Norsk Hydro boosts spending on expected aluminium uplift

Norsk Hydro, one of the world's largest producers of aluminium, will increase capital expenditure by almost 40 percent next year to modernise equipment in expectation of accelerating global demand over the next decade.

The company's optimism was tinted with caution, however, a sit introduced the latest in a string of cost-cutting program mes after the global economic downturn hit industries from auto makers to builders and brought a steady decline in benchmark aluminium prices in recent years.

Norsk Hydro expects an improving demand outlook to take hold next year and said it would lift capital expenditure to 4.3billion crowns ($700 million) from an estimated 3.1 billion crowns in 2013.

"World aluminium demand outside China is estimated to grow 2percent in 2013 and 2-4 percent in 2014," the company said in a statement ahead of a capital markets day. "The global aluminium market is expected to show solid long-term growth of 4-6 percent annually over the next 10 years."

The extra expenditure will be used to modernise key equipment at several aluminium smelters, Chief Executive Svein Richard Brandtzaeg said.

So far Norsk Hydro has had a poor return on capital expenditure compared with its peers.