“The Karmøy pilot will be the largest investment in mainland industry in a decade, beyond oil and gas. The decision thus demonstrates our confidence in the Norwegian technology cluster and Norway’s future position in sustainable production of aluminium in a global climate perspective,” says Hydro’s President and CEO, Svein Richard Brandtzæg.

Through the technology pilot in Karmøy, Hydro aims to industrialize the world’s most energy and climate efficient technology for aluminium production, with an ambition to reduce energy consumption by 15% per kilo aluminium produced compared to the world average, and with the lowest CO2 footprint in the world.

The pilot plant is designed with an annual production capacity of approximately 75,000 tonnes, with a possible start-up in the second half of 2017, at the earliest. Project costs are estimated at NOK 3.9 billion, including NOK 1.5 billion in support from Enova. EFTA’s surveillance authority, ESA, has recently approved this support.

"An important condition for the project has now been confirmed, and we will thus continue our work to mature the project towards a final building decision. Our world leading technology organization is working at full speed to prepare for construction start, which we hope to clarify early next year. The most important thing remaining is to find an overall power solution for the pilot plant," Brandtzæg says.

An overall power solution includes new competitive power contracts for the pilot plant, and a clarification from Norwegian authorities regarding the industrial ownership of power within the current consolidation model, which will enable withdrawal of power instead of financial dividends. During the last week, Hydro has entered into a new power contract with Lyse Produksjon AS of 330 GWh annually in the period 2031-2040, which covers a third of the plant’s power needs in this period. Hydro is working actively to cover the remaining power needs for the pilot towards a final building decision.

Hydro has previously received assurance from Statnett that it will be possible to extend the power grid in the area in step with an industrial development in Karmøy.

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.

No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Innovation Norway provided NOK 22.5 million in support to Hydro’s technology development programme for the pilot, which made it possible to maintain momentum until the investment support from Enova was secured.