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Executives

Siri Teigum - Chairman, Corporate Assembly

Terje Vareberg - Chair of the Board

Svein Richard Brandtzaeg - Chief Executive Officer

Eivind Kallevik - Chief Financial Officer

Anne-Lene Midseim - Corporate Secretary

Norsk Hydro ASA (OTCQX:NHYDY) 2013 Annual General Meeting Conference Call May 8, 2013 7:00 AM ET

Siri Teigum - Chairman, Corporate Assembly

Hello. I would like to welcome you all to the ordinary Annual General Meeting of Norsk Hydro ASA. Together with me on the platform, I have the Chair of the Board, Terje Vareberg; CEO, Svein Richard Brandtzaeg; CFO, Eivind Kallevik; and the Corporate Secretary, Anne-Lene Midseim.

My name is Siri Teigum and I am the Chair of the Corporate Assembly of Norsk Hydro. The Secretariat is in the process of compiling a list of shareholders who are attending with their proxies. The list will be announced as soon as it is completed and presented to the moderator. All the shareholders who are attending the meeting and who are entitled to vote have received ballots as they registers. They will be used for any written ballot. If anyone wishes to take the floor during the general meeting, please give a sign and introduce yourself by name. To facilitate a good implementation of the meeting, we intend to organize comments and questions issued by issue and those who take the floor will be asked to go to the rostrum. I will come back to this as we move along.

Item 1 on the agenda is the approval of the notice of meeting and the agenda. The notification of today’s general meeting was made in accordance with Section 510 of the Norwegian Public Companies Act and the Companies Articles of Association. The notification was sent out within the deadline to all the shareholders with a known address. The notification, the other documents to which reference is made in the notification, the proposes for decisions on the items on the proposed agenda as well as the Companies Articles of Association have in accordance with Article 10 in the Articles of Association been made available on the company’s website. So, if there are no comments now to the notification, and to the agenda, I declare that the general meeting is legally convened.

According to Article 10 of the Article of Association, it is the Chair of the Corporate Assembly who will be the moderator. So, for this reason, there will be no election of a person to chair the meeting. Further, I would like to inform you that the company’s accountant, KPMG AS, is represented by stated authorized public accountant, Arne Frogner.

Item 2 on the agenda is election of a person to countersign the Minutes of the Meeting. Pursuant to Section 516 3 of the Public Companies Act, the moderator and at least one other person elected by the general meeting shall sign the minutes. We nominate the representative of the Ministry of Trade and Industry, Morten Kallevig. If there are no comments to that, then the motion is carried.

We arrive now at Item 3 of the agenda approval of financial statements and the board’s report for the financial year 2012 for Norsk Hydro ASA and the group including the payment of dividend. This year the following briefings will be given to the AGM. The Chair of the Board Terje Vereberg will review the work of the Board in 2012. CEO, Svein Richard Brandtzaeg will after that review the company’s progress and financial performance in 2012 and in the first quarter 2012. After these briefings giving to the AGM there will be an opportunity to ask questions from the floor. The financial statements and the report of the Board is in accordance with Article 10 of the articles of association being made available on the website of the company, so will not be read aloud here. I’ll now give the floor to the Chair of the Board, Terje Vereberg

Terje Vereberg - Chairman

Moderator, dear general meeting on behalf of my self and my colleagues in Hydro’s Board, Deputy Chair Inge k. Hansen, Finn Jebsen, Eva Persson, Liv Monica Stubholt, Dag Mejdell, Pedro Rodrigues and Victoire de Margerie and the employee directors Billy Fredagsvik, Sten Roar Martinsen and Ove Ellefsen it is a pleasure for me to present the Directors report for 2012.

It is characterized by fact that Hydro has been through a year where it has had to adopt to demanding market conditions. In 2012 we achieved our most important goal in the security work, which is no fatal accidents, safe operations will always be the at most importance to us, but unfortunately we will not reach this goal in 2012. A contractor employee at Hydro’s press in Lucé, France died after an accident in the beginning of March 2013. Hydro had 3.4 injuries per million working hours at the end of December 2012.

Our main theme for the Board and the management of the company in 2012 has been to facilitate a successful merger between Hydro’s and Orkla’s extruding activities within a jointly owned joint venture namely Sapa. The transaction is expected to increase the global reach of the merged company, create stronger foothold in North America and several other important growth markets like China and the other countries in Asia and give annual synergies of around SEK1 billion. We still hope able to close the deal during the first half of the year. One of our main priorities in 2013 will be to secure a successful establishment of joint venture Sapa.

Comprehensive measure to reduce costs in the group and improve operations have given significant economies that have partially offset the negative impact of the market. One of our most important goals for 2013 is to deliver significant cost reductions in the area of Bauxite and Alumina, in accordance to the improvement program for this area. The new-in program, improvement program from B to A include all major areas of operations and focuses on increased production, improved productivity, lowered operations costs and lower manning, in addition to more efficient procurements than increased commercial earnings.

Around half of the total economies and improvements of SEK1 billion which are planned are expected to be achieved before the end of the year 2013. Within primary metal, our strategic main focus is to continue the work with continuous improvement of the melters of efficiency and cost position. Hydro’s $300 program has so far given overall economies and improvements of $324 per ton compared to the situation in 2009. The most important priority for 2013 will be to implement the last phase of this program. In 2012 Hydro decided to close down the production at the smelter in Kurri Kurri in Australia, because of the weak markets, low metal prices and a strong Australian dollar. This process was well dealt with at the local level.

In 2012, the cost for research and development was at the level of SEK247 million compared with SEK248 million in 2011. The main part of the amount concerns Hydro’s internal research organization. The rest is support to work done by external institutions. In hydro research and development and full scale production is done in parallel and we work continuously to develop technology that we will use in the future. As part of the new organizational model, we have established a new technology office at corporate level which will ensure global and long-term approach to Hydro’s strategy and technology for agenda.

Our technology work focuses on three areas, first of all to develop products that promote the use of aluminum and a sustainable development. Secondly to develop the best electrolysis technology in the world, which is the core of an aluminum company. And last but not least, leverage on research and development and technology in order to ensure optimal operations. I also like to mention the other priorities. As a global company with a rich reserve position, Hydro aims at becoming the leading player in this industry. And the priorities will be to secure the results of the company and improve the results within HSC and corporate social responsibility.

We will continue to react on the development in the market in order to improve the operating results and we will continue to practice capital discipline within the group. We will continue to prioritize improved profitability for our raw products through the improvement program Climb 10 for this business area, where the target is a return on capital of 10%, measures aiming at reducing operating costs and cost effective procurement of raw materials and sourcing will continue in the year to come in addition to efforts to improve the efficiency of our production systems. Furthermore, our goal is to develop the value of the Norwegian energy activity and we want to use our competence to secure competitive energy sourcing to our global activities.

Hydro will work on keeping the global smelter activities of the company viable which depends on energy at competitive prices. In 2012, Søral concluded a new eight years contract – power contract and in Germany we concluded a five year agreement. What made this possible was that both Germany and Norway wanted to use the CO2 compensation scheme in the EU and also the fact that the price level in the market was acceptable.

Based on the company’s enduring commitment to give its shareholder a cash dividend and the company’s strong financial position the Board proposes that the company pays a dividend of SEK0.75 per share. By the way of conclusion, I would like to say that the frame conditions – financial conditions today is a major challenge for all of the industry when it comes to satisfactory return on capital. Hydro is however well positioned for growth when the global economy picks up.

The Board wants Hydro to take advantage of its platform and potential and to continue to develop and create values for the shareholders as a global company based in Norway. And the board wants Hydro to be based on responsibly efficient and safe operations and that we have an organization that is equipped to tackle the challenge and opportunities that we are facing. On behalf of the Board, I want to greet all the employees in the company who are doing an excellent job for Hydro everyday. Thank you very much.

Thank you very much. I would like now to give the floor to the CEO, Svein Richard Brandtzaeg for his presentation.

Svein Richard Brandtzaeg - Chief Executive Officer

Thank you. And Terje told you health, safety and environment are among our most important goals to make sure that the workers get home safely and well as they were when they turned out for work. So, we started with accident statistics. We’ve reduced injuries by 10% last year, we hoped for more, but the high risk accidents were reduced by 35%, but we have a fatal accident in Lucé, a contractor was removing a punch press and things went very wrong and then operator from the hired firm lost his life in that accident. So, we still have great tasks ahead. I am not happy with the developments. So far we have had two months above the goal of (indiscernible) and we hope we will get better as time moves.

Hydro is 107 years old and we have been through a lot of restructurings for many, many years now. During the last 10 years we have gone from a conglomerate to our focus integrated aluminum company, what characterizes us is competence, technology, industrial management, but not least the ability to change and think long-term and not least the ambition to create wealth through industrial development.

We now have a strong value chain where we have ensured considerable profit on the commodities side. We have 100% ownership in one of the biggest bauxite mines in Brazil. We have ownership in the largest alumina refinery in the world. We have sound aluminum works, a strong position in downstream through the road products and with Orkla we now have 50% of the biggest press system in the world. We are close to the customer and we develop new products all the time. Technology and innovation will always be important.

If you look at the important incidents in our history since 1905, its 50 years since the annual agreement was signed, 50 years since Hydro went for development at (indiscernible) and that cost us around 80% of the turnover at that time. It was a huge investment, and the merger with OSV in 1986 was an important milestone. Then we have the acquisition of VAW in 2002 and then Qatalum of course and the acquisition in Brazil. And in 2012 the agreement with Orkla creating the world’s leading aluminum solutions provider.

What characterizes us is that Hydro has shown through its acquisitions that we can optimize and improve the operations ongoing improvements are the case with all our operations. And we have also been able to conduct transactions and consolidate the industry and shape the industry where we have been operating and we did that in aluminum too. Important incidents in the past years is especially after the financial crisis when we had to take out 26% of our capacity of the primary aluminum capacity from 2008 to 2009 only that Chinese could match that.

We started $300 program, when we saw that times were tough, we cut costs in our wholly owned aluminum works with $300 per ton, which was the most ambitious improvement program in the industry. Climb 10 was mentioned by Terje an improvement program within our roll products where this system is to achieve at least 10% rentability. And we have an improvement program in bauxite and alumina from B to A, but will improve operations and reduce cost by SEK1 billion and half of the program will be delivered by the end of 2013.

In Qatalum, we are working at full power and we are also delivering results that are better than what we had expected when it comes to volumes, excellent operational results and when it comes to the cash cost of Qatalum, it is where it ought to be, and among the best melters in the world today.

In Brazil, we have had the good takeover by our newly hired people, 6,000 new workers who took over – that we took over in Brazil, 2,000 part-time, 4,000 full-time, 2,000 contractors, and the operations are going well, but we are not happy in Alunorte. The development has been sideways for the last two quarters. So, we are trying to up the volumes now. So, we want to get to nameplate capacity, which is 6.2, 6.3 million tons of alumina. We have advertised the joint venture with Orkla, and we are preparing integration. And as Terje said closing and finalizing the transaction will be in the course of the first half year. The results from last year you have probably seen them and underlying result of $1.3 billion characterized by the poor prices for aluminum and alumina, challenging markets.

For the first quarter, it was less than $1.1 billion slightly better prices and better volumes in seasonal effects, of course, because the first quarter one year is usually better than the fourth quarter, but we see now that the second quarter, which seasonally should have been a good quarter was characterized by further reduction in the aluminum prices. The dilemma for our industry is that on the one hand, aluminum is the fastest growing metal if you compare with copper, zinc, lead, nickel etcetera. It grows faster than any other, but the problem is that the price trends are poorer for aluminum than for any other metal. You may well ask why this doesn’t seem to make sense? If you look at the development between demand and supply, you see the green part is demand for aluminum and you see it was reduced during the financial crisis and the graph on the left shows the situation outside China, and on the right hand side, you see within China. And if you look at the demand for aluminum outside China, but nearly at the level we were at before the crisis started in 2008 and 2009, but it’s not quite bouncing back yet.

In China, the growth has continued and China is the driving force behind the growth in the world, and this affects the alumina bauxite area, especially bauxite I would say, because China doesn’t have enough raw materials. And they are very interested in keeping the prices down, because they import so much of these metals. If you look at the effect here and what you need to watch, it’s the green graph, which is the price of aluminum, the 3-month price, which fluctuates here you see from 1992 to 2012, the three-month price is a good reference for us. And we have a price trend that depends a lot on the 90% percentile works that are among the 10%, the top 10% on the cost graph I will show you. I will go in and plot it. And if you do that and you track the price of aluminum, you will see that it lies very close to the cost curve, but you see some departure, sometimes it dips, sometimes it rises, but if you look at that departure and look at days in store and stocks, there is a correlation between the days in stock and when they go up and then its lower at LME, then the top 10% on the cost graph, and the opposite, when the price is above the 10% – top 10% rather for cost. Then it’s a situation, where the days in stock go down.

You can see this against the marginal costs and the metal balance if you look at surplus and deficit per year, this makes sense. There is a link here. So, this is a situation where it’s not a demand problem in aluminum, it’s a supplier program overcapacity, huge stocks that have been accumulating. And the industry has not adjusted the production to the change in demand over a long period of time. And this also characterizes the situation today LME is now under $1900 per ton which is painful for the industry. For the first quarter the price was at $2043 per ton, the market price that was the realized price, the market price was nearly the same $2040 per ton. But at the level we are at now we are in again in a situation where a major part of the industry is not making money at all. So, that’s why it’s important that we improve in every area and we have started cost reduction programs along the whole value chain.

I have mentioned the $300 dollar program we’re going to complete it this year, but that doesn’t mean that we are done with cost reductions for primary metal, we will continue. And we have embarked on our joint ventures now, we have part ownerships in (melters) where we are also running cost cutting programs at Bauxite, Alumina we have that and we improvement for old product and extrusions. This is important, these are things we can affect our selves. So, the improvement programs form an important part of the measures we are putting into place to improve the situation for the company.

The joint venture on the extrusion side means that Hydro is really of the resources been finished more exposed in extrusions will have 50% ownership in an even bigger extrusion company than we had before. When we entered into the agreement and the greater exposure we have had to adopt our re-melting where there was a flexible part in the company. Re-melting can be moved up and down in that very short space of time and we have to do that when we cut out 2,000 tons during 2012 and downstream its auto and transport where we see the positive developments and we are in an even stronger position.

Car transport or trucks is the most important export sector outside China today and we’re in a good position. And when it comes to the new Sapa the joint venture in extrusion, this is a company that will have SEK50 billion turnover, 25,000 employees in more than 30 countries in the world, it will be number one in Europe, number one in the United States, strong position in South America and a strong position in Asia where we see possibilities of growth. But the EU have to approve this from a competition point of view and they are concerned about the situation in Scandinavia. We have to offer to sell Raufoss out of this with a precision tubing company in Holland in the Netherlands. We still need to see if this is sufficient, but this is our suggestion anyway. We hope that we will finalize this during the first half of this year, it’s been approved in the United States and EU remains and China remains and that’s important.

As for developing the value of the company we have an interesting comparison here that shows you the market cap in green and Hydro compared with Alcoa, Chalco and Rusal which are the major companies in aluminum. We have improved relatively speaking compared to the competitors and that we have a higher value today than our competitors. It says a lot about the situation in the aluminum industry when Alcora and Rusal are nearly twice as large as for aluminum production, but relatively speaking we are better on the cost curve and if you analyze it externally and you will look at the EBITDA margin per ton we have a higher EBITDA margin and we create more wealth, but it’s a challenge anyway.

We have a strong foundation in our resource and asset base. I’ve mentioned bauxite alumina where we have strong positions. We have strong aluminum works. We have a good position in rolling. Our rolling part is the second largest in Europe and in many segments, we are number one. So, we have a good resource base, but the most important base is our employees. And we have done good job to get an improvement culture in all our operations. If you came to see our aluminum works along the West Coast in Norway, you will see that they run in a very different way to what we were doing only 5 or 10 years ago. The production system is one there are operators and are local management get the handle on the improvement potential and lift the production to a new level among the most energy effective aluminum works in Western Norway. They were started years ago, but they are still much better operated now than they were brand new. So, you see the potential. Once we look at breakdown, the potential we discover new potential when we finished with the $300 program we will continue.

We have a good HSC development in most areas. We are not satisfied yet, but more and more plants are running without injuries for longer periods. And we had made sure that we have leadership in R&D in the strategically important areas like Terje Vareberg mentioned, we have leadership in technology within primary metal, which is important. And we are close to the market, close to the customers, and the innovation in the interface between hydro and our customers is very important for growth in the aluminum consumption, but it also makes sure that we can produce complicated products that fit with our profile and competence, and we get more value from every ton we produce of aluminum. And these are qualities we will build on and develop further in future. The strategy for the company now for the various business areas let’s start with bauxite alumina, that’s to continued improvement program and have a stronger commercial approach. We have moved from pricing alumina based on LME percentage in relation to LME to letting the pricing stand on its own two feet and moving it towards index pricing, which is coming on well.

The largest proportion of alumina will be priced on index and not on percentages of LME. But let me mention that a great proportion is bound up by contracts entered into by wallop and that has tied up our volumes until 2015. From then on, we will be able to use the index pricing much more widely and get more value from the alumina. And then we have to develop the resource possibilities of Brazil and adapt our capacity building in the right way in Brazil. And we will postpone the new alumina refinery, because we don’t think there is enough capacity at the moment, but the CAP project will be one of the most attractive, most cost effective aluminum works in the world in the future. As for primary metal, we want to create further robustness in cut the costs and both the ones that are wholly owned and partly owned and also use the possibilities of what we have ingots, wire, etcetera, and the various kinds that we sell to the most demanding customers in the world today. And we will develop our technology further within primary metal.

I will revert to that later. And we will have a primary metal system that is ready for growth, when the world needs more aluminum. Within energy, optimal stable operations, that’s important, but we need to be flexible in our operations by selling and producing the energy that we need in an optimal way, but obviously, we also have to source effectively into our primary aluminum system. And since we have the competence in-house, we need to use the commercial competence within energy also for the rest of the value chain, where there is huge energy contracts that we enter into. We use that in Brazil and in other places where we operate. And we are developing some smaller – gradually some smaller hydropower resources. Last year, we announced that we have potentials through the Hasbro project was finished and we have some smooth projects that will give us some gigawatts in future and they payoff. As for old products, again we try to reduce the exposure within general engineering, is the standard product, more towards the automotive industries’ needs. More and more cars are produced in aluminum now. We want to optimize the portfolio between the different rolling plants, most of them in Germany, two in Norway, and one in Italy, and there is one in Malaysia, but we are getting out of that one. It’s a small plant.

And if you look at R&D and innovation, we have an interesting history here as well. Hydro is one of the few companies in this industry that have developed their own technology for electrolysis and in methodology and product development for alloys and so on. And these are things we want to develop further. We operate the only pipeline that carries bauxite from Alenorte it’s a pipeline, that’s 250 kilometers long. And we have come to the point where we have new electrolysis cells at the R&D center in auto. It’s a pilot plant. And I will tell you more about the plants we have there. And downstream, we have leading positions in many different fields as I mentioned. We have the most important supply to Tetra Pak, who produce flexible packaging and we supply aluminum in lengths of 300 kilometers in one piece. And it’s a two-meter wide strip and very few can compete with us there.

Number one for lithography for offset printing, it’s not for newspapers, it’s for magazines and journals in color, and they use aluminum there. And it’s the surface quality that is important, so it has to have a perfect surface finish at the level well at whole level it has to be perfect otherwise the print will be poor. And hydro loves producing demanding zinc products, and we have few competitors in this area. Of course, automotive is very important and we have increased there and we see new possibilities still. As Terje Vareberg mentioned, there is three main areas that we focus on when it comes to technology. First of all, we want to use the development we are working on, and use it as soon as possible full scale and we have positioned our research centers wall-to-wall with the full scale plants. So, there is a very short distance between theory and practice and our melters benefit from that everyday, the $300 program would not have succeeded if R&D haven’t used our technological competence. You can cut costs to a certain point, but you have to also develop competence and technology, where you will not succeed with your cost cuts.

Electrolysis technology I will revert to it, but it’s a vital area and we have product solutions and innovation for the most demanding clients. We are close to BMW. We supply half of all the aluminum for the BMW. We work closely with Apple, for instance, Tetra Pak I mentioned them, and many other global players are working closely with us. As for electrolysis technology, I am sure you have heard about how 4E technology a technology with high current 450,000 amps and effective and low-energy consumption. And we now have a new program how SEE, super energy efficient technology that will take the energy consumption down to the theoretical consumption, where we have electrolysis cells in order, six of them. And we see interesting results. We want get below 12 kilowatt hours per kilo aluminum, 13.5 to 14 is now the world average. As from metallurgy, we are using nanotechnology and we go in that atomic level and move things around to get the right physical composition. And the characteristics that we need and features we need, and we have worked with NTNU and energy technology are with us, Institute for Energy Technology in Oslo and scientists are working closely with the people who do the basic research. And that means that the technology can be transferred very quickly, because we have full scale production next door. And some of the most demanding customers in the world want new alloys with new physical properties, and then they come to us more often, because we have the capability to supply this very quickly. It’s its interesting also to see that and I say this, appeals to men of steel.

You see all the advertisements that compare steel and aluminum and we have many more products on the bedding. This is our latest, whether it’s aluminum for cabling in cops, it will reduce the weight even further in the car. Copper used to be – used for copper and used for cables and this is an aluminum cable. So, the car manufacturers can reduce the weight with 7 kilos or so per car and that’s very interesting to them actually. We also have close cooperation with the Powerhouse alliance in Norway. Hydro initiated this with zero, the environmental organization and Entra and Skanska are involved and Snøhetta, the architects. The plan is to build an energy positive building in Trondheim, and we have already started rehab refurbishing project in (indiscernible). That will be the first energy positive refurbished building.

We went for that, because there is 1% of the buildings that is new every year. So, we need to do something with the existing buildings with hydro technology with our partners. This will be a very interesting project. And I am sure we will see positively results when it’s done. And of course, we see the potential for using more aluminum at sea. We had a seminar recently with 100 hundred participants or more, and there was a lot of interest in increasing the use of aluminum for various maritime purposes, ships installations in the North Sea, and the advantage of aluminum in the North is that it becomes stronger the colder it gets, whereas steel gets weaker in the cold. So, the northern areas give us a competitive advantage with the use of aluminum.

As for the Norwegian melters, our ambition is to develop all our melters in future further. We have strengthened our cost position here through the cost reduction program. We still see possibilities of strengthening our competitiveness in these aluminum works, but it’s also because the situation for energy pricing in the Nordic energy market has changed a lot recently. Norway had a program called our Norway Agenda. And we have had it for years now and we try to get some common ground for the connection between energy producers and energy intensive industry. We share a faith. And in addition to the $300 program, we have also tried to get CO2 compensation in place, a compensation for a cost of an emission we don’t have in Norway. This is the carbon compensation for emissions and we don’t actually have that. We use hydropower in Norway. There is no carbon emissions, but the cost is built into it in the Nordic energy market. So, that’s in place now. We also have a much better understanding of the situation, the grid strategy and the tariffs is a new area, an important area for us to get into place because we don’t want increased grid tariffs and other investments that net is involved in, that actually eats into the carbon compensation. And we got a climate technology fund into place, which is meant for industrial development projects that may reduce the energy consumption full scale, that’s in place.

We have partly cleared up the framework conditions, but we still don’t know what the carbon costs will be after 2020, that’s not been decided by the EU or by Norway yet. And as for commercial energy solutions this is very important for us because if we are to invest in all our Norwegian aluminum works in future, we need to renegotiate energy contracts that will expire in 2020. And then we have maintenance upgrading investments for the current works and this is so they can last in the future. And we’ve looked into the possibility of getting energy contracts for new capacity in Norway and decisions for expansion will come after that. But this will take some time because as you saw there are still surplus of aluminum, so it will take quite a while before the world needs more capacity in aluminum. But we think long-term and we want to be in a position when it comes.

As for the common understanding the good thing is that a number of public reports from different quarters appeared in the past year, the trade unions and the employers association among others and their conclusion is that there is a surplus situation in the energy market. The prices have gone down and it becomes more interesting for a company like Hydro to work in Norway and invest in Norway compared to five years ago. The carbon compensation was an important piece in the puzzle and we worked quite actively. We went to several meetings with different players and we got it at the very last moment because right after that we got a new energy contract for Saugbrugs, which will run until 2020. It’s now competitive internationally that agreement. We are also looking at the possibility now of building or using part of the technology fund to get a pilot into place at (indiscernible).

On the plots where the solar cells were discounted we can built a pilot plant, a capacity of 70,000 tons and we can check tomorrow’s electrolysis technology. We have one electrolysis cell working order and it’s very difficult to verify the technology with one cell, we need to speed up. And with the pilot, we imagine that we might have 60 electrolysis cells in place and that gives us a statistical representative number so we can verify the technology. This will have the lowest energy consumption in the world, lower than our toughest competitors potentially. Some prerequisites have to be in place profitability is important and the pilot is the first step in a full scale development, because I think we will succeed and if we do then we can extend the pilot and it will be very favorable to us and the time is right when we develop this further. But we need energy, we need energy contracts and prices that are competitive for the pilot and for the next development that will follow naturally and we need (Innova) to support us. They have given us positive indications, but this has to go through the proper channels.

So, it’s an interesting development where we can invest in Norway in contrast to the earlier situation where it was difficult with the high energy prices even just five years ago. The company wants to use the competitive advantage we have in our way hydropower and the aluminum production is the most environmentally friendly aluminum production in the world and we have a strong research and development community that we can make use of to produce the next generation of technology and go for another 100 years for the company. Thank you for your attention.

Terje Vereberg - Chairman

Thank you very much. So far, the Board has made a proposal for allocation of profits and appropriation of net income and equity transfers for the financial year 2012. You will find this on page F-59, in the annual financial statement. And I would like to ask the Secretary to refer this. And the proposals of the Board is that Norsk Hydro ASA the parent company had a deficit before tax in 2012 on SEK276 million compared with the profit before tax in one 2011 on SEK3.386 billion. The annual result was a deficit of SEK324 million in 2012 compared with the profit of NOK2.613 billion in 2011. The non-restricted equity for distribution before dispositions at 31st December, 2012 was around SEK27.6 billion. The proposal of the Board is a distribution of SEK0.75 per share in dividend and this totals SEK1.528 billion, transfer of equity is SEK1.852 billion and before we go to vote here I will give the floor to Arne.

Arne Frogner

Chairman to the annual shareholders meeting on Norsk Hydro ASA, independent auditors’ report, I’m Arne Frogner I’m the responsible partner in KPMG for the auditing. As elective auditors we have given you this report, it was into two parts. One is report on the financial statements and one part is about other circumstances. I will give you the main outline. Part one we talk about the following parts. The Board of Directors and the presidency’s responsibility for the financial statements, the auditor’s responsibility and the conclusion on the consolidated financial statements where we ascertain that it’s in accordance with the accounting act and some of practices in Norway. And we confirm that the consolidated financial statements are in keeping with financial reporting standards as adopted by EU. Part two is other legal and regulatory requirements. We say that as a conclusion we find that they are consistent with the accounts and in keeping with the legislation and documentation shows that they have fulfilled their duty to produce proper documentation of the information according to sound accounting practices and the loss of Norway. So, this is our auditors’ report.

Terje Vereberg - Chairman

So according to the rules the general meeting shall also hear the statement of the corporate assembly on this issue and I would like to secretary to read the statement. You will find it on Page F-75 in the financial statement. Thank you.

Arne Frogner

Statement of the corporate assembly to the annual general meeting of Norsk Hydro ASA, the Board of Directors proposal for the financial statements for the financial year 2012 and the auditors’ report have been submitted to the corporate assembly. The corporate assembly recommends that the directors’ proposal regarding the financial statements for 2012 for the parent company Norsk Hydro ASA and the group and that this be appropriated as recommended by the Board of Directors, Oslo, March 12, 2013. Thank you very much. Are there any questions regarding these presentations or the annual report and the annual financial statements? I don’t see anyone asking for the floor? So, my question is the following can the AGM approve the financial statements and the director’s report for the financial year 2012 for Norsk Hydro ASA as proposed by the board and recommended by the corporate assembly, including the proposed dividend of NOK0.75 per share. I don’t see any votes against that motion. So, that is carried. Let’s go on, and the next item is Item 4 on the agenda, the auditors’ remuneration.

The accountant KPMG AS, Arne Frogner has sent the following letter to the company 8 May 2013. Auditing fee 2012 in accordance with the general meeting 8 May 2013, we want to ask for approval of our auditing fee for the NOK5,939,000, for the other parts NOK1,139,000 is asked as auditing fee. The complete total auditing fee for KPMG inclusive Hydro ASA is NOK27,439,000, and the other parts in auditing fee was NOK2,359,000. KPMG AS, Arne Frogner, state authorized public accountant. This was the letter from KPMG AS.

So, for the sake of good order, I would like to point out that the total auditing fee for the financial year 2012 was NOK27 million for KPMG. What the AGM is to approve is the auditing fee for Norsk Hydro ASA. I refer to the letter from KPMG AS, and I propose that the auditing fee for financial year 2012 Norsk Hydro ASA be adopted as NOK7,073,000 for KPMG AS. Can the AGM approve that notion? Yes. That notion has been approved.

And we go on and the next point is point five, Item 5, which is a statement on the corporate governance. Pursuant to Section 564 of the Norwegian Public Companies Act, the AGM shall consider the statement on corporate governance made in accordance with the Accounting Act, Section 33b. This statement is included in the section entitled Norwegian Code of Practice for corporate governance in Norsk Hydro ASA’s financial statements and directors’ report 2012. The financial statements and the Board of Directors’ report 2012 are as I mentioned available on the company’s website, and we suppose that the content is known to the attending shareholders. And the statement is not subject to a cast of vote during this annual meeting. But I give the floor to the Chair of the Board who will refer to the main parts of this statement.

More detailed review of Hydro’s governance, corporate governance is included in the financial statements and the Annual Report 2012. I refer to this material will emphasize the following. A healthy transparent governance structure will contribute to better results and better creation of value. At the same time, it builds confidence and provides a foundation for socially responsible behavior. The work with corporate governance is therefore a central to Hydro’s development. At Hydro, corporate governance is based on a clear distribution of roles and responsibilities. At corporate level, the Board of Director in Norsk Hydro exercises a control function and administrative function in respect of the group’s operations and management. The distribution of roles and responsibilities between the Board and the CEO is according to the company’s rule of procedure for the Board and of the governance document. The administrative function requires the Board of Directors to actively play a part at the executive level in cases of exceptional and great importance on which surpasses the day to day operations. The Board’s administrative duties consist (entrails) of establishing strategy, budgets, guidelines for the operations.

The CEO has established a corporate management board consisting of the heads of the respective business areas, the CFO and the vice president of HR legal and other corporate functions. Hydro’s governance system is also based on responsibility being delegated from the CEA to the business areas and to central operative corporate functions within finances, tax and accounting. In order to ensure a uniform high standard, Hydro’s corporate directives laid down common requirements. They are compulsory for all the parts of the organization and they are build on the Hydro Way.

The directive addressed amongst others read strategy, business planning, finance management of risk organizational and employee development, health, environment, and safety and ethics and CSR. The content is available for all the employees at Hydro’s intranet and through the e-learning program, You and Hydro. Hydro complies with the code of practice for corporate governance of October 2012, but have minor departures on the following points. Newest 0.6 on general meetings. The code of practice requires that the members of the Board and nomination committee be present during the AGM. We have two departures to this point. The Board is not necessarily all the members present at the AGM. The items that have been considered by the AGM have not so far made this necessary. The Chair of the Board is always present to present the report and answer questions and the other takes part as needed. And we consider that this is sufficient.

The other departure is Article 10, in Hydro’s articles of association which stipulate that AGM is chaired by the share of the corporate assembly in or in her absence the Deputy Chair. This system has been approved by the general meeting.

The other point is point 14 in the code of practice, which requires that the Board of Directors should establish guiding principles on how it will act in the event of a takeover bid. For Hydro the Board has chosen not to drew up explicit main principles for dealing with this and the background for this is that the Norwegian state represented by the ministry of the trade and industry own 34.26% of the shares in Hydro at the 31st December, 2012. And has through the ownership report white paper ’13, 2012, 2011 clearly expressed its intention to continue its long-term ownership in the company for the purpose of keeping the company’s head office and research activities in Norway.

Are there any questions or comments to this statement regarding corporate governance? That doesn’t seem to be the case, so we will go on and the next item is item six, from the agenda, the Board’s statement on the stipulation of wages and other remuneration to the executive management. So, according to the Board has to stipulate the guiding principles for wages and other remuneration to the executive member and this is note 10 in the annual report. And we are to proceed to an indicative vote on this issue and this indicative vote concerns the guidelines for the company for stipulation of wages and other remuneration to the management. The declaration about the previous financial year 2012 is only for your information.

I give the floor to the Chair of the Board, Terje Vareberg who will present the board’s guidelines.

Terje Vareberg - Chair of the Board

So, the Board’s statement on the stipulation of wages and other remuneration is as had been sent included in ‘010 of the financial statements for 2012. I refer to this statement and I would like to emphasize the following in my review. The Board has appointed a separate compensation committee consisting of the Board’s Chairman and two shareholder elected Board members, as well as one employee representative. The committee functions as an advisory board to the board and to the CEO and is mainly responsible for making recommendations to the Board based on the committee’s annual evaluation of the remuneration of the CEO and other members of the corporate management. And the recommendation of the Board and also including the annual basis for bonus payment and the bonus is actually paid. And assist the CEO by consultation on the remuneration to the other members of the corporate management.

The committee also functions as the consultative body on other material management and organizational issues. Hydro’s guidelines for the remuneration of the company’s CEO and the other members of the corporate management is based on Hydro’s global HR policy, whereby and I quote Hydro shall offer its employees an overall compensation package that is competitive and in line with good industry standard in the country in question. Where appropriate, the compensation package should also include in addition to base salary, performance-based part that shall reflect individual performance. The Board proposes that following guidelines shall apply to the year 2013 and our 12th general meeting 2014.

The remuneration of the corporate management shall at all times reflect the responsibility of the COO and the other members of the management of Hydro taking into account the complexity and the broad range of the company’s operations as well as the company’s growth and sustainability of the operations. The overall compensation share is based on Hydro’s goal of being a competitive rather than a wage legal in the relevant labor markets. The Board will therefore pursue the same practice as last year, which is a moderation in the remuneration of the management, which reflects the expectations in this area. Hydro attaches important to transparency and to ensuring that remuneration arrangements are developed and implemented in accordance with principles of good corporate governance.

The main elements of the total remuneration to the CEO and the other members of the corporate management consist of fixed remuneration bonuses, with a maximum potential payment of 50% and 40% respectively of the salary for the CEO and the other members of the management. Share-based long-term incentives of respectively 30% and 25% of the annual fixed base salary for the CEO and the other members of the executive management, other share-based remuneration, the CEO and the other members of the executive management have the possibility to take full part in Hydro’s share scheme at same conditions as other entitled employees. We also have pensions and assurance schemes and severance pay for a period of 12 months, in addition to the notice period of six months. For persons who have become members of the corporate management in 2012 or later, the severance pay will be paid for a period of six months after notice periods of six months. And I refer you to note 12 if you need more details about the different remuneration components.

The remuneration to the CEO and the other members of the executive management for the financial year ‘12 was based in essence on the same guidelines as those prepared for – proposed for 2013. Pension is a major complex and topical issue and I’d like to make a few comments in that respect. In 2010, Hydro implemented an internal pension reform in establishing a defined contribution pension system in Norway. About 30% of the employees in Norway are members as at 1 January 2013 of the defined contribution pension. The CEO and the other members of the executive management are with one exception members of Hydro’s defined benefit pension plan but with a ceiling on what is considered pension giving earnings. One member in the executive management is a member of the defined contribution system in Norway.

The CEO and the members of the executive management also have contractual early retirement agreements which apply after reaching the age of 62 on terms described in note 10. The established scheme for earlier retirement between 62 and 65 years does not apply to persons with a contractual right to retiring before they reach the age of 62 or who have been members of the corporate management in 2012 or later. Are there any comments to these guidelines? That was a comment that was in the microphone, so the interpreters were not able to interpret that, that will come back under item eight apparently. Are there other comments to this item, no then we will do an indicative vote on this item.

We will now move on to item seven which is the remuneration to the members of the corporate assembly and the nomination committee. I give the floor to the secretary.

Anne-Lene Midseim - Corporate Secretary

The election committee or nominations committee recommends the following remuneration for the corporate assembly’s members from January 1, 2013. The leader annual remuneration NOK98,000, up from NOK95,000 with an addition of NOK7,100 per meeting where the leader is present and the deputy leader stroke member stroke deputy member NOK7,100 per meeting where the member is present up from NOK6,900. The remuneration was regulated in 2012. Any comments on this proposal? No, I see no comments. Would the general meeting be able to accept the proposed remuneration to members of the corporate assembly. We will go to the vote on 7.2 that is the nominations committee.

Terje Vareberg - Chair of the Board

I give the floor to the secretary.

Anne-Lene Midseim - Corporate Secretary

We recommend that the following remuneration be determined for the members of the nominations committee from January 1, 2013. Leader NOK6,300 for meetings where the leader is present, up from NOK6,100 and the other members of the election committee, NOK4,800 per meeting where the member is present, up from NOK4,600. And these remunerations were regulated in 2012. Any comments? I see no one on the list of speakers. So, the question to the AGM is can you adopt the nominations committee suggestion for remuneration as we – it was stated and we vote.

That brings us to item eight on the agenda. And one shareholder has signed on the list of speakers with a question. So I give the floor to Mr. (indiscernible) Evanston. And there is no microphone, so the interpreter can’t hear him. He needs a handheld mike or he needs to go to a rostrum.

Unidentified Company Speaker

Moderator, Board of Directors, ladies and gentlemen, I must say it’s been a pleasure to attend this AGM. I only regret that there are so few people attending the general meeting. And I think that actually ties in with my question to the AGM, if I may strike a personal note here, I have spent 35 years, I mean, I have an anniversary for my work. My striving for strengthening of shareholder policy in Norway, because I went to Johan Melander in DNC Bank, then and the Norsk Hydro model was started. He understood me. He knew what I wanted to do. So, I started savings association and that’s now the shareholders’ association, and I am in, I was member number one of that association. So, I have now devoted 25 years to financial reform. Right from the start I had the help of (indiscernible). He was a leading director of North Hydro, and he understood investment merchant services that define group model was maybe not the best solution and investment merchant services was perhaps what was needed in Norway. As of today, it is a fact that only 3% of the stock exchange ownership is on individual hands. So, I really lost on that count.

And regarding financial reform, it doesn’t look as if Norway is going to do anything about that either. I therefore hang up my boots. I have a foundation for ethics and business, and you will see me there, but not here in years to come. Okay, that brings me on to the subject in hand. I put the same questions last year you will see them here on my slide from the shareholder. And the board and I decided to postpone this until this year. And before this, I had a meeting with the management, the Secretary of the Board, and the current secretary and very exciting man for the first three questions and that was Hans Erik Vatne, the new director of Technology. And I noted that well it will come in 2013, but they did not present here. I mean this will be at the AGM in 2013. The thing is you see they have gone for this innovation center at (indiscernible), an R&D center, and I hope that they have a co-opting strategy to a great degree, I am not sure all of you know what that entails. The innovation theory is that it can be achieved through alliances, co-opting people into a social impact innovation for clients and clients of clients.

It’s been a pleasure to hear Mr. Brandtzaeg’s presentation, the CEO. He has made it very clear that there is marked improvement I praised you in 2011, but this is a boost in your presentation of the further development that you have planned for the company. This is on the webcast, but there should have been many, many more people attending, but you are halfway, they collect 10,000 people, but the Hydro Way should also manage to convene more people. This is a flagship of innovation work in fact. So, the first three bullet points are about this. Those of you who have been given my presentation will see some key words about this. The last two questions on my slide are what I announced that I would revert to its bullet points, four and five, but before I do that let me tell you one thing, the co-opted partner that you have in surprise, Orkla. And Orkla also have some interesting improvements that are interesting to shareholders and innovative development.

Let me highlight the fact that Orkla actually issue sustainability report. Hydro, this year Hydro published our ethical responsibility and work ethics, but I do remember that one of the previous CEOs was very concerned with an interest in this work, and I feel you have a lot of interesting input that you could present like this. And the question is whether the presentation should maybe be in English, even if we have Norwegian headquarters and even if you have simultaneous interpreters here, this is of interest to our worldwide audience after all or should be in future. And I won’t be coming back. This is my last chance to give you some advice.

So, let me address my last two bullet points. Orkla implemented, I have the memo here it was attached with Item 4 on the agenda. They abolished the election of the board by the corporate assembly. Instead the AGM elected the board directly. That is the main principle in the limited company act is just that they have actually delegated the power to the corporate assembly to elect them, but you can still use the corporate assembly in future as body for cooperation.

What I would like is for Hydro and the Hydro Model to be renewed both when it comes to shareholder policy and when it comes to governance. And my last bullet point is about a more forward-looking steering committee for financial codetermination and empowerment and common interests. They have developed share savings scheme for employees. There is no reason why this committee shouldn’t make it clear that they are working for all workers and employees in Hydro when it comes to remuneration. I would also ask you to take on board this idea that is possible to have nothing, but a fixed salary for the CEO, I don’t think there should be speculation on what I mean is he is not a short-term man this is a person who has reasoned through the corporation. He thinks long-term, so he doesn’t need that variable part. That’s an old agenda for board work.

I would ask you very strongly to simply give the CEO a fixed salary. This has been on the agenda before when the schemes were much more lucrative and there was a lot of resistance, they have cutback. And that’s a positive thing. I welcome what has happened regarding the NUES guidelines for corporate governance, regarding remuneration, and they have adjusted the pension part as well, which is a good thing. So, all I have to tell you now is that on 21st May, I have a meeting with the ownership department of the Ministry of Economy of Business and Industry, but that is my future plan, but I wish you every success.

May I please ask you one thing that I am a little curious about what happens to Sapa Heat Transfer now, because isn’t that a jewel in the crown that would fit into your presentation that you showed us today, but thank you for your attention and good luck in the future. Let’s say thank you very much to (indiscernible) for his kind words to the board and to the CEO and for three very clear questions and the Chairman of the Board will answer his questions. Thank you.

Thank you for the initiative of shedding light on important and topical subjects. And as you pointed out, you had meetings with the management and with our new director of technology. And on behalf of the management and on his behalf, I appreciate the kind words. You actually pick out a lot of problems that would take the rest of the day if the AGM was to discuss this extensively. And this will go beyond the affairs of an AGM, but I see that you have raised many interesting issues that the board will take along in its work in future, but I need to correct you on one point. We have a liability report, which is the same as sustainability report. And it is in place and I also want to mention that our Investor Relations people have received awards and recognition for our transparent reporting in Norwegian and English to the investor community, but yet nothing is cast in stone, everything can be improved and we take on board your views.

As for the comment on the work that the board is doing, I can tell you that we review our procedure every year, the structure of the committees, how we organize our work, and as for remuneration and wages and salaries. This is a province that is influx so to speak, it’s under continued development, and the board has attached importance to the fact that Hydro is a global cooperation, but it is rigid in Norwegian reality. I have said in public even that both the board and the owners have to accept that we live in a world of competition, where the fight for the best people will only escalate.

And the more important, the human capital is for the cooperation the more important it will be to get the smartest, the wisest people on board. As per today, we feel that we have struck a balance, a fair balance between fixed salary and variable components. There is a long-term incentive, a share buying scheme that is mentioned in the annual report that points out that this makes them long-term. The CEO and his management have some money to purchase shares with and they are tied to them for three years. And as for the bonus, this is not linked to share prices. All that was removed, external barrier was normalized, and it’s important for the board that the bonus payments must be linked to the underlying drivers that will create results at a later time. So, let me summarize from the board a lot has happened in recent years. The structural measure with the Sapa will become very important. You had a specific question about the elements. I don’t think I can answer specific questions, but we take your views on board and we thank you very much for your questions, and we wish you every success in the future.

I also think it is important that the Hydro Way leads the way when it comes to reassuming this shareholder club or shareholder association that Hydro had. Remember at the last meeting in (indiscernible) there were 800 individual shareholders present there. That would support the Hydro Way, that were different that we are a pioneering company. CEO, Brandtzaeg, I have a comment about Heat Transfer in Sapa, the situation is that Hydro is heavily involved in the Heat Transfer area, and if we had acquired that, we would have got problems with the competition authorities. We are heavy players already in that area. We have a strong position. It’s about air-conditioning and radiators in cars and so on. So, we have sufficient capacity in that field.

Let me tell you one more thing, one last comment, yes, and that is I forgot to mention that you have a much more exciting board than you used to have. And you now have international directors, this is exciting. And finally let me say that these are all questions on the slide, so many things have changed in the right direction. I almost regret, but I was faithful to my old questions, because the agreement was that I would re-raise them this year and thank you very much for your attention.

Thank you, Mr. Evenson. Does anyone else want the floor? I can’t see anyone. In that case, we have come to Item 9, which is a review and reading of the results of the voting for the various items of the agenda. So, I give the floor to the Secretary.

Anne-Lene Midseim - Corporate Secretary

The protocol of the shareholders present and the shares present, the total number of people with voting – shares with voting rights is 1,434,427,639 shares or a total number of shares with the voting rights 2,038,789,033 shares with voting rights. And we also have the voting results, the results of the votes, sorry. All items have been carried with the necessary majority, and all items except one have been approved and accepted by more than 99% of the votes. The exception is Item 6 on the agenda, which was carried by 95.75% of the votes. The final count will be attached to the protocol or the minutes of the meeting, which will be on the website. So, we have covered all the items on the agenda. And within a few days, the minutes from the AGM will be published on the website of the company, and they will also be available for inspection at the head office. I thank all the shareholders for attending. And we adjourn the meeting. Enjoy your weekend.

Question-And-Answer

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