Hydro Seeks Improved Operations and Cost Synergies in Jamaican Alumina-deal
May 25 2004 - 11:56AM
PR Newswire (US)
Hydro Seeks Improved Operations and Cost Synergies in Jamaican
Alumina-deal OSLO, Norway, May 25 /PRNewswire-FirstCall/ -- Hydro
has today decided to exercise its right to acquire a 65 per cent
interest in the Jamaican alumina refinery Alpart and sell this
interest on to Switzerland based Glencore AG in a deal that will
enhance value creation through improved operations and cost
synergies. As a part of its chapter 11 reorganisation, Kaiser has
entered into an agreement to sell its 65 per cent interest in
Alpart to the Russian company RUSAL. According to the Alpart
Partnership agreement, Hydro has the right of first refusal on this
transaction. Hydro has today decided to exercise this right.
Simultaneously Hydro has agreed to sell this interest on to
Glencore on identical terms and conditions. This transaction will
not generate any accounting gain or loss for Hydro. Hydro has held
35 per cent of Alpart since the late 1980's, and Hydro's annual
off-take is approximately 550,000 tonnes of alumina. In terms of
the agreement with Glencore, Alpart will change from being operated
by a managing partner, to having an independent management. This
will enhance management focus and contribute to strengthen the
recent positive trends in Alpart. Both owners will be active
participants in the Board of Directors. Furthermore the agreement
contemplates an optimisation of bauxite reserves between Alpart and
Windalco, an alumina refining company in Jamaica, 93 per cent owned
by Glencore. The balance, seven per cent, is held by the Government
of Jamaica. Hydro and Glencore have also entered into a Memorandum
of Understanding, committing the parties to explore the possibility
of a closer cooperation and utilisation of synergies between Alpart
and Windalco. Windalco has an annual production of approximately
1.25 million tonnes of alumina. Any optimisation of bauxite mining
activities, as well as the changes in ownership in Alpart, will be
subject to approval by the Jamaican government. "Hydro believes the
agreement with Glencore holds a strong industrial logic that will
create value for the companies involved and enhance the position of
the Jamaican bauxite and alumina industry," says Jon-Harald Nilsen,
Executive Vice President of Hydro and head of the company's
aluminium operations. Alumina is the key raw material for the
production of primary aluminium. In addition to Alpart, Hydro holds
a 34 per cent interest in the Brazilian alumina refinery Alunorte
which after the completion of the ongoing expansion will give Hydro
the right to an off-take of approximately 1.4 million tonnes of
alumina. Hydro last year had a production of 1,470,000 tonnes of
primary aluminium in its seven fully owned and five part owned
plants in Europe, Australia and Canada. Approximately. 3
mill.tonnes of alumina is needed for the production of this metal
volume. The primary production volume will over the next few years
increase due to completion of expansion projects in Norway and
Canada. Hydro is a leading energy and aluminium supplier operating
in more than 40 countries. Hydro is one of the worlds leading
producers of offshore oil and gas, the third largest aluminium
supplier globally. Hydro's 36,000 employees create value developing
solutions enabling our customers -- and local communities worldwide
-- to become more viable. Glencore AG is a subsidiary of Glencore
International AG, a privately- owned company organised under the
laws of Switzerland. Glencore is a leading, diversified natural
resources group with worldwide activity in the mining, smelting,
refining, processing and trading of metals and minerals, energy
products and agricultural products. These activities are supported
by strategic investments in industrial assets relating to
Glencore's core physical marketing business. Headquartered in Baar,
Switzerland, Glencore employs over 1,700 people worldwide in 60
offices in over 50 countries. In its industrial operations,
Glencore employs 46,000 people in 18 plants in 11 countries,
including Windalco in Jamaica, Aughinish alumina refinery in
Ireland, and Eurallumina alumina refinery in Italy. Certain
statements in this press release are or may constitute "forward-
looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements that are not in the
nature of historical facts may be deemed to be forward-looking
statements and may contain identifying words such as "believes,"
"anticipates," "plans," "expects" and similar expressions. These
forward-looking statements are based on Hydro's current
expectations, assumptions, estimates and projections about the
company and the industries in which it engages in business. All
forward-looking statements involve risks and uncertainties. For a
detailed description of factors that could cause Hydro's actual
results to differ materially from those expressed in or implied by
such statements, please refer to its annual report on Form 20-F for
the year-ended December 31, 2002 and subsequent filings on Form 6-K
with the U.S. Securities and Exchange Commission. With respect to
each non-GAAP financial measure Hydro uses in connection with its
financial reporting and other public communications, Hydro provides
a presentation of what Hydro believes to be the most directly
comparable GAAP financial measure and a reconciliation between the
non-GAAP and GAAP measures. This information can be found in
Hydro's earnings press releases, quarterly reports and other
written communications, all of which have been posted to Hydro's
website (http://www.hydro.com/). Contact Thomas Knutzen Hydro
Aluminium Telephone +47 22539115 Drammensveien 264 Vaekero Cellular
+47 90612359 N-0246 OSLO E-mail Norway Phone: (+47) 22 53 81 00
Fax: (+47) 22 53 79 30 http://www.hydro.com/ DATASOURCE: Norsk
Hydro CONTACT: Thomas Knutzen, Hydro Aluminium, +47-22539115, or
Cellular, +47-90612359, ; Norsk Hydro, +47-22-53-81-00, or Fax,
+47-22-53-79-30 Web site: http://www.hydro.com/
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