Page 1 © Hydro

Hydro’s value chain

April 2011

From bauxite to building systems

Page 2 © Hydro

Our talents

• Building businesses

that matter

• A passion for

social commerce

• Always looking for

commercial solutions

• Making the most of

what’s available

Our Values

• Courage

• Respect

• Cooperation

• Determination

• Foresight

The Hydro Way

Hydro’s Mission

is to create a more

viable society by

developing natural

resources and

products in innovative

and efficient ways

Page 3 © Hydro

(800)

(400)

0

400

800

1 200

1 600

2 000

2 400

2 800

3 200

Hydro underlying EBIT quarterly, NOK million

Resource rich and fully integrated

2008 2009 20102007

• Based in Norway with operations in 40 countries

• 23,000 employees

• Operating revenues

• 2007: NOK 94 billion,

Euro 11.7 billion

• 2008: NOK 89 billion,

Euro 10.8 billion

• 2009: NOK 67 billion,

Euro 7.6 billion

• 2010: NOK 76 billion,

Euro 9.5 billion

• Market capitalization

• End March 2011~NOK 95 billion, Euro 12 billion

6 009 (2 555) 3 3519 930

Page 4 © Hydro

Responsible business is our license to operate

10.3

7.0

6.0

5.4

4.0 4.1 3.93.7

2.9

2002 2003 2004 2005 2006 2007 2008 2009 2010

TRI rate

Safety remains a top priority Commitment to sustainable operations

• Reducing specific energy consumption and climate gas emissions

• Helping our customers reduce their climate footprint

• Responsible restructuring

• Welcoming new colleagues from Vale – drawing on their competence

• Recognized on key indexes

Page 5 © Hydro

Upstream production facilities

Bauxite/alumina

Smelters

Remelters

Page 6 © Hydro

Aluminium downstream worldwide network

Extruded Products

Rolled Products

Page 7 © Hydro

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

Alcoa Chalco Rusal Rio Tinto Hydro afteracquisit ion

ChipingXinfa

Weiqiao BHPBilliton

Vale Hydro East HopeGroup

ChinaPower

Dubal XinfaGroup

YichuanPower

AluminiumBahrain

Century Vedanta

Alumina Aluminium

Today’s aluminium industry position

Source: CRU

Production capacity for 2010 in aluminium equivalents, million metric tons per year

Page 8 © Hydro

1Hydro’s value chain

Page 9 © Hydro

Hydro’s value chain

Bauxite Alumina EnergyPrimary

aluminiumCasting Products

Rolling

Extrusion

Page 10 © Hydro

Bauxite & Alumina

Pro forma capacity for end 2010 after Vale transaction. 100% of volumes for assets that are fully consolidated and pro rata volumes for other assets.

• Bauxite capacity 12.2 million metric tons per year

• Expansion potential to 17.2 million metric tons per year

• Alumina capacity 6.9 million metric tons per year

• Expansion potential to 14.5 million metric tons per year

• Long-term sourcing contracts for bauxite and alumina

Page 11 © Hydro

New global Bauxite & Alumina business area

MRN bauxite mine

Paragominas bauxite mine

CAP alumina refinery project

Alunorte alumina refinery

Alpart alumina refinery

Bauxite licensesRefining and mining

competenciesExternal supply

contractsSales contract

portfolio

• 5% ownership

• Signed volume off-take agreement for Vale’s 40% stake

• Capacity 18 million metric tons per year

• 60% ownership, 100% by 2015

• One of the world’s largest bauxite mines

• 2010 production 7.5 million metric tons per year

• Target to reach 10 million metric tons per year

• Possible expansion to 15 million metric tons per year

• Reserve life of several decades

• 81% ownership

• CAP refinery (Phase I) is planned to be in operation in 2015

• Paragominas expansion to be developed in parallel

• Investment estimates and expansion concepts under evaluation

• Full utilization of the existing bauxite pipeline

• 91% ownership

• World’s largest alumina refinery

• 2010 production 5.8 million metric tons per year

• Target to reach 6.3 million metric tons per year

• Bauxite supplied from Paragominas and MRN

• First quartile integrated cash cost position

• 35% ownership

• Capacity 1.65 million metric tons per year of alumina

• Fully integrated with bauxite

• 100% curtailed since mid-2009

Page 12 © Hydro

Hydro long in bauxite and alumina

0.5

1.4

1.91.8

3.3

2.2

3.7

4.2

2.2

Includes idled capacity. Assumed assets included on a pro rata basis. 2016 includes Paragominas at 15 million metric tons and CAP first phase.

Aluminium equivalent equity capacity, million metric tons per year

Hydro end-2010(Before Vale transaction)

Pro forma end-2010(60% Paragominas)

Pro forma 2016(100% Paragominas)

• Hydro’s position transformed from large share of long-term contract sourcing to full resource ownership

• Excess alumina sold on standard industry contracts until 2015

• Portfolio of bauxite and alumina sourcing contracts strengthens equity position

• Hydro will annually purchase 6.8 million metric tons of bauxite on an evergreen contract from MRN

• Hydro’s current alumina sourcing contracts will remain in portfolio

Bauxite Alumina Aluminium Bauxite Alumina Aluminium Bauxite Alumina Aluminium

Page 13 © Hydro

Energy

• Long-term power supply secured

• 9.4 TWh of renewable energy production in Norway

Page 14 © Hydro

Substantial values in long-term assets in Norway

• Stable and solid cash generation

• Indicative annual EBITDA NOK 1.6 – 1.8 billion

• Hydro’s power balance, normal year

• Normal production ~9.4 TWh

• Sourcing on long-term contracts ~7.0 TWh

• Consumption in Primary Metal* ~12.5 TWh

• Contract sales and concession power ~1.0 TWh

• Spot sales ~3.0 TWh

• Value enhancement potential

• Growth opportunities in Norway

• Holsbru project to add 84 GWh from 2012

• Optimization of power value in market, and in cooperation with smelters

3.1

2.8

3.0 0.5

Power production capacity (TWh) per region and reversion year

2044-2049

2023

2051-2057

No reversion

Telemark

Røldal-Suldal

Sogn

Normal production

9.4

* Including Sunndal 3 line currently curtailed

Page 15 © Hydro

Solid long-term power coverage for Primary Metal

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Self-generated Long-term

Medium-term Consumption

• 90% of power needs secured until 2020

• High share of renewable energy

• More than two-thirds of power needs from renewable sources

• Albras smelter in Brazil has hydropower-based contracts through 2024

• High share of general inflation linked and fixed-price contracts

• Limited commodity price exposure

• Securing acceptable power sourcing in Europe requires CO2 compensation

GWh

Page 16 © Hydro

Primary Metal

• 2.4 million metric tons per year primary capacity

• High LME and USD sensitivity

• Improving cost position

• Leading in technology

Pro forma capacity for end 2010 after Vale transaction. 100% of volumes for assets that are fully consolidated and pro rata volumes for other assets.

Primary aluminium

Page 17 © Hydro

Attractive Qatalum fundamentals

• Joint venture (50/50) between Qatar Petroleum and Hydro

• Capacity: 585,000 metric tons

• Smelter with world-class cash cost position

• Ideally located to serve all major markets in Asia, U.S. and Europe

• 2011 focus

• Ramp-up to be completed by June 2011

• Stabilize production and cost optimization

Page 18 © Hydro

Technology costs/spin-offs

Maintenance and relining

Investments

Procurement

Organization and manning

Casthouse product margin

Logistics

Operational improvements• Improved current efficiency

• Reduced power consumption• Reduced anode consumption

Fixed-cost reductionsand lean operations

Further operational improvements

Improvement program: $300 per mt

50

125

0

100

200

300

Realized

2010

2011 2012 2013

onwards

Cost reduction target from 2009 level for ~1 million metric tons annual capacity

$300/mt

Page 19 © Hydro

Strong focus to further improve cost position

800

1 200

1 600

2 000

2 400

2 800

0 10 000 20 000 30 000 40 000 50 000 60 000

Source: CRU, BOC

Estimated business operating cost 2014 by CRU

USD/metric ton

Accumulated world capacity, 1,000 metric tons

Estimated primary aluminium production cash costs

First half 2010, USD/ton

800

1 200

1 600

2 000

2 400

2 800

Rio Tinto Rusal Hydro Alcoa Century

Hydro

Hydro

Peer companies

Page 20 © Hydro

Metal Markets

Casting • 3.8 million metric tons (primary, remelt, recycling and cold metal)

• Expertise in materials

• Flexible system

• Strong marketing organization

• Risk management

Pro forma capacity for end 2010 after Vale transaction. 100% of volumes for assets that are fully consolidated and pro rata volumes for other assets.

Page 21 © Hydro

Leading metal products supplier in Europe

Casthouse productionPrimary production

Remelting & recyclingCommercial agreements

The preferred partner in casthouse

products and services

• Growing marketing position in U.S. and Asia through Qatalum volumes

• Enhance value of market system and optimize value on top of LME price

• Capitalize on strong market position through sourcing and trading strategies

• Firm operational LME risk management

Sheet ingot525,000 mt/year

Extrusion ingot1,550,000 mt/year

Foundry alloys450,000 mt/year

Page 22 © Hydro

Rolled Products

• 1 million metric tons per year

• Regional business

• Close to customers

• Innovation

• Market leading in litho and foil

Rolling

Page 23 © Hydro

No. 1 flat rolled products producer in Europe

• World leading positions in high-end products: foil, litho and automotive

• Record results in 2010

• Technology leadership and innovation

• Strategy

• Focus production system on core assets

• High-grading product portfolio

Automotive, heat

exchangers and general engineering

Revenues:NOK 6.8 billion

Packaging & building

Revenues:

NOK 11.3 billion

Litho

Revenues:

NOK 3.7 billion

Page 24 © Hydro

Attractive market position and customers

Our products Our customers Our position

Litho

World market leader

Foil

Can Leading position in Europe

Auto

Leading position in Europe

GE/

Building

More than 50% of products with global reach

Globalreach

Regionalreach

Page 25 © Hydro

Extruded Products

• 0.6 million metric tons/year

• Local business – Close to customers. More than 40 locations in 19 countries

• Close to customers

• Innovation and design

• Market leading in Building Systems

Extrusion

Page 26 © Hydro

Strong position in Europe, U.S. and BrazilExtruded Products

• Leading position in Europe in Extrusion and Building Systems

• Strong position in the U.S. and Brazil

• Global leader in precision tubing

• Strategy

• Reinforce European extrusion base

• Specialist in energy-neutral building solutions, including solar

• Selective acquisitions

• Entry into emerging markets

• Operating revenues ~NOK 19.4 billion

• ~9,500 employeesStrong

entrepreneur-ship,

management culture and competence

Product innovation through strong

customer relations

Extrusion EurasiaRevenues: NOK 8.8 billion

Building SystemsRevenues: NOK 5.6 billion

Extrusion North America

Revenues: NOK 2.5 billion

Extrusion South America

Revenues: NOK 0.8 billion

Precision TubingRevenues NOK 2.4 billion

Page 27 © Hydro

• “Mastering” Europe/gaining market share in the U.S.

• Close to customers due to strong regional presence

• More then 40 locations in 19 countries

• Top product innovation and design

• Main segments

• Building and construction

• Automotive

• Transport

• Solar

• 2010 sales volume: 388,000 metric tons

A true entrepreneurial-driven enterpriseExtrusion Eurasia, Extrusion North America and Extrusion South America

Location

Page 28 © Hydro

Building the future with aluminium

Aluminium used for

construction to double by

2020

The future is energy-

neutral buildings

Energy saving

• Reduce materials • High insulation

Energy gaining

• Active• Passive

100% recyclable

• Design• Limited types of,and non-harming

materials

Building Systems

2010 sales volume: 73,000 metric tons

Page 29 © Hydro

Winning in a demanding marketPrecision Tubing

• Competence - our proven resource

• Strike a new path

• Strong global presence

• 2010 sales volume: 67,000 metric tons

Page 30 © Hydro

Aluminium products

Automotive

Foil packaging

Beverage cans

Heat exchangersBuilding & construction

Lithographic plates

Consumer electronics

Heat exchangers

Hydro innovation drives product demand

Page 31 © Hydro

Recycling

• Release value of conserved energy in the material

• Improve carbon footprint and raise viability profile of Hydro

• Primary metal production is under threat in Europe – restructuring and consolidation of recycling industry

• Collected aluminium scrap volumes will increase significantly

Page 32 © Hydro

2Strong performanceand healthyfinancial position

Page 33 © Hydro

2010: A stronger Hydro

-900

-600

-300

0

300

600

900

1 200

1 500

1 800

2 100

2009 20102008

• Underlying EBIT up NOK 6.1 billionfrom 2009

• Reduced costs

• Improved operational performance

• Higher prices and strengthened demand

• Secured long bauxite and alumina position

• Maintained solid financial position

• Reduced operating capital days

• Qatalum ramp-up

• Stepped up cost improvement program

6,009 (2,555) 3,551

Underlying EBIT

NOK million

Page 34 © Hydro

Strong financial position

11,0

(0,1)

2,0

Dec 31, 2009 Jun 30, 2010 Dec 31, 2010

Net cash/(debt), NOK billion

NOK billionDec 31,

2009Jun 30,

2010Dec 31,

2010

Cash and cash equivalents 2.6 2.2 10.9

Short-term investments 1.5 1.3 1.3

Short-term debt (2.0) (1.5) (0.9)

Long-term debt (0.1) (2.1) (0.3)

Net cash/(debt) 2.0 (0.1) 11.0

Net int.-bearing debt in equity

accounted invest.(8.0) (9.1) (7.8)

Net pension liability at fair value,

net of expected tax benefit(5.6) (5.2) (5.6)

Other adjustments* (4.0) (3.8) (4.0)

Adjusted net debt (15.6) (18.2) (6.4)

* Operating lease commitments and other

Page 35 © Hydro

3Outlook

Page 36 © Hydro

Aluminium is the metal of the future

• Formability• Extrusion, rolling, casting

• Low melting point vs. steel

• Excellent conductivity• Thermal – electrical

• Alloying technology• Gives a wide range of physical properties

• Lightweight• One-third the density of steel

• Recyclability• 5% of original energy consumption

• 75% of all aluminium produced still in use

• Corrosion resistant• Oxide layer

Properties leadto increasedmarket share

• Aluminium-intensive urbanization and infrastructure• Climate challenge – aluminium as part of the solution• Recyclability more important with high energy prices

Page 37 © Hydro

Firm long-term demand for aluminium

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

1980 1990 2000 2010E 2020E

Source: CRU, Oct 2010

World primary aluminium demand, 1,000 metric tons

+ 18%

+ 39%

+ 54%

+ 76%

Change in % per decadeMain future

growth expectedin transportationand construction

sectors

Page 38 © Hydro

Aluminium tubing for solar collectors

Hydro is taking the lead in Europe in the introduction of aluminium tubes to the solar thermal industry, replacing traditional copper tubes

EU: Stricter emissions limitsAluminium: Part of the solution

Hydro has developed new multilayer sheet materials which enable car makers to greatly reduce nitrogen oxide emissions from vehicles

The new trend: “Aluminium cars”New Audi A6 contains a large amount of aluminium and aluminium solutions – making it lighter, safer and more environmentally sustainable

Innovation drives aluminium demand

Page 39 © Hydro

Strategy for further value creation

Bauxite & Alumina

Primary Metal

Energy

Mid- and downstream • Continue proven high-end product strategy

• Pursue profitable life-cycle investments: recycling, energy-efficient building systems, aluminum in transport

• Expand selectively in emerging markets

• Increase value of business and competence

• Focus on operation and commercialization of current assets

• Implement global approach to power sourcing

• Reposition

• Keep solid cash flow in current assets

• Expand in high-class assets

• Integrate

• Expand

• Commercialize

Page 40 © Hydro

Priorities 2011

• Successful integration of Vale’s aluminum assets

• Upstream repositioning through $300 program and Qatalum ramp-up

• Solid operations with firm cost control and strong market focus

www.hydro.com