Hydro and NKT sign €1bn aluminium wire rod agreement

Aluminium and renewable energy company Hydro and power cable solutions provider NKT have signed a long-term agreement on aluminium wire rod for power cables.

The agreement guarantees supply of low-carbon aluminium from Hydro as NKT ramps up production to meet the growing market demand for medium and high voltage power cable solutions in Europe.

The expansion will allow Hydro to secure a stable supply of low-carbon aluminium wire rod to NKT from 2026 through 2033, with a total committed volume estimated at 274,000 tonnes with an option for additional volumes.

The total quantity of aluminium covered by the agreement would be able to make medium-voltage cables equivalent to nine times around the world or all the way to the moon, which is approximately 363,000km away.

The contract has an estimated value of approximately €1 billion ($1.1 billion), depending on the quantity and future metal prices. NKT and Hydro have been partners for more than 40 years and have an existing contract for 2025.

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The agreement secures NKT access to Hydro’s REDUXA 4.0 primary aluminium, produced in Norway with renewable energy. It has a documented carbon footprint of 4kg CO2e per kilo aluminium or less, about a quarter of the world industry average.

According to the partners in a release, aluminium’s high conductivity and flexibility, combined with its light weight and lower cost compared to other metals typically used in power cables, makes it an optimal solution for developing the renewable energy grid.

Hydro aims to reduce the footprint further with NKT having first rights to primary aluminium wire rod with a carbon footprint well below 4 kg CO2e per kilo aluminium.

Upgrading Europe’s outdated grid infrastructure is a key part of the European Commission’s plan to develop a resilient, interconnected and secure energy system fit for the future.

Commenting in a release was Eivind Kallevik, President and CEO of Hydro: “It is with a sense of urgency that Europe is now mobilising to reduce the dependency on fossil fuel imports, introduce more homegrown, renewable power, and ensure security of supply of critical raw materials.

“Together with NKT, we are building a supply chain to provide responsibly sourced aluminium for the infrastructure makeover that Europe needs to bring down energy prices, accelerate the energy transition and boost European competitiveness.”

Aluminium has been defined by the EU as a critical material with Norway being a key provider, covering 40% of primary aluminium production in Europe.

Said Claes Westerlind, President and CEO of NKT: “Given the current geopolitical landscape, securing reliable, local supply chains is increasingly important.

“This long-term supply agreement with Hydro not only guarantees a stable supply of low-carbon aluminium, but it also reinforces our position as a sustainability leader in the power cable industry. It supports our strategy to continuously improve the carbon intensity of our cables, thereby supporting both our own short and long-term targets and our customers’ decarbonization ambitions.”

This is the first new contract since Hydro announced a NOK 1.65 billion investment in a new wire rod casthouse in Karmøy, Norway to meet the growing demand from Europe’s energy sector.

Hydro and NKT entered a strategic partnership in March 2024 to develop low-carbon solutions for Europe’s energy sector.