A new sustainability partnership has emerged recently! Hydro, an aluminium and renewable energy-based company, has signed a long-term offtake agreement with NKT, a power cable solution provider of wire rods for power cables. This agreement has been struck for ramping up the production to meet the growing market demand of medium and high voltage power cable solutions in Europe.
Image source: hydro.com
Partnership benefiting both companies
As per the signed agreement, Hydro will supply around 274,000 tonnes of wire rods to NKT, effective from 2026. The deal is valid through 2033, with an option to increase the amount upon request. As of now, the committed volume shall be used to make medium-voltage cables.
The estimated value of the wire rod to be shipped from Hydro to NKT is EUR 1 billion (USD 1.07 billion). However, this figure may vary depending on metal price fluctuations and specific quantity requirements. Both parties have been in alliance since the past 40 years with an existing contract for 2025, under which NKT has an access to Hydro's REDUXA 4.0 primary aluminium which is produced in Norway with renewable energy.
“It is with a sense of urgency that Europe is now mobilizing to reduce the dependency on fossil fuel imports, introduce more homegrown, renewable power, and ensure security of supply of critical raw materials. Together with NKT, we are building a supply chain to provide responsibly sourced aluminium for the infrastructure makeover that Europe needs to bring down energy prices, accelerate the energy transition and boost European competitiveness,” says Eivind Kallevik, President and CEO of Hydro.
Impact on energy transition
In 2023, the European Union had published a plan indicating boosting the efficiency of Europe's electricity grids which shall further aid in quickly upgrading and facilitating the energy transition at focus.
Moreover, this strategic partnership also focuses on reducing 4 tonnes of carbon emission per tonne of aluminium produced. This is significantly possible for both companies to achieve because the aluminium wire rods will be made using renewable energy.
Eivind Kallevik, CEO of Hydro stated, "Europe's energy transition is about one thing, more renewable power production, and the power produced must be transported over long distances. We are excited to work together with NKT to support the development of Europe’s future energy grid with low-carbon materials, ensuring that Europe’s renewable energy is transported to market using low-carbon aluminium transmission cables."
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