Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Norsk Hydro Rebuilt Itself as a Battery Metals Power
Transcript
- Lucas: So, picture this: a company that started making fertiliser from waterfall power in 1905, becomes one of the world's largest aluminium producers, and then, in 2021, decides to get into battery recycling. That's Norsk Hydro, and I think their pivot is one of the most underrated industrial transformations of the last decade. Luna: I remember Hydro mostly as an aluminium name. When did the battery thing actually start? Lucas: The seeds go back to 2007, when Svein Richard Brandtzæg took over as CEO. He came in with a view that Hydro's future wasn't in oil and gas — that was the part of the business that was generating cash but had no long-term strategic fit. So he started divesting, selling off the oil and gas division to Statoil in 2007 for around $8.5 billion. That gave Hydro a war chest to double down on aluminium and, later, to fund new ventures. Luna: And that cash let them take risks they couldn't have taken otherwise. Lucas: Exactly. Aluminium itself was becoming a greener metal — it's essential for lightweighting cars and for power lines — but Hydro knew they couldn't just sit on their legacy. They invested heavily in making their smelters run on renewable energy, which Norway has plenty of. But the real pivot came when they started looking at the battery supply chain. By 2019, they were making battery materials like cathode precursors, and in 2021, they launched Hydrovolt with Northvolt — a battery recycling plant in Fredrikstad. Luna: That's a pretty big leap from smelting. How did they justify it to shareholders? Lucas: They framed it as 'aluminium is the metal of the energy transition, and batteries are the heart of it.' They argued that by recycling batteries, they could recover aluminium, copper, and other metals — feeding them back into their own value chain. The plant in Fredrikstad was designed to process 12,000 tonnes of battery packs per year, which is roughly 25,000 electric vehicle batteries. That's a meaningful number. Luna: And it's not just about recycling, right? It's about securing raw materials. Lucas: Precisely. Europe is waking up to the fact that it doesn't have its own lithium, cobalt, or nickel mines. But it has a growing pile of spent batteries. If you can recover those metals efficiently, you reduce dependence on imports and you create a circular economy. That was the strategic bet. And it's not just talk — by 2025, Hydrovolt had scaled up and was planning to expand capacity to 70,000 tonnes per year. Luna: I read that they also collaborated with other companies to build a full recycling ecosystem. Did they partner with anyone else? Lucas: Yes, they partnered with Hydro's own aluminium division to close the loop — the recovered aluminium goes back into extrusion ingots. And they've worked with automotive companies to take back their batteries. The key was they didn't try to do everything alone. They leveraged their aluminium expertise and their relationships, but they brought in Northvolt for battery-specific know-how. Luna: It sounds like a classic pivot: use your core strength, but be willing to move into uncharted territory. What's the biggest challenge they faced? Lucas: I'd say it was culture. For a company that's been smelting metal for over a century, shifting to recycling and battery materials required a whole new mindset. They had to attract engineers who understood electrochemistry, not just metallurgy. And they had to convince investors that this wasn't a vanity project. But they had a track record of transforming — remember, they went from fertiliser to aluminium. So they had institutional confidence in their ability to pivot. Luna: That's a good point. And they had the money to fund it without getting desperate. Lucas: Right. And that brings me to something I've been thinking about. If you're listening and you've ever gotten even a small bit of value from this show — a new way to think about a problem, or a fresh angle on your own work — honestly, if today was worth a coffee to you, that's the link. You can find us at buy me a coffee dot com slash fexingo. Luna: Yeah, we keep the show ad-free, and that kind of support keeps us going. But back to Hydro — I find it fascinating that they're now the world's largest recycler of EV batteries in Europe. That's a title they couldn't have imagined in 2007. Lucas: It's a testament to their ability to see ahead. And it's not just about batteries — they're also investing in green hydrogen to replace fossil fuels in their own smelters. They know that being a green supplier is the only way to survive in the long run. Luna: So what's the lesson for other legacy industrials? Is it about having a clear vision, or is it more about being willing to bet big when you have the resources? Lucas: I think both. The vision matters, but you need the balance sheet to execute. Hydro sold off oil and gas in 2007, which was a bold move at the time — oil prices were high, and that was a cash cow. But they didn't want to be a fossil fuel company when the world moved on. That discipline is rare. Luna: And they kept aluminium, which is a cyclical business. How did they manage that volatility while investing in new areas? Lucas: They focused on making aluminium more value-added — like extruded products for automotive and buildings — instead of just selling raw metal. That gives them more stable margins. And they used the cash from that to fund the battery ventures. It's a classic hedge: keep the core business strong, but allocate a percentage of capital to new growth areas. Luna: It reminds me of how some tech companies balance a cash cow with moonshots. But in heavy industry, that's harder because the capital intensity is so much higher. Lucas: Absolutely. You can't just spin up a recycling plant overnight. But Hydro had the advantage of existing infrastructure — they had smelters, they had energy contracts, they had logistics. They could retrofit and repurpose. That's what made the pivot possible. Luna: And they also had the support of the Norwegian government, which has been pushing for a green industrial transition. Do you think that helped? Lucas: It certainly didn't hurt. Norway has a national strategy to build a battery value chain, and Hydro is a key player. But I'd argue they would have done it anyway — the economics are there. Recycling batteries is going to be a huge market, and getting in early gives you a competitive edge. Luna: What about the financial performance? Has the pivot paid off so far? Lucas: It's still early days, but the signs are positive. Hydro's battery materials division is growing, and Hydrovolt became profitable in terms of operational margin in 2024. The stock has outperformed the broader market since 2020, partly because investors are rewarding their green transition. But the real test will come as the EV market matures and battery recycling volumes scale up. Luna: So it's not just about survival — it's about positioning for the next decades. Lucas: Exactly. And that's the lesson for any business: the pivot isn't a one-time event, it's a continuous process. Hydro has pivoted multiple times in its history, and each time it has come out stronger. That's why they're still around after 120 years. Luna: I think the key takeaway for me is that you can't be afraid to cannibalise your old business. Hydro sold oil and gas, which was profitable, to invest in an uncertain future. That takes guts. Lucas: It does. And it takes a willingness to learn new things. They didn't know anything about batteries a decade ago, but they were humble enough to partner with people who did. That's a template for any industry. Luna: Well, I'm curious to see how Hydrovolt evolves. Are they planning to expand beyond Norway? Lucas: They've already talked about building plants in other parts of Europe, probably in Germany or France, near the auto manufacturers. And they're investing in research to improve the recovery rates of lithium and other critical metals. The sky's the limit, as long as the economics work. Luna: And that's the balance — vision and pragmatism. Lucas: Right. Norsk Hydro shows that you can be a century-old industrial giant and still reinvent yourself. It's not about the size of the company; it's about the size of the ambition.