Nov 1 2006
Hydro is leaving the magnesium industry, and closing the company's magnesium plant in Canada will be its next step. Continued production at the Bécancour plant would not be profitable, due mainly to the extensive export of low-priced metal from China.
Consequently, Hydro’s board of directors has decided to close the Bécancour, Québec-based plant, with its 380 employees, during the first half of 2007. The timing of the closure is in connection with the windup of a 10-year supply contract with General Motors. Hydro has not succeeded in finding a potential buyer with the financial strength to provide the plant and its employees with reasonable security for the future.
“Our employees in Bécancour have done an outstanding job in maintaining operations, despite market conditions that have constantly worsened for them. Sadly, we no longer have a basis for magnesium production in Canada,” says executive vice president Svein Richard Brandtzæg, who is head of Hydro’s Aluminium Products business area.
“We will now help our colleagues find new jobs, within Hydro or outside the company.”
It is primarily the extensive export of very low-priced metal from China that is preventing continued production at the world’s largest and most environmentally friendly magnesium plant. Hydro opened the plant in 1989 as part of its drive to target the US auto industry.
Hydro will close the plant during the first half of 2007. The company expects to clarify the amount of costs related to the closure, including severance payments to employees, in the fourth quarter of 2006. As of September 30, the book value of the plant was NOK 73 million.
Hydro has produced the light metal magnesium, with the automotive industry as a key customer group, for 55 years. The company closed its magnesium plant in Porsgrunn, Norway in 2002 and, this year, ended operations at its Porsgrunn-based magnesium casthouse.
As a result of Hydro’s board decision to exit the magnesium industry, the company will work toward divesting its magnesium casthouses in Bottrop, Germany, and in Xi’an, China, which both are performing well.