Norsk Hydro Provides US$200M Sustainability Linked Loan for Alunorte Natural Gas Switch – Aluminum Insider


Norwegian aluminum producer Norsk Hydro ASA has secured a US$200 million sustainability-linked loan to fund the company’s fuel shift from heavy oil to natural gas, a more sustainable source that will help it achieve its greenhouse gas reduction targets.

The project will see the Alunorte alumina refinery in Brazil undergo the switch, which is expected to reduce CO2 site emissions of 700,000 metric tons per year.

Pål Kildemo, executive vice president and chief financial officer of Norsk Hydro ASA, expanded on the memo in a related press release.

“Alunorte’s fuel switching project is one of the main catalysts for realizing Hydro’s sustainability ambitions of reducing greenhouse gas emissions by 30% by 2030. The close relationship with participating banks allowed us to create a solution that combines profitability and sustainability.

The note is a seven-year fixed-rate loan, and half a dozen financial institutions participated in its manufacture, including BNPP, DNB, Citi, Crédit Agricole, ING and Itau. The price of the rating will be tied to the extent to which Alunorte’s carbon emissions decrease as a result of the fuel switch.

This loan and exchange with a sustainability bond instrument is a first not only for Alunorte, but also for the Brazilian market as a whole.

“Hydro has a proven track record of using green and sustainable loans to finance operations, and our sustainable finance framework is directly linked to our medium to long-term sustainability strategy, providing an advantage in terms of access and cost of capital,” continued Kildémo.

Norsk Hydro, which was founded in 1905, financed by the Swedish Wallenberg family and French banks, began life as Norsk hydro-elektrisk Kvælstofaktieselskab (literally, “limited Norwegian hydroelectric nitrogen”) by Sam Eyde. The Norwegian government owns about 40% of the company at present. Norsk Hydro is one of the largest aluminum companies in the world, with plants in Rjukan, Raufoss, Vennesla, Karmøy, Høyanger, Årdal, Sunndalsøra and Holmestrand. Norsk also has several factories abroad.


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