(Bloomberg) -- Norsk Hydro ASA will shut its battery materials and green hydrogen businesses, in a further sign of the commercial pressures on companies striving to meet Europe’s green-energy goals.
Hydro — a major producer of hydropower and aluminum — has been building a battery business since 2017, investing in firms involved in recycling, lithium production, and other raw materials. It also held a minor stake in Northvolt, which filed for bankruptcy protection last week.
Hydrogen fuels have been an enticing alternative market for aluminum producers with in-house supplies of green energy, particularly during periods of weak demand for the metal. The technology was once hailed as a potential silver bullet for curbing carbon dioxide emissions from heavy industries, but its high costs have caused financial strains, delaying a number of high profile European projects.
“No question that they will play a role in the future, but we will focus on the core areas of what we know,” Chief Executive Officer Eivind Kallevik said on Bloomberg TV. “It’s really about how you allocate capital and where you keep the management’s focus.”
The business units will be phased out over time, but Hydro will continue to support its Hydrovolt battery recycling operation, it said. The company was set up as a joint venture with Northvolt in 2020.
The joint venture is very close to the aluminum maker’s other recycling businesses, with synergies that it plans to develop, the CEO said. It also has links with automakers — including Mercedes-Benz Group AG and Porsche AG — that are customers for its metal, he added.
What Bloomberg Intelligence Says:
Norsk Hydro’s decision to phase out its battery and hydrogen businesses is the latest indictment of Europe’s green investment climate following the collapse of Northvolt and ArcelorMittal’s decision to suspend its decarbonization program. But it should sharpen management’s focus on its core business which is facing headwinds, illustrated by Hydro’s 2025 Ebitda guidance of 4.5-5.5 billion kroner for Extrusions, which is short of consensus’ 6.1 billion estimate.
— Alon Olsha, BI metals and mining analyst
--With assistance from Priscila Azevedo Rocha and Carolynn Look.
(Updates with comments from CEO in fourth paragraph, BI comment in final.)
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