For the full year 2017 Hydro's underlying EBIT increased to NOK 11,215 million from NOK 6,425 million for 2016. The increase reflects a higher all-in metal price and alumina sales price, partly offset by increased raw material costs, fixed costs and negative currency effects.
In February 2018, extreme rainfall in Pará, Brazil, lead to regional flooding. Due to concerns over possible water contamination from Alunorte during this flooding, authorities have taken several measures against the alumina refinery. These include orders to reduce production by 50 percent and halt operations at its DRS2 bauxite residue deposit, which is currently under commissioning. In addition, suspending operations on one of two tailing dams at the Paragominas bauxite mine. Hydro issued a force majeure notice towards its alumina and alumina hydrate customers due to the production cuts and current lack of clarity into what measures it would take to return to normal operations.
Measures are being implemented to resolve the situation at Alunorte, including establishing an internal taskforce to conduct a review of Alunorte and commissioning an independent external review of Alunorte. Hydro has also decided to initiate a NOK 500 million investment to the water treatment system at Alunorte. This aims at increasing the water treatment capacity by 50 percent and improving the robustness of the plant to withstand future extreme weather conditions. So far, no spills or leakages have been detected from Alunorte’s bauxite residue deposits after the extreme rain event.
Regardless of the cause of contamination, Hydro collaborates with local institutions on humanitarian relief to assist communities in Barcarena within health and water. For neighboring communities Vila Nova, Burajuba and Bom Futuro, Hydro commits to working with local partners and investing in proper water supply. Hydro further commits to work with community, civil society and government to clarify the sources of water pollution and other water-related issues in the Barcarena region.
Due to performance challenges in Rolled Products and slower than expected progress of improvements at Albras in Primary Metal, progress on Hydro's "Better" improvement program is behind plan. While Hydro did not reach the 2017 target of NOK 500 million, the delay is not expected to impact the revised 2019 target of NOK 3.0 billion.
In 2017, Hydro completed the acquisition of Sapa, establishing Hydro as the only aluminium company with a global presence that is fully integrated across the value chain and markets.
Global demand growth for primary aluminium in 2017 reflected positive macroeconomic developments. Global supply largely matched demand, resulting in a rather balanced situation. A largely balanced global market is expected to continue into 2018. Responding to continued economic stimulus, demand growth for primary metal in China reached high single digits. Production increases continued to exceed demand growth, resulting in a production surplus in China for 2017. Chinese primary production growth is expected to reduce in 2018, influenced by environmental and supply-side reforms resulting in cutbacks of illegal capacity. This is in line with directions given by the Chinese government in 2017, closely controlling capacity expansions.
Hydro’s safety performance deteriorated in 2017, and we experienced two fatal accidents. The company's TRI rate increased from 2.6 in 2016 to 2.9 in 2017 and did not meet the 2017 target of 2.4. The addition of Extruded Solutions from October 2, 2017, did not have a significant impact as they recorded similar accident rates for 2017.
Total recordable injuries per million hours worked
Annual report 2017
Annual report 2017
Annual report 2017