Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (September 2007)
32 slides from Norsk Hydro Asa's investor day presentation, Sep 6, 2007
Slide 1: Aluminium Metal
Aluminium Metal Torstein Dale Sjøtveit, Executive Vice President and Head of Aluminium Metal September 6, 2007 1
Slide 2: Key messages
Key messages • Repositioning improves cost position • Strong financial performance • Favorable market • Firm asset base • Operational excellence • Commitment to people, operational excellence and technology development • Focused project implementation in Qatalum 1 and Alunorte 3 • Maturing profitabl
Slide 3: Aluminium Metal
Aluminium Metal What we said in 2006 What we have delivered Strong focus on return on capital Continued strong results and outlook Stade and Årdal Søderberg closed, Restructuring on track restructuring on time and below budget Operational excellence and Continued improvement efforts based production
Slide 4: Aluminium Metal production facilities
Aluminium Metal production facilities North America Europe: • 114 000 mt smelting capacity in 1 smelter • 1 457 000 mt primary smelting capacity in 8 smelters • 369 000 mt remelt capacity in 6 remelters • 359 000 mt remelt capacity in 6 remelters Middle East: • Qatalum 1 smelter under construction (
Slide 5: High profitability in all businesses
High profitability in all businesses Adjusted profitability first-half 2007 (not annualized) RoaCE percent 20 10 0 Alumina & bauxite1) Primary production2) S&T and remelters3) Share of capital employed (total NOK 29 billion) 1) Adjusted for unrealized LME and currency effects of positive NOK 123 mil
Slide 6: Primary production
Primary production Smelter – Sunndal Key characteristics 2006 • Europe’s largest smelter • Annual revenues ~NOK 7.5 billion • 950 employees Input • 690 000 tonnes alumina • 5 300 GWh hydroelectric power • 120 GWh natural gas Production • 365 000 tonnes liquid metal • 420 000 tonnes extrusion ingot a
Slide 7: Competitive cost position
Competitive cost position Business operating cost 2007* Business operating cash cost USD/tonne 3 000 BOC W eighted average RioTintoAlcan Alcoa Hydro (CRU) 2 600 2 200 1 800 1 400 1 000 Accumulated tonnage (000 tonnes) 600 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 * Source: CRU, 2007.
Slide 8: Hydro smelters well positioned
Hydro smelters well positioned Neuss smelter on cash basis Business operating cash cost USD/tonne 3 000 Average: 1 624 USD/tonne Average ex. Neuss: 1 539 USD/tonne 2 600 Neuss 2 200 1 800 1 400 1 000 Accumulated tonnage (000 tonnes) 600 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 * Sour
Slide 9: Growth and restructuring efforts
Growth and restructuring efforts Improved cost position Business operating cash cost USD/tonne 3 000 Business operating cost Weighted average Hydro (CRU) Qatalum Hydro CRU incl c losed c apacity Hydro CRU incl Qatalum ex c losed c ap 2 600 Closed 250 000 tonnes capacity 2 200 in Norway and Germany (
Slide 10: Strong growth in primary production
Strong growth in primary production CAGR 2001-07: 14% 2001 2007E Share of global production: 3.3% 4.5% Share of global production (ex. China) 3.7% 7.0% 1 000 tonnes 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 C losed production Primary production 0 2001 2002 2003 2004 2005 2006 2007E 2011E 1
Slide 11: Solid power portfolio going forward
Solid power portfolio going forward Power coverage through 2015 Percent 100% • Secured power supply and prices Neuss 75% Contract • Neuss on cash-plus basis Contracts 50% • Norway - gradual increase in power prices until 2010 as new contracts replace old 25% Self Generated Self generated • Hydro’s 2
Slide 12: Operational leadership
Operational leadership • Excellent leadership capabilities • Strong operational organization with focus on people and teams • Safety for personnel and care for the environment • Operational excellence and stretched targets • Technology and competence • Support improved performance in existing assets
Slide 13: Reduced emissions
Reduced emissions Improvement example Kg CO2e / kg • Achievements aluminium* 6 • Production doubled and absolute greenhouse gas emissions in Norway 5 reduced by 1 million tonnes CO2 annually 4 • Improved cathode designs 3 • Improved process control and 2 Qatalum operational practices 1 0 1990 1995 2
Slide 14: Strong performance culture
Strong performance culture Improvement example Production liquid aluminium Kurri Kurri aluminium plant 1 000 tonnes 175 170 165 • Achievements 160 155 150 • Increased production 145 140 135 2000 2001 2002 2003 2004 2005 2006 2007 • Reduced emission of climate gasses (PFC) Emission of PFC* gasses Ano
Slide 15: Aluminium Metal Production System
Aluminium Metal Production System Global and mandatory platform for further improvements Standardized Work Processes Defined customer-supplier relations Principles Standards and Optimized flow to reduce waste common tools Dedicated teams Local implementation of common principles Visual leadership Vi
Slide 16: Bauxite and alumina
Bauxite and alumina Alumina refinery – Alunorte Key characteristics 2006 • World’s largest refinery • 34% owned by Hydro • Located in north-east Brazil • Annual revenues ~USD 1.3 billion (100%) • 1 150 employees Input • 10 million tonnes bauxite (wet) • 8 300 GWh energy (coal, oil, electricity) 2006
Slide 17: Strong growth in alumina production
Strong growth in alumina production Hydro’s equity alumina production 1 000 tonnes 3 500 Mo U ne w re fine ry Alunorte 3 000 Alpa rt 2 500 2 000 1 500 1 000 500 0 2001 2002 2003 2004 2005 2006 2007E 2011E 17
Slide 18: Hydro well covered with alumina
Hydro well covered with alumina New refinery positions Hydro for further growth in metal Alumina coverage Percent 140% 120% 100% LME-linked contracts 80% MoU new refinery equity 60% 40% Equity 20% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Based on existing smelter capacity and decided smelter
Slide 19: Casthouse products add value
Casthouse products add value Leading supplier in Europe - growing globally Own production Primary foundry alloys Extrusion ingot Remelting & recycling Wire rod Sheet ingot Commercial agreements Casthouse 19
Slide 20: Casthouse products
Casthouse products Remelter - Clervaux Key characteristics 2006 • Large unit in multi-sourcing system • Located in Luxemburg • Annual revenues ~USD 400 million • 55 employees Input • 100 000 tonnes aluminium scrap • 15 000 tonnes primary ingot • 148 GWH (natural gas and electricity) Production • 115
Slide 21: Smelters and remelters close to customer
Smelters and remelters close to customer Quality, flexibility and short lead times • Capacity in Western Europe Remelters • 1.4 mill tonnes of primary metal Smelters with remelting capacity • 1.4 mill tonnes of remelting and recycling Products plants with remelting and recycling capacity • Total vol
Slide 22: High-grading the growth portfolio
High-grading the growth portfolio Bauxite and alumina opportunities Metal opportunities Qatalum Alumina project under expansion - Alunorte 22
Slide 23: Competence and technology
Competence and technology • Provide basis for growth and partnerships • Distinct project management skills • Proprietary technology • Value-added primary products attractive to partners 23
Slide 24: Next-generation cell technology
Next-generation cell technology Well on its way • With global competitive and ambitious performance targets • Operating well above 400 kA • Innovative design • low specific investment cost • low energy consumption • leading environmental performance • 6 cells in full operation early 2008 at the Årda
Slide 25: Leading in casthouse production systems
Leading in casthouse production systems • Excellence in casthouse operations securing high asset utilisation • Multi-sourcing focus - high and consistent product quality • Product portfolio serving rolling, extrusion and automotive industry • Extensive technical support concepts for all products 25
Slide 26: Long-term profitable growth
Long-term profitable growth Brownfield metal opportunities • Norway (Karmøy): Power supply is key • Qatar: Targeting double Qatalum capacity • Australia: Build on existing presence Additional world-class greenfield opportunities • Key factors • Power cost and source • Market and logistics • Risk and
Slide 27: Qatar - an attractive location
Qatar - an attractive location • Low operating cost • Competitive gas price • Captive power • High productivity • Expansion potential • Attractive logistics 27
Slide 28: Qatalum a 50/50 joint venture company
Qatalum a 50/50 joint venture company Joint venture agreement 50% 50% z Gas supply z Technology and competence z Industrial climate z Metal marketing z Site & off-take z Project management Power plant and smelter 28
Slide 29: Qatalum – extensive recruitment effort
Qatalum – extensive recruitment effort Firm Hydro involvement Hydro full-time Qatalum involvement Recruitment plan Qatalum operations FTE FTE 250 Hydro personnel in Operations 1 200 Hydro Start up team Hydro Project team Hydro Owners team 1 000 200 800 150 600 100 400 50 200 0 0 Jun-07 Dec-07 Jun-08
Slide 30: MoU for new alumina project in Brazil
MoU for new alumina project in Brazil • MoU with the Brazilian mining group CVRD • Important step to further expand global primary aluminium and raw materials sourcing • Final alumina production 7.4 million tonnes per year • Four-stage development, each 1.85 tonnes • Investment estimate first stage
Slide 31: Key messages
Key messages • Repositioning improves cost position • Strong financial performance • Favorable market • Firm asset base • Operational excellence • Commitment to people, operational excellence and technology development • Focused project implementation in Qatalum 1 and Alunorte 3 • Maturing profitabl
Slide 32: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements contained in this announcement constitute “forward-looking information” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as a