Hydro signs billion-euro contract to supply NKT low-carbon aluminum for EU grid

Hydro, a Norwegian company, announced on Tuesday that it had signed a contract to supply NKT in Denmark with low-carbon aluminum wire rod for the production and upgrade of Europe's grid infrastructure.

The European Union published in 2023 a plan to improve the efficiency of their electricity grids, and to roll out upgrades rapidly to help facilitate the energy shift.

Eivind KALLEVIK, CEO of Hydro, said, "Europe's transition to energy is all about renewable power and long-distance transport."

Hydro announced last month that it would invest 1.65 billion crowns ($159.3 millions) in a new facility to increase its aluminum capacity at its Karmoy smelter, located in Norway. The plant will start producing in 2028.

Hydro stated that the expansion would allow it to provide a steady supply of low carbon aluminium wire rods to NKT between 2026 and 2033. The total volume committed is estimated to be 274,000 metric tonnes. The agreement includes the option to purchase additional volumes.

Hydro estimated that the contract with NKT is worth around 1 billion euro ($1.14 billion). NKT and Hydro already have a contract in place for 2025.

Hydro's wire is made of aluminum produced in Norway. This aluminium emits less than 4 metric tons per ton, or about 25% of the average for the industry, because it is made using renewable energy.

Kallevik stated that Europe is mobilizing "with urgency" in order to reduce dependency on fossil fuels imports, increase the amount of renewable energy produced at home, and secure critical raw material supply.

The EU classifies aluminium as a critical raw material. Norway produces 40% of the primary European production.

It is used to replace copper in grids where weight and cost are important, such as in overhead transmission lines or underground cables. The metal is less conductive than copper but lighter and cheaper.

(source: Reuters)