Norsk Hydro contemplates building new aluminium plant in Norway

Norwegian aluminium maker Norsk Hydro said on Thursday it may build a new test plant at its site in Karmoey in western Norway with a capacity of 70,000 tonnes per year.

If built, the firm plans to test new, more energy-efficient production technology at the plant.

It said conditions for producing the metal in hydropower-rich Norway, where Hydro has four fully-owned plants and one part-owned, had improved in recent years, in part thanks to a new government CO2 cost compensation scheme.

The investment would not take away Hydro's focus from its flagship installation in Qatar, the joint-venture Qatalum plant, where it has an option to expand capacity, Hydro spokeswoman Inger Sethov said.

"This doesn't change our strategy, our foreign assets will be as important as our Norwegian ones," Sethov said. "The change is that we see there will be a power oversupply in the Nordic region in the future."

Aluminium production depends heavily on power and the new technology Hydro aims to test has a potential for "substantially" reducing power consumption as well as CO2 emissions, Sethov said.

The plans are still at an early stage and there is no estimate for how much it would cost, she added. The investment would depend on major support from state energy agency Enova, and no investment decision has been made yet.

If built, Hydro could tap the first metal at the plant in 2017 at the earliest, Sethov said.

"At the moment, there is overproduction and inventories of aluminium are large. Any investment in new capacity will obviously be an element in evaluating of profitability and market balance," Hydro's Chief Executive Richard Brandtaeg said in a statement.