Norsk Hydro’s CEO keen to implement a long-term financial strategy in Aluminium business

The aluminium industry has moreover well performed in terms of sustainability. It’s amazing to know that 75% of all the aluminium ever produced is still in use today, but demand for the metal is growing at a rapid pace those mining projects continues to be an important source of the commodity. The global demand for aluminium is set to expand by a compound annual growth rate of 4.25% between 2019 and 2025.

The global demand for aluminium cannot be satisfied by recycled aluminium alone, a great deal of environmental responsibility still resides with mining firms producing this valuable commodity. Norsk Hydro, one of the largest employs 35,000 people across 40 countries and is present across all continents.

Hilde Merete Aasheim, CEO, Norsk Hydro, apprehends the direction the industry is travelling towards and wants Hydro to lead the path. At the identical time, the difficulty to face unfavourable market conditions will be a great task.

The trade tensions across the globe have depressed demand for new commodities; this is creating pressure on producers to favour short-term financial goals over long-term environmental ones. But with Aasheim at the helm, this is unlikely to be the case at Hydro.

Aasheim’s with many years of experience may not have quite prepared her for recent geopolitical events and the impact that they would have on the aluminium trade.

Dmitry Glushakov, Head of Metals and Mining Research at VTB Capital said: “Aluminium was the worst-performing base metal in 2019, being down 6% year-to-date.”

Dmitry also added: “This was driven by structural cost reduction – Chinese alumina and thermal coal prices were down 30 to 35% year-to-date and drove down aluminium costs. The lower aluminium price has already affected high-cost Chinese output (down three per cent year-on-year), while some 15% of ex-China output is loss-making at the current aluminium price.”

Last year’s price woes were partly a result of the ongoing trade tensions between China and the US, which continue to impact global demand. Whenever there was the suggestion of a deal being struck between the two nations, the value of base metals made a tentative recovery.

The entire aluminium’s struggles are not the fault of antagonism between Washington and Beijing; the automotive sector, which is responsible for somewhere between 30 and 40% of aluminium’s global demand, is also experiencing a downturn. These are the difficult market conditions that Aasheim has had to contend with.