The roots of Norway-based Norsk Hydro ASA are very much tied to the harnessing of natural resources, including the production of primary aluminum and the creation of hydropower capacity in its home country.
In an era where corporations pay nearly as much attention to their carbon footprints as they do to shareholder returns, the company has paid increasing attention to recycling as one way to prepare itself for a lower carbon emissions future.
By most measures, hydropower (creating electricity for the grid from the force of rushing water) is considered a low-emissions, renewable energy source. According to Hydro, using energy sources such as hydropower to produce aluminum serves as “a good starting point” toward its sustainability goals.
Beyond that, the company identifies an increased emphasis on recycling as another linchpin in its sustainability strategy, including “record-high recycled content of postconsumer scrap” in some of the aluminum it produces.
In North America, Hydro has a considerable presence in the aluminum recycling sector via its ownership of about 20 aluminum extrusion facilities.
Keeping the planet in mind
Among the slogans Norsk Hydro uses are “People, planet, products.” The sustainability page of the company’s website states, “In short, we believe that our future profitability depends on our ability to ensure future sustainability.”
Norsk Hydro was founded more than a century ago by an engineer and scientist with a desire to create hydropower and capture nitrogen stemming from its production to create energy and food security for Norway.
According to Hydro’s website, “A determined [hydropower] engineer and a creative scientist found each other at a dinner party in 1903. With the help of a handful of young engineers, they also found a solution: Together they could bind the nitrogen in the air” to produce fertilizer.
The company entered the primary aluminum sector in 1915, using hydropower as an affordable and readily available energy source. Between the two world wars, Hydro’s energy and aluminum complex in Herøya, Norway, became “Norway’s largest industrial site,” the company says.
In the post-World War II years, Hydro diversified into the production of plastics and magnesium (as well as seafood and candy) and “joined in the exploration for oil in the North Sea,” according to the firm. Success in the North Sea oil fields also helped Hydro to fund the expansion of its aluminum production capacity.
The company says its financial success was accompanied by management and labor cooperation in areas such as the eight-hour workday and the provision of housing and an occupational medicine program in remote areas.
In the 1990s, Hydro began backing away from its conglomerate status, eventually selling off its oil, seafood and candy subsidiaries and even its original fertilizer and chemicals business unit, which became Yara International ASA. The company’s portfolio retained aluminum and energy production.
With its focus on aluminum, Hydro acquired bauxite mining assets in Brazil in 2010 and a primary smelter and refinery there that same year. Yet, in the same decade, it also received and acted upon the message from stakeholders that sustainability was of increasing importance.
One way Hydro did so was by acquiring Sapa Extrusions from that Finland-based company in 2017. Many of those aluminum extrusion facilities, which are located around the world, melt scrap as their feedstock, boosting Hydro’s presence in the scrap market.
Tapping into scrap
As of 2021, Hydro’s Extrusion North America (ENA) business unit operates 13 extrusion plants in the U.S. and two more in Canada. The firm’s Precision Tubing business unit also has one extrusion plant in the U.S. and two in Mexico.
Einar Stabell, a communications manager with Hydro, says six of the ENA extrusion locations in the U.S. and one in Canada have remelt furnaces. Additionally, ENA operates two stand-alone scrap melt shops in the U.S. and one in Canada. “Hydro Aluminum Metals [also] has two remelt operations in the U.S.,” Stabell adds.
The remelt capacity adds up, according to the company, with ENA melting approximately 525,000 tons of aluminum scrap annually in North America. “The resulting extrusion ingot produced in North America is, on average, comprised of 70 percent recycled content,” Stabell says.
Hydro’s ENA activity and those of other business units operating in North America mean “Hydro has more employees in the U.S. than any other Norwegian company,” the firm says.
The ENA business unit has more than 20 locations in the U.S. and produces heat exchange tubing as a predominant end product. Hydro also engages in aluminum casting at 10 U.S. locations and has offices for technical services, aluminum building systems brands and for part of its global Shared Service organization, Stabell says.
Despite the company’s roots in primary aluminum and its bauxite and primary smelting assets, in terms of its global operations, “Currently, more than half of the aluminum we use in our production is recycled,” Hydro says.
In its drive to meet its own sustainability goals—and to meet the goals of its end customers—Hydro also is researching and investing in ways to boost the recycled content in ingots traditionally considered primary aluminum.
The world is watching
As early as 2017, Hydro began offering new aluminum alloys marketed as “certified low-carbon,” with one of the two, initially known as 75R, made from at least 75 percent recycled aluminum.
“Our aim is to make sure we maximize the sustainability benefits of a metal that brings carbon savings in the user phase and can be infinitely recycled with only 5 percent of the original energy needed,” said Hilde Merete Aasheim at that time. (She then served as head of Hydro’s Primary Metal business area and was promoted to president and CEO in 2019.)
In 2020, Aasheim said it was Hydro’s intention to focus on low-carbon aluminum production as well as expanding its portfolio into recycling, renewables and batteries by 2025.
“Our current recycling portfolio is a solid foundation for further growth, and Extruded Solutions is shaping demand through innovative solutions in combination with a strong and diversified asset base,” Aasheim said.
Also in 2020, Hydro referred to its 75R recycled-content ingot product (rebranded as Circal) as “currently one of Hydro’s fastest growing segments.” Circal, along with a primary aluminum called Reduxa made with what it considers to be low-carbon methods, seems to be aimed for low-carbon aluminum trading contracts that are being developed by the London Metal Exchange.
Stabell says Hydro views the prospects for Circal and other recycled-content aluminum products as strategically vital to the aluminum producer’s ability to serve its sustainability-minded customers around the world. “We see a growing demand for low-carbon aluminum, and we believe this trend will continue going forward,” he says. (For a feature on low-carbon aluminum projects in this issue, click here.)
A building block (appropriately enough) for this demand is the green building movement that has property developers, architects and engineers around the world (and their customers and tenants) seeking points on green building scorecards that can be gained with recycled-content materials.
“Hydro has, over the last year, delivered Hydro Circal to more than 100 large building projects,” Stabell says. “The building industry is leading the way in driving demand for greener materials. For Hydro’s part, the projects range from smaller projects to large-scale projects.”
Manufacturers well beyond those serving the construction industry, however, also seem poised to drive demand for “greener” aluminum, according to Hydro.
“We also experience an uptick in demand from the electronic companies and companies delivering products to the end consumer, such as garden tools, furniture and sports and children’s products, where there is a strong focus on greener materials and demand from customers for sustainable products,” Stabell says.
For Hydro, the increased attention to recycling seems to have led to a classic case of “doing well by doing good.”
In the first quarter of 2021, the company posted underlying earnings before interest, taxes, depreciation and amortization of $630 million. That figure is up 36 percent from the $460 million earned in the first quarter of 2020.
“Strong global economic recovery boosted demand for renewable energy, aluminum and aluminum products,” the company states in its first-quarter earnings press release, adding that its Hydro Extrusions business area reported record quarterly results.
Having products that please customers and results that please shareholders mean Norsk Hydro likely will stay on the path spelled out on its website of providing “not just more materials, but more sustainable materials—ethically sourced, produced with low emissions, recyclable and longer-lasting.”