Cru 20110614 rostrup
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Transcript of Cru 20110614 rostrup
Sustainability in the aluminium industry
Jørgen C. Arentz Rostrup, Executive Vice President and CFOCRU’s 16th world aluminium conference, June 2011
Hydro, an integrated aluminium producer
A transforming transaction
Albras, aluminium smelter
Paragominas, bauxite mine
• Capacity: 6.3 million tonnes• Ownership: 91%• First quartile cash cost position including Paragominas bauxite
• Capacity: 10 million tonnes• Ownership: 60%, 100%
from 2015
Alunorte, alumina refinery
• Capacity: 460 000 tonnes• Ownership: 51%• Upper second quartile cash cost position
Bauxite licenses
CAP aluminarefinery project
MRN bauxitepurchase agreement
Competence
Strong positions across aluminium value chain
Bauxite Alumina Energy Primary Casting Products
Rolling
Extrusion
Recycling
Recycling
The integration of Vale Aluminium is transforming Hydro
Key operational priorities
• Integration of Alunorte and Paragominas• Operational improvements • Improve efficiency to achieve nameplate production
capacity
• USD 300 cost improvement program
• Qatalum ramp-up
• Responsible aluminium player in HSE and CSR0
1
2
3
4
5
6
7
8
9
10
1995 1998 2001 2004 2007 2010
Alunorte Paragominas
Million tonnes
Attractively positioned, global reach
Continental Europe• Leading mid and downstream position
Asia• Growing metal marketing position• Extrusion expansion in China
Norway• 900 000 tonnes hydro-powered aluminium production• Technology centre, R&D for next-generation smelter• Hydropower developments• New recycling centre
North America• Alouette aluminium smelter in Canada• Leading position in US Extrusion• Growing metal marketing position
Brazil• World-class operations and resource base• Bauxite and alumina growth projects• Albras aluminium smelter
Middle East• Qatalum 1 in production• Qatalum expansion opportunity
Australia• Primary aluminium production
Strategy for further value creation
Bauxite & Alumina
Primary Metal
Energy
Mid- and downstream • Continue proven high-end product strategy• Pursue profitable life-cycle investments:
recycling, energy-efficient building systems, aluminum in transport
• Expand in emerging markets
• Develop current asset base• Implement global approach to power sourcing
• Reposition – 300 USD/t program• Qatalum top quartile operation• Expand in high-class assets
• Improve operations• Integrate• Expand• Commercialize
Fantastic opportunities for aluminium
The big challenges of our generation
Climate changeMillions climb out ofpoverty
Increased energydemand
Growth must be sustainable
Significant aluminium demand growth expected
44
53
36
48
34
22
-10
10
30
50
70
90
110
2010 2015 2020
World outside China ChinaDemand for semis
Fight for raw materials to continueResource-constrained world
Million tonnes
+80%
Source: CRU
Aluminium is the metal of the future
• Formability• Extrusion, rolling, casting• Low melting point vs. steel
• Excellent conductivity• Thermal – electrical
• Alloying technology• Gives wide range of physical properties
• Lightweight• 1/3 density of steel
• Recyclability• 5% of original energy consumption• 75% of all aluminium produced still in use
• Corrosion resistant• Oxide layer
Properties leadto increasedmarket share
• Aluminium intensive urbanization and infrastructure• Climate challenge – aluminium as part of the solution• Recyclability more important with high energy prices
Innovation drives aluminium demand
10µm 10µm600:1
Aluminium tubing
Minimum thickness for maximum protection Power house
Hydro aims at forefront position
A sustainable industry?
Aluminium weakest performer among base metals
0
100
200
300
400
500
600
700
800
900
jan.03
jan.04
jan.05
jan.06
jan.07
jan.08
jan.09
jan.10
jan11
Aluminium Copper LeadNickel Tin Zinc
8
4
17
17
20
26
27
28
29
33
34
Aluminium,ex. China
Aluminium
Coal
Bauxite
Nickel
Tin
Uranium
Gold
Zinc
Iron Ore
Copper
Premium above 90th percentile cash cost(1990-2005), percentage
Average
Source: McKinsey, CRU, Reuters
Commodity prices, indexed
Total shareholder returns for aluminium companies low compared to other industries
88
71 67 6762
106
81
5141
50
16
42 3933 30
1812 12 10 9 7 4 4 4 4 1 0 -1 -2 -2
-10 -14-7
-2
-17 -14 -10
-24
-10-16
-24 -26 -23-19
-13
-40
-20
0
20
40
60
80
100
120
Average annual TSR, 2005–2009 () High
Low
Industry weighted average
Chemicals
Machinery and Construction
ConsumerGoods
Mining and Materials
Media andPublishing
Travel andTourism
Pharmaceuticalsand MedicalTechnology
Technology and Telecom-
munication
Transportation and Logistics
Utilities Retail Pulp and Paper
MultibusinessAutomotive and Supply
Aluminum
Source: Boston Consulting Group
Low returns permeates the whole value chain
-10 %
-5 %
0 %
5 %
10 %
15 %
Low High AverageEBITDA margin downstream businesses, percentage
2005 2006 2007 2008 2009 2010
Source: Company reports. 8 core companies
Encouraging developments
• Development of more liquid bauxite and alumina markets
• Bauxite, a fight for cost efficient resources going forward
• Technology and application development
• Continued strong demand in overseas market for advanced technology products
Responsibility
The world needs aluminium
Ability
Aluminium is a fantastic material to meet market needs
Profitability
Sustainable return is the premise for developingaluminium’s full potential
www.hydro.com