Norsk Hydro Targets Increase In Capacity Utilization

Norwegian aluminum producer Norsk Hydro ASA (NHY.OS) said Thursday that following the acquisition of Vale S.A.'s (VALE) bauxite and alumina assets in Brazil, its main short term ambition is to increase capacity utilization in the mining operations in Paragominas and in the Alunorte alumina refinery.

Executive Vice President Johnny Undeli says "The first step is to increase production in Alunorte, the world's largest alumina refinery, from 5.8 million metric tons in 2010 to 6.3 million mt, which is the volume the plant was designed for."

Undeli, head of Hydro's Bauxite & Alumina business area, adds "In Paragominas, one of the world's largest bauxite mines, we see an urgent need for increasing the production from 7.5 million mt in 2010 to 10 million mt."

Hydro would like to see a shift in the bauxite and alumina pricing model. Rather than the current model, which more or less follows the aluminium price on the London Metal Exchange (LME), Undeli says Hydro would prefer a model which mixes LME, index pricing and, to a larger degree, the costs in the bauxite and alumina value chain.