Engineering a lighter, brighter future

Among multiple highlights in 2017, the addition to the family was a defining moment. Although our renewed and extended organization embraced the new chapter of Hydro, and got off to a flying start of 2018, the Alunorte situation in Brazil shows us that we have lots of unfinished work to do also on the more basic level.

Svein Richard Brandtzæg

The Alunorte situation demands the best of us and will be a touchstone of our ability to put firm action behind our words and aspirations. Resolving the Alunorte situation in a way that meets our highest standards and satisfy our stakeholders, is also a precondition to maintain the momentum of the rest of Hydro.

Stronger together

With Extruded Solutions onboard, expanding our customer interfaces and sharpening our engineering spirit, Hydro’s aluminium operations now range from mining to recycling, and every step in between, making Hydro the truly global 360⁰ aluminium company.

Going forward together with 35,000 skillful and dedicated colleagues at 150 locations in 40 countries, is inspiring. As a complete aluminium family we can put our metal and material to good use in even more applications, light-weighting and energizing the world through smart solutions.

We are getting closer to the end-users. We are more often getting into the room with the product designers. We can learn from the agility of our new family members. And our innovators and entrepreneurs have a momentum to explore and take advantage of all the undiscovered opportunities in the space between extruded and rolled aluminium. I can’t wait for it to result in some new and exciting shapes.

Green Shift

The advances, operationally, financially and technologically, convince me that Better, Bigger and Greener are not only great guidelines individually. Measures to support one of them may often also contribute to the progress of the others.

Take for instance the Karmøy Technology Pilot. Now we are ramping-up cell after cell to finalize the plant aiming to set a new industry standard for low specific energy consumption and low specific greenhouse gas emissions. By implementing artificial intelligence as a tool to stabilizing and optimizing primary processes, we are turning Industry 4.0 from words into action, taking a real step into the “Green Shift”, adapting industrial processes to the requirements of the low-carbon economy.

In addition, ramping up the Automotive Line 3 in Grevenbroich, Germany, together with smart solutions and partnerships within Extruded Solutions, contributes to light-weighting the European car fleet.

Finalizing the ramp-up of the UBC Line (recycling of used beverage cans) in Germany, contributes to realizing the circular economy. Implementing the most advanced scrap sorting technology is both increasing recycling and reducing metal cost, as it enables us to dig deeper into the scrap pile.

It also enables us to offer the brand-new Hydro 75R product, guaranteeing at least 75 percent recycled content, all from post-consumer scrap. Similarly, we now offer the certified Hydro 4.0 product, with a carbon footprint of less than 4 kg CO2 per kilo aluminium, counting every step from mining and energy to the casthouse, transportation included.

These initiatives, investments and measures are part of Hydro’s Better, Bigger, Greener aspiration, and will contribute both to the climate and our financial bottom-line. They reflect our firm belief in aluminium as a metal, material and part of the solution – and that business targets and climate targets may very well go hand in hand.

The offer to acquire the Icelandic hydropower-based primary aluminium plant ISAL and the decision to upgrade and restart the second line at Husnes, will contribute commercially as well as to Greener, adding more hydropower-based primary aluminium to our portfolio.

Responsibility

By being a 360⁰ aluminium company, fully integrated along the aluminium value-chain, Hydro is in a unique position to control every step of production, and be responsible – for the land, water and forests, for our employees and the communities we engage with, for the energy use and emissions in our processes, and for bringing end products back into the loop to be used over again.

We have a lot going. At the same time, the situation emerging in February and March after the extreme rainfalls in the Barcarena region where our alumina refinery Alunorte is situated, illustrates very clearly that adapting to climate changes and having high ambitions for social responsibility, community dialogue and human rights are not issues that are resolved once and forever. They are issues that demand ever more resolve, and it is crucial to always stay ahead in order not to be caught off guard by unforeseen incidents.

These days we are experiencing first-hand the validity of our own claim; that to expose oneself to a crisis is a far heavier burden on a company than to invest the necessary time, cost and efforts to make sure to do things right in advance.

At the time of writing this letter we still await the reports we have commissioned about what actually happened and recommendations for how to improve. But we have already established that we must strengthen our emergency preparedness for future extreme-weather. And I have apologized to the local community for not having been open and transparent enough, and for insufficient dialogue.

I truly believe that the learnings will expedite firm improvements in our way of performing social responsibility – because we want to, but also because we have to. We have not done enough to demonstrate that we are on the same side as the communities we are a part of, in order to contribute to sustainable growth and development to our mutual benefit. We should have been better prepared, as this is incorporated in the history and culture of our company. Now is the time to show rather than tell.

Also regarding safety, we need to make additional efforts to improve performance, as we cannot accept that the positive trend over the years seem to flatten out and give us setbacks. Two fatalities in 2017 show that we must intensify not only our efforts but also our abilities – at the leadership levels as well as on the shop floor where high risk incidents may have fatal consequences.

As part of taking responsibility, and to contribute to sustainable development, Hydro is a signatory to the UN Global Compact and the Task force on Climate-related Financial Disclosure (TCFD), participates in the World Business Council for Sustainable Development and the International Council on Mining and Metals (ICMM), and is included on the Dow Jones Sustainability Indices, the UN Global Compact 100 and the FTSE4Good list.

Brighter

I would like to praise our 35,000 colleagues for their loyalty and determination, and thank them for their ability and willingness to perform extraordinarily when the situation demands it.

Global megatrends support the future of aluminium as metal and material and as a building block of modern societies. Our 360⁰ value-chain and our innovative powers are enablers for us as a company to be a forerunner in our industry.

At the same time, our belief in continuous improvement proves more crucial than ever, in operations, of course, but most certainly within corporate social responsibility as well.


Updated: February 22, 2018