Hydro has made a formal build decision for the planned full-scale technology pilot at Karmøy, Norway, aiming to verify the world's most climate and energy efficient production of primary aluminium.
Total costs are estimated at NOK 4.3 billion, consisting of net project costs of NOK 2.7 billion and around NOK 1.6 billion in support from Enova.
First metal from the technology pilot is expected during the second half of 2017.
"After several successful improvement programs, the next steps in our efforts to further strengthen our cost curve position will increasingly rely on our ability to advance our industry-leading position in technology and innovation," says Hydro president and CEO Svein Richard Brandtzæg. "The Karmøy technology pilot will play a key role in realising this ambition, ensuring that the Norwegian technology cluster remains the global leader in sustainable aluminium production."
With the pilot project, Hydro aims to industrialise the world's most climate and energy efficient aluminium electrolysis technology. The ambition is to reduce energy consumption by around 15 percent per kilo aluminium produced compared to the world average, with the lowest CO2 footprint in the world. In addition, the implementation of technology spin-offs to existing production lines are expected to improve productivity in the current primary aluminium portfolio, contributing to Hydro's capacity creep ambition of an additional 200,000 tonnes per year by 2025.
The technology pilot is designed with an annual production capacity of approximately 75,000 tonnes, consisting of 48 cells with 12.3 kWh/Kg HAL4e technology and 12 cells with 11.5-11.8 kWh/kg HAL4e Ultra technology. Total costs are estimated at NOK 4.3 billion, consisting of net project costs of NOK 2.7 billion and around NOK 1.6 billion in support from Enova. The project costs are adjusted for inflation and currency developments since the investment decision was announced in February 2015.
An overall power solution in Norway includes new competitive power contracts for Hydro's existing portfolio and the Karmøy pilot, and a pending decision from Norwegian authorities regarding industrial ownership of power within the current consolidation model. This would enable private minority shareholders in power production companies to take out dividends as physical power offtake, rather than being limited to just receiving financial dividends.
Hydro's investment in the Karmøy technology pilot is the largest, single investment in Norwegian mainland industry outside the oil and gas sector since Hydro expanded the Sunndal aluminium plant in 2002-2004.