Hydro Annual Report 2011b

petitive supply of standard aluminium ingots for our global
production system, and provides operational risk management
through LME hedging activities.
• Rolled Products consists of our rolling mills, which are
located primarily in Europe. Rolled Products also includes
our 50 percent interest in the AluNorf rolling mill in
Germany.
• Extruded Products consists of our extrusion-based business,
located mainly in Europe and the Americas, which is focused
on delivering solutions to the building and construction,
transportation, and engineered products industries.
Extruded Products also includes our aluminium building
systems and precision tubing activities.
• Energy is responsible for managing Hydro’s captive hydropower
production, external power sourcing arrangements to
the aluminium business and identifying and developing
competitive energy solutions for Hydro worldwide.
History and development
Norsk Hydro ASA was organized under Norwegian law as a
public company in 1905 to utilize Norway’s large hydroelectric
energy resources for the industrial production of nitrogen
fertilizers. Our history, spanning many industries and several
continents, has been underpinned by three distinctive
strengths: the spirit of entrepreneurship, a dedication to innovation
and the careful nurturing of our talents and values.
An emphasis on industrial research and new business alliances
enabled us to expand our fertilizer operations following the
first World War. In 1928-29, improved fertilizer technology
was introduced at Hydro’s first industrial sites in Telemark in
Southern Norway. Advancements in electricity transmission
technology paved the way for the construction of a new fertilizer
plant at Herøya, close to Porsgrunn. This provided us
with easier access to important raw materials and ideal harbor
conditions.
An era of diversification
In the three decades following the Second World War, Hydro
rebuilt itself into an industrial conglomerate, expanding into a
number of new businesses in Norway. In 1951, we began producing
magnesium metal and polyvinyl chloride at Porsgrunn.
We constructed the Røldal-Suldal hydroelectric power plant to
provide energy for our operations at Karmøy, and opened an
aluminium reduction and semi-fabricating plant there in 1967.
In order to secure stable access to raw materials and energy for
our fertilizer operations, we investigated opportunities to participate
in oil and gas production in the middle of the 1960s.
After several years, Hydro and its partners discovered oil and
gas in the Ekofisk and frigg fields on the Norwegian Continental
Shelf. Our experience in the chemical process industry
and abundant natural gas liquids resources provided the
BusIness DesCrIptIon
History and development
23
foundation for investments in the petrochemicals industry in
Norway. In 1978, we commenced production of ethylene and
vinyl chloride monomer.
During this time, we also pioneered new labor relations practices
aimed at democratizing the workplace and increasing the
cooperation between management and employees, leading to a
spirit of collaboration which continues to define the company
today.
Decades of global expansion
Hydro expanded globally in the 1980s. We developed our fertilizer
operations into one of the leading suppliers in Europe.
We also entered a new era as an oil company, becoming operator
of the Oseberg offshore oil field. Research continued to
drive our development as we introduced new technologies for
deep-water oil and gas production and horizontal drilling. In
1986-87, we acquired the Norwegian state-owned aluminium
company, Årdal og Sunndal verk, and several European aluminium
extrusion plants from Alcan and Alcoa, establishing
Hydro Aluminium as a major business within Hydro and an
important player in the European aluminium industry.
More recently, we have developed our businesses further
through substantial acquisitions, including Saga Petroleum in
1999, vAW Aluminium in 2002 and Spinnaker Exploration
Company in 2005. We also invested significant capital towards
the expansion of existing alumina and aluminium production
facilities, including our fully owned Sunndal primary metal
plant in Norway the part-owned Alouette smelter in Canada
and three substantial expansions of the Alunorte alumina
refinery in Brazil. This was followed by the decision to participate
in the construction of the Qatalum smelter in Qatar. In
2007, Hydro completed the first phase of the giant Ormen
Lange gas field, considered one of the largest industrial projects
ever undertaken in Norway. A significant portion of the
expansion of these businesses was financed through the sale of
non-core operations.
Throughout this period, we have continued to focus on
improving working conditions, and have developed principles
and directives underlying our global commitment to a viable
society.
Restructuring and concentration
The first decade of the new millennium also encompassed a
major restructuring of our downstream operations, the closure
of higher cost smelters, and ultimately, the transformation of
Hydro into a focused aluminium and energy company. In
2004, we demerged our fertilizer business through the creation
of yara, and we merged Hydro’s petroleum activities with Statoil
to form StatoilHydro in 2007, now called Statoil. We
completed the divestment of our Polymers activities in 2008
and our automotive structures business in 2009.