Hydro signs billion-euro deal to supply NKT with low-carbon aluminium for EU grid

By Pratima Desai

LONDON (Reuters) -Hydro has signed a long-term deal to supply low-carbon aluminium wire rod to Denmark's NKT for the production of power cable to upgrade Europe's grid infrastructure, the Norwegian company said on Tuesday.

The European Union published a plan in 2023 to boost the efficiency of its electricity grids and roll out upgrades quickly to facilitate the energy transition. 

"Europe's energy transition is about one thing, more renewable power production, and the power produced must be transported over long distances," said Hydro's CEO Eivind Kallevik. 

Last month Hydro announced a 1.65 billion crown ($159.3 million) investment in a new facility at its smelter in Karmøy, Norway to expand its aluminium capacity. The plant is expected to start production in 2028. 

Hydro said the expansion will allow it to ensure a stable supply of low-carbon aluminium wire rod to NKT from 2026 through 2033, with a total committed volume estimated at 274,000 metric tons. The deal includes an option for additional volumes. 

The contract with NKT has an estimated value of around 1 billion euros ($1.14 billion), Hydro said. NKT and Hydro have an existing contract for 2025.

Hydro's wire rod is made from aluminium produced in Norway, which emits less than four metric tons of carbon per ton of aluminium, about a quarter of the world industry average, as it is made with renewable energy.

Kallevik said Europe was mobilising "with a sense of urgency" to cut dependency on fossil fuel imports, introduce more homegrown renewable power, and ensure security of critical raw materials supply.

Aluminium is classified by the EU as a critical material, and Norway accounts for 40% of its primary European output.

The metal is used as a substitute for copper in power grids when cost and weight matter, in uses including overhead transmission lines and underground cables. It has lower conductivity than copper, but is cheaper and lighter. 

($1 = 0.8789 euros)

($1 = 10.3603 Norwegian crowns)

(Reporting by Pratima Desai; Editing by Jan Harvey)