A final agreement would give Hydro a 75 percent holding in a potential bauxite and alumina project, in line with Hydro’s strategy to grow in primary aluminium production and raise its equity coverage of the key raw material alumina.

The work to determine the potential bauxite reserves and possible pursuit of additional reserves in the Kimberly region will begin in the upcoming dry season, starting in July.

Hydro, a leading global aluminium company with operations on five continents, already operates the Kurri Kurri primary aluminium plant in New South Wales in Australia, with a 2006 production of 164,000 tons and about 500 employees. It also has a minority ownership in the nearby Tomago primary aluminium plant.

Hydro and UMC will soon begin talks with local authorities and key community stakeholders in Australia.

United Minerals Corporation is a listed Australian mining company with substantial bauxite tenements in the Kimberly region, with activities mainly in diamonds, iron ore and bauxite. UMC holds a number of granted and pending explorations licenses in the region.

Hydro is a Fortune 500 energy and aluminium company with 33,000 employees in nearly 40 countries. Following the completion of an agreed merger of its oil and gas activities with Norwegian oil firm Statoil, expected in the third quarter, Hydro will pursue business opportunities worldwide in line with its strategy to grow as a leading aluminium and power company, based in Norway.

In 2006, Hydro supplied close to 3.6 million tons of primary aluminium metal, of which 1.8 million tons came from its 11 fully and part-owned primary aluminium plants in Europe, Canada and Australia.