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Norsk Hydro Second Quarter 2011

Underlying EBIT for bauxite and alumina rose during the quarter due to the effect of the acquired bauxite and alumina activities from Vale and improved production performance. Underlying results for primary metal also improved compared to the first quarter, mainly due to higher realized aluminium prices and sales volumes, partly offset by increased raw material costs. Ramp-up of production at Qatalum, the 50/50 joint venture between Qatar Petroleum and Hydro, continued during the quarter and is expected to reach full capacity by the end of the third quarter. February 2011 Hydro completed the take-over of the majority of Vale’s aluminium business in Brazil. In addition to the assets acquired from Vale, Hydro’s bauxite and alumina activities previously included in the primary metal segment have been transferred to the new bauxite and alumina segment. Primary metal includes the Albras aluminium plant in addition to Hydro’s pre-transaction primary aluminium production activities. Global demand for alumina outside China was slightly higher in the second quarter compared to the first quarter mainly due to ramp-up of new and restart of a limited amount of curtailed primary aluminium production capacity. Annualized alumina production outside China amounted to about 53 Mt. Alumina demand and production in China continued to increase in the second quarter compared to the previous quarter, mainly due to commissioning of new primary aluminium production and alumina projects. Platts alumina spot prices have been trading around USD 400 per t during the quarter, representing a range of roughly 15­­–15,5 % of LME. Demand and supply of primary aluminium in the world outside China increased slightly during the second quarter compared to the first quarter, amounting to an annualized consumption and production of 26,2 Mt and 26,5 Mt respectively. The company estimates of demand growth of approximately 7 % for 2011. Consumption in China increased significantly in the first half of 2011. In the second quarter annualized consumption amounted to 20,2 Mt. The Chinese primary aluminium market is expected to be largely balanced for 2011. June 2011, Hydro started up 15 kt of curtailed production capacity at its Sunndal smelter. Depending on continued satisfactory market conditions, Hydro’s ambition is to start up the remaining curtailed production at the Sunndal smelter by the end of 2011 representing 85 kt of annual production capacity. The timing for a full restart will be decided later (Source: Reuters 07/2011).


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