Consolidation to drive aluminium markets

Norsk Hydro ASA (Hydro), the Oslo-based aluminium producer, has reported that it is taking a close interest in the consolidation of the aluminium sector.

It is also observing developments in China, which it believes can indicate future trends in the aluminum markets, particularly in view of forecasts that the country may move from a slightly net importer of aluminum unit, to net exporter, by 2010.

Hydro estimates annual demand growth in the industry at between 4% and 4.5% over the next 10 years and it expects increased demand from China to represent two-thirds of that growth.

Eivind Reiten, the group’s chief executive believes that global aluminum markets will be driven by industry consolidation.

Hydro itself is seeking to expand through both acquisitions and organic growth and will continue to focus on growth through partnerships along the lines of existing agreements with Qatar Petroleum, or CRBD in Brazil.

The group agreed to sell its energy assets in 2006 to focus solely on its aluminum and power business.

Hydro expects to see a substantial increase in power costs, as access to attractive and available power sources becomes limited globally.

However, its current capacity and projects are well covered with hydro power and long-term contracts.