro in Brazil: Uniquely positioned as #1 in aluminium in South-America • 100% equity in Paragominas (11 mtpy), 5% equity and No.1 in 45% off-take of MRN (18 mtpy) MRN Alunorte bauxite CAP Albras • Total access to bauxite in Brazil: ~19.5 mtpy Paragominas • Hydro owns 92.13% of Alunorte (6.3 mtpy),
Slide 4: Our first priority – conducting business the Hydro Way
Our first priority – conducting business the Hydro Way Safety and environment Corporate responsibility Safety performance (TRI) at industry benchmark Carbon-neutral from a life-cycle perspective 2.6* 2020 ambition of a TRI rate Close the rehabilitation gap below 2.0 and zero fatalities by 2020 * TRI
Slide 5: Opportunities and challenges in the global bauxite and alumina landscape
Opportunities and challenges in the global bauxite and alumina landscape 5
Slide 6: Aluminium demand continues to outpace other base metals
Aluminium demand continues to outpace other base metals Driving bauxite and alumina demand Aluminium continues to be the fastest growing base metal CAGR 2016 – 2025 Global demand base metals Index 2000=100 270 220 170 120 Global semis demand: 70 3-4 % 2000 2002 2004 2006 2008 2010 2012 2014 2016 Alu
Slide 7: Chinese primary production dependent on resource imports
Chinese primary production dependent on resource imports Around 36% of production based on imported raw material (average 2013-2016) % of Primary Production 100 7% Imported 90 80 Imported 29 % 70 60 50 100 % 93 % Domestic 40 64 % Domestic 30 20 10 0 Primary production Alumina Bauxite Source: CRU, Ch
Slide 8: Bauxite production in China to level off, higher bauxite imports from the Atlantic increases freight exposure
Bauxite production in China to level off, higher bauxite imports from the Atlantic increases freight exposure Chinese bauxite production and imports Monthly Chinese bauxite imports Mtpy Million mt 8 200 Imports (incl. alumina as bauxite equivalent) 7 Forecast domestic 6 150 Historical domestic 5 4 1
Slide 9: Alumina curtailments reduce oversupply outside China
Alumina curtailments reduce oversupply outside China Capacity curtailments in the Atlantic basin, offset by growth in Pacific World ex-China alumina supply/demand balance Mill. tonnes 60 40 Point Comfort 20 Corpus Christi Ras Al Khair 0 Nhan Co 2015 2016 2017e Paranam Atlantic Pacific Demand Kendawa
Slide 10: Alumina prices rising amid smelter restarts and cost inflation
Alumina prices rising amid smelter restarts and cost inflation Recent alumina price drivers Platts alumina index (PAX) USD/t 450 Market balances • Smelter restarts and new projects ramping up in China 400 • Tight markets ex. China amid curtailments 350 Cost inflation • Rising coal prices 300 • Highe
Slide 11: Hydro Bauxite & Alumina – strong operational and commercial performance
Hydro Bauxite & Alumina – strong operational and commercial performance 11
Slide 12: Paragominas: Lifting and stabilizing production
Paragominas: Lifting and stabilizing production 12.2 11.7 Paragominas production annualized, in milion mt 10.9 10.8 Record high 2016 production 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 • Improved equipment conditions, operating standards
Slide 13: Alunorte: Record 2016 production above nameplate capacity
Alunorte: Record 2016 production above nameplate capacity Alunorte production annualized, in milion mt 6.3 6.5 6.5 Significantly improved production stability 6.2 6.1 6.1 6.0 5.9 5.9 5.9 5.8 5.8 5.8 • 6.3 million mt last 12 months production at nameplate capacity 5.5 5.0 5.2 • Improved equipment eff
Slide 14: Exposure to index pricing increasing for Hydro's alumina sales
Exposure to index pricing increasing for Hydro’s alumina sales Hydro alumina sales Strong commercial organization maximizing value of B&A assets Index % 35% 50% 65% 75% 75% 85% • Strategic sales and purchases to capture long-term value 100% 80% 60% • Supply chain optimization 40% 20% • Reduced demur
Slide 15: Further strengthening the competitiveness of Bauxite & Alumina
Further strengthening the competitiveness of Bauxite & Alumina Strong progress on operational and commercial efforts Better Bauxite & Alumina Improvement categories Improvements in NOK million BNOK 1.0 1 000 Alunorte Fixed 900 cost • Support production above nameplate capacity 800 Commercial • Impro
Slide 16: Challenges and opportunities for Hydro in Brazil
Challenges and opportunities for Hydro in Brazil Main challenges Hydro response • Deforestation • Close the rehabilitation gap by 2020 • Red mud handling − Research partnerships creates basis for state-of-the-art approach to mining rehabilitation • Social impact • Installation of press filter at Alu
Slide 17: Hydro's strategic priorities for the bauxite and alumina area
Hydro’s strategic priorities for the bauxite and alumina area 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 improvemen
Slide 18: HYDRO
HYDRO
Norsk Hydro — Metal Bulletin Bauxite and Alumina Conference 2017 on 6ix