Norway's Hydro to Exit Battery and Green Hydrogen Ventures

Norsk Hydro, the prominent Norwegian aluminum producer, announced on Wednesday that it will no longer invest in its battery and green hydrogen businesses, a decision driven by the current challenging market conditions, according to the several media reports. The company has made the strategic move to phase out these operations as part of its ongoing effort to refocus its business on green aluminum. As part of this new direction, Hydro has launched an ambitious cost-cutting initiative that aims to save 6.5 billion Norwegian crowns (around $582 million) by 2030. The savings will be used to strengthen and enhance the company’s aluminum recycling and extrusion operations, key areas it intends to focus on moving forward.

In a statement released ahead of its investor day, Hydro emphasized that "battery materials and green hydrogen will no longer be strategic growth areas" for the company, and that no further capital will be allocated to these sectors. This shift marks a significant departure from its previous efforts to expand into emerging markets such as battery production and green hydrogen, which were seen as key components of its long-term growth strategy. Instead, Hydro will focus its resources on solidifying its position in the aluminum market, particularly in recycling and extrusion, as it looks toward a sustainable future.

Despite pulling out of the battery and green hydrogen markets, Hydro will continue to support its battery recycling venture, Hydrovolt. This business, which Hydro co-founded with Swedish company Northvolt in 2020, will remain under Hydro’s industrial ownership. Hydro has stated that it will maintain close ties with Hydrovolt, especially in relation to its recycling business and strategic partners. Just last month, Hydro revealed that it is now the sole financier of Hydrovolt, after Northvolt’s financial troubles led it to file for U.S. Chapter 11 bankruptcy protection. Northvolt, once viewed as a frontrunner in Europe’s electric vehicle (EV) battery industry, failed to secure additional funding from major investors like Volkswagen and Goldman Sachs, leading to its financial collapse.

As part of its restructuring, Hydro’s cost-cutting program will focus on operational efficiency, improving procurement processes, and accelerating digital transformation across its business. The company hopes these measures will help mitigate the impact of ongoing market challenges. Hydro also reiterated its 2030 adjusted core profit target, although it has adjusted the forecast to the lower end of the 5-8 billion Norwegian crown range, due to continued difficulties in the market.

Hydro has been facing several external challenges that have affected its operations. Aluminum volumes in Europe have been declining, largely due to a downturn in electric vehicle production. This decline was partly driven by Germany’s unexpected decision to end subsidies for EV production, which had been a major incentive for manufacturers. Additionally, looming European Union tariffs on aluminum imports from China have added further pressure to the market. These factors have combined to create a difficult environment for the company, but Hydro remains focused on strengthening its core business areas to navigate through these challenges.

This strategic pivot marks a significant shift for Hydro as it doubles down on its commitment to sustainability through green aluminum production while navigating the turbulent landscape of global market dynamics.