Annual report 2022
Dual-play growth &
green leadership
Delivering your potential
We are Elkem
Advanced silicon-based
materials shaping a better
and more sustainable future
Elkem in brief
Who we are and
what we do
45.9
NOK billion total
operating income
28%
EBITDA margin
>80%
renewable
electricity
0
net zero
emissions by 2050
Elkem is one of the world’s leading suppliers
of advanced silicon-based materials shaping a
better and more sustainable future. The company
develops silicones, silicon products and carbon
solutions by combining natural raw materials,
renewable energy and human ingenuity. Elkem
helps its customers create and improve
essential innovations like electric mobility, digital
communications, health and personal care as well
as smarter and more sustainable cities.
With a strong track record since 1904, Elkem's
global team of more than 7,300 people has a
joint commitment to stakeholders: Delivering
your potential. Elkem is listed on the Oslo Stock
Exchange (ticker: ELK) where it is part of the
OBX® ESG Index, a selection of 40 blue-chip
companies demonstrating best Environmental,
Social and Governance (ESG) practices.
Our divisions
Silicones
Silicon Products
Carbon Solutions
Table of contents
Elkem's history
Highlights
Elkem’s value chain
8
10
14
Letter from the CEO
16
The Elkem way
Silicones
20
22
Silicon Products
24
Carbon Solutions
26
The Elkem share
30
Board of directors’ report
Board and management
Corporate governance
Overview of main risk areas
34
50
52
68
Risk descriptions
70
ESG report
Introduction
74
76
The Elkem climate roadmap
ESG management
Environmental
80
84
96
Social
120
Governance
136
Third party verification
Taxonomy report
154
156
Financial statements
160
Consolidated financial statements
164
Notes to the consolidated financial statements
170
Financial statements – Elkem ASA
254
Notes to the financial statements – Elkem ASA
259
Declaration by the board of directors
Independent auditor’s report
Alternative Performance Measures (APMs)
291
292
298
Elkem's history
Foundation
→
Sam Eyde establishes Elkem
→
Development of electrometal-
lurgical processes
1904
Innovation
→
The Fiskaa Verk, Norway site is
purchased in 1917 for experimental
and research purposes
→
Elkem patents the Söderberg
electrode in 1918
→
Elkem listed on Oslo
Stock Exchange
Expansion
→
Producer of aluminium
→
Partner with Alcoa
→ Rhöne-Poulenc is
established in 1948
1950
Industrial giant
→
Elkem merges with
Christiania Spigerverk to
become one of Norway's
largest companies
→
Xinghuo plant is
established in 1968
Internationalisation
→ International expantion;
steel and ferroalloys
→
Acquisition of Union Carbide
Portfolio optimisation
→
Sold metal business
→
Acquisition of Icelandic Alloys
→
Start-up of Elkem Solar
→
Elkem acquired by Orkla
and delisted from the Oslo
Stock Exchange
Growth & specialisation
→
Rhodia Silicones acquired by
Bluestar in 2007, renamed
Bluestar Silicones International (BSI)
→
Elkem acquired by Bluestar in 2011
→
Merger with BSI in 2015
→
Spin-off of Elkem Solar
2000
Integration
→
Becoming a global, integrated leader in
silicon-based advanced material solutions
→
Initial public offering: Re-listing on the
Oslo Stock Exchange in 2018
→
Integrated with and acquisition of Xinghuo
and Yongdeng, with successful branch
expansion at Xinghuo
2020
Dual-play
growth
and green
leadership
→
Record financial results in
2021 and 2022
→
Solid balance sheet enables
attractive dividend and
growth investments
→
Well-positioned for global
megatrends like green
transition and digitalisation
→
Good portfolio balance between
East and West – and upstream
and downstream
→
Awarded double A- scores from
CDP on climate and forests
→
Aiming to be one of the winners
in the green transition
→
Vianode, with Elkem as largest
shareholder, investing NOK
2 billion in battery materials plant
10 highlights
from 2022
In 2022, Elkem delivered its best financial
result in the company's 118-year history.
Elkem benefitted from its robust business
model and high market prices.
1Q-2022
→
Elkem was awarded a platinum rating on sustainability
transparency from EcoVadis, one of the world’s largest
and most trusted providers of sustainability ratings
→
Elkem announced a partnership with Hydro and Altor
to accelerate the growth of Vianode. Hydro and Altor
to have 30% ownership each, while Elkem retained
40% ownership
→
Elkem made a decision to invest NOK 150 million
in a flagship R&I centre in Shanghai, China to meet
the growing demand for advanced silicone products
and technologies
2Q-2022
→
Elkem signed a new credit facilities agreement of
EUR 1,000 million. The facilities agreement includes
sustainability performance targets linked to health
and safety and reduction of the group’s product
carbon footprint
→
Elkem entered into new 7-year power contract
in Norway starting from 2027 with an aggregate
volume of 2.5 TWh
3Q-2022
→
In September, Elkem celebrated the opening of its
new specialised silicones facility in York, S.C., USA for
production of high purity silicone materials to medical
implantable and pharmaceutical applications
→
Elkem Silicones was declared 2022 R&D 100 Awards
winner in Mechanical Materials category for safety
and reliability for silicone solutions for electric vehicle
thermal management
→
Supported by Elkem, Hydro and Altor, Vianode made
the decision to build the first phase production plant
for advanced battery materials at Herøya, Norway
4Q-2022
→
Elkem successfully placed a series of floating rate
loans in the Schuldschein market, amounting to
EUR 200 million
→
Inauguration of the world’s first carbon capture pilot
for smelters in Rana, Norway, with main goal to verify
the technology on industrial gases from smelters and
other process industries
→
Elkem awarded double A- scores from CDP for efforts
on climate and forests, and B score on water security
Plants
Offices
HQ
Key figures
Unit
2022
2021
2020
2019
2018
2017
2016
Total operating income
NOK million
45 898
33 717
24 691
22 668
25 230
20 985
16 594
Operating income growth
Ratio
36%
37%
9%
-10%
20%
26%
EBITDA
NOK million
12 925
7 791
2 675
2 656
5 793
3 188
1 559
EBIT
NOK million
10 898
5 899
948
1 189
4 522
1 927
264
Profit (loss) for the period
NOK million
9 642
4 664
278
897
3 367
1 249
-268
Cash flow from operations
NOK million
9 551
4 100
1 513
2 133
4 031
2 336
627
Reinvestments in % of D&A
Ratio
84%
91%
81%
80%
84%
72%
57%
Total assets
NOK million
52 781
41 850
30 888
29 004
31 129
25 507
23 092
Net interest-bearing debt
NOK million
2 615
4 827
8 058
5 722
3 264
8 111
9 502
Debt leverage
Ratio
0.2
0.6
3.0
2.2
0.6
2.5
6.1
Equity
NOK million
28 773
19 874
12 635
12 952
13 722
8 565
5 830
Equity share
Ratio
55%
47%
41%
45%
44%
34%
25%
Return on capital employed (ROCE)
Ratio
40%
26%
5%
7%
26%
12%
2%
Earnings per share (EPS)
NOK
15.09
7.49
0.41
1.47
5.74
2.08
(0.52)
Number of employees
Number
7 372
7 074
6 856
6 370
6 280
6 113
6 022
Total recordable injury rate H1+H2
Ratio
3.2
3.7
2.3
2.2
2.2
3.1
5.3
NO emissions
x
Tonnes
6 519
8 932
6 610
6 718
7 068
7 109
7 309
Total CO emissions (Scope 1, 2 and 3)*
2
Mill tonnes
10.74
11.60
10.27
Energy consumption
TWh
6.54
6.54
6.40
6.01
6.23
5.28
4.40
* Total scope not reported before 2020.
Elkem’s value chain
Low cost sustainable
input factors
Quartz
Coal
Biocarbon
Renewable power
High temperature/chemical
production processes
Silicones
Silicon Products
Carbon Solutions
Examples of applications
and markets
Mobility and
Science and
Healthcare
transportation
chemicals
Digital
Smart cities and
Energy
communication
construction
and power
Personal care and
Advanced
consumer goods
manufacturing
and industrial
Letter from the CEO
All-time high results in
an extraordinary year
The unprecedented market momentum continued into
2022, enabling Elkem to deliver all-time high revenues
and financial results. We also continued to position for the
future by launching an updated corporate strategy focusing
on our integrated business model and green leadership.
Elkem continued to benefit from exceptionally
strong markets in 2022. However, the all-time high
results were also largely a result of strong cost
and market positions, built-up over time through
continuous improvement and strategic choices. We
have secured access to low-cost and sustainable
input factors and been able to maintain and deliver
high productivity and quality, despite supply chain
challenges and trade restrictions.
Our record results and current solid balance sheet
will enable an attractive dividend to shareholders
and secure continued investments in growth,
driven by global megatrends like the green
transition and digitalisation.
Good operational performance
I am impressed by how our entire global team
in Elkem has delivered excellent operational
performance throughout a challenging year. The
restrictions related to the coronavirus pandemic
(Covid-19) continued but were eased significantly in
most countries during the year.
Russia’s invasion of Ukraine has significantly
influenced market dynamics, primarily through the
impact on energy prices. At the outbreak, Elkem did
not have any manufacturing or own employees in
Ukraine or Russia and these countries accounted for
a very limited part of our revenue. We continuously
monitor and comply with all sanctions on Russia
relevant to our operations.
At the end of the year, we decided to partially
curtail production at two plants in Norway due to
high power prices. This enabled us to optimise
value creation and contribute to increased flexibility
in a tight power market for households and
businesses in Norway.
Focus on safety improvement
Regrettably, we have had two high-severity
incidents involving contractors during the year,
and in general experienced a setback during the
pandemic with a high number of low-severity
incidents both in 2021 and 2022.
A new and reinforced system for Health, Safety
and the Environment (HSE) improvement is now
being rolled out globally in Elkem in order to
reverse the trend.
Prepared for the future
In the near term, we expect a slowdown in
global economic activity and that market prices
will come down to more normal levels. However,
there is significant uncertainty on how macro-
economic development and inflationary pressure
will impact demand, and continued volatility in our
markets is likely.
In the longer term, global megatrends remain
strong, and the critical raw materials are increasingly
important in building a sustainable future.
Helge Aasen
CEO, Elkem ASA
Strong growth in Asia combined with re-
industrialisation in the western part of the world
will create opportunities for Elkem. In the green
transition, we have a particular focus on the fast-
growing electric mobility segment. An electric
vehicle typically contains four times more silicones
than a conventional car.
Geopolitical tensions are on the rise, and increasing
trade barriers create risks, but also opportunities.
Elkem is among very few companies with complete
and integrated value chains in different regions,
making us less vulnerable to disruptions in supply
chains and trade flows.
A strategy of dual-play growth
and green leadership
It is on this basis we have set out specific growth
ambitions for Elkem: We aim to become among the
top three players in the silicones industry worldwide,
and to be the number one player in silicon products
and carbon solutions in the West.
This means growing not just with the markets we are
in, but faster. We aim to grow by more than five per
cent per year, but also to do so profitably, with an
EBITDA margin of at least fifteen per cent per year.
We have a good balance between Eastern and
Western markets, with around 60% of our revenues
in the West and 40% in the East. This balance
provides more stability in revenue and earnings.
As we have seen during the pandemic, weakness
in one region has largely been offset by a more
positive development in other regions. In addition,
the pandemic showed the vulnerability of global
supply chains.
We have experienced that Elkem’s integrated value
chain provides significant competitive advantage
and margin protection.
Green leadership: One of the winners
in the green transition
Elkem aims to be part of the solution to combat
climate change – and to be one of the winners in
the green transition. We will do this through three
key levers:
→
Reducing our emissions: we already have
a strong position with 83% of our energy
consumption being renewable. Our target is to
reduce overall CO
2
emissions by 28% within
2031. In December, Elkem was awarded double
A- scores from CDP for the company’s efforts
on climate and forests.
→
Supplying to the transition: Elkem aims to
grow its supplies of advanced materials to
green markets such as better buildings, electric
vehicles and renewable energy. Our largest
single customer across Elkem globally is now a
globally recognised producer of electric vehicles.
→
Enabling circular economies: we continue to
work closely with customers and researchers
to increase recycling within our own
operations, as well as developing the eco-
design of innovative products.
Unprecedented volatility –
but also opportunity
For us in Elkem, and our entire global team,
across geographies and divisional lines, from top
management to front-line workers, we are aligned
around a clear mission: To provide advanced
silicon-based materials shaping a better and more
sustainable future. This describes what we do, but
also why we do it and why it is so important.
I have been in Elkem’s top management for twenty-
two years, and now more than twelve years as CEO.
I have never seen such volatility in markets combined
with inflationary pressure and uncertainty regarding
future economic activity as now. At the same time,
I also see an unprecedented opportunity for Elkem
given our diversity geographically and culturally, our
broad product range, and good positions to take part
in the green transition.
This gives me confidence that we will be able to
continue to deliver value for all our stakeholders – in
line with our purpose: Delivering your potential. Not
just in 2022, which has been an exceptional year,
but in many years to come.
Helge Aasen,
CEO, Elkem ASA
Who we are, how we work and why we are here
The Elkem way
We are Elkem
→
A leading global provider of silicon-based advanced materials
Our mission
→
Elkem’s products are critical input factors to a vast number of applications
Advanced silicon-based
that are necessary in sustainable solutions enabling renewable energy,
materials shaping a better
energy storage, mobility solutions, infrastructure improvements and
digital communications
and more sustainable
→
Elkem develops its business in accordance with the UN Sustainable
future, adding value to
Development Goals and the Paris agreement
stakeholders globally
→
It is our belief that companies that act responsibly and create value by
securing sustainable economic growth with a limited environmental
footprint will be successful in the long term
Our purpose
→
Elkem’s purpose is in our commitment to stakeholders: Delivering
Delivering your potential
your potential
→
We believe that the long-term megatrends – like sustainability, energy
demand, urbanisation, increased standard of living, ageing and growing
population, and digitalisation – will continue
→
This will drive growth in demand for advanced materials, including
silicones, silicon and carbon solutions
→
We in Elkem are a team of professionals powered by passion for people.
We bring agile and innovative solutions to our customers and our other
stakeholders, because we care
Our values
→
Involvement
commits people. We know that only people can identify
Involvement
problems and opportunities and find solutions. By involving colleagues,
Respect
customers and other stakeholders, and by being transparent and committed
to teamwork, we increase our ability to learn and develop new solutions
Precision
→
We
respect
the law, the environment, our employees, colleagues,
Continuous improvement
customers, suppliers, owners, local communities and different cultures.
Respect is about being fair, open and honest, trusting your colleagues and
partners and appreciating diversity
→
Commitment to
precision
expresses itself through our work to develop
and follow standards of best practice and safe and stable production. By
establishing work and safety standards, we can measure and continuously
improve our performance
→
We know that the value chain can always be improved. We do this through
experimenting, using new technology and looking for ways to eliminating
waste.
Continuous improvement
means that we are always looking for
improvement potential, keeping an open mind and always ready to learn
and share our knowledge
Our growth ambitions
→
Top 3 in silicones worldwide
→
Number 1 in silicon products and carbon solutions in the West
Our corporate strategy
Dual-play growth
→
Balanced between
geographic regions
(East & West)
→
Balanced across the
value chain (Upstream &
Downstream)
>5%
Growth per year
>15%
EBITDA margin
per year
Dual-play growth and
green leadership
Green leadership
→
Strengthening position
as best in the industry
on low
CO
2
→
Growing supplies to
green transition and
creating green ventures
-28%
Reduce CO
2
(2020-2031)
0
net zero emissions
by 2050
Silicones
→
Balanced geographical growth
→
Improve cost position
→
Higher degree of specialisation
Silicon Products
Selective growth
Secure leading cost positions
Lower carbon emissions
→
→
→
Carbon Solutions
→
Selective growth
→
Sustainable low-cost position
→
Preferred supplier with
high quality
Silicones
Strong growth potential
with green shift and global
middle-class rising
19.3
NOK billion in total
operating income
42%
of group sales*
*Share of group sales from external customers ex. Other
End markets
→ Construction
→ Automotive
→ Chemical formulators
→ Personal care
→ Healthcare
→ Paper and film release
→ Silicone rubber
→ Textile
Elkem is a fully integrated producer from silicon metal to
upstream siloxane and downstream silicone specialties.
Silicones can be manufactured into many forms including
solids, liquids, semi-viscous pastes, foams, oils and rubber.
They are flexible and can resist moisture, chemicals, heat,
cold and ultraviolet radiation.
Due to its wide range of application areas, silicones are
used in a large number of products and industries, including
manufactured goods, construction materials, electronics,
consumer and medical items.
Silicones can be encountered every day in a number of
areas, including in personal care products, in cars, in the gel
on a wound dressing and in sealing and insulating materials
in electrical equipment.
The main growth drivers are the green transition and the
rise of middle class worldwide to serve markets such as
electrification of transportation, electronics, and healthcare.
The division’s key strategic focus is on balanced geo-
graphical growth between the main markets in the Eastern
and Western world, improve the cost position through new
investments in France and China, and to focus on R&D and
further specialisation of the products portfolio.
14 main plants
China
Xinghuo, Shanghai,
Zhongshan ,
Yongdeng (silicon)
France
Roussillon, Saint-Fons,
Salaise-sur Sanne
Germany
Lübeck
Italy
Caronno
Spain
Santa Perpetua
USA
York
Brazil
Joinville
India
Pune
Korea
Gunsan
Key figures
2022
2021
2020
2019
2018
Total operating income (in NOK million)
19 288
17 429
12 800
11 319
13 130
EBITDA (in NOK million)
2 022
3 672
1 326
1 486
3 629
EBITDA margin (in %)
10%
21%
10%
13%
28%
Number of employees
4 637
4 395
4 224
3 718
3 677
Sales volume (thousands metric tonnes)
394
409
372
336
314
Silicon Products
Global leader in silicon-based
materials and solutions
24.5
NOK billion in total
operating income
50%
of group sales*
*Share of group sales from external customers ex. Other
End markets
→ Automotive
→ Construction/industrial equipment
→ Electronics
→ Specialty steel
→ Solar and wind turbines
→ Refractories
→ Oil and gas
Elkem is a leading producer of silicon-based materials,
including silicon, ferrosilicon, specialty alloys based on
ferrosilicon and Microsilica
®
.
Silicon is used in silicones, aluminium alloys and polysilicon,
and has a number of favourable chemical and physical
properties, including semi-conductivity, making it highly
versatile for numerous industrial and electronic applications.
Ferrosilicon is mainly used in the steel industry to remove
oxygen from the steel and as an alloying element to
enhance the quality, including strength and elasticity.
Foundry alloys are used in the production of iron castings to
improve their properties such as tensile strength, ductility
and impact properties. Microsilica is a process product
of the silicon and ferrosilicon production and is used in
construction, refractory, oilfield and polymer industries.
The main markets are automotive, construction, electronics,
and renewable energy.
Elkem has low-cost positions based on scale and
operational excellence, as well as strong market positions in
specialty niches based on deep application knowledge and
close customer relationships.
The division’s strategy is based on selective growth
opportunities, securing leading cost positions, and to lower
the carbon emissions.
10 main plants
Norway
Salten, Thamshavn,
Rana, Bremanger,
Bjølvefossen,
Iceland
Grundertangi
China
Shizuishan
India
Nagpur
Paraguay
Limpio
Canada
Chicoutimi
Key figures
2022
2021
2020
2019
2018
Total operating income (in NOK million)
24 457
14 783
10 804
10 151
10 822
EBITDA (in NOK million)
10 224
3 702
1 212
994
1 990
EBITDA margin (in %)
42%
25%
11%
10%
18%
Number of employees
1 958
1 904
1 890
1 889
1 875
Sales volume (thousands metric tonnes)
490
502
479
445
466
Carbon Solutions
Market leader in electrode
paste and specialty products
to metallurgical industries
3.8
NOK billion in total
operating income
8%
of group sales*
*Share of group sales from external customers ex. Other
End markets
→ Ferroalloys
→ Silicon
→ Aluminium
→ Iron foundries
Elkem is a leading producer of specialty carbon
products for various metallurgical smelting processes
and primary aluminium industries and the only producer
with a global reach.
Carbon products are used in electric arc furnaces and by
the aluminium and iron foundries industries. Søderberg
electrode paste is the most common electrode system used
in submerged arc furnaces to ensure that the raw material
reaches the required process temperatures. The Søderberg
electrode technology has more than 100 years of successful
technology leadership. The technology and carbon products
are used by producers of silicon, ferrosilicon, ferrochromium,
ferronickel, ferromanganese, silicomanganese, calcium
carbide and copper and platinum matte.
The main market drivers are linked to the production of
steel and ferroalloys and high-quality electrodes are critical
for the customer’s productivity.
The division's strategy is based on selective growth
opportunities, sustainable low-cost positions and high-
quality products giving status as preferred supplier.
6 main plants
Norway
Kristiansand
Brazil
Serra (Carboindustrial
and Carboderivados)
South Africa
Emalahleni
China
Shizuishan
Malaysia
Bintulu
Key figures
2022
2021
2020
2019
2018
Total operating income (in NOK million)
3 752
2 176
1 870
1 838
1 895
EBITDA (in NOK million)
1 166
508
437
312
335
EBITDA margin (in %)
31%
23%
23%
17%
18%
Number of employees
401
395
394
420
422
Sales volume (thousands metric tonnes)
302
294
256
257
289
The Elkem share
Elkem aims to be an attractive investment for
shareholders, delivering competitive return through
sustained growth and a consistent dividend policy.
NOK 22.5 bn
Elkem’s market cap as at
31
December 2022
NOK 6.00
dividend per share for 2022
12,874
shareholders
639.4
million shares
→
Elkem ASA is a public limited company. The
share is listed on the Oslo Stock Exchange
and the ticker code is ELK
→
Elkem ASA was re-listed on Oslo Stock
Exchange on 22 March 2018
→
Elkem ASA has one share class with
639,441,378 ordinary shares, each with a
nominal value of NOK 5
→
All shares have equal rights and are freely
transferable. Each share grants the holder
one vote and there are no structures granting
disproportionate voting rights
→
Bluestar Elkem International Co. Ltd. SA, owned
by China National Bluestar is the majority
shareholder with 52.9%
→
Nine analysts are covering Elkem, providing
market updates and estimates for Elkem’s
financial development
Elkem’s financial targets
Target metric
Targets
Comments
Revenue growth (%)
5 - 10%
Grow faster than market through specialisation,
organic growth and acquisitions
EBITDA margin (%)
15 - 20%
Target average margin through
the economic cycle
Reinvestments % of D&A
80 - 90%
Ensure appropriate and disciplined capital
allocation following long-term plans
Debt leverage ratio
1.0x - 2.0x
Ensure efficient and robust capital structure
Dividend target
30 - 50%
of group profit
Stable and predictable over time
Dividend overview
Pay-out ratio (%)
50%
25%
0%
2018
2019
2020
2021
2022
Dividend yield (%)
20%
10%
0%
2018
2019
2020
2021
2022
Elkem intends to pay dividends reflecting the underlying
earnings and cash flow. The company will target a dividend
pay-out ratio of 30-50% of the group's profit for the year.
The proposed dividend for 2022, subject to approval from
the annual general meeting in 2023, is NOK 6 per share,
representing 40% of the group’s profit for the year.
Year
Earnings
per share
Dividend
per share
Date
proposed
Date
approved
Ex date
Pay-out ratio
Dividend
yield (%)
2022
15.09
6.00
08.02.2023
28.04.2023
02.05.2023
40%
17%
2021
7.49
3.00
09.02.2022
27.04.2022
28.04.2022
40 %
9 %
2020
0.41
0.15
09.02.2021
27.04.2021
28.04.2021
37 %
1 %
2019
1.47
0.60
12.02.2020
08.05.2020
11.02.2020
41 %
2 %
2018
5.74
2.60
11.02.2019
30.04.2019
02.05.2019
45 %
8 %
Share price development since listing
50
45
40
35
30
25
20
15
10
5
0
2018
2019
2020
2021
2022
Common share data
2022
2021
2020
2019
2018
Share price high (NOK)
43.70
38.50
29.60
36.10
45.00
Share price low (NOK)
27.30
25.70
11.20
20.20
21.00
Share price avg (NOK)
35.60
32.20
20.40
25.10
34.00
Share price year-end (NOK)
35.20
29.80
28.40
24.80
22.20
Volume
290 206 422
438 749 361
303 729 619
369 570 346
342 107 122
Turnover
10 324 893 777
14 103 001 272
6 114 487 641
9 438 910 774
10 506 950 753
EPS (NOK)
15.09
7.49
0.41
1.47
5.74
Market cap. year-end (NOK billion)
22.50
19.10
16.50
14.40
12.90
Shares outstanding for 2022
634 476 985
633 037 606
581 310 344
581 310 344
581 310 344
Shares issued
639 441 378
639 441 378
581 310 344
581 310 344
581 310 344
Geographical distribution of shareholders
As of 31 December 2022 Elkem had 12,874 shareholders
10.7%
1.2%
1.6%
5.3%
China
Norway
United States
Sweden
Finland
28.3%
52.9%
Other
The 20 largest shareholders as of 31 December 2022
Rank
Name
Holding
Stake
Change from
2021 %
Citizenship
1
China National Bluestar
338 338 536
52.9 %
∙
-
China
2
Folketrygdfondet
27 621 555
4.3 %
↓
-6 %
Norway
3
Alfred Berg Kapitalforvaltning
23 394 407
3.7 %
↑
4 %
Norway
4
Must Invest
14 000 000
2.2 %
↑
6 %
Norway
5
Storebrand Asset Management
13 588 521
2.1 %
↑
3 %
Norway
6
Pareto Asset Management
9 841 226
1.5 %
↑
22 %
Norway
7
Vanguard
9 512 660
1.5 %
↑
11 %
United States
8
Arctic Fund Management
7 800 305
1.2 %
↓
-16 %
Norway
9
Nordea Fonder
7 317 911
1.1 %
↓
-29 %
Norway
10
JP Morgan Asset Management
7 170 463
1.1 %
∙
New
United States
11
BlackRock
5 399 562
0.9 %
↑
19 %
United States
12
Elkem ASA
4 964 393
0.8 %
↓
-22 %
Norway
13
DNB Asset Management AS
4 193 580
0.7 %
↓
-44 %
Norway
14
SEB Fonder
4 145 695
0.6 %
∙
New
Sweden
15
Handelsbanken Fonder
4 062 771
0.6 %
↓
-19 %
Sweden
16
Eika Kapitalforvaltning
3 568 893
0.6 %
↓
-33 %
Norway
17
First Fondene
3 559 529
0.6 %
↓
-35 %
Norway
18
KLP Kapitalforvaltning AS
3 243 825
0.5 %
↓
-40 %
Norway
19
Forsvarets Personellservice
3 179 000
0.5 %
↑
30 %
Norway
20
Dimensional Fund Advisors
2 782 495
0.4 %
∙
New
United States
Total 20 largest shareholders
497 685 327
77.8 %
Board of directors’ report
The best financial result in
Elkem’s 118-year history
In 2022, Elkem recorded its best financial result ever,
underlining Elkem’s robust business model and strong
cost positions. The underlying demand for Elkem’s
products has generally been good, with high prices for
silicon and ferrosilicon products in particular.
Elkem's mission is to provide advanced silicon-based
materials shaping a better and more sustainable future,
adding value to stakeholders globally. The board of
directors believe that safe and environmentally responsible
operations is a prerequisite for value creation. With a highly
competent organisation, well-invested assets, attractive
market positions and ongoing growth initiatives, Elkem is
committed to creating value for all stakeholders.
Elkem concluded 2022 with the best financial result in
its 118-year history. The financial results were positively
impacted by strong operational performance and
attractive sales prices. The strong business performance
has benefitted from Elkem’s global footprint with
competitive value chains from raw material sourcing
to attractive end-market positions worldwide. Silicon
Products’ sales prices were at high levels in 2022,
impacted by the energy crisis in Europe and capacity
curtailments among other silicon and ferrosilicon
producers. The good financial results were supported by
dedicated efforts from all employees worldwide, ensuring
operational improvements, increased specialisation and
attractive investments, further strengthening Elkem’s
competitiveness. Towards the end of 2022, the global
economy was characterised by rapid inflation, increasing
interest rates and a slowdown in economic activity.
However, the board of directors believes that the long-
term underlying growth prospects remain positive for
Elkem and is of the opinion that Elkem has a solid asset
base and financial capability to support further growth,
creating value for all of the group’s stakeholders.
Elkem’s consolidated operating income increased by 36%
Year-over-Year (YoY) to NOK 45,898 million in 2022. The
EBITDA
1
margin was 28% compared to 23% in 2021.
The leverage
2
ratio was 0.2x as at 31 December 2022. This
is below the leverage target of 1.0x to 2.0x over the cycle
and is a consequence of the strong result for the year.
Elkem’s policy is to pay a dividend of 30-50% of the
profit for the year. The board of directors has proposed
a dividend payment of NOK 6.00 per share for 2022,
subject to approval at the annual general meeting, which
would represent 40% of profit for the year. The board of
directors believes the proposed dividend is appropriate
based on the strong financial result and solid financial
position, while also taking weaker market outlook and
investment plans into consideration. Adjusted for the
proposed dividend for 2022, leverage ratio would be
0.5x at 31 December 2022.
To remain a safe workplace is always the first priority for
Elkem. A reinforced Health, Safety and Environment (HSE)
system is now being rolled out globally. A comprehensive
understanding of health and safety risks has the highest
priority in the company, and the understanding is founded
on critical process control combined with a culture of
precision and continuous improvement.
Environmental, Social and Governance (ESG) is essential
for Elkem, enabling environmentally friendly and socially
responsible production of advanced silicon-based
materials. Elkem aims to take a green leadership and
be part of the solution to combat climate change by
reducing our emissions, supplying the green transition,
and enabling circular economies. Elkem is continuously
pursuing its global climate roadmap to reduce the average
product group carbon footprint by 39% by 2031 and
achieve carbon-neutral production globally by 2050.
1
EBITDA commented under APM section
2
Leverage ratio commented under APM section
Total operating income
NOK million
EBITDA
1
NOK million
Leverage
2
ratio
Furthermore, social and governance principles are
advocated to support a diverse workforce built on respect
and inclusive work culture, and protection of human rights
throughout the value chains.
Key business developments 2022
Investments supporting growth and specialisation
Elkem’s ambition is to grow revenue by 5-10% per year
through the cycle supported by organic growth initiatives
and acquisitions. Key investment projects in 2022 include:
→
Silicones capacity expansion projects in France
and China. The projects are progressing according
to plan, targeting upstream capacity increase of
25% in France and 50% in China. These landmark
investments will strengthen Elkem’s cost positions
for upstream silicones, while supporting downstream
expansions that meet attractive customer growth in
key geographies.
→
In January 2022, Elkem secured 100% ownership
of the Elkem Salten energy recovery plant
through acquiring the remaining 50% stake from
Kvitebjørn Energi. The plant recovers 28% of the
electrical energy used at Elkem Salten, equal to the
power consumption of about 15,000 Norwegian
households. The transaction provides increased
strategic flexibility to Elkem.
→
In April 2022, Elkem made a decision to invest NOK
150 million in a flagship R&I centre in Shanghai,
China. The new R&I centre will house several
application centres addressing the development
trends in key industries such as high-performance
silicone products for EVs, medical devices, cosmetics,
coating materials for textile, leather and airbags, and
products for 3D printing.
→
In June 2022, Elkem acquired KeyVest Belgium S.A.
a specialist company in sourcing of materials and
production of metal powders to the refractory industry
and other segments including advanced ceramics.
This will expand Elkem’s product portfolio, enabling
further growth within specialised silicon products, and
improved service level and processing capabilities.
→
In September 2022, Elkem celebrated the opening
of its new specialised silicones facility in York, SC in
the US. The facility will produce high purity silicone
materials meeting the strict requirements in medical
implantable and pharmaceutical applications.
Elkem aims to be a leading silicone supplier to the
healthcare industry and the new facility opens a
potential high-margin market of more than NOK 3
billion in annual revenue.
Strategic initiatives for continued value creation
Key initiatives to ensure growth and create shareholder
value have been implemented during the year, providing a
solid basis for value creation.
→
In 2022, Elkem announced a partnership with Hydro
and Altor to accelerate the growth of Vianode, a
producer of sustainable battery materials. Hydro
and Altor Equity Partners have each acquired 30%
ownership in Vianode, while Elkem retains the
remaining 40% ownership. Vianode, with the backing
of its owners, has decided to invest in the first
industrial-scale plant for sustainable battery materials
at Herøya in Norway. The investment for this phase 1
investment amounts to around NOK 2 billion.
→
In 2022, Elkem signed a new loan facilities agreement
of EUR 1,000 million. The facilities agreement includes
sustainability performance targets linked to health and
safety and reduction of the group’s product carbon
footprint. In addition, Elkem successfully placed a
series of floating rate loans in the Schuldchein market,
amounting to EUR 200 million.
→
Access to renewable power at competitive terms is a
key requirement for sustainable upstream production
of silicon and ferrosilicon. In the second quarter,
Elkem entered into a new 7-year power contract in
Norway starting from 2027 with an aggregate volume
of 2.5 TWh. Elkem has hedged approximately 80%
of its power consumption in Norway until 2026 at
competitive rates.
ESG and climate roadmap is essential in Elkem
People and safety are at the core of Elkem, alongside
sustainable operations conducted responsibly through
operational excellence. Elkem shall be an attractive
employer and aims to be one of the winners in the green
transition, taking its part to combat climate change.
→
In February 2022, Elkem was awarded the Platinum
rating on sustainability transparency from EcoVadis,
one of the world’s largest and most trusted
providers of business sustainability ratings. This
positions Elkem among the top 1% of the companies
evaluated worldwide.
→
In June 2022, Elkem entered into long-term contracts
for two climate-friendly ships for North Sea operation,
enabling the use of green methanol as fuel, featuring
high safety standards and backed by a strong
business case. Both vessels are expected to be in
operation from the second half of 2024.
→
In December 2022, Elkem was awarded double
A- scores from CDP for the company’s efforts on
climate and forests. The company achieved a B score
on water security. To earn an A score from CDP,
organisations must show environmental leadership.
Companies that score a B have addressed the
environmental impacts of their business and ensure
good environmental management.
→
Elkem aims to reduce its total fossil CO
2
emissions
by 28% from 2020-31 and increase the supply of
products to green transition, resulting in a 39%
improvement of its average product carbon footprint
in the same period. Elkem’s long-term goal is net-zero
emissions by 2050.
About Elkem
Established in 1904, Elkem is one of the world's leading
providers of advanced silicon-based materials shaping
a better and more sustainable future. Elkem is a publicly
listed company on the Oslo Stock Exchange (ticker code:
ELK) and is headquartered in Oslo, Norway. The company
has more than 7,300 employees, 30 production sites and
an extensive network of sales offices worldwide. In 2022
Elkem had a total operating income of NOK 45.9 billion. To
learn more, please visit .elkem.com.
↗
Elkem is a fully integrated producer with operations
throughout the silicon value chain from quartz to silicon
and downstream silicone specialities as well as speciality
ferrosilicon alloys and carbon materials. Elkem has
organised its operations into three business divisions:
Silicones, a fully integrated silicones producer; Silicon
Products, a provider of silicon, ferrosilicon, foundry
alloys, Microsilica and related speciality products;
and Carbon Solutions, a supplier of electrode paste
and speciality products to the ferroalloys, silicon and
aluminium industries.
The Silicones division is one of the world's leading fully
integrated silicone companies, with more than 4,600
employees and a global footprint. The division has R&I
centres in Europe and Asia, sales offices worldwide, and
plants in China, France, Germany, Italy, Spain, USA, Brazil,
India, and South Korea. The Silicones division represents
42% of the Group total operating income.
The markets for the Silicones division’s products are
large and growing. Demand is driven by a number of
megatrends, such as the green transition, digitalisation
and energy demand growth. The Silicones division serves
diverse markets, from electric cars to construction,
via electronics, aerospace, healthcare, personal care,
packaging, airbag coating and more. Elkem has a
comprehensive range of silicone products (> 5000
stock keeping units) with leading market positions in
engineering elastomers for EV’s, coatings for packaging,
hygiene and bakery paper and airbag coatings.
The Silicon Products division is a world-leading supplier
of silicon, ferrosilicon, foundry alloys, Microsilica, and
other speciality products. The Silicon Products division
represents 50% of the Group operating income. Silicon
Products has about 1,900 employees and has plants in
Norway, Iceland, Canada, India, Paraguay and China, and
quartz mines in Norway and Spain.
Silicon has a number of favourable chemical and physical
properties, including semi-conductivity, making it highly
versatile for numerous industrial and electronic applications.
As such, it has a wide range of applications, predominantly
as an alloying material for aluminium and in the production
of silicones and polysilicon for electronics and solar cells.
Ferrosilicon and foundry alloys are used in the steel industry
and iron foundry industry, respectively. The Silicon Products
division serves customers in a number of end markets, such
as chemicals, aluminium, electronics, automotive, speciality
steel segments, solar, construction, refractories, and oil &
gas. China has been the largest growth market for silicon
over the last years and is expected to remain an important
growth engine for global demand.
The Carbon Solutions division is the world-leading
supplier of electrode paste, prebaked electrodes and
speciality products to the ferroalloys, silicon, and
aluminium industries. The division has approximately
400 employees and plants in Norway, South Africa,
Brazil, Malaysia, and China. The Carbon Solutions
division accounts for approximately 8% of Elkem’s
operating income from external customers. The steel and
aluminium industries account for a significant portion of
the division’s end-user applications and, as a result, drive
the demand dynamics in the industry.
Financial performance
The consolidated financial statements are prepared and
based on International Financial Reporting Standards
(IFRS) as endorsed by the European Union (EU) and
effective at 31 December 2022.
Consolidated profit and loss statement
Consolidated operating income for the Elkem group
amounted to NOK 45,898 million compared to NOK 33,717
million in 2021. The 36% increase was driven by higher
prices in all divisions. The Silicones division saw an 11%
increase in operating income supported by increased
prices for specialities, in addition to good commodity
prices in the APAC region during the first half of the year.
Sales volumes decreased compared to 2021 mainly due to
weaker demand in Europe and the US. Operating income
for the Silicon Products division increased by 65% due
to favourable silicon, ferrosilicon, and foundry prices
throughout the year, in addition to improved specialities
sales volume. Carbon Solutions’ operating income
increased by 73%, driven by higher prices countering
higher raw material and energy prices in addition to higher
sales volumes.
Operating income
NOK million
1 576
-928
45 898
9 674
1 859
33 717
2021
Silicones
Silicon
Carbon
Other
2022
Products
Solutions
/Elim
Consolidated EBITDA ended at NOK 12,925 million
compared to NOK 7,791 million in 2021. The corresponding
margin increased from 23% in 2021 to 28% in 2022.
EBITDA improved YoY supported by strong EBITDA from
Silicon Products and Carbon Solutions primarily driven by
higher sales prices, increased specialities sales volumes
and attractive cost positions. Silicones delivered weaker
EBITDA due to higher raw material cost. We refer to
“Divisions business performance” for further descriptions.
EBITDA
NOK million
659
-397
12 925
6 522
7 791
-1 650
2021
Silicones
Silicon
Carbon
Other
2022
Products
Solutions
/Elim
Consolidated operating profit was NOK 12,414 million in
2022 compared to NOK 5,785 million in 2021, an increase
of NOK 6,629 million explained mainly by improved
consolidated EBITDA, partially countered by increased
amortisation, depreciation and impairment losses.
Amortisation and depreciation were NOK 1,999 million in
2022 compared to NOK 1,816 million in 2021. The increase
in amortisation and depreciation is attributed to higher
investment levels from 2020 to 2022. Impairment losses
were NOK 28 million in 2022 compared to NOK 76 million
in 2021. Other items were positive NOK 2,151 million
in 2022 compared to positive NOK 10 million in 2021.
Other items are largely related to the net impact from the
change in fair value of commodity contracts related to
power in Norway, embedded EUR derivatives in power
contracts, foreign exchange gains, and gains from the sale
of shares in Vianode AS. This was partially countered by
restoration expenses related to business in Canada and
business projects and acquisitions expenses.
Consolidated profit before income tax ended at NOK 12,236
million for the year, compared to NOK 5,827 million in 2021.
Net financial items were NOK 178 million negative in 2022
compared to NOK 42 million positive in 2021. The share
of profit from equity-accounted financial investments
was negative NOK 17 million in 2022 compared to positive
NOK 37 million in 2021. Finance income was NOK 67
million and foreign exchange gains were NOK 85 million in
2022 compared to NOK 40 million and NOK 241 million in
2021 respectively. Finance expenses were NOK 313 million
compared to NOK 276 million in 2021.
The consolidated profit for the year was NOK 9,642
million, after NOK 2,594 million in tax expenses. The tax
expenses mainly consisted of taxes on the current year’s
result. In addition, the tax expenses included effects on
changes in both non-recognised deferred tax assets and
the change in applicable tax rates from 2021 to 2022.
The main items recognised in the consolidated statement
of other comprehensive income are related to cash flow
hedges (foreign currency hedges and power price hedges)
and currency translation differences. These items had a
net income of NOK 1,234 million for 2022, compared to a
net income of NOK 1,078 million in 2021.
The share of consolidated profit attributable to
shareholders of Elkem ASA was NOK 9,561 million,
resulting in basic earnings per share NOK 15.09 per share
in 2022 compared to NOK 7.49 per share in 2021.
The total comprehensive income for the year was
NOK 10,876 million in 2022 compared to NOK 5,742
million in 2021.
Divisions’ business performance
The Silicones division had an operating income in 2022
of NOK 19,288 million (NOK 17,429 million in 2021).
EBITDA was NOK 2,022 million in 2022 compared
to NOK 3,672 million in 2021. The EBITDA decrease
was caused by significantly higher raw material costs
particularly for silicon in both France and China. This was
only partially countered by higher realised sales prices of
specialities and positive currency effects. From attractive
levels in the first half of 2022, commodity sales prices in
China decreased to weak levels towards the end of the
year driven by oversupply and negative demand impact
from the Covid-19 situation. Sales volumes decreased
by 4% YoY from 409,000 metric tonnes (mt) in 2021 to
394,000 mt in 2022.
The Silicon Products division had an operating income in
2022 of NOK 24,457 million (NOK 14,783 million in 2021).
EBITDA was NOK 10,224 million in 2022 compared to
NOK 3,702 million in 2021. The record high EBITDA
was mainly attributable to good operations and higher
sales prices for all products, particularly for silicon and
ferrosilicon, in addition to higher sales prices and sales
volumes of foundry alloys and attractive cost positions.
The energy crisis in Europe and capacity curtailments
among silicon and ferrosilicon producers resulted
in a tight supply situation in Europe. Sales volumes
decreased from 502,000 mt in 2021 to 490,000 mt in
2022. The positive sales price impact was only partially
offset by higher raw material cost of reduction materials
such as coal and coke.
The Carbon Solutions division had an operating income
in 2022 of NOK 3,761 million (NOK 2,176 million in 2021).
EBITDA was record high at NOK 1,166 million in 2022
compared to NOK 508 million in 2021. The improved
EBITDA was mainly due to higher prices that countered
increased raw material cost, strong operational excellence
and sales volumes increasing by 3% from 294,000 mt in
2021 to 302,000 mt in 2022.
Cash flow and statement of financial position
Cash flow from operating activities was NOK 9,314
million for the year, compared to NOK 4,913 million in
2021. Positive cash flow contribution from EBITDA (NOK
12,925 million) was countered by increased working
capital (NOK 1,583 million), gains from equity accounted
companies (NOK 108 million), changes in fair value of
derivatives (NOK 1,139 million), changes in provisions,
bills receivable and other (NOK 539 million), gains on
disposal of subsidiaries (NOK 159 million), interest
payments (NOK 319 million) and higher income taxes
paid (NOK 1,345 million).
Amortisation, depreciation and impairment increased
in 2022. The increase is attributed to higher investment
levels during the past few years, particularly in Silicones in
China, but also considerable investments in Europe and
the Americas, underlining the dual-play growth strategy
and green leadership ambition.
Changes in working capital were negative YoY mainly
due to an increase in inventories. Higher inventories were
explained by higher raw material prices, impacting the
value of raw materials and finished goods, and higher
volumes of critical raw materials. Management continues
the high focus on optimising working capital. Optimisation
actions include a careful review and adjustments to match
production and sales forecasts, optimising minimum
and maximum stock levels, an active push to sell slow-
moving stocks, individual follow-up of credit days towards
customers and suppliers, in addition to adjustments of
factoring arrangements for the group.
Cash flow from investing activities amounted to NOK
4,404 million for the year, compared to NOK 3,185
million in 2021. Elkem invested NOK 1,682 million in
maintenance, environment, health and safety (EHS),
and productivity improvement initiatives during the year.
In addition, Elkem had NOK 2,797 million in strategic
investments. The cash flow from investing activities in
2022 is mainly explained by investments in the Silicones
division, investments in Vianode AS and a pilot for
biogenic reduction materials in Canada.
Cash flow from financing activities was negative NOK
2,899 million, compared to positive NOK 2,056 million
in 2021 supported by capital increase. The negative cash
flow from financing activities in 2022 was mainly related
to dividends paid to the owners (NOK 1,900 million). In
addition, other items in cash flow from financing activities
in 2022 that were net negative include changes in bills
payables and restricted deposits (NOK 218 million),
payment of lease liabilities (NOK 116 million) and payment
of interest-bearing loans and borrowings (NOK 7,237
million) countered by new interest-bearing loans and
borrowings (NOK 6,648 million).
Change in cash and cash equivalents was NOK 2,011
million for the year.
Elkem’s financial position improved during 2022 due
to the strong financial results. The group’s equity ratio
improved from 47% in 2021 to 55% at the end of the year.
The leverage ratio for the group was reduced from 0.6x
in 2021 to 0.2x at the end of 2022. The board of directors
views the group’s underlying competitive positions and
the strong equity ratio as a good basis to support further
growth of the group.
Total interest-bearing liabilities was NOK 12,278 million
as of 31 December 2022, of which NOK 1,946 million
matures in 2023. Debt maturities in 2023 mainly consist
of short-term loans in China for local working capital
financing. Cash and cash equivalents amounted to NOK
9,255 million in addition to NOK 6,356 million in undrawn
credit facilities. Net interest-bearing debt
3
amounted to
NOK 2,615 million as of 31 December 2022. The board
views the group’s cash and financial position to be strong.
Going concern
The board of directors is of the opinion that the Elkem
Group has the ability to continue its business in the
foreseeable future and hence confirms that the accounts
have been prepared on a going concern basis and that thi
assumption is appropriate at the date for the accounts,
and that the group, after the proposed dividend, has
sufficient equity and liquidity to fulfil its obligations.
Strategic priorities
The board of directors conducts an annual review of
Elkem’s strategy. This review includes an assessment
of strategic priorities and financial scenarios based
on industry trends, market development and other
framework conditions.
In the near term, there is macroeconomic uncertainty,
and we expect a slowdown in global economic activity.
Geopolitical tensions are on the rise and increasing trade
barriers create risks. Elkem is among very few companies
with complete and integrated value chains in different
regions, making us less vulnerable to disruptions in suppl
chains and trade flows.
In the longer-term, global megatrends remain strong
and are expected to drive demand for Elkem’s products.
Growth in Asia, combined with re-industrialisation in the
West, will also create opportunities for Elkem, based on
the company’s geographic presence. Elkem aims to grow
by more than 5% per year, with an EBITDA margin over
the cycle of at least 15%.
The main strategic priorities are dual-play growth and
green leadership. Dual-play growth means that Elkem will
target balanced growth between geographic regions (Eas
and West), and balanced growth across the value chain
(Upstream and Downstream).
Green leadership means that Elkem aims to be part of
the solution to combat climate change by reducing our
emissions, supplying the green transition, and enabling
circular economies. The target is to reduce overall CO
2
emissions by 28% within 2031. Elkem aims to grow its
supplies of advanced materials to green markets such
as better buildings, electric vehicles and renewable
energy. In addition, we continue to work closely with
customers and researchers to increase recycling within
our own operations, as well as developing the eco-
s
y
t
design of innovative products.
3
See APM section
The focus on a higher degree of product specialisation
through R&I and selected acquisitions remain a key
strategic measure to improve and stabilise the group’s
profitability through the business cycle.
To support its strategic goals, Elkem will focus on
operational excellence, digitalisation, people development
and ESG. In addition, Elkem’s divisions will focus on
developing and maintaining sustainable low-cost
positions. Together, these initiatives comprise the group’s
strategic and operational goals to secure profitable
and sustainable growth. Our experience is that Elkem’s
integrated value chain provides significant competitive
advantage and margin protection.
Operational excellence and the principles of lean
manufacturing are deeply rooted in Elkem Business
System (EBS). EBS is built on Elkem’s core values
and is designed to involve everyone in improvement
activities and promote a culture of operational excellence,
continuous improvement, and deep learning. The goal is to
ensure that Elkem remains a competitive producer based
on strong operational performance, economies of scale,
and an integrated value chain from raw materials through
to advanced end products.
To achieve this, Elkem focuses on developing its
employees to identify problems and eliminate their root
causes. Motivated and highly skilled people are essential
for successful strategy implementation. In addition, Elkem
is focusing on digitalisation as a strategic measure to
accelerate improvement activities in the whole value chain.
The goal is to make Elkem an increasingly data-driven
company by implementing digital initiatives to streamline
processes, optimising resource allocation, and developing
cultural capabilities and agile working methods.
Research and innovation is vital to support and
realise Elkem’s strategy on sustainable growth
and specialisation
Elkem devotes considerable effort and resources to
Research and Innovation (R&I) activities with more than
2.5% of 2022 revenues dedicated to new products and
new processes, including technical support to customers.
With this investment, carried by more than 550 researchers
around the world across 14 R&I and application centres, the
R&I teams filed more than 35 new patents during the year.
New products introduced less than five years old represent
more than 20% of Elkem’s turnover.
R&I efforts are key to create and develop innovative
products for new market needs R&I and include
environmentally friendly products and energy-efficient
production technologies. This global optimisation of the
value chain is at the heart of the projects managed by
Elkem and is a key part of Elkem’s strategy.
Elkem’s R&I facilities within chemistry and new chemicals,
new materials and supporting laboratories, play a crucial
role in our customers’ successes. Elkem’s R&I efforts
contribute to the development of new products with
tailored properties for high-end markets, new additives
for process aids, or reinforced materials and support with
critical analysis information needed for troubleshooting.
Elkem’s R&I focus remains imperative to reach the group’s
ambition related to specialisation and growth based on
global megatrends.
During 2022, Elkem put in place a proactive roadmap to
remain competitive and be more responsive to customer
needs and demands, which was implemented around
the digitalisation of our R&I from data acquisition to
formulation optimisation.
Open innovation and collaborative mindset
With around 30 national and European collaborative
projects in partnerships with start-ups, small and
medium-sized enterprises, academics and clusters,
Elkem is highly recognised for its open and innovative
mindset. Through collaboration, Elkem wants to be at
the forefront of new technologies exploring mainly five
essential topics, including:
→
Energy efficiency and CO
2
emission reduction by,
for example, replacing fossil coal with biomass in the
production of silicon and ferrosilicon alloys.
→
Circular economy, mainly on recycling (including
waste and end-of-life) and eco-design (products
and processes).
→
New materials, for instance in 3D printing and
additive manufacturing processes, battery cells
and batteries, and lightweight materials.
→
R&I digitalisation, processes and new materials
modelling to speed up the capture of value.
→
Technology scouting to better anticipate the future
needs of our customers and markets.
Highlights include:
→
Focus on 3D printing
→
3Deus Dynamics, a Silicones 3D printing start-up
in which Elkem has invested with a long-term
perspective, has just been awarded by the
European Innovation Council (EIC accelerator)
funding of more than 2.5 million euros to develop
the medicine of the future.
→
Focus on new materials
→
Elkem Silicones was named a winner in the
renowned worldwide competition of the 2022
R&I 100 awards in the Mechanical Materials
category with the BLUESIL™ RT Foam Range
with Silicone Solutions for Electric Vehicle
Thermal Management.
→
“Cast the Future”, Elkem Silicon Products
received the highly coveted “Best Paper Gold
Award Technology” for the superb paper outlining
the performance of specialised cerium inoculants
to produce high integrity ductile iron castings.
→
Focus on climate strategy and circular economy
→
A global roadmap includes the carbon
management including CO
2
modelling,
methodology for climate reporting, the carbon
capture initiatives and the development in the
future of new silicon processes (SiCaLo project
in collaboration with Norwegian University of
Science and Technology and SINTEF).
→
Project on chemical recycling of silicones’ wastes
reducing CO
2
emissions by 65% and waste by
75% (project in collaboration with University of
Lyon and start-ups).
To maintain and develop this technological edge, Elkem
is evolving through internal projects and the support of
collaborative platforms, such as:
→
Axel One in Lyon, France, is one of the hubs for
smart processes, online analysis, new materials and
circular economy. The partnerships with the region
and the French government have created a centre
of excellence around the industry of the future,
integrating environmental and societal concerns and
process optimisation.
→
The pilot facility at Elkem’s corporate R&I centre in
Kristiansand, Norway, is an important asset for both
process and product development. The partnership
with the Norwegian Catapult Centre, Future
Materials, and new collaborative projects, national
and European, has further strengthened the position
of the centre.
R&I initiatives and expansion
At Elkem’s production sites, new applications are
developed and supported by laboratory expertise and
analysis to ensure that the latest technologies and
capabilities are implemented in practice. In addition, the
working methodology is used across all segments and
markets to optimise the customer or market interaction.
In 2021, Elkem’s new R&I centre ATRiON opened at the
Saint-Fons site in Lyon, France, at the heart of the so-called
“Chemistry Valley” to reinforce innovation within Elkem and
Open Innovation together with external partners. The state-
of-the-art R&I centre is dedicated to the Silicones division
and brings together more than 130 researchers.
In 2022, Elkem announced a plan to invest more than
RMB 100 million to enlarge its Flagship Asia-Pacific R&I
Center in Shanghai. The centre will be created to help
Elkem Silicones’ customers in the Asia-Pacific region
improve their innovation capabilities, accelerate the
development of new products and applications and seize
emerging opportunities.
As a part of Elkem’s specialisation strategy, the Silicones
division has increased R&I personnel by more than 20%
worldwide in the last four years, with a clear strategy in
place to leverage this capacity worldwide.
Sustainability: Environmental, social and
governance (ESG)
Elkem is a signatory to the UN Global Compact and is
committed to develop the business in line with the UN
Sustainable Development Goals and the Paris agreement.
The group believes that safe and environmentally friendly
production will be even more important in the future and
that together with its customers and partners, the group
can create both today’s and tomorrow's solutions.
Elkem works to ensure best practices within ESG to
ensure socially responsible and sustainable business
practices for all stakeholders. Elkem evaluates the
sustainability materiality at least once a year in
accordance with the widely used reporting framework
Global Reporting Initiative (GRI). Prioritised targets and
actions are introduced to make sure that improvements
are implemented. The key topics that have been identified
as material according to the updated GRI 2021 materiality
assessment, the material topics for Elkem in 2022 are
CO
2
and other GHG emission reductions, including
energy management, local emissions, biodiversity, water
management, waste management and circularity, health
and safety on site, environmental and social due diligence
in the supply chain, responsible economic practices,
product governance and supplying the green transition.
More information about our response to the material
topics is found in the ESG report, which details our
commitments and activities within environmental,
social and governance and is prepared according to GRI
framework. The ESG report can be found on page 74. This
report is an integral part of the annual report and has been
independently verified by a third party.
↗
Health, Safety and Environment
HSE is the backbone of Elkem’s business and is always
the first priority. Our HSE efforts are based on a zero-
harm philosophy and our HSE management system is
systematically implemented to work towards this goal.
The safety of our employees is the most critical pillar
of our philosophy. The group strongly believes, and has
demonstrated, that Elkem’s operations can be done
without any harm to employees and people. Elkem
uses considerable resources to identify hazards and to
implement appropriate measures to reduce risk to an
acceptable level so that all employees and contractors
performing working at Elkem can leave work just as
healthy as they were when they arrived.
In 2023 we will be rolling out a new safety management
system called FORUS to enhance this work. The system
is aligned to global best practice related to HSE (Health,
Safety and Environment) and will be used to improve our
overall HSE performance.
Elkem has a strict reporting regime for injuries and requires
all injuries to be reported, investigated, and mitigated
independently of the severity. Unfortunately, Elkem
experienced two subcontractor fatalities at our sites in
2022. In addition, there was one high-consequence work-
related injury for our own employees. This shows that our
health and safety work must be maintained and improved
and that we can never lose focus. The total recordable injury
rate went down from 3.7 in 2021, to 3.2 in 2022, and the lost
workday rate (LWR) was 0.9, down from 1.5 in 2021.
More detailed information about Elkem’s management
system, reporting, safety numbers and how the company
follows up throughout the organisation and value chain can
be found in the Social chapter in the ESG report, page 120.
In addition to a safe and healthy working environment,
secure labour rights and respect for internationally
recognised human rights in our own operations and
the value chains are key priorities for Elkem. For more
information about how the company assesses and
addresses human and labour rights risks, please see the
Social chapter in the ESG report, page 128.
Elkem affects the environment and communities around
the world. Therefore, Elkem is always looking for new
and innovative ways to reduce waste and emissions and
to increase the yield from raw materials. This means
using highly developed production technologies and
running operations with resource-efficient processes.
For more information about how Elkem is reducing its
environmental footprint and increasing the positive impact
of its products, see the ESG report under the chapter
Environmental, page 98.
In accordance with the Transparency Act section 5, Elkem
reports on human rights due diligence as part of our
annual ESG report. The relevant account can be found
in the chapters on “Human rights” (pp. 128-131) and
“Responsible value chain management” (pp. 148-149). The
ESG report is made available on Elkem’s website.
Diversity, inclusion, and equality
Elkem is committed to creating equal opportunities in a
diverse and inclusive working environment. The group
appreciates that every individual is unique and valuable
and should be respected for their individual abilities. Elkem
expects that all colleagues act accordingly and promote
the four Elkem values.
Elkem believes that its human capital is its most valuable
asset. The collective sum of the individual differences, life
experiences, knowledge, inventiveness, self-expression,
unique capabilities, and talent that employees invest in
their work represent a significant part of not only Elkem’s
culture but its reputation and the company’s results. The
group has zero-tolerance for any form of harassment
or discrimination.
The company has well-established policies and practices
related to diversity, equality, and inclusion (DEI). The
policies include the code of conduct, human rights policy,
people policy, and the global standard procedures cover
processes such as, recruitment, working conditions,
promotions, development, on- and off-boarding, and
protection against harassment.
Elkem’s DEI vision is to cultivate a diverse, equitable and
inclusive workplace where all employees feel engaged,
valued, and have a sense of belonging. Promoting
diversity, inclusion, and equality are essential in attracting
and retaining talent to establish and maintain profitability,
competitive advantage, and sustained success at Elkem.
The group’s objective is to create a culture of inclusivity
where all voices are heard. As a result, the company
benefits from people who dare to ask questions, are
not afraid to try new approaches and bring diverse
perspectives to the table. By creating and sustaining
a diverse, equal, and inclusive working culture, Elkem
aims to increase its ability to deliver market-leading
products and services to customers profitably. In 2022
Elkem conducted its first global employee engagement
survey and both the high response rate and the overall
high engagement score (above industry standard)
provide good conditions for the company to continue its
improvement work in all parts of the value chain.
Please see the Activity and reporting duty report for
updated 2022 information.
↗
Governance
The board of directors recognises the importance of
good corporate governance, and the goal is to ensure
the protection of all shareholders’ interests and that the
company complies with high ethical and social standards.
Elkem is subject to corporate governance reporting
requirements under section 3-3b of the Norwegian
Accounting Act and the Norwegian Code of Practice for
Corporate Governance, cf. section 7 of the continuing
obligations of stock exchange-listed companies.
The Accounting Act may be found (in Norwegian) at
.lovdata.no. The Norwegian Code of Practice for
Corporate Governance can be found at .nues.no.
Elkem’s board consist of 11 board members as of
31 December 2022, of which eight are shareholder-
elected and three are employee-elected. Four of the
shareholder-elected board members represent the
majority shareholder, while the other four shareholder-
elected members are independent. Elkem had seven
board meetings in 2022. A detailed overview of the
board members’ attendance may be found in the board
of directors’ report on salary and other remuneration to
leading personnel in Elkem.
The board of directors’ report on corporate governance
can be found on page 53 in this report and is an integral
part of the Report of the board of directors.
Risk management
Elkem’s board and management have a strong focus on risk
management to monitor the group’s risk profile, ensuring
that adequate risk management processes are in place.
Elkem conducts a yearly risk mapping process based on
interviews with divisions and corporate staff. Each risk is
evaluated based on internal and external conditions and
takes deemed likelihood, estimated financial impact, time
horizon and mitigating activities into consideration. The
purpose is to gain a thorough understanding of the group’s
risk profile and financial risk tolerance. A summary of the
risk analysis is presented on page 68 in this annual report.
The evaluation of climate-related risks and opportunities
has become an increasingly important part of Elkem’s
overall risk management processes. In 2021, Elkem
implemented reporting on climate risks and opportunities
according to TCFD. This framework has been further
developed in 2022 and climate risks have become an
integrated part of the risk mapping process.
Large crises can sometimes be triggered by events that
are unexpected and unpredictable. Such events are often
referred to as “black swans”. Recent examples include
Covid-19, the war in Ukraine and the energy crisis in Europe.
“Black swans” demonstrate the need for general risk
preparedness and the need for proactive, professional and
agile reaction to unforeseen and severe incidents. Elkem’s
robust business model and strong financial position have
shown good resilience during the previous crisis scenarios.
The main business risks impacting the group’s financial
performance relate to sales prices and sales volumes for
silicon-related materials and costs for key raw materials,
energy and other consumables. The demand for silicon-
based materials has increased, and the growth is expected
to exceed the growth in global GDP. Demand and prices
will, however, fluctuate based on economic cycles and
competition, and significant price and volume changes can
be observed depending on the overall business sentiment.
Particularly in commodity markets, the sales prices are
impacted by supply and demand developments. Elkem
is seeking to mitigate and reduce the financial impact
by investing in R&I and capturing specialised market
positions to reduce commodity price exposure. In addition,
Elkem’s integrated value chain provides flexibility to
change production between product groups and between
commodities and specialties. Combined with diversified
end-markets and long-term customer relationships, this is
expected to reduce the market risk exposure.
Sanctions and regulatory framework conditions have
also become increasingly important over the past years.
Elkem has operations in many countries and could be
exposed to trade tensions, sanctions and other changes
in regulatory framework conditions. This could impact
access to raw materials sourcing, as well as access to
attractive end-markets. Breach of sanctions could also
have severe consequences, for example on the group’s
financing arrangements or business activities. Elkem
maintains a tight monitoring of the prevailing sanction
lists and trade related restrictions to ensure compliance.
Our integrated business model also means that Elkem
is among very few companies with complete and
integrated value chains in different regions.
Elkem operates in an international market and is exposed
to a variety of financial risk factors, including currency
risk, interest rate risk, liquidity risk and counterparty risk.
Elkem’s results, cash flow and equity are exposed to
fluctuations in currency exchange rates, and Elkem seeks
to reduce the impact from changes in currency exchange
rates by a pre-defined cash flow hedging programme.
The balance sheet risk is mitigated by keeping loans in
foreign currencies to match the underlying assets. Elkem
operates in capital intensive industries and is exposed to
interest rate fluctuations on its net interest-bearing debt.
Elkem has adopted a floating interest rate policy, which is
deemed to give adequate protection through economic up-
and downturns. Future hedging of interest-rate exposure
may be evaluated based on exposure and sensitivity.
Liquidity risk relates to the company’s ability to meet
financial obligations. Elkem has a strong cash position,
good access to undrawn credit facilities and satisfactory
long-term financing arrangements. In 2022, Elkem
raised new loan facilities of EUR 1,000 million and EUR
200 million in the bank and Schuldschein markets. The
transactions have improved the group’s maturity profile
and liquidity position. Elkem has a credit rating from
Scope and the rating of BBB/Stable was affirmed in 2022.
The rating reflects Elkem’s strong financial profile, solid
position in the global silicone and advanced materials
markets, as well as the company’s solid global footprint.
Counterparty credit risk is managed by close monitoring
of the receivables portfolio combined with credit insurance
and payment conditions. Elkem’s financial transactions
and deposits are with solid and reputable banks.
Elkem has signed a liability insurance policy that covers
any past, present or future member of the board of
directors and company officer. The insurance covers pure
financial losses, including defence costs, that the insured
persons are legally obliged to pay, resulting from, or as
a consequence of, a claim. The liability insurance covers
any losses to the company and its subsidiaries due to
securities claims and indemnified claims against the board
of directors and company officers.
See note 27 in the financial statements for more details
on financial risk.
Financial reporting process
Elkem has routines to ensure that the financial statement
is reported according to applicable laws and regulations
and in accordance with adopted accounting policies.
These routines are described in internal reporting
manuals, which are updated regularly according to new
accounting principles.
The financial reporting plan includes controls and checks
of reports to ensure consistency of the financial reporting.
The financial information is consolidated and controlled at
several levels within the respective divisions.
The audit committee performs reviews of the quarterly,
half-year and annual report with a special focus on
accounting topics such as provisions and liabilities,
estimates and judgements, or issues with a major impact
on the financial statement in addition to reviews of
Elkem’s ESG and climate related reporting. The external
auditors participate in these meetings in addition to
representatives from the management and finance
function of Elkem.
Future prospects
The past two years have been characterised by
unprecedented societal impact related to Covid-19 and
supply chain disruptions. The recent volatility in markets
related to the energy crisis, combined with inflationary
pressures, adds to the uncertainty regarding economic
activity. The board of directors’ assessment is that the
fundamentals and long-term prospects for Elkem are
positive. Elkem has a dedicated and competent global
organisation, cost competitive integrated business
model and a solid financial position at the end of 2022,
providing a solid starting point to execute on the dual-
play growth strategy and green leadership.
Elkem aims to grow both in the Western and Eastern
world while focusing on sustainability and the green
transition. Potential geopolitical polarisation could lead
to trade barriers creating opportunities for dual-play
providers. Climate risk and environmental regulations
will require reduced emissions and more sustainable
solutions, and Elkem is well positioned based on its
high proportion of renewable electricity and targeted
climate ambitions. Elkem will continue to pursue its
main strategic initiatives to become top 3 in silicones
worldwide and number 1 in silicon products and carbon
solutions in the West.
Elkem’s financial position is considered to be strong at the
end of the year with a robust equity ratio, low leverage ratio
and strong cash flow generation and liquidity position.
Elkem ASA
Elkem ASA is the parent company of the Elkem group. The
company’s accounts have been presented in accordance
with the Norwegian Accounting Act and generally
accepted accounting practices in Norway. The accounts
are prepared on the basis of a going concern assumption.
For Elkem ASA, the operating income amounted to NOK
16,455 million in 2022 compared to NOK 9,740 million in
2021. The operating profit ended at NOK 7,543 million in
2022, compared to NOK 1,799 million in 2021.
The net change in cash and cash equivalents amounted
to NOK 1,056 million. Cash flow from operating activities
amounted to positive NOK 5,314 million, countered by
investing activities of NOK 3,089 million and negative
cash flow from financing activities of NOK 1,169 million.
Elkem ASA’s equity was NOK 14,009 million at the end
of 2022. The equity ratio ended at 40%. Profit for the
year was NOK 5,990 million. The net interest-bearing
debt amounted to NOK 2,301 million per 31 December
2022. Cash and cash equivalents amounted to NOK 5,316
million. The board of directors’ view is that the dividend
proposal for the year is appropriate based on the group’s
overall financial position and the current market outlook.
Allocation of 2022 net profit:
The profit for the year was NOK 5,990 million. The
board of directors proposes to distribute NOK 6,00 per
share corresponding to NOK 3,813 million as dividend
distributed from other paid-in capital and retained
earnings. In total the board of directors proposes the
following allocation (in NOK million):
Dividends from other paid-in capital
-2 716
Dividends from retained earnings
-1 097
Profit for the year to retained earnings
5 990
The board of directors of Elkem ASA
Oslo, 8 March 2023
Zhigang Hao
Chair of the Board
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Jingwan Wu
Board member
Grace Tang
Board member
Nathalie Brunelle
Board member
Marianne Elisabeth Johnsen
Board member
Terje Andre Hanssen
Board member
Marianne Færøyvik
Board member
Thomas Eggan
Board member
Helge Aasen,
CEO, Elkem ASA
Board of directors
2022
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Marianne Elisabeth
Johnsen
Board member
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Jingwan Wu
Board member
Nathalie Brunelle
Board member
Grace Tang
Board member
Marianne Færøyvik
Board member
Terje Andre Hanssen
Board member
Thomas Eggan
Board member
For more information, please see Elkem.com
↗
Corporate management
2022
Helge Aasen
Morten Viga
Katja Lehland
Asbjørn Søvik
CEO
CFO
SVP Human Resources
SVP Green Ventures & Digital
Håvard Moe
Louis Vovelle
F
rederic Jacquin
SVP Technology
SVP Innovation and R&D
SVP Strategy & Business
Development
Larry Zhang
Inge Grubben-Strømnes
Luiz Simao
SVP Silicones
SVP Silicon Products
SVP Carbon Solutions
For more information, please see Elkem.com
↗
Corporate governance
The board of directors’
report on corporate
governance
Good corporate governance is important to ensure
confidence in the company and value creation in the best
interest of shareholders, employees and other stakeholders.
Governance criteria are, together with Environmental and
Social criteria (ESG), increasingly used to evaluate the
performance of a company. This report, combined with the
ESG report, annual report and website, document Elkem’s
group activities and results.
Elkem is subject to corporate governance reporting
requirements according to section 3-3b of the Norwegian
Accounting Act and the Continuing obligations of stock
exchange listed companies at Oslo Stock Exchange.
Further, Elkem’s board of directors endorses "The
Norwegian Code of Practice for Corporate Governance"
(the "Code"), most recently revised on 14 October 2021
and issued by the Norwegian Corporate Governance
Policy Board (NCGB). The Code of Practice is available
at .nues.no.
This report follows the system used in the Code,
and forms part of the board of directors’ report.
Elkem generally follows the recommendations set out in
the Code, but has deviations in the following sections:
→
Section 3. The board of directors' authorisation to
increase the share capital corresponding to 10% of
the current share capital can be used for several
purposes, to ensure flexibility and ability to act
quickly. Pursuant to the Code, such authorisation
should be intended for a defined purpose.
→
Section 6. Voting on members to the board of
directors and the nomination committee takes place
as a combined vote, reference to section 7. Pursuant
to the Code the shareholders should be able to vote
on each individual candidate nominated for election.
Due to unavailability of the chair, the board was
represented by the presence of the vice chair at the
annual general meeting in 2022.
→
Section 7. The nomination committee justifies its
proposals combined, and not separately for each
board member pursuant to the Code. The nomination
committee focuses on the combined qualifications
and experience, as well as diversification on
background and gender.
1. Implementation and reporting on
corporate governance
Elkem’s corporate governance policy is based on the
Code, and as such designed to establish a basis for good
corporate governance to support achievement of the
company’s core objectives, strategies, and risk profile on
behalf of its shareholders, including the achievement of
sustainable profitability.
Elkem believes good corporate governance involves
openness and trustful cooperation between all parties
involved in the group: the shareholders, the board
of directors and executive management, employees,
customers, suppliers, public authorities and society
in general.
By pursuing the principles of corporate governance,
the board of directors and management contributes
E
a
b
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2
f
a
d
m
p
3
d
p
t
p
l
a
p
a
to achieving open communication, equal rights for all
shareholders and good control and corporate governance
mechanisms. The board of directors assesses and
discusses Elkem’s corporate governance policy, strategy,
and risk profile on a yearly basis.
Elkem aspires to comply with the recommendations
of the Code. If the Code is deviated from, the deviation
is described and explained in the relevant section of this
statement. A summary of the deviations is also
provided above.
No deviations from the code.
2. Business
Elkem’s mission is to provide advanced silicon-based
materials shaping a better and more sustainable future.
Elkem develops its business in support of the ambitions
of the UN Sustainable Development Goals and the Paris
agreement. Our strategy is focused on dual play growth,
which means that growth should be balanced both geo-
graphically and across the value chain. Green leadership is
a key part of Elkem’s new strategy, with focus on low CO
2
emissions, and supplies to the green transition and creating
green ventures. Operational excellence, a higher degree of
specialisation, and securing sustainable low-cost positions
are key strategic goals on divisional level.
Elkem’s business scope is clearly described in section
3 of the articles of association:
→
The object of the company is to develop and engage
in industry, mining, trade and transportation as well
as exploration and exploitation of natural resources.
The company may also develop, acquire and exploit
patents inventions and technical knowhow. The
company may participate directly or indirectly or
by other means in companies engaged in activities
outlined above or activities that promote or support
such objects.
With a strong track record since 1904, Elkem is one
of the world’s leading providers of advanced material
solutions. The company is a fully integrated producer
with operations throughout the silicon value chain and
develops silicones, silicon products and carbon solutions
by combining natural raw materials, renewable energy,
and human ingenuity. Elkem helps its customers create
and improve essential innovations like electric mobility,
digital communications, health, and personal care as well
as smarter and more sustainable cities.
Elkem is operating in capital intensive and cyclical
industries and has 30 production sites and an extensive
network of sales offices around the world. While this gives
competitive strengths, it also gives exposure to a range
of risk factors. The board of directors has defined goals
and strategies for the business and has a clear focus on
risk profiles and risk management to create value for the
company’s shareholders. In the past two years several
incidents have caused significant market disruptions,
for example the Covid-pandemic, the war in Ukraine,
shortages of semi-conductors and power disruptions.
Elkem has independent and fully integrated value chains
both in the East and West and has managed well through
these challenging conditions. More details on the main
risks and risk management principles are presented in the
annual report. See also section 10 below.
In 2022, the board has revised Elkem’s strategy and set
out dual play growth and green leadership as the main
strategic priorities. Dual play growth means that Elkem
will target balanced growth between geographic regions
(East and West), and balanced growth across the value
chain (upstream and downstream). Green leadership
means that Elkem will work to strengthening the position
as best in the industry on low CO
2
and growing supplies to
green transition and creating green ventures. Focus on a
higher degree of product specialisation through R&D and
selected acquisitions is a key strategic measure to improve
and stabilise the group’s profitability through the business
cycle. To support its strategic goals, Elkem will focus on
operational excellence, digitalisation, people development
and ESG (Environmental, Social and Governance). In
addition, Elkem’s divisions will focus on developing and
maintain sustainable low-cost positions. Together these
initiatives comprise the group’s strategic and operational
goals to secure profitable and sustainable growth.
Risk management and internal control systems are in
place to manage operational risks. The company aims to
maintain a strong financial profile with a robust capital
structure. The target, based on earnings over the business
cycle, is to have a leverage ratio of 1.0x - 2.0x, defined as
net interest-bearing debt to EBITDA.
Sustainability is central in Elkem’s business strategy.
Elkem defines sustainability work as continuous efforts
to maximise the positive impact on the environment and
societies, as well as to minimise any negative impact.
Elkem is a signatory to the UN Global Compact and
applies sustainability in line with the principles of the
UN Global Compact. Elkem is committed to develop
its business in support of the ambitions of the Paris
climate agreement and the UN Sustainable Development
Goals (SDGs). Elkem is also committed to follow the
United Nations Guiding Principles on Human Rights
and Business. Elkem’s Silicones division is a member
of the Responsible Care Global Charter which is the
chemical industry’s global initiative to drive continuous
improvement in environment, health, safety and security.
Elkem has implemented guidelines and procedures in
accordance with section 3-3c of the Accounting Act,
including code of conduct, policy on anti-corruption and
CSR polices. Elkem's ESG report is included in the annual
report for 2022.
Elkem's objectives, strategy, risk profile and financial
targets are evaluated by the board of directors on
an annual basis. The board also reviews the group’s
performance in ESG and evaluates the climate risks and
opportunities and makes regular assessments to ensure
compliance and high-quality standards.
No deviations from the Code.
3. Equity and dividends
As at 31 December 2022, the group’s equity was NOK
28,773 million, which is equivalent to 55% of total assets.
The total issued share capital of Elkem amounted to NOK
3,197,206,890 divided into 639,441,378 shares, each with
a nominal value of NOK 5.
lkem aims to maintain an investment grade profile
nd targets a leverage ratio, defined as net interest
earing debt to EBITDA, in the level of 1.0 - 2.0x, based
n earnings over the business cycle. As at 31 December
022, the leverage ratio was 0.2x. The leverage ratio has
urther strengthened compared to 31. December 2021 as
result of higher EBITDA and lower net interest-bearing
ebt, as Elkem has benefitted from a strong business
odel and attractive market positions. Adjusted for the
roposed dividend payment for 2022, the leverage as at
1 December 2022 would have been 0.5x. The board of
irector’s target is to ensure a leverage ratio in line with
olicy over the business cycle. In addition, Elkem aims
o keep a robust liquidity reserve and a smooth maturity
rofile on its loan portfolio to mitigate financing and
iquidity risk. As at 31 December 2022, available cash
mounted to NOK 9,255 million providing a strong liquidity
osition. In addition, Elkem has undrawn credit facilities
mounting to NOK 6,342 million.
In 2022, Elkem signed a new credit facilities agreement of
EUR 1,000 million with its bank group. The credit facilities
agreement consists of a revolving credit facility in the
amount of EUR 500 million and a term loan facility in the
amount of EUR 500 million. The facilities agreement also
includes certain sustainability performance targets linked
to health and safety and reduction of the group’s carbon
footprint. In addition, Elkem placed a series of floating rate
loans amounting to EUR 200 million in the Schuldschein
market. These transactions provide a solid financing
position for the group. The board of directors considers
Elkem’s capital structure, including equity and debt
structure, to be appropriate to the company’s objective,
strategy and risk profile.
The company’s dividend policy is to aim for dividends
distributions to reflect the underlying earnings and cash
flow of the group and targets a dividend pay-out ratio of
30-50% of the group’s profit for the year.
The proposed dividend pay-out for the financial year
ended 31 December 2022 is NOK 3,813 million, which
corresponds to NOK 6.00 per share. The proposed
dividend represents 40% of the group’s profit for 2022.
The board of directors has not been granted any
authorisation to approve distribution of dividends.
At the annual general meeting on 27 April 2022, the board
of directors was granted the following authorisations:
→
In order to give the board of directors financial
flexibility and enable quick access to the market in
the event of an acquisition in return of shares or for
general corporate purposes, the board of directors
was granted an authorisation to increase the share
capital with an amount up to NOK 319,720,689
corresponding to 10% of the current share capital.
The authorisation covers share capital increases
against contribution in kind and share capital increase
in connections with mergers. The shareholders’
preferential rights to new shares may be deviated
from. The authorisation is valid until the annual
general meeting in 2023, but no longer than to and
including 30 June 2023. This authorisation was not
utilised in the financial year ended 31 December 2022.
→
The board of directors was granted an authorisation
to increase the share capital up to NOK 40,000,000
to be used in connection with the issuance of new
shares under the company's share incentive scheme.
The authorisation is valid until the annual general
meeting in 2023, but no longer than to and including
30 June 2023. This authorisation was not utilised in
the financial year ended 31 December 2022.
→
In order to allow the board of directors to utilise the
mechanisms permitted by the Norwegian Public
Limited Liability Companies Act to acquire own shares,
the board of directors was granted an authorisation to
acquire own shares with a total nominal value of up to
NOK 319,720,689 corresponding to 10% of the current
share capital. The maximum amount that can be paid
for each share is NOK 150 and the minimum is NOK
1. The authorisation is valid until the annual general
meeting in 2023, but no longer than to and including
30 June 2023. Under this authorisation the board of
directors announced the acquisition of 5,000,000 own
shares on 21 July 2022. The average purchase price
per share was NOK 38.46. Parts of the own shares
acquired have been sold under the share incentive
programme and as at 31 December 2022 Elkem holds
4,964,393 own shares.
Deviations from the Code: The board of directors'
authorisation to increase the share capital with an amount
up to NOK 319,720,689, corresponding to 10% of the
current share capital can be used for several purposes.
Elkem believes that this authorisation is important in
order to allow the board of directors, in the interest of
time, to act quickly in connection with a transaction or
other corporate events where it is in the shareholders and
Elkem's interest to increase the share capital.
4. Equal treatment of shareholders
All shareholders shall be treated on an equal basis, unless
there is just cause for treating them differently.
Elkem has carried out transactions in its own shares
during 2022. These transactions were carried out through
the stock exchange and ensured equal treatment of
all shareholders. Elkem announced the acquisition of
5,000,000 own shares on 21 July 2022. The average
purchase price per share was NOK 38.46. Elkem engaged
a third party to carry out the share buybacks on behalf of
the company and the third party managed the programme
and made its trading decisions independently of Elkem.
No deviations from the Code.
5. Freely negotiable shares
The shares in Elkem are freely negotiable and there are
no restrictions on any party’s ability to own, trade or vote
for the share in the company. Elkem has only one class of
shares. Each share grants the holder one vote and there
are no structures granting disproportionate voting rights.
No deviations from the Code.
6. General meetings
The board of directors will ensure that the company’s
shareholders can participate in the general meetings.
The annual general meeting in 2022 was held as a hybrid
meeting. Shareholders had the option to either attend the
general meeting physically or digitally by following the
live audiocast of the meeting, submit questions relating
to the items on the agenda and cast their votes in real
time. The digital meeting was organised by DNB Bank
ASA, Elkem’s registrar in the Central Security Depository,
Verdipapirsentralen ASA (Euronext Securities Oslo), and
its subcontractor.
The board of directors will further ensure that:
→
notices for the general meetings are sent to all
shareholders individually, or to their depository
banks, at least 21 days in advance, that all matters
to be considered by the meeting are specified and
that relevant documents are made available on the
company’s website;
→
the resolutions and any supporting documentation
are sufficiently detailed, comprehensive and specific,
allowing shareholders to understand and form a view
on all matters to be considered at the general meeting;
→
the CEO, the chair of the board of directors and the
chair of the nomination committee attend the general
meeting; and
→
the general meeting is able to elect an independent
chair for the general meeting.
The articles of association of Elkem does not provide for
any deadline for the shareholders to give notice of their
attendance at the general meeting. The board of directors
may still encourage shareholders to give such notice
within a set deadline.
Shareholders who are unable to participate in the general
meeting will be given the opportunity to vote by proxy
or through written voting in a period prior to the general
meeting. The company will in this respect provide
information on the procedure and prepare a proxy form/
written voting form. The Company will nominate a person
to act as proxy.
All board members and members of the nomination
committee are encouraged, but not obliged, to
participate in the annual general meeting. The chair
of board was represented by the presence of the vice
chair at the annual general meeting in 2022, due to the
unavailability of the chair.
Elkem has chosen not to follow the recommendation
to vote separately on each candidate nominated for the
board of directors and the nomination committee. The
process of the nomination committee is focused on the
combined qualification and experience of the proposed
members to the board of directors and the nomination
committee, and the voting should therefore also be carried
out as a combined vote.
Deviations from the code: Voting on members to the board
of directors and the nomination committee takes place as
a combined vote.
7. Nomination committee
According to section 7 of Elkem’s articles of association,
the company shall have a nomination committee
consisting of two or three members in accordance with
the decision of the general meeting. The members of
the nomination committee are elected by the annual
general meeting. The general meeting has also approved
guidelines for the duties of the nomination committee,
elected the chairperson and determined the remuneration
of the members of the committee.
After the general meeting in 2022 the nomination
committee comprises the following members:
→
Sverre S. Tysland
/ Chair / Practicing lawyer /
Independent / Re-elected in 2022 for a term of office
of one (1) year until 2023;
→
Zhu Xiaolei
/ Committee member representing the
majority shareholder / Re-elected in 2022 for a term
of office of one (1) years until 2023; and
→
Anne Kjølseth Ekerholdt
/ Committee member /
Practicing lawyer / Independent / Re-elected in 2022
for a term of office of one (1) year until 2023.
The members of the nomination committee have been
elected to take into account the interests of shareholders
in general and to consider and ensure compliance with
the guidelines in section 9 of the Code regarding the
composition and independence of the board of directors.
The nomination committee does not include members
of the board of directors or the executive management.
The nomination committee shall make recommendations
to the general meeting for the election of shareholder
elected board members and members of the nomination
committee, and the remuneration of the board of
directors and the nomination committee. When
nominating shareholder representatives to the board of
directors, the nomination committee presents relevant
information about the candidates, together with an
evaluation of their independence.
In connection with the nomination committee’s work with
proposing candidates, and to ensure that the candidates
represent a broad group of the company’s shareholders,
the nomination committee is in contact with the board
of directors, the CEO and major shareholders. The
nomination committee will consider holding individual
discussions with each member of the board of directors,
and furthermore, ensure that the board of directors is
composed to comply with legal requirements and the
corporate governance code.
The nomination committee have justified its proposal for
the board of directors. While the nomination committee
presents relevant information about each candidate
separately, the nomination committee focuses on the
combined qualifications and experience of the proposed
members of the board of directors when presenting its
proposal to the general meeting. Information on how to
propose candidates is available on Elkem’s webpage.
Deviations from the Code: The nomination committee
justifies its proposals combined and not separately for
each board member.
8. Composition and independence of the board
As of 31 December 2022 the board of directors of
Elkem comprises 11 members, of which eight members,
including the chair, are shareholder elected. The
remaining three members are elected by and among
the company’s employees.
As of 31 December 2022, the board of directors of Elkem
comprise of the following persons:
→
Zhigang Hao
/ Chair / Representing the majority
shareholder / Re-elected in 2021 for a term of office of
two (2) years until 2023;
→
Dag Jakob Opedal
/ Vice chair / Independent / Re-
elected in 2022 for a term of office of two (2) years
until 2024;
→
Olivier Tillette de Clermont-Tonnerre
/ Board
member / Representing the majority shareholder / Re-
elected in 2022 for a term of office of two (2) years
until 2024;
→
Nathalie Brunelle
/ Board member / Independent /
Elected in 2022 as new board member for a term of
two (2) years until 2024;
→
Yougen Ge
/ Board member / Representing the
majority shareholder / Re-elected in 2021 for a term of
office of two (2) years until 2023;
→
Jingwan Wu
/ Board member / Representing the
majority shareholder / Elected in 2022 as new board
member for a term of two (2) years until 2024;
→
Grace Tang
/ Board member / Independent / Elected
in 2021 as new board member for a term of two (2)
years until 2023;
→
Marianne Elisabeth Johnsen
/ Board member /
Independent / Re-elected in 2021 for a term of office
of two (2) years until 2023;
→
Terje Andre Hanssen
/ Board member / Employee
representative / Elected for a term of office until the
annual general meeting in 2024;
→
Marianne Færøyvik
/ Board member / Employee
representative / Elected for a term of office until the
annual general meeting in 2024 and;
→
Thomas Eggan
/ Board member / Employee
representative / Elected for a term of office until the
annual general meeting in 2024.
Anja-Isabel Dotzenrath did not seek re-election at the
annual general meeting in 2022 and resigned from the
board. Dotzenrath was replaced by Nathalie Brunelle.
Jingwan Wu was elected new board member to fill the
vacant position after Helge Aasen’s resignation in 2021,
following which the board comprised 10 members. In
addition, Thomas Eggan has replaced Knut Sande as
employee representative.
The composition of the board of directors is considered
to attend to the common interests of all shareholders
and meet the company's need for expertise, capacity
and diversity. Four of the board members are women,
and none of the members of the company's executive
management are members of the board of directors.
The board of directors is composed so that it can act
independently of any special interests. The majority of
the shareholder elected board members are independent
of the executive management and material business
connections of the company.
Further, four out of the current eight shareholder elected
board members are independent of the company’s majority
shareholder. Further information on each of the board
members is presented at .elkem.com and information
on their record of attendance at board meetings can be
found in the board of directors’ report on salary and other
remuneration for leading personnel for 2022.
Members of the board of directors are encouraged to own
shares in the company, however, with caution not to let
this encourage a short-term approach which is not in the
best interests of the company and its shareholders over the
longer term. As of 31 December 2022, the following board
members owned shares in the company: Olivier Tillette
de Clermont-Tonnerre (15,517 shares), Dag Jakob Opedal
(40,000 shares), and Marianne Færøyvik (4,950 shares).
No deviations from the Code.
9. The work of the board of directors
The board of directors' work follows an annual plan, with a
particular focus on objectives, strategy and implementation.
The plan is evaluated and approved around the beginning
of each calendar year. The board of directors also annually
evaluates its performance and expertise, the evaluation is
presented to the nomination committee.
The board of directors has implemented instructions for
the board of directors and the executive management,
which are focused on determining allocation of internal
responsibilities and duties. The objectives, responsibilities
and functions of the board of directors and the CEO are
in compliance with rules and standards applicable to
the group and are described in the company’s annual
report. The board of directors have also implemented
procedures to ensure that members of the board of
directors and executive personnel make the company
aware of any material interests that they may have in items
to be considered by the board of directors. The board of
directors will also be chaired by some other member of
the board if the board is to consider matters of a material
character in which the chair of the board is, or has been,
personally involved.
The board of directors held seven board meetings in 2022.
Two board members were absent from one meeting.
Except for that, all board members attended all board
meetings in 2022.
The instructions for the board of directors states how
agreements with related parties shall be handled. In
the event of a not immaterial transaction between the
company and its shareholders, a shareholder's parent
company, members of the board, executive management
or closely related parties of any such parties, the board
will arrange for a valuation to be obtained from an
independent third party. Agreements with related parties
will be disclosed in the directors’ annual report.
The board of directors has established an audit committee
and a remuneration committee.
No deviations from the Code.
The audit committee
The board of directors has established an audit committee
which is a working committee for the board of directors,
preparing matters and acting in an advisory capacity.
The audit committee is responsible for overseeing
financial reporting and disclosure and assist the board
of directors with assessments of the integrity of the
company’s financial statements, financial reporting
processes and internal controls, risk management and
performance of the external auditor. In 2022, the audit
committee also assumed responsibility for preparatory
work and supervision related to the board’s management
of sustainability and non-financial reporting, internal
control over sustainability and non-financial reporting, and
sustainability-related risk management.
The board of directors has issued instructions for the work
of the audit committee, and the duties and composition
of the committee are in compliance with the Norwegian
Public Limited Liability Companies Act. The members
of the audit committee are elected by and amongst the
members of the board of directors for a term of up to
two years and comprised the following persons as of 31
December 2022:
→
Dag Jakob Opedal
/ Chair/ Independent
→
Grace Tang
/ Member / Independent
→
Jingwan Wu
/ Member / Representing
the majority shareholder
The committee members have the overall competence
required to fulfil their duties based on the organisation
and operations of the group, at least one member of the
audit committee is competent in respect of finance and
audit. The majority of the members are independent of
the business.
The remuneration committee
The board of directors has appointed a remuneration
committee which comprised the following persons as of 31
December 2022:
→
Zhigang Hao
/ Chairperson / Representing the
majority shareholder
→
Olivier Tillette de Clermont-Tonnerre
/ Member /
Representing the majority shareholder
→
Marianne Elisabeth Johnsen
/ Member / Independent
The remuneration committee is a preparatory and
advisory committee for the board of directors in
questions relating to the company’s compensation of the
executive management. The purpose of the remuneration
committee is to ensure thorough and independent
preparation of matters relating to compensation to
the executive personnel. The remuneration committee
puts forth a recommendation for the board of directors’
guidelines for remuneration to senior executives in
accordance with section 6-16a of the Norwegian Public
Limited Liability Companies Act.
The members of the remuneration committee are elected
by and amongst the members of the board of directors
for a term of up to two years and are independent of the
company’s executive management.
The board of directors has issued instructions for the work
of the remuneration committee.
No deviations from the Code.
10. Risk management and internal control
It is ultimately the responsibility of the board of directors
to ensure that the company has sound and appropriate
internal control systems and risk management systems
reflecting the extent and nature of the company’s
activities. Sound risk management is an important tool
to create trust, ensure a good environment, health and
safety standards and enhance value creation. Evaluation
of climate related risks and opportunities have become
an increasingly important part of Elkem’s overall risk
management processes. As part of this work Elkem has
presented a global climate roadmap in 2021 and also
reported on climate risks and opportunities according
to Task Force on Climate-related Financial Disclosures
(TCFD) reporting recommendations. The TCFD framework
has been implemented as an integrated part of Elkem’s
yearly risk assessment.
Elkem complies with all laws and regulations that apply
to the group’s business activities. The group’s code of
conduct sets out the overall ethical guidelines, which apply
to all Elkem employees, members of the board of directors
as well as those acting on Elkem’s behalf.
The company has a comprehensive set of relevant
corporate manuals and procedures, which provide
detailed descriptions of procedures covering all aspects of
managing the operational business. The procedures and
manuals are continuously revised to reflect best practice
derived from experience or adopted through regulations.
In 2022, Elkem has made an extensive review and update
of its governing documents.
The board of directors conducts annual reviews of the
company’s most important areas of exposure to risk and
such areas’ internal control arrangements. A summary of
the main risks is presented in the annual report. The focus
on climate related risk has increased and is an integrated
part of this assessment.
The board of directors describes the main features of
the company’s internal control and risk management
systems connected to the company’s financial reporting
in the company’s annual report. This covers the culture
of control, risk assessment, controlling activities and
information, communication and follow-up. The board
of directors is obligated to ensure that it is updated on
the company’s financial situation, and to continuously
evaluate whether the company’s equity and liquidity
are adequate in terms of the risk from, and the scope
of, the company’s activities, and shall immediately take
necessary actions if it is demonstrated at any time that
the company’s capital or liquidity is inadequate. The
company focuses on frequent and relevant management
reporting to the board of directors. The reports contain
matters related to health and safety, market development,
operations and financial performance. The purpose
is to ensure that the board of directors has sufficient
information for decision-making and is able to respond
quickly to changing conditions or important incidents.
Board meetings are held regularly, and management
reports are provided to the board on a monthly basis.
No deviations from the Code.
11. Remuneration of the board of directors
The remuneration to the board of directors is determined
by the shareholders at the annual general meeting based
on a proposal from the nomination committee. The level
of remuneration to the board of directors is considered to
reflect an international level and the board of directors’
responsibility, expertise, the complexity of the company and
its business, as well as time spent and the level of activity in
both the board of directors and any board committees.
The remuneration of the board of directors is not linked
to the company’s performance and Elkem does not grant
share options to its members of the board of directors.
The board members, or companies associated with board
members, have not been engaged in specific assignments
for the company in addition to their appointments as
members of the board of directors. The remunerations
for the period from May 2022 until the annual general
meeting in 2023 are as follows:
Board of directors:
→
Chair: NOK 819,000
→
Vice chair: NOK 614,250
→
Board members: NOK 409,500
→
Observers: NOK 204,750
Audit committee:
→ Leader: NOK 147,420
→ Member: NOK 98,280
Remuneration committee:
→ Leader: NOK 147,420
→ Members: NOK 98,280
The total compensation to members of the board of
directors is disclosed in the board of directors’ report
on salary and other remuneration for leading personnel
for 2022.
No deviations from the Code.
12. Remuneration of executive personnel
The board of directors prepares guidelines for the
remuneration of executive management. These
guidelines include the main principles for the company’s
remuneration policy and contributes to Elkem's
commercial strategy, long-term interests and financial
viability, which align the interests of the shareholders
and the executive management. The guidelines are
communicated to the annual general meeting and
presented in a separate appendix to the agenda for
the general meeting. A report on the salary and other
remuneration to the executive management will be
prepared in accordance with the rules of the Norwegian
Public Companies Act and relevant regulations.
Performance-related remuneration of the executive
management in the form of share options, bonus
programmes or similar are linked to value creation for
shareholders or the company’s profit over time. Such
performance related remuneration is subject to an
absolute limit.
No deviations from the Code.
13. Information and communications
Elkem is under an obligation to continuously provide its
shareholders, Oslo Stock Exchange and the financial
markets in general with timely and precise information
about the company and its operations. Relevant
information is given in the form of annual reports,
quarterly reports, press releases, notices to the stock
exchange and investor presentations in accordance with
what is deemed appropriate from time to time. Elkem
maintains an open and proactive policy for investor
relations and has given regular presentations in connection
with annual and quarterly results. The goal is that Elkem’s
information work shall be in accordance with best practice
at all times and all communications with shareholders shall
be in compliance with the provisions of applicable laws
and regulations and in consideration of the principle of
equal treatment of the company’s shareholders.
Investor contact/investor relations (IR) activities are
conducted in accordance with the IR policy and by the IR
team only. The IR team comprises the CEO, the CFO and
the VP Finance and Investor relations.
The company publishes an annual, electronic financial
calendar with an overview of dates for important events,
such as the annual general meeting, interim financial
reports, public presentations and payment of dividends,
if applicable.
In addition to the board of directors’ dialogue with the
company’s shareholders at general meetings, the board of
directors promotes suitable arrangements for shareholders
to communicate with the company at other times. The
board of directors have delegated this task to the IR team.
Elkem has held regular investor meetings in connection
with each of the quarterly presentations in 2022 and
attended several investor conferences. In addition,
Elkem arranged a Capital Markets Update in 2022 in
connection with the company’s results presentation for
the third quarter. The IR team has conducted physical and
electronic meetings with both domestic and international
investors from for example Great Britain, United States,
Germany, France and Switzerland. The plan is to arrange
regular investor meetings and capital market updates
when it is considered expedient in order to keep the
market up to date about the company’s development,
goals and strategies.
No deviations from the Code.
14. Take-overs
Elkem has one major shareholder controlling 52.9% of
the shares as of 31 December 2022. Elkem has not been
subject to any takeover bids in 2022.
In the event of a takeover bid, the board of directors
and executive management each have an individual
responsibility to ensure that the company’s shareholders
are treated equally and that there are no unnecessary
interruptions to the company’s business activities.
The board of directors has a particular responsibility in
ensuring that the shareholders have sufficient information
and time to assess the offer. In the event of a take-over
process, the board of directors shall abide by the principles
of the Code, and also ensure that the following take place:
→
the board of directors will not seek to hinder or
obstruct any takeover offer for the company’s
operations or shares unless they have valid and
particular reasons for doing so;
→
the board of directors shall not exercise mandates or
pass any resolutions with the intention of obstructing
the takeover offer unless this is approved by the
general meeting following announcement of the offer;
→
the board of directors shall not undertake any
actions intended to give shareholders or others an
unreasonable advantage at the expense of other
shareholders or the company;
→
the board of directors shall not enter into an
agreement with any offeror that limits the company's
ability to arrange other offers for the company's
shares, unless it is self-evident that such an
agreement is in the common interest of the company
and its shareholders;
→
the board of directors and executive management
shall not institute measures with the intention of
protecting the personal interests of its members at
the expense of the interests of the shareholders; and
→
the board of directors must be aware of the particular
duty it has for ensuring that the values and interests
of the shareholders are protected.
In the event of a take-over offer, the board of directors
will, in addition to complying with relevant legislation and
regulations, seek to comply with the recommendations
in the Code. This includes obtaining a valuation from an
independent expert. On this basis, the board of directors
will make a recommendation as to whether or not the
shareholders should accept the offer.
A takeover process gives rise to a particular duty of care to
disclose information, where openness is an important tool
for the board of directors to ensure equal treatment of all
shareholders. The board of directors shall strive to ensure
that neither inside information about the company, nor any
other information that must be assumed to be relevant for
shareholders in a bidding process, remains unpublished.
There are no other written guidelines for procedures to
be followed in the event of a takeover offer. The company
has not found it appropriate to draw up any explicit basic
principles for Elkem’s conduct in the event of a take-over
offer, other than the actions described above. The board
of directors otherwise concurs with what is stated in the
Code regarding this issue.
No deviations from the Code.
15. Auditor
The board of directors is responsible for ensuring that the
board and the audit committee are provided with sufficient
insight into the work of the auditor. In this regard, the board
of directors ensured that the auditor submitted the main
features of the plan for the audit of the company to the
audit committee in 2022. Further, the board of directors
invited the auditor to participate in the board meeting that
dealt with the annual accounts. At these meetings, the
auditor (i) reports on any material changes in the company's
accounting principles and key aspects of the audit, (ii)
comments on any material estimated accounting figures,
and (iii) reports all material matters on which there has
been disagreement between the auditor and the executive
management of the company.
Once a year, the board of directors reviews the
company's internal control procedures with the auditor,
including weaknesses identified by the auditor and
proposals for improvement. In this regard, a review of the
company's internal control procedures with the auditor,
including weaknesses identified by the auditor and
proposals for improvement, was carried out by the board
of directors in 2022.
In order to ensure the auditor's independence of the
company's executive management, the board of directors
has established guidelines in respect of the use of the
auditor by the management for services other than
the audit.
No deviations from the Code.
The board of directors of Elkem ASA
Oslo, 8 March 2023
Zhigang Hao
Chair of the Board
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Jingwan Wu
Board member
Grace Tang
Board member
Nathalie Brunelle
Board member
Marianne Elisabeth Johnsen
Board member
Terje Andre Hanssen
Board member
Marianne Færøyvik
Board member
Thomas Eggan
Board member
Helge Aasen,
CEO, Elkem ASA
Overview of main
risk areas
>7,300
30
employees
worldwide
plants
presence
Elkem’s board and management have a strong focus on
risk management to monitor the group’s risk profile and
to ensure that adequate risk management processes
are in place. The board and management consider risk
management to be a key part of Elkem’s corporate
governance structure and important to create trust and to
enhance value creation.
Elkem carries out a yearly risk mapping process based
on interviews with divisions and corporate staff functions.
The objective is to identify the top five to ten risks
for each division and corporate function. Each risk is
evaluated based internal and external conditions and
takes deemed likelihood, estimated financial impact, time
horizon and mitigating activities into consideration. The
individual risks are then organised into categories and
aggregated on group level. The main purpose is to gain
a thorough understanding of the group’s risk profile and
financial risk tolerance.
Risks are split into five main categories; strategic risks,
financial risks, raw material risks, production and process
risks, and market and product risks. The risk categories
are structured according to Elkem’s value chain.
Climate risk has become an increasingly important part of
Elkem’s overall risk management processes. Climate risks
could for example affect Elkem’s strategic positioning, raw
material supply, end-markets, and financial performance.
In 2021, Elkem implemented reporting on climate risks
and opportunities according to Task Force on Climate-
related Financial Disclosures’ reporting recommendations
(TCFD). In the risk assessment for 2022, climate risk has
been treated as an integrated part of the risk mapping
process. In addition, Elkem has made a study on physical
climate risks based on Elkem’s specific locations to gain
an understanding of where Elkem is materially exposed.
The results of this study are presented in Elkem’s updated
TCFD report for 2023.
Strategic risks
Raw material risk
Production and
Market and
process risks
product risks
Financial risks
ESG and
climate
Risk descriptions
1.
Black Swan
“Black swan” describes an unpredicted event which can cause dramatic
changes to economies and societies. Despite comprehensive risk management
procedures, it is impossible to prepare for every scenario. Recent examples are
Covid-19, the war in Ukraine and the energy crisis in Europe. “Black swans”
demonstrate the need for general risk preparedness and the need for proactive,
professional and agile reaction to unforeseen and severe incidents. It also shows
the importance of generally robust financials and supply chains to enable
companies to endure unexpected changes in market conditions. Elkem has a
robust business model with a solid global footprint and well diversified end-
markets. The financial position is also strong.
2.
Market risk (prices
Elkem's sales prices and sales volumes may vary depending on industry
and volumes)
conditions and competitive environment. This constitutes one of the main
risks affecting the group’s financial performance. In commodity markets, the
sales prices are generally impacted by supply and demand development, while
specialties tend to have more stable pricing over the business cycle. Elkem’s
strategy is to increase the sales of specialised products, but the group is also
attractively positioned in commodity markets based on strong cost positions.
Elkem’s integrated value chain provides flexibility to change production between
product groups and between commodities and specialties. Combined with
diversified end-markets and long-term customer relationships, this is expected
to reduce the market risk exposure.
3.
Sanctions and trade
Sanctions and trade restrictions have increased over the past years. This could
related restrictions
negatively impact Elkem's trade flows and access to raw materials and/or
attractive end-markets. Any breach of sanctions could have severe consequences,
for example on the group’s financing arrangements or business activities. Elkem
keeps tight monitoring of prevailing sanction lists and trade related restrictions to
ensure compliance. This is to avoid that Elkem or third parties engage in business
activities with sanctioned entities or individuals.
4. Regulatory frame-
Elkem has operations in many countries and could be exposed to changes
work conditions
in regulatory framework conditions. This could negatively affect the group’s
competitive position and market access. Examples of such regulatory and political
framework conditions are; CO
2
emission schemes, other environmental or product-
related requirements, changes in anti-dumping duties and export taxes, export
control or sanctions, and regulations and availability of electric power. Elkem seeks
to take a proactive approach to reduce these risks. In addition, the group’s diverse
geographical presence and integrated value chains in Europe and Asia could reduce
the negative impact from various trade tensions and restrictions.
5. Performance
Elkem has a growth strategy based on organic growth and selected mergers and
and payback on
acquisitions (M&A) transactions. Large investment projects carry an inherent risk of
capex projects
delays, cost overruns, and underperformance. In addition, M&A transactions carry
the risk that an acquired entity does not deliver the expected profit or synergies,
or that due diligence processes have failed to identify potential claims or other
obligations. Elkem seeks to mitigate such risks by diligent project management
and thorough due diligence processes, comprising professional support from legal,
financial, audit and industry expertise.
6. Health and safety
Elkem's working environment includes significant inherent risk of injuries or even
fatalities, and there are risks of large fires and explosions in connection with high
temperature smelting processes, molten metals, chemical processes, electrical
equipment and other potentially hazardous incidents. The safety of our employees
and contractors is Elkem's main priority. Elkem uses considerable resources to
identify hazards and implement appropriate measures to avoid incidents and to
reduce risk to an acceptable level, including safety instructions, training, physical
protection and adherence to Elkem Business System (EBS) principles. Insurance
and risk survey programmes are in place to mitigate risks and financial exposure.
7.
Raw material
Global supply chains could be exposed to disruptions due to trade regulations
access and
and restrictions, pandemics, cyber-attacks, availability of transportation, and
supply chain
potential impact of climate change. In the past two years several incidents have
caused disruptions in global transportation and supply chains, for example covid
related interruptions worldwide, the war in Ukraine, low water levels in rivers and
channels in Europe, lack of container capacity, shortages of semi-conductors
and power disruptions. Elkem has thorough sales and planning processes, a
diversified raw material sourcing strategy, and globally connected supply chains
to mitigate risk exposure. Elkem's integrated value chain has managed well
through recent challenges.
8. Environment
Elkem has global operations exposed to environmental regulations, and potential
and climate
impact of climate change. Climate risks comprise both regulatory, transitional
and physical risks, for example. extreme weather, drought, flooding, wind, and
ocean rise. Many of Elkem's production facilities are located close to sea or river,
or in close proximity to cities or local communities. In addition, Elkem's integrated
supply chain depends on access to stable inbound and outbound transportation.
Elkem has high attention to secure assets and avoid business interruptions and
seeks to ensure a sustainable business model by reducing emissions and ensuring
compliance with environmental regulations.
9.
Cyber and IT risk
IT is used for virtually all business-related activities, including sales, production
planning, procurement, maintenance, finance and accounting. An IT incident
or cyber-attack could therefore cause severe disruptions to Elkem’s operations.
Good IT procedures with high focus on security, training of employees, up to date
equipment, frequent software updates and segmentation of networks are the main
actions to mitigate and prevent these risks. Elkem has a cyber insurance in place to
mitigate negative financial impact.
10. Compliance and
Elkem has operations in many countries, of which some are in regions known for
legal risks
high risk related to for example corruption and human rights violations. This gives
an inherent chance of unacceptable business behaviour either through corruption,
breach of competition law, breach of sanctions, breach of human rights, or other
unethical activities, either by employees or by business partners. There is also legal
and litigation risks in connection with contracts and/or intellectual property. Elkem
has a high focus on compliance and internal control and has strengthened its
compliance function and internal control systems over the past years. Guidelines
for ethical conduct, training of all employees and visible and accessible channel for
reporting misconduct (whistle blower) are in place. Insurance cover is in place for
directors and officers, employment practices liability and crime.
ESG report 2022
Reducing emissions towards net
zero while growing supplies to the
green transition
Delivering your potential
ESG report content
The ESG report contains Elkem’s most important communication on
material Environmental, Social and Governance topics. The report
covers the key strategy of the company, how the company manages
sustainability and climate change issues, and how we progress on
each topic. In the 2022 ESG report you will find the following:
The Elkem climate roadmap
80
ESG management: People and organisation
84
ESG management: Sustainability and ESG governance
90
Environmental material topics
96
Social material topics
120
Governance material topics
136
UN SDG reporting
150
ESG third party assurance
154
Operations:
30 plants world-wide and
more than 7,300 employees
Operating income 2022:
45.9 billion NOK
Total scope 1+2+3
emissions 2022:
10.74 million tonnes
>80% of production based
on renewable electricity
ESG highlights in 2022
→
In 2022, Elkem launched an updated corporate
strategy on dual-play growth and green leadership
→
Elkem was awarded the platinum rating on
sustainability transparency from EcoVadis, one
of the world’s largest and most trusted providers
of sustainability ratings, ranking Elkem as top
1% performer
→
Elkem was awarded double A- scores from CDP
for efforts on Climate and Forests, and B score on
Water security
→
Elkem signed its first sustainability linked credit
facilities agreement of EUR 1,000 million. The facilities
agreement includes sustainability performance targets
linked to health and safety and reduction of the
group’s product carbon footprint
→
Elkem Silicones was declared 2022 R&D 100 Awards
winner in Mechanical Materials category for safety
and reliability for silicone solutions for electric vehicle
thermal management
→
The world's first carbon capture pilot for smelters was
inaugurated in Rana, Norway, with main goal to verify
the technology on real industrial gases from smelters
and other process industries
→
Elkem announced a partnership with Hydro and
Altor to accelerate the growth of sustainable battery
material provider Vianode
→
Elkem commissioned two climate-friendly ships for
North sea operations
Elkem's ESG agenda
Elkem’s products are building blocks for the low-carbon
society and critical for the green transition. Examples
include renewable energy, energy storage, mobility solutions,
infrastructure improvements, digitalisation, and healthcare.
Our people and safe sustainable operations, conducted
responsibly and with excellence, are the core of Elkem.
Our mission:
Advanced silicon-based materials
shaping a better and more
sustainable future, adding value
to stakeholders globally
Our commitment:
To develop our business in
accordance with the UN SDGs
and Paris agreement
Our values:
Respect
Precision
Involvement
Continuous improvements
Sustainability foundation: Material topics
Elkem follows the principles, requirements, and guidelines of the GRI 2021
Standards to identify the material sustainability topics for the group.
Environmental
Climate action
→
CO
2
and other GHG
emission reductions,
including energy
management
→
Biodiversity
→
Local emissions to air
→
Waste management
and circularity
→
Water management
Social
Safety first
→
Health and safety on site
→
Human rights, including
labour rights
Governance
Responsible
business partner
→
Environmental and
social due diligence
in supply chain
→
Supplying the
green transition
→
Product governance,
including chemical safety
→
Responsible eco-
nomic practices
Sustainability reporting
About this report
The annual ESG report is part of Elkem’s annual report,
approved by the board. The company defines the
organisational boundaries on an operational control basis.
All the numbers in the report covers 100% of operations.
The ESG report also functions as a stand-alone report. For
more information on Elkem’s business areas and strategy,
see page 14 and onwards in the annual report.
↗
Reporting framework
Elkem reports in accordance with the Global Reporting
Initiative (GRI) Standards 2021 and consider this report
to be our Communication of Progress (COP) to the
United Nations Global Compact (UNGC). Elkem discloses
information through several reporting systems to increase
transparency and ensure standardised reporting. The GRI
index can be found online, and includes references to the
World Economic Forum’s stakeholder capitalism initiative
to standardise sustainability metrics.
↗
Assurance
PwC has undertaken a limited assurance on the ESG
reports alignment with the GRI Standard. Further
information about the limited assurance can be found
in the assurance statement.
↗
ESG transparency and reporting
acknowledgements 2022
Ecovadis: Platinum
Top 1% out of more than 90,000 global companies,
on sustainability transparency and action.
CDP: A-
Responding to all three scopes of the CDP for the first
time in 2022, and recognised with A- on Climate and
Forests, and a B score on Water security.
S&P Global CSA: Top 90 percentile
With a score of 53, Elkem is rated in the top 90 percentile
in the chemical industry, in the S&P Global Corporate
Sustainability Assessment for 2022. The rating focuses
on both industry-specific and financially material topics
for companies.
ESG 100: A
Top score for ESG reporting in 2022, in an assessment
of top 100 listed companies on the Scandinavian stock
exchanges, from Position Green. A is awarded for
companies with excellent reporting in line with best
practice, clear strategy, and quantifiable targets.
The Elkem climate roadmap
Elkem is committed to reduce
emissions and to contribute in
line with the Paris agreement
Elkem announced its global climate roadmap in 2021, which is
closely linked to the corporate strategy of green leadership.
↗
The climate roadmap sets out the direction for how Elkem
will contribute to limit global warming caused by climate
change, and has three key pillars:
Reducing our emissions
Achieving fully climate neutral
production throughout our value chain
By 2031:
Reducing absolute emissions
by 28% from 2020-2031 while
growing the business – delivering 39%
improvement in product footprint
By 2050:
Achieving fully carbon
neutral production (zero fossil
emissions) globally
Supplying to the transition
Providing the advanced material
solutions required to enable the
green transition
Grow supplies of advanced materials
to green markets
such as better
buildings, electric vehicles and
renewable energy
Build new business in green markets
such as battery materials, biomass
and energy recovery
Enabling circular economies
Enabling more circular activities in
our operations, products and markets
Increase recycling
in our
own operations
Increase recycling
with
our customers
Develop the eco-design
of
innovative products
During the last year,
Elkem has
been involved in a carbon capture
project, testing new technology
at our plant in Rana, Norway. This
is part of the long-term ambition
to achieve net zero emissions
by 2050. The pilot for carbon
capture is the first project of its
kind within the silicon industry.
↗
Our roadmap to climate neutral products
-39%
Net
zero
2020
Biomass
More China
Low-carbon
2031
CCS at
Other
2050
baseline
in smelters
renewables
supply chain
target
smelters
initiatives
target
Status – delivering on the roadmap
Metric
2022
2021
2020
Total GHG emissions (CO
e)
2
Mill tonnes
10.74
11.60
10.27
Scope 1
Mill tonnes
2.42
2.35
2.40
Scope 2
Mill tonnes
0.94
0.90
0.91
Scope 3
Mill tonnes
7.38
8.35
6.96
Product group carbon footprint*
CO e/kg
2
6.9
7.4
N/A
* CO
2
equivalents
per kg of produced material
For a more detailed overview
and explanation of the emissions
development, see the CO
2
and
GHG emissions chapter
↗
The total GHG emissions went down by 7.5% in 2022,
compared to 2021. Both scope 1 and 2 saw an increase
of 3-4%. Elkem's scope 3 upstream emissions were
reduced by 18%. The reduction was mainly explained by
sourcing from lower carbon suppliers, in combination with
purchasing fewer raw materials externally.
The Elkem climate roadmap
Supplying the
green transition
The corporate strategy is to take green leadership, by being
in the forefront of reducing emissions and focus on markets
and products that are essential in the green transition.
Silicon metal is listed by the EU as a critical raw material th
is economically and strategically important to the Europea
market. These raw materials are essential for nearly all
electronics, health care and green technologies and will be
pillars for enabling the transition to a low carbon society,
both in Europe and the rest of the world.
The demand for Elkem’s products is driven by global
megatrends such as sustainability and clean energy
demand growth, such as solutions for the electrification
of transportation, increased energy storage and batteries,
reducing emissions and energy consumption, and the
replacement of oil-based materials. Elkem aims to continu
growing the supplies of advanced materials to global
markets by 5-10% per year.
In the 2021 climate roadmap, Elkem launched an ambition
to grow the supplies of advanced materials to the green
transition markets by 5-10% per year. Elkem is currently
working to define the KPIs, to be able to track this ambitio
towards 2031. In addition, the company has worked on
understanding the green criterias of the EU Taxonomy
that are relevant for Elkem. This will become mandatory
reporting from 2023.
Elkem's statement on the EU Taxonomy for sustainable
economic activities are available on page 156 in the
annual report.
↗
at
n
e
n
Vianode is built
upon
technological advancements
and decades of industrial
experience in Elkem and was
formally established in 2021.
Vianode’s range of synthetic
graphite products offers unique
performance characteristics and
are produced with significantly
lower CO
2
emissions than today's
standard battery materials
– supporting the ambitions
of leading battery cell and
automotive manufacturers. More
information on Vianode.
↗
In 2022, approximately 45%
of Elkem's revenue came
from products that are EU
Taxonomy eligible.
The Elkem climate roadmap
Circular economy
2022 was a milestone year for the development of Elkem’s
circular economy with a strong emphasis put on our current
projects and the launch of new promising ones. Of note last
year was also the consolidation of a global roadmap that
has both the establishment of a common circular mindset
and the development of our open innovation ecosystem on
circular economy at its core.
Highlights from 2022
→
Elkem developed a methodology, materialised by the
“circular economy wheel” below, which we use to
position our current and future products, processes
and technologies. Placing eco- design at the heart
of this wheel and as a preliminary step to a virtuous
circular economy will enable us to better manage the
end of life of our products.
→
Elkem strongly believes that anyone, regardless of
their position or field of expertise, can contribute to the
development of a circular economy. In 2022, a global
innovation contest was held internally, fuelling projects
and building common understanding of circular
economy. The four winning ideas, amongst more than
a hundred, benefit from a strong sponsorship and
recognition from the corporate management.
The success of this competition is not only
acknowledged by the number of new projects, but
also by the way people with different backgrounds got
together to impact the future of the company.
Elkem launched collaborative projects to develop
our own network of competences and to develop
new solutions faster fitting both with regulations and
customer needs. These collaborative projects involve
partners all along the value chain with the aim to
make this ecosystem more circular, allowing us to
produce goods and service in a sustainable way by
limiting the excessive consumption of resources and
the production of waste.
→
Safe chemistry
Technology contributes
and regulations
to at least one of the life
cycle criteria
Be cautious of
12 principles of
impact transfer
green chemistry
Design
Ensure a new product
has lower impact than the
previous one
Processing
Transport and
Distrubution
End of life
Handprint
Raw
materials
Figure: The circular economy wheel
ESG management
People and organisation
A strong and consistent company culture, fair treatment of
all employees and a safe, inclusive and motivating working
environment are the foundations for making Elkem an
attractive employer for our current and future employees.
Continuously developing the organisation to enable
strategy implementation, as well as systematic competency
development and performance management of each
employee, are key to ensure successful and sustainable
growth of the company.
Commitment
Elkem is committed to empowering people to become
experts in their own areas of responsibility through
involvement, respect, continuous improvement
and precision.
Targets
→
100% of employees have an annual
development discussion
→
100% of the mandatory training is
completed by the assigned target group
Key events 2022
→
Global employee engagement survey
→
Turnover rate: 6%
→
Employees that have had development
discussions: 89%
Key risks
×
Ability to attract necessary resources – both the
competencies and necessary capacity – in the
remote locations of the Elkem plants
×
Lack of development opportunities and follow-up
may result in demotivated employees and a high
turnover rate
×
Restrictions on travelling due to the pandemic have
made it challenging to exchange best practises and
create good teamwork across entities
Key opportunities
→
As an attractive employer and industry leader
worldwide, Elkem can retain and attract highly
skilled and motivated employees that support
the shared strategic goals
→
Global operations offer exciting development
opportunities to all employees
→
Further development of good leaders offers
the opportunity to enhance employee
performance globally
Our people are Elkem’s most valuable asset. Elkem's
human resource strategy, the way the company is
organised and the continuous investment in developing
our people are the vehicles to deliver on the business
strategy. Focusing on leadership development at all
levels in the organisation, strengthening the culture
fundamentals and the Elkem Way, ensuring critical
competencies where and when they are needed, as well
as investing in the individual development of all employees
are the main building blocks of the HR strategy.
Elkem offers a wide range of internal training, which
is continuously evaluated and further developed. The
increased use of digital channels enables faster and
broader roll-out of competency development.
Leadership development
Elkem provides three global standard leadership
development programmes targeting first level, mid-level
and senior level leadership accordingly.
Our first level leadership programme, referred to as
Elkem’s Leadership Essentials program, targets middle
management, team leaders, shift leaders, new leaders or
any employees with personnel responsibility. It aims to
create a one Elkem culture by developing a baseline of
effective people leaders in alignment with our purpose,
values and mission.
At the second tier, we offer a mid-level leadership
programme, Elkem Leadership programme targeted to our
high potentials and more senior leaders. The programme
runs for one year and consists of five modules aiming
to increase knowledge about Elkem through working
in interdisciplinary team projects. Elkem’s Leadership
program also offers the participants individual coaching
and evaluations. Candidates to this programme are
nominated from Elkem worldwide and finally selected by
the corporate management of Elkem.
At the third level of leadership, we provide Elkem Excellence
Program. This programme is offered to the most senior level
of leaders in Elkem, who have already concluded the Elkem
Leadership program, leaders at division management level
and leaders leading other leaders.
Competency development
All Elkem internal training offering is available for the
employees on the company intranet Learn-pages. The
information displays the available training offering to the
different groups of employees ranging from the operators
to the different groups of white collar employees. As part
of the annual development discussion (DD) the individual
development plans, including mandatory training, is
discussed and reviewed with each employee.
The mandatory training categories include:
→
Compliance
→
HSE
→
Intellectual Property
→
Technical safety
→
Leadership development
→
IT security
→
Elkem Onboarding Program (EOP)
We also offer a wide range of optional trainings in the
following categories:
→
Digital
→
EBS
→
Innovation
→
IP
→
Legal
We aim, through easy access and a wide availability
of courses to serve and engage our employees to take
charge of their own learnings and to continuously grow
and develop.
Development discussion (DD)
Every employee shall know their targets and plan together
with their leaders what support and resources they need
to meet them, to develop further and perform well. All
employees are expected to contribute to a performance
culture that drives continuous improvement. It shall be
safe for all employees to challenge the status quo to drive
a culture of innovation. This requires that all employees
receive regular constructive feedback on their performance
and contribution to the working environment.
At Elkem, this is done through formal and informal
channels, starting with the individual's job description and
the DD, where individual annual targets are agreed upon,
performance is discussed, and mutual feedback is given.
This is done to support changing work priorities aligned
with strategic goals. As part of the DD, the leader also
receives feedback from the employee to enhance both
individual performance and cooperation.
Elkem encourages employees to take on new challenges
and responsibilities to develop themselves and to contribute
to the company's culture of sharing and cross-divisional,
-functional and -geographic learning. Elkem offers good
conditions to support employees on such development
steps if a change includes a relocation. Elkem's global target
is for 100% of employees across all locations and levels to
have an annual development discussion with their leader. In
2022 89% of all Elkem employees had their DD, the highest
percentage in the past five years. We continue to work
systematically towards our target of 100% and are pleased
with the development in 2022.
People policy and survey
Elkem's global people policy establishes the principles for
the people processes and the company's obligation to
handle employment matters consistently and supporting
the employees throughout their employment with Elkem.
The people policy aims to cover key material issues for
employees globally.
In 2022, Elkem conducted its first global employee
engagement survey. The survey was well received by
the employees and revealed a high level of engagement
globally "above industry benchmarks". This allows the
company to focus on maintaining the topics with good
feedback from the organisation, and in the spirit of
continuous improvement, establish good programmes for
the areas the employees pointed to as improvement areas.
Elkem Business System (EBS) – our common culture
EBS is Elkem's business system and leadership
philosophy, which embodies our common culture,
language and provides working- and continuous
improvement methods for all employees. EBS is a key
to achieve operational excellence across the value chain.
Building on our values; respect, involvement, precision,
and continuous improvement, EBS is the foundation
of Elkem’s company culture. At the heart of EBS is the
dedication to involve all employees in improvement
work and Elkem takes great pride in empowering our
employees as experts in their own responsibility areas.
Elkem considers delegated and decentralised decision-
making to be a strength and key element of its business
culture. The EBS principle of empowering people is key
to understanding Elkem’s view on labour rights and
employee involvement. Elkem seeks to achieve increased
efficiency in the product value chain through the people
value chain. Elkem employs a team-based structure with
orderly working and wage conditions, providing a wide
range of opportunities for personal development.
Developing a shared language and culture takes time.
When Elkem establishes or acquires new entities,
the priority is always to implement our HES and EBS
standards and systems, regardless of the location or
previous organisation of the site. Some Elkem sites are
at the beginning of this journey, while other entities have
come a long way.
EBS assessments to promote involvement and continuous
improvement include:
→
A corporate EBS team assesses all sites biannually
through observations and discussions to evaluate
the progression, involvement, and improvements and
encourage further development.
→
The assessment's topics are divided into three main
parts: i) Daily operations related to work teams and
daily management, 5S visual management and
problem-solving, ii) systematic improvements related
to flow, control, and capability and iii) sponsorship,
strategy, learning and competence development.
→
Across all levels, Elkem's leadership focuses on
involvement, knowledge and information sharing and
on the management's commitment to empowering
their employees through continuous improvement
and shared goals and tools.
During the last years, Elkem has expanded its presence
globally, particularly in China. Elkem’s previous experience
from China shows that cultural and maturity differences
have not prevented the implementation and development
of EBS. We are continuously hiring and training new local
employees and conducting assessments to find the gaps
and improvement areas to further develop our organisation.
Flexibility and work-life balance
To reach Elkem's overarching goals, the company
needs to develop an organisational culture based on
participation, teamwork, and people empowerment.
Elkem is committed to providing flexibility in working
hours and -location in accordance with local laws
and regulations. Such flexibility can be offered by the
company at the employee’s request, provided that it
does not in any way prevent or hinder the employee in
performing his/her job tasks. Across the whole company,
working terms must allow employees to combine working
and family life. Elkem recognises that a better work-life
balance can improve employee motivation, performance,
and productivity, and reduce stress. Therefore, the
company wants to support employees to achieve a better
balance between work and their other priorities.
Products
World class
quality products
require world
People
class performers
Figure: The double value chain
Turnover
Elkem strives to retain existing employees and attract
new ones. The turnover rate indicates the attractiveness
of Elkem as an employer and how well Elkem manages to
keep its employees. The total turnover rate in the Elkem
group was 6% in 2022, down from 8,4% in 2021. The
female share of leavers was 27% and of new hires the
same level. Elkem is working systematically to increase
the female share, but that has proven to be challenging.
In 2022, in Norway, the share of female applicants to all
open positions was 24%.
Changes to the organisation
The required number of people and competencies in
different areas of Elkem's business can both increase
and decrease for various reasons. When it is necessary
to reduce the workforce, the process shall always
comply with relevant legislation and agreements.
Furthermore, the management shall involve employees
and their representatives early to run a transparent
and constructive process, both for the employees who
leave the company and those who remain. Therefore,
change management is an essential part of leadership
development activities in Elkem.
Contractors and temporary hires
All Elkem employees shall have a written employment
contract or other written documentation of employment
that complies with local legislation. This also applies to
contractors and temporary hires. Elkem invests in people
and thus aims to offer permanent employment and limit
non-regular employment. However, during peak times,
contracted and temporary work can be considered for
time-limited projects or projects in need of specialised,
non-core competencies. Elkem is committed to fair
compensation and priority rights to potential permanent
employment in such cases. Contractors are subject to the
exact same HES requirements as our own employees, and
all contractors receive full training and follow-up to ensure
that they work in a safe and healthy environment. The
number of contracted employees (non-Elkem employees
working full-time for more than three months as a
substitute for hired employees) at Elkem was 331 in 2022.
KPIs
Metric
2022
2021
2020
Comment
Total employees
Number
7 372
7 074
6 856
Europe
Number
2 953
2 898
Asia
Number
3 632
3 433
America
Number
758
716
Africa
Number
28
27
Turnover rate
%
6%
8%
6%
-2%
Female share of new hires
%
26%
27%
26%
Female share of leavers
%
27%
23%
23%
+4%
Blue collar / operators
%
59%
55%
65%
White collar / staff
%
41%
45%
35%
Total contractors
Number
331
433
420
Europe
Number
125
159
115
Asia
Number
171
238
265
America
Number
35
36
40
Africa
Number
0
0
0
Temporary hire rate (%) to permanent employment
%
5%
7%
6%
-2%
Part time workers rate (%) to permanent employment
%
1%
6%
3%
-5%
Development discussions
%
89%
78%
85%
+11%
The colour indicates a positive or negative development year on year.
ESG management
Sustainability and
ESG governance
Elkem manages a complex value chain. All parts of the
value chain, such as the supply of raw materials, access
to highly competent employees, and the timely delivery
of products to customers impact the ability to reach the
company’s strategic goals. The company strategy of dual-
play growth and green leadership leans on a strong ESG
(environmental, social and governance) governance.
There is an increased expectation of companies to manage
their value chain in a responsible manner and to mitigate
sustainability-related impacts through the value chain
across environmental, social and governance aspects.
In particular, the world needs businesses to take
responsibility to reduce their total carbon footprints
to succeed in the transition towards a more green
and just society, governed in an ethical way. Materials
should be recyclable, long-lasting, and produced
with low greenhouse gas (GHG) emissions. Materials
should also be produced responsibly and ethically,
with a precautionary approach to both the people and
the environment. To achieve this, society needs more
innovative and efficient solutions. Increasing demand
for low-carbon technologies and products, such as solar
panels, batteries and electric vehicles, is impacting and
increasing demand for several of Elkem’s product
segments within silicones, silicon, and ferroalloys.
The board
ESG and sustainability are integrated into Elkem’s overall
business strategy, and the responsibility sits with the
collective board. ESG related risks and opportunities are
also part of board meeting agendas. The board follows
up and reviews the group’s ESG strategy on an annual
basis as part of the regular strategy process. In addition,
the board of directors receives information about the
company’s ESG performance and projects through regular
reporting and board meetings.
In 2022, the board of directors assigned the responsibility
for preparatory work related to sustainability and non-
financial reporting to the audit committee. The audit
committee prepares the board of directors' follow-up
and review and internal control of the sustainability and
non-financial reporting. The committee also supervises
sustainability-related risk management and the
company’s sustainability ratings performance. The audit
committee works to ensure that the board has good
procedures and internal control over sustainability and
non-financial reporting.
The board shall evaluate its performance, competence and
expertise annually. As part of this, the board shall evaluate
the composition and the way its members function, both
individually and as a group. The board shall evaluate its
performance and work, including agenda, topics, and
preparations for board meetings. The board shall also
evaluate its competence in relation to the existing and new
objectives and requirements set out for its work.
Management and operational level
The Chief Financial Officer (CFO) is the most senior
management position responsible for ESG related
topics. The CFO is responsible for managing the ESG
steering committee, the management body responsible
for ESG, which consists of members from the corporate
management. The ESG steering committee reports to the
Chief Executive Officer (CEO). Elkem’s business strategy
and corporate governance policy are approved by the
board of directors and provide the overall framework for
the group’s strategic direction and governance structure.
Governing documents
Elkem´s governing documents define the principles for
how the group’s business should be conducted. The
foundation for Elkem´s corporate governing documents is
the code of conduct and the Governance policy. The code
of conduct provides a framework for what Elkem regards
as responsible conduct. It sets clear ethical standards in
critical areas and explains how Elkem representatives are
expected to conduct themselves when acting on behalf of
the company. The code of conduct is supported by several
group policies, procedures, and supporting documents.
Group policies are approved by the Compliance
Committee. These provide directions for common
objectives, commitments and behaviours, define the
36%
50%
3
women in the
independent
employee
board
directors
representatives
ESG and sustainability governance structure
SVP
SVP Human
Chief Financial
SVP
SVP Strategy
SVP
SVP Silicon
SVP
SVP Green
Technology
Resources
Officer
Innovation
& Business
Silicones
Products
Carbon
Ventures &
and R&D
Development
Solutions
Digital
VP HSE
ESG office
General meeting
Board of directors
Audit committe
Chief Executive
Officer
* Functions marked in green are members of the ESG steering committee
principles and commitments for the governing processes
within Elkem, and allocate roles and responsibilities of the
group’s functions. The group governing documents contain
requirements that are mandatory for all Elkem group
companies and operational units, regardless of division and
geography. To ensure that commitments for responsible
business conduct are embedded in all business activities
and relationships, all company governing documents must
be consistent with the code of conduct.
Over the past year, Elkem has invested significant efforts
in restructuring and improving the group governing
documents and in making sure that they are easily
available to all employees by publishing them in a common
document library available on the Elkem intranet. A
global information campaign towards all employees uses
intranet articles, direct email and leadership webinars to
ensure a baseline knowledge of the governing documents.
Simultaneously, the owner of each policy prepares an
implementation plan for their respective areas. These plans
are tailored to specific target groups determined by roles
and responsibilities.
Several of Elkem’s policies and procedures are available
online under “Governing documents and tools”.
↗
Elkem adheres to the principles of “the Norwegian Code
of Practice for Corporate Governance” issued by the
Norwegian Corporate Governance Board (“NUES” or
the “Code”). The objective of this Code is to ensure that
companies listed on regulated markets in Norway practice
corporate governance that regulates the division of roles
between shareholders, the board of directors and executive
management more comprehensively than is required
by legislation. Further information about our corporate
governance can be found in the bord of directors’ report on
corporate governance in the annual report.
↗
Remuneration
The CEO and the corporate management have
performance-based compensation based on predefined
metrics. The metrics are defined according to the areas
of responsibility. The performance-related short-term
incentives (STI) are limited to 100% of the base salary
for the CEO and 50% of the base salary for the
corporate management.
The Company has the option of reclaiming, in full or in
part, awarded short-term incentive (STI) remuneration
in certain situations (“claw back”), including where
incentive remuneration was awarded or paid out based
on information subsequently proven to be incorrect. The
clawback provision was implemented in 2022.
The metrics for the CEO for 2022 include:
→
Health, safety, and environmental performance
with target of zero major incidents with high
severity consequences.
→
Zero substantiated misconduct cases with a
potential of causing financial or reputational harm
to the company.
→
Define the roadmap of 39% reduction of the carbon
footprint of main products within 2031, in line with the
Elkem climate strategy and deliver on the 2022 targets.
The corporate management bonus for 2022 was linked
to the same criteria as the CEO metrics, focusing on
compliance and sustainability. Criteria also include the
employees’ completion of compliance training to drive
and further develop good compliance culture and to avoid
substantiated misconduct cases.
For more information about the remuneration management,
please see the board of directors' report on salary and other
remuneration for leading personnel for 2022.
The Elkem house
The Elkem house illustrates the building blocks of Elkem’s
business model. Our mission and values represent the
foundation to support our working practices, our culture
and how we work. Our mission, values, and working
practices are interlinked and support our corporate strategy.
Risk management and materiality assessment
Risk management process
The board of directors has the ultimate responsibility for
ensuring that Elkem has appropriate risk management
systems that reflect the extent and nature of the
group’s activities and value chain impact. The board and
management regard risk management as a key part
of Elkem’s corporate governance structure, which is
important to create trust and to enhance value creation.
This includes ESG and climate-related issues. Evaluating
ESG and climate-related risks and opportunities has
become an increasingly important part of Elkem’s overall
risk management processes. These factors impact
strategy, financial conditions, and all aspects of Elkem’s
value chain, from raw materials to finished products.
Elkem conducts an annual risk mapping process based on
interviews with divisions and corporate staff. The purpose
is to thoroughly understand the group’s risk profile. Each
risk is evaluated based on internal and external conditions
and takes into consideration the deemed likelihood,
estimated financial impact, time horizon and possible
mitigating activities. The financial impact is based on
how a risk factor may impact Elkem's EBIT, cash flow and
equity position. In addition, the frequency or likelihood for
each risk is evaluated. A frequency of more than 5 years
or a probability below 20% is defined as low, between 1-5
years or a probability of 20-60% is defined as medium
and more than 1 per year or a probability of more than
60% defined as high.
ESG approach – continuous improvements
Strategy
Map sustainability/
The main coordinator of ESG in the organisation is the
ESG areas that are
ESG office. The ESG office reports to the ESG steering
important to our business
committee and collaborates closely with business
and stakeholders, and
prioritise an annual list of
units and divisions, to review and advise on relevant
improvements.
sustainability and ESG issues – to set targets and
Performance
Targets
improve systematically. As part of the Elkem Business
Evaluate performance to
Anchoring with those
responsible in the
System (EBS), it is our philosophy and belief that what
be able to map, adjust
and prioritise again.
organisation, set targets and
gets measured gets managed. An essential part of
develop plans to improve.
this work is to advise and improve key performance
indicators that are reviewed by corporate management.
Reporting
Action
Track progress in
Corporate ESG
accordance with targets
functions support and
set, and communicate
advise line functions in
transparently.
improvement work.
Corporate strategy
Working practices:
EBS:
Elkem
HSE:
Health
ESG:
Environmental
Business
Safety
Social
System
Environment
Governance
Values:
Continuous
Respect
Involvement
Precision
improvement
Mission:
Our mission is to provide advanced silicon-based materials shaping a better and
more sustainable future, adding value to stakeholders globally
Culture
tion
ounda
F
Figure: The Elkem house
Climate risk
The assessment of climate related risks and opportunities
is an integrated part of Elkem’s risk management
processes. Elkem follows the framework from The Task
Force on Climate-Related Financial Disclosures (TCFD)
and includes an assessment of both transitional and
physical climate risks.
The risk management processes considering climate risks
are not only limited to substantive risks. Risks that today
are perceived to have limited financial impact or frequency
could increase going forward due to climate change. In
particular, such risks include acute and chronic physical
risks such as extreme weather events like flooding, storms,
sandstorms and high temperatures. In the past, such
events have not had substantial financial impact on the
company, but Elkem is monitoring such effects to evaluate
the possible impact on future raw material accessibility,
transportation and pricing.
A complete risk overview can be found in the risk overview
in the annual report.
↗
And an updated TCFD report for
2023 is available online.
↗
Materiality assessment changes
Elkem followed the principles, requirements and
guidelines of the GRI 2021 Standards to identify the
material topics for Elkem’s ESG report 2022. To ensure
best practice it has been necessary to conduct a new
impact-based materiality assessment. In the new GRI
framework impacts are defined as the sole parameter to
assess materiality. The aim is to facilitate objective and
balanced reporting.
The process of identifying Elkem’s most significant impacts
started with a mapping of all production locations across
the three business divisions: Silicones, Silicon Products, and
Carbon Solutions. Differences in the value chains between
these divisions imply different potential impacts. Activities
and business relationships for each business area were
mapped out. This information was then used to establish
Elkem’s sustainability context on a local level, as well as
on a global level. Guidance and input were provided by
relevant stakeholders and experts. In addition, independent
research on sectors and locations was used as the basis for
the identification and ranking of impacts. The impacts were
evaluated based on acute or potential impact, scale and
scope of severity and likelihood.
Elkem aknowledges that there are inherent risks connected
to its operational activities, due to the sector and
geographical locations that the company operates within.
The identification and assessment of potential impacts
has been made based on general risks that are relevant to
Elkem’s operations. Elkem’s approach and actions to limit
the potential risks have not been taken into consideration.
The impact assessment resulted in the following
material topics:
→
CO
2
and other GHG emission reductions,
including energy management
→
Local emissions to air
→
Biodiversity
→
Water management
→
Waste management and circularity
→
Health and safety on site
→
Human rights, including labour rights
→
Environmental due diligence in the supply chain
→
Social due diligence in the supply chain
→
Responsible economic practices
→
Product governance, including chemical safety
→
Supplying the green transition
The positive and negative impacts comprised in the
material topics are the ones that were deemed the most
significant for Elkem’s global operations and value chains.
The main focus will be on impacts directly connected
to Elkem’s own activities, because Elkem can manage
these directly. However, Elkem also acknowledges
potential negative impacts throughout its value chains.
Consequently, ‘’Social due diligence in value chain’’
and ‘’Environmental due diligence in value chain’’ were
established as material topics in 2022.
Civil society
Investors and
Political
shareholders
authorities
Employees
Regulatory
and unions
authorities
Customers
and suppliers
Figure: Key stakeholders
More information on stakeholder
issues and ways of dialogue, see
this article on our website
↗
E
Environmental
Social
Governance
Environmental
Introduction
With a fully integrated value chain from raw materials and
production of upstream silicon to downstream silicones, it
is vital to manage the environmental footprint from cradle
to grave. It is Elkem’s target to minimise the negative
environmental impact throughout the value chain.
Converting quartz to silicon is a high-temperature
smelting process that consumes vast amounts of energy.
The production process uses carbon sources like fossil
coal, charcoal, and wood chips as a reductant in the
chemical conversion, releasing emissions of CO
2
, NO
x
(Nitrogen Oxides), SO
2
(Sulphur Oxides) and dust.
Reducing our CO
2
emissions is of high priority and
strategic importance. In addition, processing silicon into
silicones involves substantial quantities of wastewater
treated before discharge to remove residues such as
Chemical Oxygen Depletion (COD) substances from
the process. Reliable water management is becoming
increasingly important, and water related challenges vary
strongly across Elkem’s value chain.
Moreover, the impact on nature and the management of
biodiversity have become increasingly important issues for
the process industry, as for the rest of the world. Although
managing the impact on life on land and life under water is
not a new area for Elkem, we are currently working to better
understand how we influence the biodiversity threats.
Environmental issues are managed and reported to the
corporate management monthly and managed through
the HSE (Health, safety, and environment) management
system. All Elkem units are required to develop and
manage their own HSE management systems in line with
the corporate standard.
All environmental impacts are identified and documented
with measurements or calculations showing performance
compared to governmental permits and/or internal
improvement targets set by Elkem. Elkem considers waste
streams to have value, either by reducing, recycling, or
reusing and we work continuously to reduce waste across
our operations.
Today, Elkem is a leader in understanding the complexity
of producing carbon products, silicon, and silicones. The
company’s continued dedication to research and innovation
makes our production even safer and more efficient.
The environmental topics material to Elkem are:
→
CO
2
and other GHG (Greenhouse Gas) emission
reductions, incl. energy management
→
Local emissions to air
→
Biodiversity
→
Water management
→
Waste management and circularity
Key highlights
→
Answered all three CDP disclosures for the first time,
securing two A-, Climate and Forests, and one B
score, Water security
→
First time publishing a full scope 3 methodology
report
↗
→
First sustainability linked loan agreement, with
product group carbon footprint as one of two KPIs
Key KPI
Metric
2022
2021
2020
Total CO emissions: Scope 1 + scope 2 + scope 3
2
Mill tonnes
10.74
11.60
10.27
Biocarbon share
%
20%
22%
19%
Product group carbon footprint
CO e/kg
2
6.9
7.4
N/A
product
Energy consumption from renewables
%
81%
84%
81%
Waste re-used, recycled, or diverted from landfill
%
70%
70%
67%
Water consumption
Megaliters
27 439
25 709
30 000
Environmental
CO
2
and other GHG
emission reductions
Elkem is committed to taking a leading industry position in
reducing fossil CO
2
emissions by increasing renewable carbon
sources and developing innovative production processes. The
total GHG emissions went down with 7.5% in 2022.
Key events 2022
→
Published scope 3 methodology report
→
Defined baseline for Elkem’s product group
carbon footprint (PGCF)
→
Established sustainability-linked bank facilities
agreement for EUR 1 000 million with targets
linked to reduction of CO
2
emissions
→
Included climate roadmap target into top
management bonus scheme
→
Commissioned a pilot plant in Canada to
produce biogenic reduction materials
→
Implemented a new sourcing strategy in China
based on low carbon silicon metal for the
silicones production
Targets
→
Reduce absolute emissions in scope 1+2
by 28% by 2031
→
Reduce the product group carbon footprint
by 39% by 2031
Key risks
×
Carbon pricing and regulatory disharmony
between countries and regions
×
Market demand for less carbon-
intensive products
×
Restrictions on the use of biobased sources
×
Reputational risk with stakeholders if
emissions are not reduced
×
Physical risk, in particular the risks related to
heatwave, as well as risks related to extreme
weather variability in the form of acute
precipitation increases
Key opportunities
→
Offer products with a low carbon footprint
→
Resource efficiency
→
New market access and growing green demand
A more comprehensive overview of the climate
risks and opportunities can be found in the
TCFD 2023 report.
↗
Key numbers 2022
Scope 1
Scope 2
Scope 3
Biocarbon share
Product group carbon footprint
2.42 million tonnes
941 656 tonnes
7.38 million tonnes
20%
6.9 kg CO
2
/ kg produced
Commitment
Elkem’s commitment is to develop the business in
accordance with the Paris agreement, to limit global
warming to well below 2°C and achieve the long-
term commitment to be net-zero by 2050. Elkem
will do so by reducing own emissions, growing its
market share in the green transition, and enabling
more circular solutions.
Policies
→
The climate change commitment has its
foundation in the climate roadmap and the
HSE policy.
Elkem’s corporate policies
↗
Elkem uses carbon sources as a reduction material in the
production of silicon and ferrosilicon. Carbon sources such
as coal, coke and biocarbon are key input factors in Elkem’s
production and result in CO
2
emissions. The smelters
account for about 70% of Elkem’s total scope 1 emissions.
Elkem currently uses 20% biocarbon in the production
to reduce fossil CO
2
emissions. As outlined in the climate
roadmap, progress towards reducing emissions will be
based on the increased use of biocarbon, the sourcing of
materials with lower carbon footprints and changes in the
power mix toward more renewables. Elkem is working on
a detailed plan to implement these measures, including
plant upgrades, biocarbon substitution, carbon capture and
storage and sourcing strategy to realise our ambitions.
Elkem reports the company’s scope 1, 2 and 3
emissions according to the GHG Protocol and defines
the organisational boundaries on an operational control
basis. All CO
2
emission numbers are CO
2
equivalents if
not stated otherwise.
Scope 1
The scope 1 emissions in Elkem mainly come from the
production processes, and account for about 95%. The
remaining 5% are fuels and methane emissions.
Most of the direct CO
2
emissions come from the smelting
processes (1.7 million tonnes CO
2
e), where carbon (C) reacts
with oxygen in quartz to produce silicon/ferrosilicon. GHG
emissions are calculated based on third party certificates
of carbon content in raw materials (coke and coal). CO
2
emissions from other sources, including heating and fuel,
are calculated based on standard conversion factors in
accordance with the EU Emissions Trading Systems (EU
ETS) Guidelines.
The total scope 1 emissions were 2.42 million tonnes in
2022. Since 2017, Elkem has increased production using
seven additional smelting furnaces: two in Norway, four
in China and one in Paraguay. Except for the furnace
in Paraguay, all these expansions have come from
acquiring existing capacity. The furnace in Paraguay only
uses biocarbon as a raw material reductant, making its
operations (scope 1 + scope 2) close to carbon neutral.
The historical increase in CO
2
emissions is also connected
to the acquisition of upstream silicone activities in China,
which uses a coal-fired boiler to produce steam used in
the production process. The increase from 2021 is due to
volume effect.
Scope 2
Elkem's industrial processes are power-intensive, and
electricity consumption is fundamental for operations.
Scope 2 emissions are defined as indirect GHG emissions
associated with the consumption of electricity, steam,
heat, or cooling. The electricity emission factors used
in the reporting are based on data provided by the
International Energy Agency for 2020. These data are
available on a national level only.
Due to the large size of
the power system in China and the considerable regional
differences in CO
2
intensity and regional differences in
the plans to decarbonise the power system, Elkem uses
data for the regional emission intensity for China. The
emission factors for China are based on data provided by
an external consultant.
Elkem's scope 2 emission in 2022 was 941,656 tonnes,
an increase from 901,059 tonnes in 2021. The increase
is mainly due to increased production volumes in China,
where the power mix has higher CO
2
emissions compared
to other places Elkem operate.
Scope 3
Scope 3 is the term used to describe the indirect GHG
emissions resulting from activities in the value chain, but
outside of our operational control, according to the GHG
protocol. There are 15 categories of scope 3 emissions.
The full scope 3 emissions were reported for the first time
in the 2021 report.
Environmental
CO
2
and other GHG emission reductions
Elkem has expanded our reporting to ensure we capture
the largest and most material indirect sources of GHG
emissions in our value chain. The two largest categories
identified are “purchased goods and services” and “end
of life treatment”. Scope 3 emissions were 7.38 million
tonnes in 2022, a 12% reduction from 2021.
The split between the scope 3 categories
Scope 3 upstream
Scope 3 downstream
Purchased goods and service
Capital goods
Transport
Other
End of life treatment
Use of products
s
Biocarbon
As the use of carbon sources are essential to the production
of silicon and ferrosilicon, it is critical to increase the share
of biocarbon to reduce fossil CO
2
emissions. Based on
current technology and availability of carbon sources, the
total emissions will vary year by year, based on production
volumes. To reduce the fossil CO
2
emissions, Elkem's main
strategy is to replace fossil coal with biocarbon in our
smelting operations. The target is to increase the biocarbon
share at the smelters to 50% by 2031.
The biocarbon share of Elkem's CO
2
emissions was 20%
in 2022, a small decrease from 2021. However, the runrate
varies a lot (discarding Paraguay that run with more than
95% at all times), and at some of the smelters it was as
high as 45%. Undersupply of biocarbon is a key challenge.
Elkem will continue the work on finding sustainable and
financially viable biocarbon sources. Each of the plants
has developed a roadmap to reach the 2031-goal and
will report on their progress. To secure sufficient supply,
Elkem is developing new technologies for biocarbon
production in Canada, based on residues from sawmills
and not on virgin timber. Elkem is also actively involved in
new technology development and industrial partnerships.
It is a prerequisite for Elkem that renewable sources
comply with our environmental and social requirements.
Elkem reported to the CDP Forest for the first time in
2022, and was rewarded with an A- score, highlighting the
focus on developing sustainable sourcing of biocarbon
and preventing deforestation.
LCAs
Life Cycle Assessments (LCAs) are being performed to
quantify the environmental impact of our products. LCAs
support Elkem in reducing its environmental footprint
even further by providing an accurate overview of the
environmental impact of the operations. Furthermore,
these assessments increase product transparency to
assist our customers in their sustainability transformation.
In 2022, Elkem conducted third party assessments of
the environmental impact of the products produced at
some of the major plants. These assessments have been
undertaken on a cradle to gate basis, i.e. covering the
manufacturing process of raw materials until the products
reach our plant's gates. Elkem will continue to perform
LCAs on additional major product groups in 2023.
Product group carbon footprint (PGCF)
Elkem has a target of reducing the absolute CO
2
emissions
by 28% by 2031 (scope 1+2), despite expecting its
business volumes to rise in the same period due to its
strong product fit with the green transition. Accordingly,
the company has set a target of reducing the carbon
footprint of its products, defined as reducing the Product
Group Carbon Footprint (PGCF) by 39% by 2031.
Although the absolute CO
2
reduction is imperative, the
relative reduction in Product Group Carbon Footprint is
also relevant in assessing the group’s performance.
Elkem has defined two main product categories in the
carbon footprint reduction target, representing Elkem’s
main product segments with 93 % of total operating
income in 2021 (the baseline year). The scope of the PGCF
includes i) upstream production of silicones (i.e. silox) and
ii) tapped silicon and ferrosilicon metal, defined as CO
2
e
(scope 1+2+3 to gate) per kilogram of product produced.
Silicon produced by Elkem in Europe has a low CO
2
footprint compared to silicon delivered by other
producers, mainly due to:
→
Renewable hydro-power electricity.
→
The use of bio-based reductants.
→
Good operational performance with high yields,
efficient capacity utilisation and limited waste/off-
spec volumes.
The baseline year of the PGCF target has been set to 2021.
Silicones and Silicon Products business areas are relatively
similar in terms of volume and operating income and the
average PGCF is thus calculated as the arithmetic average
of the two.
CO2
CH4
N2O
HFCs
PFCs
SF6
NF3
Downstream activities
Reporting
company
Upstream activities
Purchased
goods and
services
Upstream
leased assets
Scope 3
Indirect
Employee
commuting
Business
travel
Capital goods
Scope 2
Indirect
Purchased electricity,
steam, heating and
cooling for own use
Company
facilities
Company
vehicles
Scope 1
Direct
Scope 3
Indirect
Upstream
leased assets
Franchises
Use of sold
products
End-of-life
treatment of
sold products
Investments
Processing of
sold products
Fuel and energy
related activities
Upstream
transportation
and distribution
Downstream
transportation
and distribution
Waste generated
in operations
Figure: GHG scope definition
KPIs
2021
Product group
Weight
2022
(baseline year)
Avg. silicones PGCF
50%
8.8
10.0 kg CO e/kg
2
Avg, silicon alloys PGCF
50%
5.0
4.9 kg CO e/kg
2
Elkem average PGCF
100%
6.9
7.4 kg CO e/kg
2
Metric
2022
2021
2020
Comment
Scope 1 –
direct emissions
Mill tonnes
2.42
2.34
2.39
+3%
Scope 2 –
Indirect emissions, electricity use, location based
Mill tonnes
0.94
0.90
0.91
+5%
Scope 2 –
Indirect emissions, electricity use, market based
Mill tonnes
2.64
2.77
2.64
-5%
Scope 3 – indirect emissions, total
Mill tonnes
7.38
8.35
6.95
-12%
Upstream
Mill tonnes
4.06
4.92
3.72
-18%
Downstream
Mill tonnes
3.33
3.43
3.23
-3%
Biocarbon share
%
20%
22%
19%
-2%
All numbers in the above table are CO
equivalents.
2
The colour indicates a positive or negative development year on year.
Environmental
Energy management
Energy efficiency and sustainable sourcing of energy is of
utmost importance to ensure security of supply, while at the
same time reducing Elkem's global greenhouse gas footprint.
Key events 2022
→
Electricity consumption based on
renewable energy: 81%
→
Approval and project start of the Phoenix
project in China that will give a substantial
reduction in energy intensity for the
production of silicones
Key risks
×
Changing regulatory framework,
permits and requirements
×
Volatility of energy prices
Targets
→
Energy recovery increase year on year
→
Energy intensity improvements on
main products
→
Improved energy efficiency in facilities
and equipment
Key opportunities
→
High percentage (more than 80%) of
renewable energy use
→
Public grants for implementation of
some energy efficiency measures
→
Continued roll out of renewable energy
in China and Europe
Commitment
Contributing to the green transition by providing
products with low carbon footprint, achieved by
reducing energy consumption and increasing share
of renewable power.
Policies
Elkem uses an Energy management system at all
energy intensive sites.
Elkem’s corporate policies
↗
In 2022, we witnessed events that indirectly and directly
may impact Elkem’s business and the energy supply to
the production.
In EU; The war in Ukraine combined with several other
factors led to a constrained energy supply situation. Elkem
naturally takes the responsibility to reduce the energy
intensity, in line with our previous engagements.
→
The French government responded to the situation by
launching a plan to reduce the energy consumption of
France by 10% within 2024. For the chemical industry
this implies intensifying the work on energy efficiency.
In Elkem France, the major energy consuming site,
Elkem Roussillon, has ISO 50001 energy management
certification since 2016 and has considerably reduced
its energy intensity over the years. The efforts at all our
French sites are now being intensified.
→
Elkem’s operations in other EU countries are
considerably less energy intensive, but are also
increasing the efforts to reduce energy consumption.
For instance, the Elkem site in Lübeck is ISO
50001 certified.
In China: The Chinese government launched its 14th
five-year plan for the period 2021-2025 with a target of
reducing energy intensity (energy consumption per GDO)
by 13.5% by 2025 as compared to 2020. This translates
into requirements for Elkem’s Chinese production sites to
reduce their energy intensity correspondingly.
Parts of Elkem’s value chain are highly energy intensive,
with silicon, ferrosilicon and foundry alloys being produced
in high temperature electric arc furnaces. Elkem consumes
around 6.5 TWh of electricity per year, and in 2022 about
81% of this electricity was produced from renewable
sources. As the percentage is already very high Elkem does
not have quantitative targets to further increase it. Elkem
does however expect the availability of renewable energy
in China to increase substantially in the coming years,
which will enable the company to move more of our current
Chinese power base to renewable solutions.
Elkem's three main targets within energy are
a.
improving the energy efficiency of existing
facilities and equipment,
b.
reducing the energy intensity of main products, and
c.
increasing energy recovery from processes that
generate surplus heat.
Elkem was an industrial pioneer in the utilisation of waste
heat, with the first energy recovery system on a silicon
smelting furnace being installed already in the 1970s.
Recovered heat from smelting furnaces can be utilised as
hot water for district heating, steam for other production
processes and to generate new electricity. Electricity is
sold back to the grid while hot water and steam are used
both internally and externally to supply other companies
and communities in the vicinity of each plant.
Elkem’s commitment to improving our energy footprint
is part of our general commitment to minimise the
environmental footprint, as stated in the Elkem General
policy. The HSE management system requires all units
to implement energy management and to report on
consumption, recycling and deviations while working
actively towards our targets. At the corporate level Elkem
also has an environmental manager and a senior corporate
energy specialist coordinating improvement efforts.
Environmental certification is part of Elkem's efforts
within energy management. All applicable sites are
ISO14001 certified either individually or with umbrella
certification, and it has been decided to initiate energy
management ISO50001 certification at five plants in
2023. All environmental deviations and environmental
indicators including those that are energy related are
registered and followed up in the company’s reporting and
deviation management system Synergi.
Energy consumption
Total gross electricity consumption in Elkem in 2022 was
6,542 GWh, the same level as 2021. Most of this change
is related to increased production. About 80% of the total
gross electricity consumption is based on renewable power
Environmental
Energy management
production. Except for one smelter in China, all smelting
furnaces in Elkem run on renewable electrical energy.
In addition to electrical energy, Elkem also consumes
approximately 1.4 TWh of other types of energy for internal
vehicle operation and heating/cooling of facilities and
processes. Most of this is fossil-based energy.
Elkem does not have an overall target to reduce its total
energy consumption, due to the growth strategy focused
on increasing the production and availability of materials
that are essential for the green transition. Elkem’s targets
therefore focus on using our energy base as efficiently
as possible and thereby reducing the energy intensity
of the products.
Energy recovery
Elkem has a long-term strategy to increase energy
recovery annually as part of its climate programme.
Most of Elkem's major production sites have production
processes that generate surplus heat with high enough
temperatures to be recovered. This heat can be used to
generate new electricity for the grid, as well as steam or
hot water for internal or external use in production or as
district heating. The potential for energy recovery has been
mapped at all applicable sites and energy recovery has
already been implemented, including large offgas boilers
at four smelters, generating new electricity and steam.
The latest addition came online at the Elkem Salten plant
in 2021 increasing the total recovery capacity by 270 GWh
annually of electrical energy, equal to the consumption of
more than 15,000 Norwegian households.
Globally, a total of 892 GWh of heat and electricity
were recovered from Elkem’s plants in 2022, equal
to about 55,000 Norwegian households’ annual
electricity consumption. This represents 11% of total
energy consumption, a decrease from 13% in 2021, due
to lower production at some major facilities equipped
with energy recovery.
Energy efficiency
As part of their energy management efforts, Elkem sites
are required to have updated energy inventories showing
specific consumption and the potential for improving
efficiency, thereby reducing consumption and cost. One
example of this is replacing old, inefficient electrical motors
with new efficient motors with variable frequency drives.
Other examples of important projects to improve energy
efficiency can be found at Elkem Xinghuo where old
inefficient coal boilers used to generate steam for the
production process are being replaced with new co-
generation technology that produce both steam and
electricity with a substantially lower consumption of coal.
The second project is a major expansion of silox capacity
with significantly lower energy intensity.
KPIs
Metric
2022
2021
2020
Comment
Energy consumption – electricity
GWh
6 542
6 536
6 399
0%
Consumption of purchased or
acquired electricity, renewable
GWh
5 397
5 488
5 153
-2%
Driven by reduced
consumption in Norway
Consumption of purchased
or acquired electricity, non-
renewable
GWh
1 144
1 047
1 246
+9%
Driven by increased
consumption in China
Renewable share of electricity
consumption
%
81%
84%
81%
-3%
Energy recovery
GWh
892
909
711
-2%
Due to reduced production
at facilities equipped with
energy recovery
Energy recovery of
consumption
total
%
11%
13%
10%
-2%
Driven by the inclusion of
Xinghuo coal consumption in
the total energy consumption
Consumption of fuel (excluding
feedstock) non-renewable
GWh
1 438
44
0
Including for 2022 Xinghuo
coal consumption in the
reporting scope
Consumption of fuel (excluding
feedstock) renewable
MWh
0
0
0
Consumption of purchased or
acquired heat
MWh
0
0
0
Consumption of purchased or
required steam, renewable
MWh
0
0
0
Consumption of purchased or
required steam, non-renewable
MWh
53
59
54
-9%
Total energy consumption
GWh
8 033
7 023
6 773
+14%
Driven by the inclusion of
Xinghuo coal consumption in
the reporting scope
The colour indicates a positive or negative development year on year.
Environmental
Biodiversity
Elkem’s value chain includes numerous process flows,
including mining, high-temperature calcining, high-
temperature smelting processes, and chemical production.
Mining and chemical processing are activities that could
have significant impact on biodiversity.
Key events 2022
→
Responded to the CDP Forest for the first time
in 2022, focusing on deforestation. Score: A-
→
Established a cross-divisional biodiversity
mapping project, to increasingly understand the
biodiversity impact of the company
Erimsa quartz mines wins
environmental award
↗
Elkem defines biodiversity as the variability among
living organisms from all sources including terrestrial,
marine, and other aquatic ecosystems and the ecological
complexes of which they are part; this includes diversity
within species, between species and of ecosystems, in
line with the recommendations from newly established
Taskforce on Nature-related Financial Disclosures
(TNFD). Biodiversity is an integrated part of the group's
environmental management system, and closely linked to
other sustainability impacts followed up by VP HSE.
It is vital for Elkem to uphold our responsibility for limiting
our environmental impact from our operations and Elkem
supports the conservation of biodiversity and promotes
sustainable management practices. Elkem is committed
to preserving biodiversity and ecosystems around our
facilities. The commitment is outlined in Elkem’s HSE
policy, which is approved by the compliance committee.
Elkem recognises the importance of considering
relevant environmental aspects, including consideration
of water quality, water use, soil conditions, habitats,
vegetation, and the physical stability of landforms and
decommissioned structures.
Areas of particular exposure to Elkem
Mining
Mining is associated to relatively high biodiversity-related
risks, connected to water use and terrestrial ecosystem
use. Additionally, there are biodiversity-related risks
connected to GHG emissions, non-GHG air pollutants,
water pollutants, soil pollutants and solid waste.
Elkem solely mines quartz, that has less stress on the
ecosystem compared to other forms of mining. Given
that quartz is a common mineral, Elkem can source
raw material from non-protected areas. Elkem’s mining
activities are strictly coordinated with the national mining
authorities. Elkem makes environmental risk and impact
assessments part of the mandatory steps when applying
for mining permits, including consultation with biodiversity
experts and local stakeholders.
During mining projects, emissions to water and air are
monitored, as well as the impact on soil, vegetation, and
the landscape. All activities are audited by the national
mining authorities. Elkem also prioritises mineral side
streams utilisation to reduce the impact of the mining
process. As a mitigation measure, annual provisions are
made, earmarked for the restoration of the mine after the
activities are ended.
Commitment
Elkem is committed to preserving biodiversity
and ecosystems around our facilities, including
water quality, water use, soil conditions,
habitats, vegetation, deforestation challenges
and the physical stability of landforms and
decommissioned structures.
Elkem is committed to implement locally driven
biodiversity activities at plant level based on the
principles of avoid, reduce, restore, and regenerate
and transform.
Policies
HSE policy
All policies are available on Governing
documents and tools
↗
Elkem is a member of IMA-Europe (Industrial Minerals
Association). Together with several other European
companies, the organisation enables conditions for
positive change for biodiversity.
Biocarbon
Elkem’s smelters use a combination of quartz, a carbon
source and electricity to produce silicon and ferrosilicon.
Elkem’s ambition is to increase the renewable share of the
carbon source, by replacing fossil coal with biocarbon.
The increased need for biocarbon requires the company
to ensure that the biomass (i.e. wood chips and charcoal)
are sourced from sustainable forestry. Elkem is committed
to minimising the impact of our biocarbon strategy for
existing forestry and does not accept deforestation in
our supply chain. Only sustainably and legally produced
biomass shall be used in Elkem’s production.
Elkem is committed to sustainable and ethical raw
material sourcing in accordance with internationally
accepted principles and standards. Ethical and
sustainable biocarbon sourcing is based on three
main principles:
→
Acceptable wood resources for the production
of biocarbon.
→
Acceptable working conditions and respect for
basic human rights during the production and
logistics process.
→
Zero tolerance for corruption and legal
non-compliance.
Chemicals
The speciality chemicals industry is related to high
biodiversity risk connected to water use, terrestrial
ecosystem use, GHG emissions, non-GHG air pollutants,
water pollutants, soil pollutants and solid waste.
Elkem uses chemical compounds in the production
process of silicones. Solid waste, non-GHG air pollutants,
water use, and water pollutants are closely monitored to
reduce impacts on biodiversity.
Elkem’s chemical processing activities are strictly
coordinated with the national and local authorities. Elkem
conducts assessments of biodiversity risks when deciding
on a new plant for chemical processing.
Elkem collaborates with local governments and experts to
reduce impacts on biodiversity. Elkem’s Silicones division
is a member of the Responsible Care Global Charter which
is the global chemical industry’s unifying commitment to
the safe management of chemicals throughout their life
cycle, while promoting their role in improving quality of life
and contributing to sustainable development.
Water represents a critical input in many of Elkem's main
production processes and is covered in more depth in the
Water management chapter on page 110.
↗
KPIs
KPIs will be evaluated in the biodiversity mapping project
in 2023.
Environmental
Water management
Water represents a critical input in many of Elkem's main
production processes. Elkem is also indirectly dependent
on water as more than 80% of its electricity is hydropower.
It is therefore important to ensure that our water footprint
is sustainable. Water related challenges vary strongly
across Elkem's value chain and are mainly centred around
preventing hazardous discharge.
Key events 2022
→
Water withdrawals in water stressed areas in
2022 were reduced by 160,000 m
3
or 23%
compared to 2020 (base year)
→
Water intensity related to silicone production
have increased from 87,3 to 87,9 litres per tonne
or 0.7% in 2022 compared to 2022 (base year)
→
CDP Water: B, up from B- in 2021
Key risks
×
Water availability
×
Water quality (contamination and discharge)
×
Water-related regulatory framework
and permits
×
Stakeholder conflict
×
Biodiversity and ecosystems
Targets
→
20% reduction of water withdrawals in water
stressed areas by 2031 from a 2020 base
year. The target covers the following Elkem
plants: Yongdeng (China), Elkem Carbon China,
Ferroveld (South Africa) , Elkem Foundry China,
Nagpur (India)
→
12% reduction per unit of produced silicones
by 2031 from a 2020 base year. Production of
silicones accounts for 90% of Elkem’s total
water consumption
Key opportunities
→
Strong environmental management systems
→
Improvements of water handling, particularly
the production expansion project at the
Xinghou plant in China
Water withdrawal in water stressed areas is a burden
both to the local societies and the environment at Elkem
Yongdeng (China), Elkem Carbon China, Ferroveld (South
Africa), Elkem Foundry China, Nagpur (India).
Water consumption related to silicone production primarily
affect the environment due to water discharges from
the production sites (COD and Cu). Silicone production
accounts for 90% of Elkem’s total water consumption.
Water consumption and scarcity
Elkem acknowledges the importance of stewarding
water as a shared resource. Thus, we have implemented
programmes to strengthen corporate water management,
including monitoring of water withdrawal, consumption,
and discharge.
The primary utilisation of freshwater is split into four areas:
→
Water as a raw material for production.
→
Water used to cool production equipment and products.
→
Water used for cleaning.
→
Water used for emergency preparedness.
The first two represent the majority of all water usage
and require good quality to avoid product contamination,
equipment corrosion and clogging, and contamination of
water infrastructure.
Water consumption (discharge and withdrawals) are
monitored depending on availability and source and
reported to corporate every quarter. Some water
withdrawals are measured directly with in-line water
meters for continuous measurement, while others are
calculated by capacity reflecting actual operational time.
Figures on water withdrawals in areas with water scarcity
are generally controlled by third parties as water
is purchased by an external supplier.
Discharge volumes of process water are reported quarterly
to corporate management. Discharge of cooling water,
returned to the source of extraction at similar quality as the
raw water extracted, is not monitored directly as the volume
and quality equals withdrawn water. The cooling water
is only subject to heat exchange and most of the cooling
systems are closed avoiding extensive evaporation. Loss of
cooling water in open cooling towers is not measured.
Many of Elkem's production sites are subject to
regulations requiring permits for discharge to water.
Specific parameters are included in each plant's permit
and reported annually as a minimum. A total of 17 water
discharge parameters are also measured or calculated and
reported quarterly to corporate from applicable plants.
Almost all of Elkem’s production units are located in areas
with ample access to water and no significant water
stress issues. This is not only important for our production
processes, but also for our electricity, which is mainly based
on hydropower. A small number of sites are located in
areas with long-term or periodic water scarcity (north-east
China, South Africa, India), but not water stress. In these
areas, Elkem's water withdrawals are low due to the nature
of the actual production. Water management measures
have been implemented in all areas including systematic
risk assessments (including those done in connection with
TCFD), and measures to limit withdrawal.
All sites have readily available potable water free of charge
and unlimited for all employees and contractors working
on site. Sanitary facilities, including toilets and hand/
face washing facilities, are also available across all sites.
In addition, showers and changing rooms are available
across all sites where employees need to shower after work.
Working uniforms for this type of work are also provided
and cleaned by the company free of charge.
Environmental
Water management
Indirect use in the value chain outside of Elkem has not
yet been fully evaluated except discussions around water
availability for hydroelectric power that is deemed critical
as an energy source for most of Elkem's smelters.
Water management
Most water consumption issues represent low risk as
production sites with high consumption are in areas
with ample water supply, but the environmental issues
connected to water discharge are more critical. Most of our
major production sites are located close to large bodies of
water (both fresh and saltwater basins) where uncontrolled
discharge could have lasting negative environmental
impact. Therefore, water management is also focused on
fully understanding the environmental effect of all water
discharges in connection with our production and ensuring
that systems are in place for effective water monitoring
and treatment to ensure compliance with public discharge
permits and improvement targets to reduce discharge of
harmful substances.
Enablers to meet these strategic targets, specifically for
water-related issues, are:
→
Substitution of raw materials.
→
Good housekeeping practices.
→
Development of new processes and
production technology.
→
An advanced control programme, including
environmental monitoring.
→
Wastewater treatment and reduction by
recycling or reuse.
→
Transparency (CDP Water).
Discharge to water and water treatment
Many of Elkem's production sites are subject to permits
for water discharge . Specific parameters are included in
each plant's permit and reported anually as a minimum.
A total of 17 water discharge parameters are measured or
calculated and reported quarterly to corporate HSE from
applicable plants.
The three most critical discharges to water are organic
substances that can affect oxygen concentration in water
(Chemical Oxygen Demand), Silicone Cyclics (D4, D5 and
D6) and Polycyclic aromatic hydrocarbon (PAH). The two
first are an inherent part of upstream and intermediate
silicones production while the third is found in the carbon
paste production.
Chemical oxygen demand (COD) indicates the amount of
oxygen consumed by reactions in a measured solution,
which is used to quantify the number of organics in the
water. The potential impact of higher COD levels in water is
related to reduced levels of dissolved oxygen (DO).
A reduction of DO can lead to anaerobic conditions,
which is harmful to fish and biota. Therefore, compliance
is ensured through extensive monitoring to minimize the
generation of organic waste in production processes,
infrastructure maintenance to prevent leakage from
production units and pipelines and optimal operations
of on-site water treatment to ensure purification
before discharge.
D4, D5 and D6 are important intermediates in the
production of Silicones and have been defined in the
EU as Substances of Very High Concern (SVHC). D4 is
categorised as Persistent, Bioaccumulative and Toxic (PBT)
and D5 and D6 are categorised as very Persistent, very
Bioaccumulative (vPvB) substances. Internal spills may
cause adverse environmental effects if they enter sewage
systems that cannot treat and remove D4/ D5 residues,
but the main concern is not in our own production. The
main concern is residual amounts that may remain in our
customer's consumer wash-off products and enter sewage
systems during final use. This may adversely affect the
marine environments because of low biodegradability and
the risk of bioaccumulation. The compounds are, however,
easily degraded by photooxidation.
Elkem's strategy to reduce the risk of harm with D4/ D5/D6
is threefold. The first part involves a high focus on process
control and on avoiding spills and leakages in our own
production processes. The second part is dedicated R&D
efforts together with our customers to reduce residual D4/
D5/D6 in their products. The third part includes substantial
investments in China, both in upstream and downstream
production, to replace cyclic materials such as D4, D5, and
D6 with linear materials.
PAH discharges originate when coal-tar pitch is used as
a binder in the production of carbon products including
smelting furnace electrodes which is one of the main
products in Elkem Carbon Solutions. PAH is typically bound
to particles and not easily biologically available, but it is still
strictly regulated as it is defined as SVHC by the EU.
PAHs have moderate to high acute toxicity to aquatic life
and birds and can have adverse long-term effects including
tumours, reproduction, development, and immunity.
Compliance with discharge permits is ensured through
process control and extensive water treatment on-site to
limit the amount of PAH in discharges to water. Elkem has
also invested substantial funds in R&D activities and holds
a leading position in the development of alternative binders
without PAH.
There were no significant D4/D5 or PAH spills in 2022.
KPIs
Metric
2022
2021
2020
Withdrawal
Total freshwater withdrawal
Fresh surface water, including rainwater,
water from wetlands, rivers, and lakes
Groundwater – renewable
Third party sources
Megaliters
Megaliters
Megaliters
Megaliters
89 587
46 509
452
42 716
85 654
46 698
581
38 391
86 900
46 644
613
39 913
Discharge
Discharge of cooling water
Discharge of process water
Fresh surface water
Brackish surface water/seawater
Third-party destinations
COD flow
Total water discharge
Total water consumption
Megaliters
Megaliters
Megaliters
Megaliters
Megaliters
Thousand kg
Megaliters
Megaliters
54 542
7 605
4 489
56 437
1 210
183
62 145
27 439
52 925
7 020
4 936
54 883
1 260
202
59 945
25 709
59 000
16 500
5 000
43 000
1 100
263
75 500
30 000
Environmental
Waste management
and circularity
Elkem’s business system builds on a zero-waste philosophy
focusing on the reduction of all kinds of waste throughout
the value chain with a high focus on the efficient utilisation
of all resources, reduction of waste generation and on reuse,
recycling, or sales of residual waste.
Targets
→
Hazardous waste to landfill: Reduction of 10%
→
Waste to disposal: Reduction of 10%
→
Waste recycled: Increase by 10%
Key risks
×
Cost risk: Increased cost of hazardous waste
handling storage and disposal with tightening
local legislation
×
Restrictions in use of bio-based sources
Key opportunities
→
Cost / profit opportunity with less raw material
cost and more sellable products
→
Climate opportunity with less raw material
transportation and increased circularity
Commitment
All physical waste streams have value and it is
our goal to realise that value and avoid disposal
or destruction, enabling circular economies in our
operations and with partners.
Policies
→
HSE policy
Elkem’s corporate policies
↗
Elkem’s value chain includes numerous process flows,
including mining, high-temperature calcining, high
temperature smelting, and chemical processing.
Major waste streams from our process
flows are:
→
Tailings and off-spec materials from
mining activities.
→
Degraded and off-spec raw materials from
calcining and smelting.
→
Spent synthesis mass, filtration cakes and
spent solvents from chemical processing.
→
Dust and sludges from air and water
treatment facilities.
→
Dirty packaging.
Management and utilisation:
Several processes have been put in place to reduce waste.
The focus is mainly on process improvements to:
→
Reduce waste generation.
→
Reuse and recycle (spent mass neutralisation
and packaging).
→
Incineration with and without energy recovery.
Any residual waste left after other efforts is disposed of
in accordance with local regulations, including limited
landfilling in approved landfills. Over 70% of processed
waste generated in 2022 was either reused or recycled.
The value chain for Elkem’s products consists of four
main types of production, each with specific potential
waste streams:
Quartz
is found both as rock formations in mountain seams
and as stones in prehistoric riverbeds. The extraction
process includes the use of explosives for mountain
seam extraction or diggers to remove topsoil for riverbed
extraction. Quartz is then further processed with washing,
crushing and sizing. No hazardous chemicals are used
in the process. Main waste streams from the process
are tailings from the extraction or washing and off-spec
qualities or sizes from crushing and sizing. Most of the
waste streams are utilised to restore open-pit mines or
sold as by-products (sands and gravels to the construction
industry), while some are landfilled in connection with
the restoration of mining sites. Elkem is also developing
alternative usages for sands in agriculture and sports.
Waste in connection with shipment:
It is usually in bulk
with no specific packaging.
Hazard classification:
As quartz is a naturally occurring
mineral there are no hazardous wastes in the process.
Carbon production
consists of high-temperature
treatment of anthracite and petroleum coke. The mixing
of these with binders creates different types of paste
used for electrodes, fill materials and additives in the
metallurgical smelting industry. Major waste streams
are degraded raw materials and off-spec production.
Most of this can be reprocessed safely back into new
batches of product. The remaining waste is delivered to
approved suppliers for hazardous waste treatment. New,
non-hazardous (green) binders are under development to
reduce the use of high temperature coal tar pitch (CTPht).
Waste in connection with shipment:
The primary raw
materials are received in bulk, eliminating packaging.
Finished products are delivered to customers in big bags
or on pallets, giving customers a potential source of waste.
However, the packaging materials are of good enough
quality and can be reused multiple times.
Hazard classification:
Degraded raw materials and off-
spec production can contain binders consisting of CTPHT
which is listed as a substance of very high concern.
Environmental
Waste management and circularity
Silicon smelting
consists of a high-temperature
chemical reaction that transforms quartz and carbon
(coal, charcoal, or wood chips) into silicon. In addition,
alloying, crushing and sizing operations are used to
tailor the product to customer needs in the electronics,
foundry and chemical industries.
Major waste streams are degraded raw materials, slag
from smelting, particles in off-gas emissions and fines
generated during crushing and sizing operations. In the
early 1970s, Elkem pioneered off-gas capture and utilisation
by developing necessary bag filter technology to capture
off-gas from smelting furnaces and other technologies to
turn it into a valuable product used in hundreds of products
today. This technology turns over 150,000 tonnes of waste
into products every year.
The other waste streams have historically been sold as
low-value off-grade products or landfilled on site. Teams
of dedicated professionals have worked on increasing
the utilisation of these streams for many years now,
treating them as valuable raw materials that can either be
reintroduced to Elkem's different production processes or
sold as value-added products to customers. As a result of
this work, Elkem harvests more than 100,000 tonnes of
process products every year, reducing costs at our plants
and generating new solutions for our customers.
Waste in connection with shipment
: Except for charcoal,
which is supplied in big bags, and alloying materials,
which are often shipped in smaller containers, most raw
materials are supplied in bulk, reducing the need for
packaging. Finished products are also shipped either in
bulk or in big bags on pallets that can be reused.
Hazard classification:
None of the major waste streams
are defined as hazardous. Some alloying materials and
chemicals used to process silicon after smelting are
hazardous, but do not represent major waste streams.
These are always delivered to certified third party
suppliers for disposal.
Silicone formulation
consists of many different chemical
processes and reactions that result in specialty products
closely tailored to customer needs. A number of different
waste streams, both hazardous and non-hazardous
are generated throughout and between the different
production processes. Main waste streams include acid
water, used solvents, hydrolysis by-products, sludge,
and waste masses. Waste reduction is included in the
discussion on annual objectives and improvement plans
conducted by the production teams and our research and
innovation departments.
Waste in connection with shipment:
Substantial amounts
of packaging is needed for raw materials, intermediate
and finished products. Waste reduction efforts focus on
reuse (IBCs, pallets, and drums) and recycling.
Hazard classification:
A large part of the waste generated
during the production processes is hazardous waste. All
hazardous waste is either treated on-site (incineration,
neutralisation, reuse) or sent to certified service providers
for destruction.
Generic waste streams:
Elkem also has generic waste
streams such as used oil from vehicles and equipment,
and packaging materials from sourced goods. Each site
has dedicated systems to sort waste on site and deliver
waste to approved service providers that will recycle or
re-use it whenever possible.
KPIs
Metric
2022
2021
2020
Comment
Total waste generated
Tonnes
462 745
397 247
356 156
16%
**
Non-hazardous waste to landfill
Tonnes
45 273
58 465
48 077
-23 %
**
Hazardous waste to landfill
Tonnes
6 301
5 200
6 031
21%
**
Non-hazardous waste to
Tonnes
2 485
15 660
2 399
-84 %
**
destruction
Hazardous waste to destruction
Tonnes
67 166
38 791
62 004
73%
**
Total waste directed to disposal
Tonnes
121 225
118 116
118 544
3%
Approx. 30% of total waste generated
Byproducts to recycling/sale ex.
microsilica
Tonnes
129 318
137 998
94 690
-6%
**
Oils and chemicals to recycling
Tonnes
9 398
69
1 945
**
Scrap, packaging, etc. to
recycling
Tonnes
65 386
4 491
4 687
**
Microsilica
Tonnes
137 418
136 573
136 322
1%
Total waste diverted from
disposal (reused or recycled)
Tonnes
341 520
279 131
237 645
22%
Approx. 70% of total waste generated
Mining activities*
Tonnes
354 456
320 687
308 263
11%
Tailings and crushing residue (natural
rock without chemical processing) from
mining.
*All of the waste in the mining activities was returned to the mining
sites for further use in mining activities or as part of our programme
to refurbish mining site for return to farming or to their natural state.
** The major changes in number is due to changes in classification
as the reporting structure in Elkem is improving. We continue to work
internally to improve the quality of the data.
Environmental
Local emissions to air
Local emissions to air are inherent to many of Elkem's main
production processses and are therefore deamed material to
the company. As local emissions to air, such as NO
x
, SO
2
and
dust, affect air quality, measures to control and reduce the
emissions are therefore priority areas of improvement.
Targets
→
Dust: 30% reduction by 2025 baseline year 2015
(1,970 tonnes)
Key risks
×
Increased levels of sulphur (S) in available
raw materials
×
Increased emissions due to volume expansions
Key opportunities
→
Reduction of dust, NO
x
and SO
2
by substitution
of old boilers at Xinghou with efficient Co-Gen
Technology (2024)
→
New emission abatement at Elkem Carbon
China (2022) will significantly reduce both dust
and SO
2
emissions
→
Elkem biocarbon strategy will reduce SO
2
emissions by approx. 2,000 tonnes per year
towards 2030
KPIs
Metric
2022
2021
2020
Comment
Dust
Thousand tonnes
1 204
1 379
1 270
-13%
SO
Thousand tonnes
2
7 229
7 280
6 880
NO
Thousand tonnes
6 519
8 932
6 610
-27%
x
The colour indicates a positive or negative development year on year.
Commitment
Elkem is committed to a zero-harm, ie. ambient air
quality well below applicable standards.
Policies
→
HSE policy
Elkem’s corporate policies
↗
Local emissions to air are are closely monitored to ensure
compliance with public permits. A total of 17 parameters
concerning emission to air are reported by applicable sites
quarterly to corporate HSE. Variations in the emission
are mainly tied to changes in production volume as they
are inherent to the production process, but they can also
be affected by the quality of raw materials, the process
control and investment in filter or scrubber systems.
These emissions are regulated in public permits.
Emissions from SO
2
were stable in 2022 compared to
2021. Both dust and NO
x
emissions were reduced in 2022,
compared to 2021.
NO
x
Nitrogen oxides (NO
x
) are generated in Elkem's high
temperature smelting and calcining processes and can be
harmful to ecosystems and vegetation, as well as human
health. Elkem has successfully invested substantial funds
in R&D and furnace upgrade to reduce NO
x
emission
from Silicon smelting furnaces and will continue to do so
going forward. The 2022 NO
x
emissions numbers show a
significant reduction compared to 2021 (-27%). This was
both related to volume effects from the temporary shut
down of furnaces in 2022 and effects of low-NO
x
furnace
design at several silicon smelters.
More than 80% of reported NO
x
emissions are based on
online monitoring and reporting. The approximately 20%
remaining is based on industrial emission factors.
SO
2
Sulphur dioxide (SO
2
) is generated when using carbon
materials in the smelting process and when calcining coal
and coke in the carbon products process. SO
2
emissions
can have a negative effect on both plant and animal life,
as well as human health. SO
2
emissions can be reduced
through the use of carbon materials with low sulfur
content, or by off-gas treatment. The SO
2
emissions in
2022 were at the same level as 2021. An slight increase in
sulphur content in raw materials have been mitigated by
temporary shut down of several silicon furnaces in 2021.
A majority of the reported SO
2
emissions are based on
mass balance, i.e. analysis of sulfur in raw materials. A few
plants have digital monitoring.
Target: Reduction of 3,000 tonnes of SO
2
emissions.
Dust
Dust is a major challenge in the production of both silicon
and carbon products. It is not only a pollutant to the
external environment, but also a working environment
health challenge. For both areas the main focus is to
reduce the generation of dust in different production
processes and increase the collection and filtering of
dust that is generated so it does not escape out into
the working environment. Extremely high temperatures
and ultra-fine particles that disperse very quickly make
it especially difficult to capture dust generated in some
of the production processes. Elkem allocates significant
resources to combat dust and has a longterm ambition
of reducing levels of dust in the working environment to
levels where exposure is acceptable without the use of
respiratory protection. For external emissions of the dust
the goal is a reduction of dust emissions by 30% by 2025
compared to 2015.
Target: 30% reduction by 2025, baseline year 2015. The
dust emissions in 2015 was 1,970 tonnes. In 2022, the
dust emissions where almost 40% down from 2015.
Dust emission calculations are based on multiple
quantification strategies, including continuous
monitoring in stacks, estimates on fugitive emissions
and third party control.
S
Environmental
Social
Governance
Social
Introduction
Safe operations for all people at our sites are always our
first priority. Elkem believes that all incidents can and
should be prevented and a zero-harm philosophy guides
our everyday work. To be able to deliver on this ambition, a
skilled, engaged and diverse workforce is the key. This also
represents the foundation to maintain our continued success
and achieve strategic priorities.
Elkem’s strategy of growth and green leadership is built
on operational excellence and continuous improvements.
Our employees are the single most important factor for
success. Elkem's global team of more than 7,300 people
have a shared commitment to our stakeholders: To deliver
our and your potential.
Our employees are Elkem’s most valuable resource.
Therefore, Elkem takes responsibility for all activities on
Elkem’s properties and is committed to ensuring that
employees and contractors working on Elkem sites can do
so without suffering any harm. Elkem is also committed to
influence its suppliers and business partners to have the
same focus on health and safety.
Unfortunately, Elkem experienced two fatalities in 2022,
one in India and one in China. The investigations showed
that necessary safety measures were not followed,
showing that the health and safety work can never lose
focus. For more information see the HSE chapter.
↗
After several years of Covid-19 pandemic hardship, the
organisation has continued to manage the impacts at local
levels in 2022, where necessary. Travel restrictions have
been partly lifted, making it possible for the HSE audits
and -training to get back to the pre-pandemic level.
In addition, it is important that individual involvement
is promoted. As part of our commitment to a safe work
environment, Elkem also considers the protection and
promotion of human rights, workers’ rights, decent living
wages, and equal opportunities as being vital to Elkem’s
operations. At Elkem, we believe a sustainable future
depends on our ability to reduce disparities and create
social prosperity. Elkem is committed to build a culture
based on equality and respect for cultural differences.
Elkem has engaged external subject matter experts to
conduct a human rights impact assessment, covering
the company’s overall risk exposure, as well as taking
deep dives on selected countries and operations. The
final report contains findings and recommendations that
will guide Elkem’s priorities for strengthening the human
rights program going forward.
The social topics material to Elkem are:
→
Health and safety on site
→
Human rights, including labour rights
In addition to the material topics, Elkem outlines its
commitment and work on diversity, equality and inclusion
(DEI) in the ESG report as part of the stakeholder
expectations. Pursuant to Norwegian legislation
requirements, Elkem makes available the annual Activity
and reporting duty-report.
↗
Key highlights in 2022
→
Elkem’s first global employee engagement survey
was conducted
→
Human rights impact assessment carried out
→
Review of all HR policies & procedures in light of DEI
→
Developed 360 inclusive leadership feedback
assessment tool
→
New upgraded HSE training programme
FORUS developed
Key KPI
2022
2021
2020
Total recordable injury rate
3.2
3.7
2.2
Reported confirmed cases of child or forced labour
0
0
0
Employees covered by collective bargaining agreements
40%
39%
N/A
Female share
25%
25%
25%
Social
Health and safety on site
A robust health and safety culture is the essence of our licence
to operate. Elkem’s Health, Safety and Environment (HSE)
efforts are based on a zero-harm philosophy and our HSE
management system is implemented to work systematically
towards this goal. Total recordable injury rate decreased in
2022, but there were several high-consequence injuries.
Health and safety management
Elkem’s production activities involve inherent dangers,
exposures and emissions that may cause substantial
harm as operations include high temperature smelting
(>2,000°C) and advanced processing of hazardous
chemicals. A zero-harm philosophy and an organisation
that is fully committed to giving first priority to the health
and safety of employees and contractors working on site
is paramount to our success and our licence to operate.
Even though Elkem bears the full responsibility for
ensuring a safe and healthy workplace, the company also
expects its employees and contractors working on Elkem
property to be fully committed to a safe and healthy
workplace and to do their part in achieving this.
To safeguard the line management's ability to fulfil this
responsibility, each site has an HSE organisation based on
the size of the organisation and the level of risk. Elkem’s
corporate Vice President for HSE is responsible for Elkem’s
HSE management system. Compliance with the system is
internally audited on a routine basis at the site by corporate
and divisional resources. The internal corporate HSE audit
programme aims to audit all production sites a minimum of
every other year. There were 22 audits in 2022 and there are
20 audits planned for 2023. With the implementation of the
safety management system FORUS, each site starts with
internal self-assessments, followed up with divisional and
corporate audits.
Elkem works continuously to provide the employees and
contractors with the right skills and tools to understand
and deal with any risks they may face in our workplace.
Elkem has developed comprehensive systems for risk
management that are applicable across all Elkem
sites worldwide.
We show our commitment by:
→
Having clearly defined responsibilities and accepting
accountability for health and safety at all levels of
the organisation.
→
Always prioritising individual health and safety when
making decisions.
→
Setting ambitious goals and striving for continuous
improvement in health and safety.
→
Using the same HSE systems, tools, methods, and
having the same expectations to HSE performance
wherever Elkem operates worldwide.
Elkem has a strict reporting regime for injuries and
requires all injuries to be reported, investigated, and
mitigated, independently of severity. Overall, the total
number of injuries went down in 2022, with most
being low-consequence injuries. Unfortunately, Elkem
experienced one subcontractor fatality in India and one
subcontractor fatality in China. The investigations showed
that necessary safety measures were not followed. In
addition, there was one high consequence injury among
our employees, up from zero in 2021. This just shows that
the health and safety work can never lose focus, for all
working at Elkem’s facilities.
The total recordable injury rate went down from 3.7 to 3.2
and the lost workday rate was 0.9, down from 1.5 in 2021.
All recordable injuries and high-potential incidents are fully
investigated and measures are implemented to prevent
similar incidents from happening in the future. Detailed
information is also shared with other sites to ensure
implementation of learnings from the incidents at all
applicable Elkem sites.
Commitment
Elkem is committed to providing a 100% safe
workplace with zero harm and zero injuries.
Our commitment to HSE covers all employees
and contractors.
Policies
→
Code of conduct
→
HSE policy
Elkem’s corporate policies
↗
HSE management system and auditing
Elkem has for many years used a comprehensive
in-house developed corporate HSE management
system called FOKUS (from the Norwegian word for
“focus”, implying the need for significant attention on
the organisation's HSE issues) that applies to all sites
and activities worldwide. The system is built around
recognised international standards for HSE management
and covers relevant HSE topics identified by extensive
risk assessment at all sites. It has been decided to
implement a new safety system built around the ISRS
system of safety management with the name of FORUS.
The system name is derived from the goal to be a leader
(Forerunner System) in safety. The basis of the system
continues to be risk-based. It consists of a manual,
safety procedures and protocols as well as a full auditing
system. The system’s requirements and provisions cover
all Elkem employees and all contractors working on
Elkem property. In addition, suppliers of raw materials
and goods are asked to comply with basic HSE rules and
regulations as part of contractual purchasing agreements.
Elkem’s HSE management system defines HSE as a line
management responsibility where managers at all levels of
the organisation are accountable for the HSE performance
in their organisations and locations.
Incidents management
General requirements for recording, notification and
classification of injuries and incidents are based on criteria
from US OSHA, which are relevant for Elkem’s type of
industry. Elkem has a comprehensive digital incident
management system and expects all employees to report
any injuries, incidents, unsafe conditions, deviations, and
non-compliances. All reports are subject to investigation,
mitigation sharing and, where appropriate, for learning
and improvement. Serious incidents are subject to
comprehensive root cause analysis. Recordable injuries
and high-risk incidents are presented for corporate
management on a weekly basis for discussion.
In addition to reporting, incident management also
includes emergency preparedness. All sites have
emergency plans and emergency resources tailored to
their level of risk. This varies from simple first aid and
fire extinguishing equipment, to fully equipped in-house
emergency response teams.
Covid-19 management
After several years of Covid-19 pandemic hardship, the
organisation has continued to manage the impacts at
local levels where necessary in 2022. Travel restrictions
have been lifted in most countries, making it possible for
Elkem’s HSE audits and training to get back to the level
before the pandemic. However, China has continued with
a strict policy regarding Covid-19 and travelling to China
remains problematic. Hence, the local teams have taken
on more of the role of auditing and training.
Social
Health and safety on site
Health and safety training
Elkem employees receive comprehensive documented
HSE training to ensure a complete understanding of
hazards in the workplace and how they can avoid harm
during daily operations. Training activities include:
→
Basic training in Elkem’s HSE management system
FORUS mandatory for all employees.
→
Specific work-related training for each work operation
and each tool employees are required to use to ensure
they have necessary competence to do the job in a
safe and health manner.
→
Awareness training to ensure each employee
understands how their personal behaviour can affect
the health and safety of themselves and others.
→
Training needs and completed training activities are
reviewed annually through development discussions
with each employee and documented at the site level.
Contractor health and safety on site
Elkem’s zero-harm philosophy applies also to all
contractors working on site and contractors are subject
to the same health and safety requirements as Elkem
employees when working on Elkem property. Contractor
companies are screened before being contracted, and
contractor employees receive specific HSE training from
Elkem before they are allowed to work at Elkem plants.
The two fatalities in 2022 shows the need to keep training
all own employees and contracted employees.
For more comprehensive information ↗
KPIs
Employees
Work-related injuries
Metric
2022
2021
2020
Comment
Fatalities
Absolute numbers
Rate
0
0
0
0
0
0
No change
High-consequence work-related injuries
Absolute no.
Rate
1
0.1
0
0
1
0.1
Number up 100%
Lost workday injuries
Absolute no.
Rate
13
0.9
21
1.5
10
0.8
Number down by 38%
Other recordable injuries
Absolute no.
Rate
31
2.2
30
2.2
19
1.5
Number up by 3%
Total recordable injuries
Absolute no.
Rate
44
3.2
51
3.7
29
2.2
Number down by 14%
Hours worked
Number
13 936 109
13 706 429
13 097 248
Up 2%
Contractors
Work-related injuries
Metric
2022
2021
2020
Comment
Fatalities
Absolute numbers
Rate
2
0.3
0
0
0
0
Number up by 200%
High-consequence work-related injuries
Absolute no.
Rate
2
0.3
0
0
0
0
Number up by 200%
Lost workday injuries
Absolute no.
Rate
14
2.4
7
1.5
6
2.2
Number up by 100%
Other recordable injuries
Absolute no.
Rate
8
1.4
10
2.1
7
2.5
Number down by 14%
Total recordable injuries
Absolute no.
Rate
22
3.8
17
3.5
13
4.7
Number up by 29%
Hours worked
Number
5 722 932
4 797 159
2 761 047
Up 20%
The colour indicates a positive or negative development year on year.
Social
Human rights, including
labour rights
Elkem promotes decent working conditions and respect for
human rights in our operations and value chains. There is
a growing general acceptance of business’ duty to respect
human rights.
Key events 2022
→
Conducted a company-wide human rights
risk- and impact assessment with support
from external experts
→
Formalised functional ownership of human
rights with Corporate Compliance
→
Integrated human rights considerations into
several group governing documents
Key risks
The areas where Elkem’s operations, activities and
value chain pose the highest risk to people are
identified as:
×
Risk of unsafe, hazardous work environment
and safety concerns related to Elkem’s own
production and processes or our supply chain
×
Risk of unfavorable working conditions
(specifically working hours, wage and overtime
payment) among Elkem’s suppliers
×
Risk of forced or involuntary labour occurring
in Elkem’s supply chain
×
Risk of negatively impacting the living
conditions and livelihoods of the local
community through Elkem’s own production
and processes or our supply chain
Targets
→
Improve performance in accordance with
human rights action plan
→
Make human rights eLearning mandatory
for key employee target groups
→
Further strengthen framework for human
rights due diligence in the supply chain
The chapters
Human rights Responsible
value chain management, and Responsible
economic practices have been developed
to comply with the legal requirements as
stated in the Norwegian Transparency Act
2021 and the UK Modern Slavery Act 2015.
Commitment
Elkem is committed to the UN Declaration and
International Conventions on Human Rights, the
OECD Guidelines for Multinational Enterprises, the
ILO Declaration on Fundamental Principles and
Rights at Work, ILO’s core conventions and relevant
local legislations in the countries where we operate.
We follow the United Nations Guiding Principles on
Business and Human Rights.
Policies
→
Code of conduct
→
Code of conduct for business partners
→
Human rights program
→
People policy
Elkem’s corporate policies
↗
The group is fully committed to avoiding complicity in
human rights abuses, and to respect, protect and promote
human rights throughout our operations. Our commitment
is expressed in our code of conduct, which is approved
by the board of directors. The commitments and how we
operationalise them are further elaborated on in our Human
rights program. Both documents were updated in 2022 and
apply to all employees (including temporary personnel) and
directors in Elkem ASA and subsidiaries, corporate affiliates,
and joint ventures that are majority owned or controlled by
Elkem (individually and collectively). Our expectations to
suppliers, distributors, agents, traders/resellers and joint
venture partners are codified in our code of conduct for
business partners.
As an international company, Elkem operates in a global
market, both as a producer of materials and products and
as a buyer of commodities and services. It is important to
acknowledge that this global footprint puts us at risk of being
complicit in human rights violations. We have a long history
of encouraging and ensuring employee representation,
and we have demonstrated a strong HSE focus in all our
operations. However, we also have a wide-ranging, multi-
tiered supply chain where it is difficult to achieve full
transparency on labour conditions. In addition, we operate in
countries where human rights are under pressure.
There has been a rise in countries considering and passing
human rights laws that regulate business activities. New
laws took effect in for example Norway, the United States
and the Netherlands in 2022, and further legislative
developments are expected in 2023-2024.
While we as a company cannot resolve all human rights
issues in isolation, we have a responsibility to identify
human rights risks in our value chains and mitigate them to
the best of our ability. We are continuously taking steps to
strengthen our human rights framework.
Human rights
Human rights risks are present across the company’s
activities, operations and functions, and human rights
considerations must therefore be an integrated part of
multiple processes. In 2022 we revised our governing
documents and developed the Human rights program.
↗
This describes how Elkem operationalises its commitment
to respect and support internationally recognised
human rights, and references the most relevant policies,
procedures and other resources that
support the
implementation of the human rights program. In parallel,
internal subject matter experts have reviewed governing
documents for functions such as HR and supply chain
to ensure our group policies and procedures integrate a
human rights risk assessment and mitigation efforts in
core operations.
Elkem recognises that respecting human rights begins
with understanding what human rights are and how our
business activities may impact them. An eLearning course
is available to all Elkem employees and will be made
mandatory for relevant groups of employees in 2023.
As we grow and enter new and challenging markets,
we see the need to take a more systematic approach
to our human rights strategy. In 2022, we conducted a
company-wide human rights risk- and impact assessment
with support from external experts. An action plan
will be developed in 2023 based on the findings and
recommendations. Progress on the action plan will be
reported to the ESG steering committee.
Labour rights
Elkem acknowledges all employees’ right to form and
join trade unions of their own choice. We have a long and
strong tradition of including and involving employees
and their unions and believe this improves our decision-
making processes.
Social
Human rights, including labour rights
It is important in Elkem to have a good, regular and
constructive dialogue between the employees and the
management. Elkem recognises and respects the freedom
of association and the right to collective bargaining in
accordance with local, national legislation and practices.
In countries where the local laws, practice or traditions do
not support this, Elkem encourage channels and arenas
where the employees are informed about the company’s
status and allowed to get information, raise concerns, and
influence decisions affecting them.
Collective bargaining agreements:
In 2022, 40% of all Elkem employees globally were covered
by collective bargaining agreements. In Norway and most
other countries where Elkem operates, the collective
agreements are generalised. The generalisation of a
collective agreement means that all employees who work
in a profession or business that falls under the scope of
the generalised collective agreement have, as a minimum,
a claim to the pay and working conditions that appear
in the collective agreement that has been generalised.
The purpose of the generalisation is to ensure that all
workers receive pay and working conditions that are equal
and fair and protect for example foreign workers against
unreasonable or unacceptable pay and working conditions.
The level of trade union coverage varies from country to
country. In some countries the operators are organised
under one collective bargaining agreement. In other
countries there are no unions represented in Elkem’s
entities. At sites where there are no formalised labour
unions, local management is encouraged to set up
channels and arenas for collaboration where employees
are informed about the company’s status and allowed to
raise concerns and influence decisions that affect them.
The EBS tools and culture supports this as involvement in
decisions is part of the management system.
Elkem complies with local statutory requirements
regarding freedom of association in all countries where we
are present. Pursuant to the Norwegian Companies Act
provisions, employees have three representatives and two
observers on the board of Elkem ASA. Elkem also has a
European Works Council (EWC), which is in accordance
with the European Union Directive 2009/38/EC. The
meetings take place annually.
For employees who are not members of trade unions and
in countries where collective bargaining agreements are
in place, Elkem determines their working conditions and
terms of employment based on the collective bargaining
agreements that cover the organised employees in
order to ensure equality. In countries and for groups of
employees who are not covered by collective bargaining
agreements, the local HR-function is always involved
in determining the working conditions and terms of
employment to ensure fair and equal treatment of all
employees. The HR-function together with the local line
management are responsible for full compliance with local
laws to ensure the labour rights.
Working hours shall be in accordance with local law or
agreements. Where the operation of the business makes
it necessary to deviate from this, measures shall be taken
to secure sufficient time for rest between each working
period, and the actual working hours shall be in line with
the intentions above.
2022 Human rights impact assessment:
As we grow and enter new and challenging
markets, we see the need to take a more
systematic approach to our human
rights strategy. In 2022, we conducted
a company-wide human rights risk and
impact assessment. The assessment was
supported by external experts employing
methodology based on OECD due diligence
guidance for responsible business conduct,
focusing on risk to people. The assessment
combined desktop research into country-,
sector- and company specific risks with a
review of Elkem’s current human rights risk
management framework and interviews
with key internal stakeholders across
Elkem’s global locations and business
areas. Deep-dives were conducted into
certain locations selected on the basis of
size and nature of Elkem's operations and
inherent country risk.
The purpose of this assessment was to
identify, assess, and prioritise existing and
emerging human rights risks for Elkem,
and make recommendations for further
risk-mitigating actions and improvements
to how we manage human rights risks.
The results of the assessment serve as the
starting point for improved human rights
management in Elkem in accordance
with our commitments and regulatory
requirements. An action plan will be
developed in 2023 based on the findings
and recommendations. Progress on the
action plan will be reported to the ESG
steering committee.
Employees are entitled to medical treatment covered by
the company in the event of sickness or injury resulting
directly from their work at Elkem. In the event of work-
related disablement or death, employees or their surviving
immediate family member(s) will receive insurance
payments and/or pension. In addition, employees shall
be protected from being dismissed due to pregnancy or
responsibility for new-born children, consistent with local
customs and laws.
Child and forced labour
Elkem strongly condemns human trafficking as a breach
of fundamental human rights. Employment in Elkem shall
always be on a voluntary basis and without any form of
threats, force, or unlawful recruitment.
Elkem has operations in parts of the world where there is a
risk of child labour and forced labour, such as parts of Asia,
South America, and Africa. We take this risk seriously, and
we will not tolerate the use of child or forced labour in any
of our operations and facilities. We expect the suppliers and
contractors with whom we do business to uphold the same
standards. Our expectations are codified in our code of
conduct for business partners, which was updated in 2022
to include clearer language on respect for human- and
labour rights including prohibition on forced or involuntary
labour. More information about our sustainable supplier
management practices can be found in the supply chain
management chapter on page 148.
↗
There were no confirmed incidents of child or forced
labour in Elkem in 2022.
The people policy and the code of conduct for business
partners protects the rights of the employees and
the stakeholders that are specifically vulnerable to
our activities. The age limit for working in Elkem is 18
years. There are two exceptions to this; i). vacation
substitutes and vocational students, where the age
limit is 16 years, are only allowed to do light and simple
work that is deemed safe and does not conflict with
school participation, and ii). apprenticeships or other
programmes are accepted for children under 16, but only
if this enhances the child’s education.
Some supplier production sites or some of our own
plants are considered high-risk work only allowed to
be performed by trained and qualified people. Several
measures are in place to ensure compliance with these
procedures and our human rights policy. Elkem has
strict routines to ensure that all official permits and
registrations are in accordance with local law, and that
all employees have written employment contracts or
other documentation in line with local legal requirements,
insurance coverage and correct tax payments. HSE audits
are regularly conducted at all plants, with specific focus on
these topics for plants in high-risk areas. All Elkem work
procedures and HSE rules and training requirements apply
for own employees as well as contractors. All incident
reporting and follow-up also includes contractors.
Grievance mechanism
Elkem’s grievance mechanism, accessible from the
company website, is targeted towards stakeholders who
have feedback or concerns related to our plants, projects,
or other business activities worldwide. Concerns received
through the grievance mechanism are confidentially
handled and coordinated by the ESG Office, together
with the relevant parts in the organisation. The aim of the
dialogue with the complainer is to resolve and/or clarify
the concern.
Elkem has also established a secure speak up channel
which is available to internal and external parties. More
information can be found in the chapter on Responsible
economic practices, on page 140.
↗
KPIs
Metric
2022
2021
2020
Comment
Employees covered by collective bargaining agreements
%
40%
39%
64%
Human rights impact assessment
Status
Completed
Decided
N/A
Reported confirmed cases of child or forced labour
Number
0
0
0
Number of cases reported through the grievance
mechanism
6
2
N/A
All cases reported
were resolved
Social
Diversity, equality and
inclusion (DEI)
At Elkem, we believe that our people are our most
valuable asset. The collective sum of the individual
differences, not only represents a significant part of
our culture, but also our reputation and achievements.
By embracing equal opportunities, and a diverse and
inclusive company culture, Elkem aims to increase our
customer centricity, cultural awareness, compliance
and innovation.
Key events 2022
→
Global employee engagement survey
→
Conducted DEI workshop in the corporate
management team
→
Review of all HR policies and procedures to
actively support DEI
→
Developed inclusive leadership assessment tool
Key risks
×
Legal challenges as a result of non-compliance
×
Poor attraction and retention of top talent
×
Impact of low inclusion on ability to deliver
continuous improvement and innovation
Targets
→
DEI awareness training for the senior
leadership in the company
→
Develop and incorporate value-based
competencies and behaviours in HR
processes & procedures
→
Work with senior leadership to adopt and
role-model the values-based behaviors
→
Develop & implement DEI training
for recruitment, promotion and talent
management purposes
Key opportunities
→
Attract, retain and engage diverse talent
→
Tap into diverse perspectives, leading to better
continuous improvement and innovation
→
DEI delivers a positive impact on performance
Commitment
Elkem is committed to actively participating in,
supporting and sponsoring programmes that increase
diversity and promote inclusion and equality.
Policies
→
Code of conduct
→
Speak up policy
→
People policy
Elkem’s corporate policies
↗
In 2022, Elkem worked on several DEI intiatives including
corporate management DEI workshop, the deployment
of Elkem's first ever global employee engagement survey,
design and deployment of a new Leadership Essentials
program, development of an inclusive leadership 360
feedback assessment, and a review of all HR policies,
procedures and processes to actively support DEI.
Cultural diversity
Overall, Elkem has good multi-cultural spread in the
organisation. This is measured by the distribution of
employees that belong to nationalities outside the
country in which they work. In Norway, Elkem has 36
different nationalities represented in the workforce. In
France, 15 and in the US, 9 nationalities. In several smaller
entities in Europe and South America there are also 5 or
more different nationalities represented. Moving forward,
the company will continue to assess the diversity needs
and to attract cultural diversity in its operations. In total
in Elkem there are employees of 65 different nationalities.
The largest groups are Chinese, Norwegian, French,
American, Icelandic and Spanish.
Age diversity
16% of the total workforce is under the age of 30, 56%
between 30 and 50 years of age and 28% above 50.
Among the management, 59% of the leaders are in the
30-50 years category. We follow up the age structure
of our workforce and we work systematically to further
develop, maintain and transfer knowledge and critical
competencies from senior to more junior employees.
Gender diversity
The gender diversity is very stable in Elkem, with the
proportion of female to male employees being 25% to 75%.
In the management teams (corporate, division and plants)
the female share is 30% globally and among all leaders who
have personnel responsibility 23%. Moving forward, we
continue our efforts to increase female share through our
recruitment, retention and promotion processes.
We believe that a diverse, equitable and inclusive
workplace, that mirrors the markets we serve, is a
strategic business priority, and critical to our success. The
diverse perspectives and experiences of our employees
are essential to our ability to achieve excellence in
research, innovation and continous learning. We also
understand that to foster such a climate, requires a
sustained and long-term commitment to DEI, and
acknowledge that sometimes engaging in diversity is also
challenging. With this in mind, our future focus will be to
strengthen the awareness about DEI in Elkem, as well as
further develop our company culture by reinforcing core
behaviors in line with the Elkem values.
Leadership
We believe that the commitment and accountability of our
leaders are of utmost importance. The way our leaders
communicate and interact with their teams, what they
communicate and emphasise, their vision for the future,
what they celebrate and recognise, what they expect,
how they make their decisions, the extent to which they
are trusted and the beliefs and perceptions that they
reinforce are all critical in impacting a diverse and inclusive
culture in the workplace. Our leadership development
programmes focus on developing and equipping Elkem's
leaders with the people skills needed to engage and
empower their employees to perform at their best. The
golden thread of DEI has been deliberately interwoven into
the programmes, in modules and topics such as: Inclusive
leadership, unconscious bias, psychological safety,
managing self and managing teams.
Social
Diversity, equality and inclusion (DEI)
Mission, vision, values, and behaviours
Our culture based on the Elkem Business System (EBS)
is our character and the personality of our organisation.
It's what makes our business unique and is the sum of
the purpose, mission, values and behaviours. At Elkem, all
employees are expected to act in accordance with and role
model our values of: respect, involvement, precision, and
continuous improvement. We strive to collaborate and work
well together, independent of our diversity dimensions,
by building trust through transparency, open and direct
communication and willingness to listen, that enable us to
collaborate productively and be open to new perspectives.
Policies, procedures and
supplementary material
In an effort to work more strategically with DEI, we have
taken a more holistic approach, beginning with analyzing
the systems, processes and procedures we currently have
in place, through a DEI lens. We reviewed and re-designed
our HR People policies, procedures, and supplementary
material in light of our DEI policies, ensuring equal
opportunities for all, as well as committing to equity as
a company. Our focus has been on sustaining wellbeing,
flexibility and fairness in the workplace.
The way ahead
As we move forward in our DEI journey, we will focus
on the following initiatives in 2023:
→
Culture – increase the awareness of DEI and
develop value-based competencies.
→
Recruitment – of diverse candidates.
→
Succession planning and promotions – actively
support DEI in processes and procedures.
→
Branding – to create Elkem's DEI identity and
promote and show our commitment.
Board of directors and management
Elkem's board of directors consists of 11 members from
China, France and Norway. Three out of eight shareholder
elected board members are women, per the Norwegian
Public Limited Liability Companies Act. Furthermore,
one out of the three employee elected representatives, is
female. The female share of the board is 36%. One of the
eleven board members are in the age group 30-50 years
old. The rest of the members are 51 years or older.
The corporate management team of Elkem consists of
ten people from China, France, Norway and Brazil. The
management team consists of nine men and one woman.
One of the members is in the age group of 30 to 50
years old and the rest are 51 years or older, unchanged
from 2021. The female share in the management teams
in general is 30%, whereas the overall female share in
the company is 26%. There are differences within the
organisation – in some units female leaders account
for over 50% of the site management whilst at other
locations, there are no women in the management team.
For more information on our current activities and action
plans please see the 2022 Activity and reporting duty
report (ARP).
↗
KPIs
Metric
2022
2021
2020
Comment
Female share
Female share in company
Female share in management
Female share in leadership programme
Female leaders overall, with personell responsibility
Female share in trainee programme
Female share of part time workers
Female share of temporary employees
Female share white collar
Female share blue collar
Parental leave – average women (Norway only)
Parental leave – average men (Norway only)
%
%
%
%
%
%
%
%
%
Weeks
Weeks
25%
30%
36%
22%
38%
31%
25%
35%
17%
38.3
17.5
25%
30%
N/A
24%
43%
45%
29%
36%
17%
38
16
25%
24%
19%
25%
58%
60%
18%
34%
21%
38.7
18.5
Downwards trend
-5%
-14%
-4%
Age distribution, employees
< 30 years
30-50 years
>50 years
%
%
%
16%
56%
28%
16%
56%
28%
14%
60%
26%
Age distribution, management teams
< 30 years
%
30-50 years
%
>50 years
%
Salary: CEO to median employee (NOR) wage
Ratio
The colour indicates a positive or negative development year on year.
3%
59%
38%
10:1
6%
60%
34%
7:1
3%
64%
33%
11:1
+4%
G
Environmental
Social
Governance
Governance
Introduction
Elkem believes that companies that act responsibly and
create value by ensuring production with the lowest possible
environmental impact will be successful in the long term.
Sustainability is central to Elkem’s business strategy, and
the company works proactively to ensure integrity and
responsibility in all operations.
Elkem’s operations affect several stakeholder groups,
such as employees, customers, suppliers, and local
communities. Elkem works proactively to ensure safe
and healthy working conditions and high integrity
towards all stakeholder groups. We consider trust and
partnerships key to our success and long-term value
creation. Elkem has implemented policies, procedures
and training to ensure a strong compliance culture across
the group to ensure good corporate governance. For a
complete overview of the governance structure and how
the company’s sustainability and ESG work is organised,
please see ESG management: Sustainability and ESG
governance chapter.
Elkem is committed to developing its business in
accordance with the UN Sustainable Development
Goals and the Paris agreement. As a signatory of the
United Nations Global Compact, Elkem aims to ensure
that the business is aligned with the ten UN Global
Compact principles.
Elkem seeks to obtain a satisfactory regulatory framework
for all its operations, and are committed to do so in
accordance with our code of conduct, with complete
transparency and no hidden agendas. Therefore, we
participate in relevant industry organisations and
take lobby positions when needed. A full list of the
organisations Elkem participates in can be found under
“membership organisations overview” here.
↗
A selection of Elkem’s governing tools and policies are
available online.
↗
The governance topics material to Elkem are
→
Environmental due diligence in the supply chain
→
Social due diligence in the supply chain
→
Responsible economic practices
→
Product governance, including chemical safety
→
Supplying the green transition
Key highlights in 2022
Update of group governing documents
During the past year, Elkem has invested significant
efforts in restructuring and improving the group governing
documents and making sure that they are easily available
to all employees by publishing them in a common
document library available on the intranet.
Launch of revised code of conduct
The code of conduct has been revised and updated in
2022, with several new chapters and more information
on existing topics. It has also been translated and is now
available online in nine languages: English, Chinese,
French, Icelandic, Japanese, Korean, Norwegian,
Portuguese, and Spanish.
Strengthened internal control function
Established new role; Corporate internal control
manager. The function will support the implementation
and monitoring of requirements codified in the group
governing documents, enabling Elkem to address
weaknesses and ensure continuous improvement.
Mapping physical climate-related risks
Conducted a project to improve the understanding of
acute and chronical physical climate-risks to the company.
Human rights due diligence in supply chain
In 2022, Elkem has laid the foundations for systematic
social due diligence in the supply chain by conducting a
company-wide human rights impact assessment.
Key KPIs
Metric
2022
2021
2020
New raw material suppliers subjected to assessment
Number
100%
92%
100%
and pre-qualification
Compliance training
Minutes / employee
31
28
54
Employees with signed code of conduct
%
94%
96%
98%
Number of significant fines due to non-compliance
Number
0
0
0
with law or environmental deviations
Governance
Responsible economic
practices
Elkem considers good corporate governance to be a
prerequisite for value creation and trustworthiness. The
regulatory requirements and stakeholder expectations
for establishing effective compliance programmes
are continuously increasing and require organisations
to have adequate cultures and procedures in place to
ensure responsible economic practices and prevent non-
compliance, misconduct, corruption and fraud.
Key events 2022
→
In 2021, Elkem set the target to
strengthen its compliance capacity in
China and France. In 2022, the company
strengthened both its compliance
and internal control functions, adding
resources in China, France, and Norway
with specialist competence in data
protection, internal audit and
internal control.
These organisational improvements
enabled us to reach our goal of developing
a new set of group policies, procedures,
and internal controls. All group governing
documents were revised in 2022, forming
the basis for systematic implementation,
monitoring and reporting of key
requirements and associated controls.
→
Within the compliance area, new
procedures for high-risk processes such as
conflicts of interest, gifts and hospitality,
sponsoring and donations, and third-
party risk management were developed
to provide better guidance to employees
and leaders. New supporting tools improve
transparency and traceability.
Target
→
Finalise and implement a robust sanctions
compliance programme
→
Develop and start implementing a robust
data protection compliance programme
→
Develop methodology for holistic
compliance risk assessment
Key risks
×
High risk markets
×
High value investments
×
Government interactions
×
Licenses and permits
×
Business partner
Key opportunities
→
Empower employees and partners through
targeted training and awareness activities
→
Reduce financial and reputational risk
through effective compliance
program implementation
→
Build stakeholder trust through transparent
disclosure of compliance performance
Commitment
Elkem bases its activities on the principles of
honesty and respect for other people. We will
meet the same ethical standards, respecting the
laws, cultures, dignity, and rights of individuals
everywhere we operate. We have a zero-tolerance
policy towards any form of corruption and conduct
in our business in accordance with applicable anti-
money laundering and antitrust laws.
Policies
→
Code of conduct
→
Code of conduct for business partners
→
Compliance policy
→
Speak up and investigation procedure
→
Anti-corruption compliance program
→
Conflict of interest procedure
→
Gifts and hospitality procedure
→
Sponsoring and donations procedure
→
Third-party risk management procedure
→
GDPR compliance policy
→
Competition law procedure
Elkem’s corporate policies
↗
Compliance training
Elkem is committed to providing relevant and
engaging compliance training. Elkem made significant
enhancements to the 2021-2022 online training
programme, launching new ethics, anti-bribery and
corruption and antitrust modules. The training programme
is available in multiple languages and is mandatory for all
employees within the defined target groups.
Anti-competitive practices
Elkem is committed to avoid anti-competitive practices
across all operations. The competition law procedure
outlines what behaviour is considered acceptable or
not and was updated in 2022. Elkem conducts anti-
competitive practice risk assessments to identify high-
risk jurisdictions and employee groups that are most
exposed to anti-competitive practices. In addition, Elkem
provides both general eLearning and targeted trainings
for competition law compliance and makes ad hoc
assessments to identify red flags and mitigate any gaps.
Anti-bribery and corruption
Elkem has a zero-tolerance policy against corruption. Elkem
has multiple operations across jurisdictions and in several
high-risk countries. Elkem also interacts with government
officials for permits and other administrative issues.
Elkem takes a risk-based approach to its compliance
work and risk assessments provide important information
to maintain and further develop our anti-bribery and
corruption programme. Our risk-based approach is applied
to all we do, that is to say when entering new markets and
introducing new products. Our anti-corruption compliance
programme was updated in 2022 and can be found on
Elkem’s website.
↗
Working with business partners
We know that bribery cases, human rights breaches,
environmental disasters and scandals often involve
business partners, such as agents, consultants, suppliers,
joint venture partners and distributors. It is important
for Elkem to work with business partners of high ethical
integrity. In 2021, Elkem introduced a new screening tool
to facilitate better vetting and continuous monitoring
of business partners against sanction lists. In 2022,
the tool was integrated with our customer relationship
management platform to enable efficient screening and
monitoring of new and existing customers. Going forward,
data from the tool will be used to enable risk based due
diligence, audit target identification and monitoring of
business partners throughout their lifecycle.
The code of conduct for business partners forms part of
contracts and agreements with Elkem’s business partners
and was updated in 2022 to include clearer requirements
on issues such as sanctions compliance, human rights
and Elkem’s speak up channel.
Speak up / Whistleblowing
Elkem encourages all employees and external parties
to report possible dishonest or illegal conduct without
carrying the risk of adverse reactions. Elkem has
established a secure speak up channel which can be used
to report misconduct and non-compliance with Elkem’s
Governance
Responsible economic practices
code of conduct. The speak up channel is available to
all employees and external stakeholders. It allows for
anonymous reporting via web or telephone in all Elkem
languages with clear guidance on how to report concerns.
Elkem has also developed a procedure to escalate severe
matters to the management level, the audit committee
and the external auditor to ensure that issues of concern
reach top management.
The speak up channel and the speak up policy are
available and communicated through Elkem’s intranet
site and corporate website. The channel and policy
are also promoted during employee training and are
accessible via physical posters and handouts at plants
and offices. Misconduct reports are handled by Corporate
Compliance and in accordance with applicable legislation
on misconduct reporting. Elkem has zero tolerance for
retaliation against those who report a concern and will
sanction those who retaliate.
Tax strategy
Elkem is fully committed to complying with tax laws in
each jurisdiction in which we operate. Our approach to
tax is based on transparency and we cooperate with tax
authorities to ensure full compliance and it is based on the
business ethics outlined in the code of conduct.
Our objective is to comply with all relevant laws, rules,
regulations, reporting and disclosure requirements in all
countries in which the group operates. Elkem has a low
risk tolerance in matters concerning tax. Where tax law is
unclear or subject to interpretation, our tax position will
always be conservative. Hence, we will not pursue any
form of aggressive tax planning arrangements, but only
engage in tax planning activities that support our business
and reflect commercial and economic activity.
The tax approach in Elkem is anchored with the board
of directors on an annual basis. The group tax function
is organised under and reports regularly to the CFO. The
group tax function is responsible for tax governance and
tax management in the group and works closely with
other functions in order to ensure that risks are identified
and mitigated at entity level. Group tax sets the governing
procedures related to tax which the units in our group
must follow. Tax compliance is always a responsibility of
the local units.
The tax strategy shares the same approach to risk as
Elkem's overall strategy and there will be continuous
reviews to ensure that the level of tax risk is in line with
Elkem’s overall risk appetite.
Elkem’s primary tax risk is that of not being compliant
with applicable tax laws and regulations and therefore not
paying the correct amount of tax. Elkem manages this
risk by operating effective tax governance and ensuring
tax decisions are made by senior staff with appropriate
skills and experience. In addition, Elkem uses third party
advisors where necessary to ensure compliance with
applicable laws and regulations.
Group tax has procedures in place to identify, measure,
manage, monitor and report on tax risks. Tax risk is
managed in line with Elkem’s internal control framework
where identified risks are being assessed and appropriate
mitigating actions are being established.
We seek an open and transparent relationship with all
of the tax authorities we deal with. Our dealings shall
be undertaken in a consistent, timely and professional
fashion and we are committed to providing tax authorities
with any information they should require in order to
comply with tax laws and regulations.
In line with Elkem's goal of transparency we will report
the country-by-country information for the Elkem group,
meaning Elkem ASA and all directly or indirectly controlled
subsidiaries, joint ventures and permanent establishments
where Elkem holds an ownership of more than 50%.
Non-compliance
There were no significant instances of non-compliance
with laws and regulations during 2022 that resulted
in significant fines or non-monetary sanctions. Elkem
defines significance by environmental deviations, long-
and short-term damage on the environment, production
stops and economic impact. In 2021, Elkem received an
environmental fine of CNY 122,000 at the Chinese plant
Yongdeng, due to lack of dust gathering systems. The
plant was upgraded accordingly.
An overview of country-by-
country reporting on tax can
be found in online
↗
KPIs
Metric
2022
2021
2020
Average minutes of compliance training
per employee*
Minutes /
employee
31
28
54
Total number and nature of misconduct
reports
Number
14
→
→
→
→
Corruption and
fraud: 6
Conflicts of
interest: 3
Inappropriate
workplace
behaviour and
harassment: 4
Privacy
violation: 1
13
→
→
→
→
→
→
→
Company /
professional
code violation: 1
HSE violation: 1
Corruption and
fraud: 1
Human rights
violation: 1
Conflicts of
interest: 1
Inappropriate
workplace
behaviour: 7
Sanctions
violation: 1
11
→
Corruption
and fraud:
11
Number of confirmed cases of corruption**
and fraud
Number
5
0
3
Number of confirmed incidents in which
employees were dismissed or disciplined
for corruption**
Number
2
0
2
Public legal cases regarding corruption**
brought against the organisation or
its employees
Number
0
0
0
Confirmed incidents when contracts
with business partners were terminated
or not renewed due to violations related
to corruption**
Number
5
0
0
Employees with confirmed commitment
to the code of conduct
%
94%
96%
98%
*2022 training included eLearning courses concerning ethics and Elkem’s code of
conduct, anti-bribery, and corruption, and antitrust. The courses were distributed to
different risk-based target groups.
** In this context, corruption is defined as in GRI 205 and includes practices such as
bribery, facilitation payments, fraud, extortion, collusion, and money laundering; the
offer or receipt of gifts, loans, fees, rewards, or other advantages as an inducement
to do something that is dishonest, illegal, or represents a breach of trust. It can also
include practices such as embezzlement, trading in influence, abuse of function, illicit
enrichment, concealment, and obstructing justice.
Governance
Product governance including
chemical safety
Elkem is in a unique position in covering the entire
value chain from quartz as a raw material via
metallurgical silicon to specialty silicones. Hence, all
aspects of product stewardship apply to the various
production steps.
Product governance hierarchy in Elkem
Product governance
Policies and management responsibilities
Product stewardship
Regulations and standards, product safety (PS), advocacy, life cycle analyses
Product compliance
Safety Data Sheets, Compliance certificates, REACH, product registrations,
emission permits
There are a number of rules and regulations to comply
with for products that Elkem manufactures and markets,
such as safety data sheets, transport regulations, REACH
registrations, etc. Ensuring that a product fulfils all legal
requirements can be described as
product compliance
.
One level above product compliance is
product
stewardship
. Elkem defines product stewardship as an
integrated business process for managing and minimising
the health, safety, environmental and regulatory risks of a
product’s life in the best interest of society.
One level above product stewardship is
product governance.
Product governance defines the overall policies for Elkem’s
products and covers topics such as ethical obligations,
animal testing policy, policy on emerging technologies,
sustainability of raw material sourcing, biodiversity policy,
and targets for the reduction of CO
2
emissions.
In this chapter you will find some key aspects of product
governance in Elkem.
Renewable raw materials and
biobased products
Biocarbon is a strategic raw material for the sustainable
production of Elkem’s silicon and ferrosilicon products
and include wood chips, charcoal and biocarbon
agglomerates. Elkem is committed to sustainable
and ethical raw material sourcing in accordance with
internationally accepted principles and standards,
such as FSC (Forest Stewardship Council) and PEFC
(Programme for the Endorsement of Forest Certification).
Elkem’s sourcing contracts, as well as Elkem’s corporate
standards, comply with the highest level of sustainability
and responsible sourcing of natural raw materials.
Mining activities and biodiversity
Elkem has a strong commitment to exclude protected
areas from its mining activities. Elkem’s mining activities
are rigorously coordinated with the national mining
authorities. Since quartz is a common mineral and not of
environmental concern, Elkem is able to source its raw
material solely from non-protected areas.
Commitment
Proactive management of the use of chemicals
and the protection of the environment and the
human health are fundamental pre-requisites for
conducting Elkem’s business and securing our
license to operate.
Policies
Elkem’s corporate policies
↗
Elkem makes environmental risk and impact assessments
as part of the mandatory steps when applying for mining
permits, including the consultation with biodiversity
experts. During mining operations, emissions to water
and air are monitored, as well as the impact on soil,
vegetation, and the landscape. All activities are audited by
the respective national mining authorities. As a mitigation
measure, annual provisions are made, earmarked for the
restoration of the mine after end of activity. Elkem has
received awards in Spain for sustainable development and
good environmental practices of its quartz mining activities.
As a member of IMA-Europe (Industrial Minerals
Association), Elkem commits to the mining industry’s
sustainability charter: Biodiversity and Environment |
IMA Europe.
Elkem is committed to responsible sourcing of minerals,
to avoid any possible conflict with human rights abuses
or environmental degradation. Read our conflict mineral
statement here.
↗
Transport safety
The transport of hazardous goods is heavily regulated
internationally, such as through UN Transport Regulations
or the International Maritime Organization (IMO). These
result in a number of standards for packed material
(IMDG), transport of solid bulk cargoes (IMSBC) and
transport of liquids in bulk (IBC).
All transport is provided by professional transport
companies that follow these standards and regulations.
At the plant sites, transport of hazardous goods by truck
occurs, and strict procedures have been implemented for
each hazardous substance to ensure the safe transport,
including loading, unloading and handling.
Checklists covering the condition of the vehicles and
equipment, as well as speed and alcohol control, are
standard routines at plant sites. All plants are ISPS
ports (International Ship and Port facility Security) with
restricted access. All personnel must undergo safety
training, and transport companies participate in safety
drills with the plant’s own fire brigade.
Hazardous substances management
It is Elkem’s policy to assess safer alternatives for
hazardous substances of concern and to promote
its substitution and reduction. The company reviews
the options to mitigate identified risks, including
possible substitution, phasing-out any substance
posing an unacceptable risk to human health and/or
the environment or limiting the exposure of the SVHC
substance if substitution is deemed not possible. The
assessment of alternative solutions for hazardous
chemicals is practised in all Elkem laboratories
and plants.
Governance
Product governance including chemical safety
The main hazardous substances of concern used in
Elkem’s operations are:
→
In carbon products: High temperature coal tar pitch
(CAS no. 65996-93-2) is used as an intermediate in
the production of Söderberg electrode paste.
→
In silicones: D4, D5, D6 are key intermediates in the
production of silicones-based polymers that are
classified as Substances of Very High Concern (SVHC).
They are used under strict conditions in a limited
number of products and closely controlled throughout
the production, storage, and shipping processes. While
substitution is not possible, production processes are
constantly improved to reduce the residual amount in
the downstream products.
→
In silicon products and ferroalloys: These are made
from natural raw materials such as quartz, coal, and
iron oxide that often contain trace amounts of heavy
metals. Cadmium and lead are listed as SVHC but
their concentrations in Elkem’s products are far below
the generic threshold limit value of 0.1 % w/w and do
not trigger regulatory action.
The European chemicals legislation REACH requires
suppliers of articles (manufacturers or importers) to inform
their European downstream users about the presence
of substances of very high concern (SVHC) when their
concentration exceeds 0.1% (w/w). Elkem regularly
monitors its product portfolio for SVHC substances that
are subject to existing or future regulatory restrictions
or that are associated with particular concerns. The
management plans are reviewed regularly, defining
the specific risks associated with each identified
SVHC substance. Elkem reviews all possible options to
mitigate identified risks, including possible substitution
where possible, phasing-out any substance posing an
unacceptable risk to human health and/or the environment
or limiting the exposure of the SVHC substance if
substitution is not deemed feasible.
In addition to complying with all chemical production
regulations, the Silicones division is a signatory of the
Responsible Care Global Charter of the International
Council of Chemical Associations (ICCA). Through
Responsible Care, Elkem commits to improving
performance, engaging with stakeholders to understand
their concerns about industry operations and products
and extending the Responsible Care ethic throughout
the value chain.
The key principles of the charter is:
→
Promoting transparency to build trust
with stakeholders.
→
Safeguarding people and the environment by
continuously improving environmental, health
and safety performance.
→
Driving continuous improvement in chemical product
safety and stewardship throughout the supply chain.
→
Strengthening chemicals management systems by
participating in the development and implementation
of lifecycle-oriented, sound-science and risk-based
chemical safety legislation and best practices.
Product safety programme
The safety of Elkem’s products is ensured by two main
pillars, a) the chemical safety assessment through the
different operative chemicals legislation and b) the
mandatory safety data sheets (SDS) that work as a
hazard communication tool to ensure a safe and informed
handling of the products by the company’s customers and
own employees. The product stewardship team gathers
expertise on key end-markets the company is working
with. Being involved from the very first stage of product
development is critical to make sure the correct regulatory
context is included.
Elkem’s management commits to a zero-harm policy.
This includes detailed standard operating procedures
(SOP), the duty to familiarise oneself with relevant safety
data sheets and safe job analyses. Specific databases
(Inosa) store the formal requirements and make them
traceable. Incident investigation and corrective actions
are part of the corporate HSE standard and supported by
a dedicated software tool (Synergi). Auditing is an import
process in Elkem’s safety programme and includes both
auditing of Elkem’s suppliers and contractors, as well as
internal audits and audits by our customers. This is part of
Elkem’s ISO 9001 and ISO 14001 certifications.
Chemical safety
Compliance with chemical product regulations include
product registrations, product authorisations, safety
data sheets and product labels. There are also industry
specific regulations that Elkem complies with, for example
for products that are in contact with food and water
(packaging) or health care (band aid/wound care).
With a portfolio of more than 4,000 different products
that are used in a multitude of applications, regulatory
and product compliance is key for Elkem. A document
management system has been implemented in
the Silicones division and ensures that compliance,
certificates, and regulatory statements are easily available
for the distribution to customers.
Elkem is committed to comply with international
regulatory requirements and provides safety data
sheets (SDS) for all products in accordance with UN
Globally Harmonized System of Classification and
Labelling of Chemicals (GHS). In all markets where
Elkem’s products are promoted, the products must meet
specific requirements and comply with certain technical,
regulatory, health and environmental standards.
Elkem is involved in regional and international trade
associations that help us understand and anticipate
new regulations and standards that may impact Elkem’s
industry or that of its customers.
Key events in 2022 for chemical safety:
→
As signatories of the CEFIC improvement plan, Elkem
Silicones is proactively reviewing its REACH dossiers,
with the task planned to be completed by 2027.
→
Elkem Silicones is actively working on its REACH-
Turkey (KKDIK regulation) obligations to meet the
registration deadline of 31/12/2023.
→
Elkem Silicones is actively working to meet the EU
Poison Center Notifications (PCN) requirements for
industrial uses by the end of 2023.
→
Elkem Silicones completed its content review of EU
Safety Data Sheets (> 2500 products) in 2022
→
Supported over 2000 non-standard customer
requests in 2022 needing strong PSRA support.
Animal testing policy
Elkem commits to refrain from animal testing, except
where legally required. All necessary toxicology studies
on vertebrate animals, conducted by Elkem Silicones,
are validated and coordinated centrally via an Elkem
toxicologist. Central coordination ensures that the
product stewardship team is aware of all existing and
relevant data, supporting product safety and covering
global regulatory needs. All studies are compliant with
European cosmetic regulations.
Policy on emerging technologies
Elkem is aware of risks and controversies associated
with the use of emerging technologies. Elkem does not
use GMO (genetically modified organisms) and has no
research activities within stem cells or genetic engineering.
Elkem does however utilise nanoforms of existing products
because they are key enablers for sustainable constructions
(Elkem Microsilica®) and for battery technology (silicon).
Elkem is committed to assess risks related to the use
of nanoparticles, and to implement measures to reduce
potential exposure, as it is required by national occupational
hygiene legislation. Furthermore, nanoforms require a
specific chemical safety assessment under the European
REACH legislation to ensure their safe use.
Elkem follows an internal procedure for the assessment
of new products (incl. nanoforms) through the corporate
product stewardship team.
There were no material incidents of non-compliance
concerning the health and safety impacts of products and
services, to Elkem's knowledge.
Governance
Responsible value chain
management
Responsible sourcing is a strategic priority for
Elkem. Elkem’s total global procurement spend is
approximately NOK 25 billion per year, covering
supplies of raw materials, energy, goods, services,
and logistics. The active supply base consists of
about 18,000 suppliers globally. The number of raw
material suppliers is relatively low, while the number of
suppliers of other goods and services is high.
Target
→
All new raw material suppliers subject to
assessment and pre-qualification screening
→
All new suppliers of raw material subject to
supplier audit
→
All new suppliers to sign Elkem’s code of conduct
for business partners
Responsible sourcing and the supply chain
As one of the world’s leading suppliers of silicon-based
advanced materials with operations throughout the
value chain from quartz to specialty silicones, Elkem
continuously strives to improve the way we source our
supplies. The procurement organisation is responsible for
raw material supply, logistic services, goods, and services
required for Elkem’s operations. Elkem’s procurement
organisation is decentralised, with procurement functions
both at the corporate, divisional and plant level. We further
differentiate between procurement of major raw materials,
and procurement of indirect materials. Suppliers of major
raw materials are always considered critical suppliers,
and suppliers of indirect materials may be considered
critical. The corporate supply chain has the overall global
responsibility for developing and maintaining Elkem’s
procurement and logistics strategy, as well as Elkem’s
global procurement policies and procedures.
Elkem has policies and procedures in place to ensure and
govern responsible sourcing. This includes:
→
Procurement policy, outlining Elkem’s procedures for
prequalification and management of suppliers.
→
Policy for sourcing of biocarbon, outlining Elkem’s
commitment to sustainable forest management and
the requirements for procuring bio-based reductants
in Elkem.
Contracts with suppliers ensure that risk assessments and
audits can be conducted both prior to pre-qualification
and at any stage of the supplier contract. Elkem has a code
of conduct for business partners, which is included in all
procurement contracts. The business partner code sets out
Elkem’s expectations to suppliers with regards to ethics,
labour rights and social and environmental issues.
Supplier due diligence and screening
The procurement function is responsible for carrying out
pre-qualification and risk assessments of suppliers, based
on corporate requirements within environment, health and
safety, social responsibility, anti-corruption and compliance
with laws and regulations. All new suppliers of raw materials
are screened against environmental and social criteria. For
high-risk suppliers, additional due diligence assessments
are performed, such as integrity due diligence.
We are continuously investing in technology to support
and improve upon these processes. In 2021 a new
contract lifecycle management (CLM) system went live.
In 2022, Elkem conducted a pilot to test a third-party risk
management tool. In 2023, Elkem plans to implement
a new supplier relationship management system. The
new system will enable a more unified process for
screening and vetting of suppliers across all divisions
and jurisdictions, tracking and monitoring suppliers’
compliance throughout the contract lifecycle, as well as
identifying and managing supplier risk. The learnings
captured from the pilot will be used to design the process
flow for supplier prequalification.
Supplier due diligence and screening under
the pandemic
Historically, Elkem has done 100% audits on their new
raw material suppliers. Due to the limitations given by the
pandemic, we have we not been able to keep this level in
2022 on an overall basis. The target is to get back on a
high level when the restrictions in all regions are lifted.
Responsible supply chain management
Elkem has developed detailed requirements for high-
risk suppliers and contractors regarding health, safety,
and environmental standards for operations like mining,
transportation, storage, and loading, and is actively
involved in the promotion and monitoring of safe and
decent working conditions. This includes health and
safety training and providing correct personal protection
equipment for suppliers’ employees when necessary. Age
control to prevent child labour and ensure responsible
working conditions for young employees is also carried
out. Elkem requires suppliers and contractors to engage
their employees with written contracts on fair terms, and
to give them information about their right to organise
and collectively bargain with management where this is
legally possible.
Elkem’s requirements are regularly discussed in meetings
with suppliers. High-risk suppliers must demonstrate their
understanding of legal requirements and hazards in their
operations and present plans showing how risk will be
eliminated or controlled while working for Elkem. Elkem
performs audits and inspections, both in connection with
routine visits for quality, technical and business follow-
up, and as unannounced site visits. External auditors also
conduct supplier audits on Elkem’s behalf. Violations of
Elkem’s requirements are addressed with warnings in
addition to requests for improvements when necessary.
Repeated violations may lead to requirements for speedy
implementation of improvement plans, financial penalties,
or termination of contracts.
KPIs
Metric
2022
2021
2020
Comment
Share of new raw materials suppliers subjected
to assessment and pre-qualification screening
%
100%
92%
100%
+8%
Share of new raw material suppliers subjected
to supplier audit
%
19%
>90%
The last two years,
it has been hard to
conduct audits due
to Covid-19
Adverse human rights concerns in supply
Number
chain reported
0
1
0
The colour indicates a positive or negative development year on year.
Elkem’s impact and
contribution to the 2030
Agenda for Sustainable
Development
Our mission:
Advanced silicon-based materials shaping
a better and more sustainable future,
adding value to stakeholders globally.
As a signatory to the UN Global Compact, Elkem supports
the 2030 Agenda and is committed to develop our business
in accordance with the framework. The UN Sustainable
Development Goals (SDGs) were established in 2015 by
the United Nations (UN) to build a more sustainable and
equal world by 2030. The 2030 Agenda acknowledges
that the 17 goals cannot be reached without the active
support of businesses worldwide. It calls on companies
to use innovation, technology, and creativity to address
developmental challenges and opportunities.
Elkem connected the UN SDGs to the materiality
assessment for the first time in 2020 and linked
the materiality to how the company impacts and is
impacted by the 2030 Agenda. The updated materiality
assessment for 2022, in line with GRI standards 2021,
builds on this analysis. Although we understand that all
goals are interlinked, Elkem has identified three SDGs
that are most material and where we can contribute the
most. Below is an explanation on how we impact and are
impacted by the SDGs.
How Elkem supports the SDGs ↗
SDG
Impact analysis
Elkem’s highest priority is to create a safe
and zero harm workplace. We work tirelessly
in the whole organisation to make sure that
all people leave our sites as healthy as they
arrived, creating a safe and secure working
environment. In addition, we continuously
work to protect our workers’ labour and
human rights and promote a harassment-free
working environment. Elkem is committed to
doing business according to the UN Guiding
Principles on Business and Human Rights.
Our impact:
Elkem must provide a secure
and safe workday for all employees and
contractors. We are aware and have
experienced that working at our facilities may
lead to health and safety risks. It is Elkem’s
obligation to provide safe jobs and make sure
that the employees have decent and liveable
wages and a flexible work-life balance
situation. When a serious accident happens,
a full investigation takes place to make sure
that all causes are uncovered and that it will
not happen again.
In addition, we influence the supply chain
through our partnerships to make sure that
our suppliers and customers also take up this
responsibility. Our most important tool is the
code of conduct for business partners. On site,
contractors get HSE training aligned with what
the employees of the company has.
Impacted by:
As we grow and enter new and
challenging markets, we see the need to take
a more systematic approach to our human
rights strategy. Elkem operates in several
countries which are at risk of child labour and
forced labour. Elkem does not tolerate any
use of children or forced labour in any of our
operations or facilities. We expect the same
from our suppliers and others we do business
with. While Elkem as a company cannot
resolve all such issues in isolation, we have a
responsibility to identify human rights risks in
our value chains and to mitigate them to the
best of our ability.
Prioritised SDG sub-
targets Elkem reports on
Target 8.7:
Take immediate
and effective measures
to secure the prohibition
and elimination of the
worst forms of child labour
eradicate forced labour,
and by 2025 end child
labour in all its forms
including recruitment and
use of child soldiers.
Target 8.8:
Protect labour
rights and promote safe
and secure working
environments for all
workers.
2021
No reported
events of
child and
forced labour
in Elkem
One reported
concern in
supply chain
No reported
high severity
injury
Injury rate: 3.7,
up from 2.3 in
2020
Introduced
human rights
e-learning
Employees
covered by
collective
bargaining
agreements:
39%
2022
No reported
events of
child and
forced labour
in Elkem
One sub-
contractor
fatality in
India. One
subcontractor
fatality in
China
Injury rate: 3.2,
down from 3.7
in 2021
Human
rights impact
assessment
conducted
Employees
covered by
collective
bargaining
agreements:
40%
SDG
Impact analysis
Climate change mitigation exposes Elkem to
Target 13.1:
Strengthen
Scope 1:
Scope 1:
several challenges and opportunities. Climate
resilience and adaptive
2.34 mill.
2.42 million
change response and the transitioning to more
capacity to climate related
tonnes
tonnes
sustainable solutions will impact our business
hazards and natural
and financial conditions as we move forward.
disasters in all countries.
Scope 2:
Scope 2:
901 000
942 000
Elkem has published an updated TCFD report
tonnes
tonnes
in March 2023, with improved scenario and
financial impact assessment. The full report is
Scope 3:
Scope 3:
available here.
↗
8.35 mill.
7.38 mill.
tonnes
tonnes
Our impact:
Greenhouse gas (GHG) emissions
(CO
2
) are inherent to the process of the
Biocarbon
Biocarbon
silicon, ferrosilicon, and silicones production.
share: 22%
share: 20%
Therefore, the industrial process and the
whole value chain (scope 1, scope 2 and scope
Energy
Energy
3) are part of the climate change challenge.
recovery
recovery
We acknowledge that our climate work is a
rate: 14%
rate: 11%
continuous process. Elkem understands that
the company must reduce the CO
2
emissions
Increased
Carbon group
in line with the Paris agreement. Meanwhile,
ambitions
footprint:
we aim to contribute positively by providing
announced
6.9 kg CO
/
materials and solutions that are beneficial to
2
in the climate
kg produced
combating climate change. Products needed
roadmap
in the low carbon society include the materials
that Elkem provide, so it is the company's
CDP Climate
CDP
responsibility to deliver these products with a
change:
Climate: A-
low carbon footprint.
A-, showing
CDP
leadership in
Forests: A-
Impacted by:
Climate change affects Elkem in
disclosure and
different ways, like technology development,
transparency
market adaption, reputation, and regulatory
limitations. One example is regulatory
mechanisms like emission trading schemes.
For example, changes in ETS regulations may
cause a reduction of allowances and higher
prices. This will increase Elkem’s direct costs
which is a current risk in our operations.
Therefore, reducing GHG emissions from
production is a strategic goal. In addition,
Elkem is monitoring how physical, chronic, and
acute climate change effects could affect our
locations and business.
Prioritised SDG sub-
targets Elkem reports on
2021
2022
SDG
Impact analysis
An improved understanding of the
Target 12.4:
By 2020,
Have fully
Update on
environmental and social impacts of
achieve environmentally
implemented
environmental
products and services is key to ensure
sound management of
environment
management
sustainable value chain for the future.
chemicals and all waste
management
system
Therefore, strong environmental
throughout their life cycle,
system in the
management of chemical safety, air, and
in accordance with agreed
organisation,
water emissions, and minimising the
international framework
with digital,
environmental footprint are key priorities.
and significantly reduce
quarterly
their release to air, water
reporting
Our impact:
Our products and production
and soil to minimise
have an environmental footprint throughout
their adverse impact on
Total waste
Total waste
the value chain. Elimination of waste is one of
human health and the
generated:
generated:
the key strategies for successful operations.
environment.
397,247
462,745
Our health, safety, and environment (HSE)
tonnes
tonnes
policy covers actions on energy and resource
utilisation, environmental impact through
No significant
No significant
emissions to air and discharge to water and
spills of
spills of
waste reduction and waste management.
D4/D5
D4/D5
Our goal is to reduce the waste generation by
good process control. Circularity is becoming
CDP Water: B-
CDP Water: B
more and more critical throughout our value
chain. Elkem is working with customers and
researchers across the topics of reduce, reuse
Total waste
Total waste
and recycle. For example, increase the use
Target 12.5:
By 2030,
diverted
diverted
of recycled raw materials in our operations
substantially reduce
from disposal:
from disposal:
by collecting them, reintroducing them, and
waste generation through
276,483
341,520
valuing by-products (such as Elkem Microsilica
prevention, reduction,
tonnes
tonnes
®). By joining forces with our customers, we
recycling and reuse.
aim to increase the collection of waste to
Share of
Share of
recycle them chemically or mechanically.
process
process
waste that
waste that
Impacted by:
There is an increased focus
was reused or
was reused or
on environmental and climate-friendly
recycled: 70%
recycled: 70%
production from society, employees, and
investors. In addition, operations are subject
to environmental permits and the risk of
stricter permits from governments and/or
other policy changes require our attention
to ensure compliance and successful
transition to a society with lower carbon
and environmental footprint.
Prioritised SDG sub-
targets Elkem reports on
2021
2022
To the Board of Directors of Elkem ASA
Independent statement regarding Elkem’s sustainability reporting
We have examined whether Elkem ASA has prepared a GRI Index for 2022 and measurements and reporting of
key performance indicators for sustainability (sustainability reporting) for the year ending 31 December 2022. Our
assurance engagement was conducted to obtain limited assurance.
●
Elkem's GRI Index for 2022 is an overview of which sustainability topics Elkem considers material to its
business and which key performance indicators Elkem uses to measure and report its sustainability
performance, together with a reference to where material sustainability information is reported
. Elkem’s
GRI Index for 2022 is available at https://www.elkem.com/sustainability/policies-and-statements/policies-
and-reports/. We have examined whether Elkem has developed a GRI Index for 2022 and whether
mandatory disclosures are presented according to the Standards published by the Global Reporting
Initiative (www.globalreporting.org/standards) (criteria).
●
Elkem has defined key performance indicators for sustainability in their ESG report for 2022. The
measurement of the indicators is determined by topic-specific disclosure requirements from GRI or own
disclosures as specified by Elkem and explained in the ESG report (criteria).
“
Supplying the green
transition
”
is based on the criteria as defined in EU Taxonomy. For the following KPIs we have examined
the basis for 2022 and examined whether the KPIs are calculated, estimated and reported in accordance
with the criteria:
o
"CO2 and other GHG emission reductions, incl. energy management " (see KPIs presented on
page 103 and 107)
o
"Local emissions to air" (see KPIs presented on page 118)
o
“Water management" (see KPIs presented on page 113)
o
"Waste management and circularity" (see KPIs presented on page 117)
o
“Health and safety on site” (see KPIs presented
on page 127)
o
“Environmental due diligence in the supply chain” (see
first KPI presented on page 149)
o
“Social due diligence in the supply chain” (see
first KPI presented on page 149)
o
“Responsible economic practices, including anti
-corruption and tax strategy
”
(see first four KPIs
presented on page 143)
o
“Supplying the green transition”
(see KPIs presented on page 159)
In addition, as part of the key performance indicators in this statement we have examined the indicator
product group carbon footprint (PGCF) for 2021 (page 103).
Management’s responsibility
Management is responsible for Elkem’s sustainability reporting and for ensuring that it is prepared in
accordance with the criteria described above. Their responsibility includes designing, implementing
and maintaining internal controls that ensure the development and reporting of the GRI Index and key
performance indicators for sustainability.
Our independence and quality control
We are independent of the company in accordance with the law and regulations and the International Ethics
Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our ethical obligations in accordance with these
requirements. We use ISQM 1 - Quality management for firms that perform audits or reviews of financial
statements, or other assurance or related services engagements and maintain a comprehensive system of quality
control including documented guidelines and procedures regarding compliance with ethical requirements,
PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA,
www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
professional standards and applicable legal and regulatory claim.
Auditor’s responsibilities
Our responsibility is to
express a limited assurance conclusion on Elkem’s sustainability reporting based on the
procedures we have performed and the evidence we have obtained. We conducted our work in accordance with the
Standard on Assurance Engagements
ISAE 3000: “Assurance engagements other than audits or review of
historical financial information". A limited assurance engagement in accordance with ISAE 3000 involves assessing
the suitability in the circumstances of management's use of the criteria as the basis for the preparation of the
sustainability reporting, assessing the risks of material misstatement of the sustainability reporting whether due to
fraud or error, responding to the assessed risks as necessary in the circumstances, and evaluating the overall
presentation of the sustainability reporting.
A limited assurance engagement is substantially less in scope than a
reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding
of internal control, and the procedures performed in response to the assessed risks.
The procedures we performed were based on our professional judgement and, among others, included an
assessment of whether the criteria used are appropriate, as well as an assessment of the overall presentation of
the sustainability reporting. Our procedures also included meetings with representatives from Elkem who are
responsible for the material sustainability topics covered by the sustainability reporting; review of internal control
and routines for reporting key performance indicators for sustainability; obtaining and reviewing relevant information
that supports the preparation of key performance indicators for sustainability; assessment of completeness and
accuracy of the sustainability reporting; and controlling the calculations of key performance indicators for
sustainability based on an assessment of the risk of error.
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in
extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited
assurance engagement is substantially lower than the assurance that would have been obtained had we performed
a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about
whether the sustainability reporting has been prepared, in all material respects, in accordance with the criteria.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Conclusion
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our
attention that causes us to believe that
●
Elkem’s GRI Index for 202
2 is not, in all material respects, developed and presented in accordance with
the requirements of the Standards published by The Global Reporting Initiative;
●
Elkem’s key performance indicators are not, in all material aspects, developed, measured and reported in
accordance with the definitions and explanations provided in relation to the key performance indicators.
Oslo, 8 March 2023
PricewaterhouseCoopers AS
Anders Ellefsen
State authorized public accountant (Norway)
(2)
Taxonomy report
Statement on the EU
Taxonomy for sustainable
economic activities
The EU Taxonomy is a classification system that is part of
the European Union’s policy measures to reach the EU’s
Green deal, which was launched in 2019. The EU Taxonomy
classifies environmental performance of economic activities
across a wide range of industries and sets technical
requirements that corporate activities must meet in order
to be considered sustainable.
Purpose
The main purpose of the EU Taxonomy regulation is to help
investors and companies in making informed investment
decisions on environmentally sustainable economic
activities. It establishes criteria for determining whether an
economic activity qualifies as environmentally sustainable.
For the purpose of the EU Taxonomy Regulation, the
following are defined as environmental objectives:
→
Climate change mitigation.
→
Climate change adaptation.
→
The sustainable use and protection of water
and marine resources.
→
The transition to a circular economy.
→
Pollution prevention and control.
→
The protection and restoration of biodiversity
and ecosystems.
Scope
The EU Taxonomy climate and reporting delegated acts
were published in June and July 2021, respectively, while
the first mandatory year of reporting for non-financial
companies in Norway will apply from January 2024, for
the fiscal year 2023. Elkem is in scope of the EU
Taxonomy regulation, on the basis that the regulation
covers large, listed companies with more than 500
employees. Although the EU Taxonomy has not entered
into force in Norwegian law as of end year 2022, Elkem
provides voluntary disclosures on the financial year of
2022 based on expected interest and knowledge of the
reporting requirements.
As preparation to the mandatory taxonomy report in
2024 for the fiscal year 2023, Elkem has decided in
this report to disclose the share of its eligible economic
activities against the taxonomy. Hence, this report
does not include alignment figures of eligible economic
activities and Elkem will continue to assess the technical
screening criteria for these activities in 2023, in order to
report on these figures in 2024.
EU has prioritised the economic activities that can
make the most relevant contribution to EU’s climate
and energy targets. Prioritised activities are subject
to technical screening criteria set out in the taxonomy
delegated acts. Given the current status of the regulatory
process, silicones are within the scope of EU Taxonomy
eligible activities, as silicones fall within the definition of
Manufacture of Plastics in Primary form.
Silicon and ferrosilicon activities are currently not defined
with specific criteria in the EU Taxonomy. Elkem has
therefore undertaken the assessment based on available
information and guidance. Changes to the factual
circumstances as well as the regulatory landscape, may
lead to a different assessment of our economic activities
under the Taxonomy Regulation in the future.
The three stages of the EU Taxonomy
There are three stages that all activities need to pass in
order to be considered for the EU Taxonomy. First, the
activity must substantially contribute to at least one of the
six environmental objectives as defined in the Regulation.
What qualifies as significant is defined within the technical
criteria of the Regulation. The second stage is that the
activity must not do any significant harm to the other
defined environmental objectives. The third stage is that
the company behind the economic activity must comply
with a set of minimum social safeguards.
Identified taxonomy-eligible activities for Elkem
A taxonomy-eligible economic activity means an activity
that is defined in the Delegated Act (EU) 2021/2139,
supplementing the Taxonomy Regulation, irrespective
of whether that economic activity meets any or all of the
technical screening criteria.
Taxonomy-eligible activities to be disclosed for FY2022
only refer to the environmental objectives of climate
change mitigation and climate change adaptation.
A Delegated Act for the remaining four environmental
objectives has not been published, and thus, is not yet
effective. A Taxonomy non-eligible economic activity is
any activity that is not covered by the Taxonomy to date.
Elkem has identified the following economic activities
as being taxonomy-eligible under the first two
environmental objectives:
3.1
Manufacture of renewable energy technologies.
3.4
Manufacture of batteries.
3.5
Manufacture of energy efficiency equipment
for buildings.
3.6
Manufacture of other low carbon technologies.
3.17
Manufacture of plastics in primary form.
Manufacture of renewable energy technologies
with
highly specialised applications can be defined as eligible
under the EU Taxonomy. Ferrosilicon and foundry
alloys are highly specialised products for wind power
equipment and therefore comply with the taxonomy
definition for this activity. Silicones is also a highly
necessary product to secure long maturity for solar
panels and is therefore defined as eligible.
Substaintially contribute
To at least one of the six
environmental objectives as
defined in the Regulation
Do no significant harm
To any of the other five
environmental objectives
as defines in the
proposed Regulation
Comply with
Minimum safeguards
Manufacture of batteries
is defined as activities
that explicitly includes manufacturing of respective
components for batteries, such as battery cells, casings,
and electronic components. Silicon and silicone products
used in batteries have been evaluated as a key component
in the battery pack.
Manufacture of energy efficiency equipment for buildings
are insulation products and their key components for
application in buildings. Elkem has evaluated that the
silicones products that are used in energy efficiency
equipment serve as an important insulator component in
buildings, and is therefore eligible within this category.
Manufacture of other low carbon technologies
that
aim to substantially reduce GHG emissions in use, can
qualify under this category. Microsilica has significant
and direct low carbon impact, such as reduced use of
cement and longevity, when used in cement, compared to
conventional cement production.
Manufacture of plastics in primary form
is an eligible
activity under the EU Taxonomy. Although silicones are not
defined within the general terms of plastics (from oil), this
activity gathers all Elkem's silicones products that have
generic applications. The description of this economic
activity in the Taxonomy refers to NACE code C20.16,
which includes silicones.
Silicones are used in several products that are critical
to the green transition. This includes products for more
energy efficient technologies, where silicones bring
unmatched performances. Studies show that for every ton
of CO
2
emitted from silicones production and end-of-life
disposal, the use of silicones allows for 9 times greater
GHG emissions savings.
Measuring the activity and performance
Turnover:
The turnover KPI is calculated as the part of
net turnover associated with Taxonomy eligible activities
divided by the total net turnover. The total net turnover
equals the external revenue, ref note 7 in the consolidated
financial statements.
Revenue associated with
eligible activities
Elkem's total revenue from the
sale of products and services
Capital expenditures:
The CapEx KPI is defined as the
CapEx related to assets or developments associated with
Taxonomy eligible activities divided by total CapEx as
defined in IFRS standards IAS 16, IAS 36 and IFRS 16,
and can be found as “additions” in note 15, 16 and 17 in
the consolidated financial statements. CapEx related to
a plan to expand Taxonomy-eligible activities has been
evaluated not to be relevant expenditures to Elkem in the
case of eligibility reporting. CapEx related to the purchase
of output from Taxonomy-eligible economic activities and
individual measures has also so far been excluded from
the CapEx numerator due to low economic materiality of
these expenditures.
Given the nature of Elkem’s production processes, CapEx
projects impacts both eligible and non-eligible activities.
Since Silicones is defined as eligible, we have used the
revenue split of Silicones division as a proxy for the
allocation of CapEx from the silicones activities. For other
eligible activities we have used the total revenue split as
proxy.
Operating expenses:
The OpEx KPI is defined as
operational expenses related to Taxonomy eligible assets
or processes divided by the direct non-capitalised cost
related to research and development and any other direct
expenses relating to the day-to-day maintenance of fixed
assets. OpEx related to a CapEx plan to expand taxonomy-
eligible activities has been evaluated not to be relevant
expenses to Elkem in the case of eligibility reporting. OpEx
related to the purchase of output from Taxonomy-eligible
economic activities and individual measures has also so
far been excluded from the OpEx numerator due to low
economic materiality of these expenses.
Other operating expenses directly linked to activities
with turnover and activities related to selling, general,
and administration are not considered as applicable for
the calculation of the OpEx KPI.
Assessment of Taxonomy-eligibility table
Estimated EU Taxonomy-eligible economic activities in
Elkem´s Revenue, CapEx and OpEx in 2022.
Given the nature of Elkem’s production processes, OpEx
projects impacts both eligible and non-eligible activities.
We have therefore used the total revenue split of the
eligible activities as a proxy for the allocation of OpEx
to these activities.
The total operating expenditures included in the OpEx KPI
are expenses coming from following functions:
→
Research and development
→
Building renovation measures
→
Short-term leases
→
Maintenance and repair
Research and development costs cover MNOK 526,
related to employee benefits.
Building renovation measures are currently of limited
relevance to Elkem, as there is no ongoing significant
project related to this subject
Short term leases cover MNOK 70, described in note 16.
Maintenance and repair expenses include Elkem`s
maintenance and repair cost not qualifying for
capitalization as part of the relevant asset. Repair and
maintenance activities consist of MNOK 1 344.
Turnover
CapEx
OpEx
NOK millions, except percentages
Economic activities
Absolute
%
Absolute
%
Absolute
%
3.17
Manufacture of plastics in primary form
17 229
38%
3 025
66%
708
38%
3.1
Manufacture of renewable energy technologies
791
2%
93
2%
33
2%
3.4
Manufacture of batteries
1471
3%
176
4%
61
3%
3.5
Manufacture of energy efficiency equipment for buildings
381
1%
67
1%
16
1%
3.6
Manufacture of other low carbon technologies
548
1%
10
0%
23
1%
Total taxonomy-eligible activities
20 421
45%
3 371
73%
879
45%
Total taxonomy non-eligible activities
24 642
1 239
1 060
Total
45 063
4 609
1 939
Financial Statements
2022
Contents
Financial statements
Consolidated statement of profit or loss
164
Consolidated statement of comprehensive income
165
Consolidated statement of financial position
166
Consolidated statement of cash flows
167
Consolidated statement of changes in equity
168
General information
Note 1
General information and basis of presentation
170
Note 2
Basis for preparing the consolidated financial statements
170
Note 3
Accounting estimates
172
Group structure
Note 4
Composition of the group
172
Note 5
Equity accounted investments and joint operation
178
Information about statement of profit or loss
Note 6
Operating segments
182
Note 7
Operating income
187
Note 8
Grants
189
Note 9
Employee benefits
190
Note 10
Share-based payments
196
Note 11
Other operating expenses
198
Note 12
Other items
199
Note 13
Finance income and expenses
200
Note 14
Taxes
201
Information about statement of financial position
Note 15
Property, plant and equipment
206
Note 16
Leases
209
Note 17
Other intangible assets
212
Note 18
Goodwill
215
Note 19
Impairment assessment
216
Note 20
Inventories
219
Note 21
Trade receivables
220
Note 22
Other assets
222
Note 23
Interest-bearing assets and liabilities
224
Note 24
Provisions and other liabilities
228
Note 25
Financial assets and liabilities
230
Note 26
Hedging
237
Other information
Note 27
Financial risk
241
Note 28
Capital management
248
Note 29
Number of shares
248
Note 30
Earnings per share
249
Note 31
Supplemental information to the consolidated
250
statement of cash flows
Note 32
Related parties
250
Note 33
Pledge of assets and guarantees
252
Note 34
Change in presentation
253
Note 35
Events after the reporting period
253
APM
Alternative Performance Measures
298
Consolidated statement of profit or loss
Amounts in NOK million
Note
2022
2021 Restated
1)
1 January - 31 December
Revenue
Other operating income
Share of profit (loss) from equity accounted investments
Total operating income
7
7
5
6
Raw materials and energy for production
Employee benefit expenses
Other operating expenses
Amortisation and depreciation
Impairment losses
Operating profit (loss) before other items
9
11
15, 16, 17
15, 16, 17
(21 976 )
(4 918 )
(6 714 )
(1 999 )
(28 )
(15 985 )
(4 530 )
(5 536 )
(1 816 )
(76 )
Other items
12
Operating profit (loss)
Share of profit (loss) from equity accounted financial investments
Finance income
Foreign exchange gains (losses)
Finance expenses
Profit (loss) before income tax
5
13
13
13, 16
(17 )
(313 )
(276 )
Income tax (expense) benefit
Profit (loss) for the year
14
(2 594 )
(1 163 )
Attributable to:
Non-controlling interests' share of profit (loss)
Owners of the parent's share of profit (loss)
Earnings per share in NOK:
Basic
Diluted
30
30
1)
See note 34 Change in presentation
Consolidated statement of comprehensive income
Amounts in NOK million
Note
2022
2021 Restated
1)
1 January - 31 December
Profit (loss) for the year
Remeasurement of defined benefit pension plans
Tax effects on remeasurement of defined benefit pension plans
Change in fair value of equity instruments
Total items that will not be reclassified to profit or loss
9
14
(33 )
(4 )
(10 )
Currency translation differences
Hedging of net investment in foreign operations
Tax effects hedging of net investment in foreign operations
Cash flow hedges
Tax effects on cash flow hedges
Share of other comprehensive income (loss) from equity accounted companies
Total items that may be reclassified to profit or loss in subsequent periods
14
26
14
5
(142 )
(218 )
(29 )
(215 )
Share of other comprehensive income (loss) from equity accounted companies
Cash flow hedges
Tax effects on cash flow hedges
Total reclassification adjustments for the period
26
14
(424 )
(317 )
(282 )
(220 )
Other comprehensive income (loss) for the year, net of tax
Total comprehensive income for the year
Attributable to:
Non-controlling interests' share of comprehensive income
Owners of the parent's share of comprehensive income
Total comprehensive income for the year
Consolidated statement of financial position
Amounts in NOK million
Note
31.12.2022
31.12.2021
Assets
Property, plant and equipment
Right-of-use assets
Other intangible assets
Goodwill
Deferred tax assets
Equity accounted investments
Derivatives
Other assets
Total non-current assets
15, 19
16, 19
17, 19
18, 19
14
5
25, 26
22
Inventories
Trade receivables
Derivatives
Other assets
Restricted deposits
Cash and cash equivalents
Total current assets
20
21
25, 26
22
23
23
Total assets
Equity and liabilities
Paid-in capital
Retained earnings
Non-controlling interests
Total equity
29
Interest-bearing liabilities
Deferred tax liabilities
Employee benefit obligations
Derivatives
Provisions and other liabilities
Total non-current liabilities
16, 23
14
9
25, 26
24
Trade payables
Income tax payables
Interest-bearing liabilities
Bills payable
Employee benefit obligations
Derivatives
Provisions and other liabilities
Total current liabilities
16, 23
23
9
25, 26
24
Total equity and liabilities
Oslo, 8 March 2023
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Jingwan Wu
Board member
Grace Tang
Board member
Marianne
Elisabeth Johnsen
Board member
Nathalie Brunelle
Board member
Thomas Eggan
Board member
Terje Andre Hanssen
Board member
Marianne Færøyvik
Board member
Helge Aasen
CEO
Consolidated statement of cash flows
Amounts in NOK million
Note
2022
2021
Operating profit (loss)
Amortisation, depreciation and impairment losses
15, 16, 17
Changes in working capital
31
(1 583 )
(2 020 )
Equity accounted investments
5
(108 )
(15 )
Changes in fair value of derivatives
(1 139 )
(9 )
Changes in provisions, bills receivable and other
(539 )
(88 )
(Gains) losses on disposal of subsidiaries
12
(159 )
Interest payments received
Interest payments made
(319 )
(242 )
Income taxes paid
(1 345 )
(423 )
Total cash flow from operating activities
Investments in property, plant and equipment and intangible assets
15, 17
(4 213 )
(3 266 )
Received investment grants
8
Proceeds from sale of property, plant and equipment
15, 17
Acquisition of subsidiaries, net of cash acquired
4
(108 )
Disposal of subsidiaries, net of cash
4
Payment of contingent consideration related to acquisitions (IFRS 3)
24, 31
(176 )
(78 )
Acquisition of and capital contribution to joint ventures
5
(292 )
Other investments / sales
(10 )
Total cash flow from investing activities
(4 404 )
(3 185 )
Dividends paid to non-controlling interests
(38 )
(58 )
Dividends paid to owners of the parent
(1 900 )
(96 )
Capital increase
29
Net sale (purchase) of treasury shares
29
(38 )
(278 )
Net changes in bills payable and restricted deposits
23
(218 )
Payment of lease liabilities
16, 23
(116 )
(118 )
New interest-bearing loans and borrowings
23
Payment of interest-bearing loans and borrowings
23
(7 237 )
(3 180 )
Total cash flow from financing activities
(2 899 )
Change in cash and cash equivalents
Currency translation differences
Cash and cash equivalents opening balance
Cash and cash equivalents closing balance
23
Consolidated statement of changes in equity
2022
Amounts in NOK million
Share
capital
Other paid-in
capital
Total paid-in
capital
Foreign currency
translation
reserve
Cash flow
hedge reserve
Other retained
earnings
Total retained
earnings
Total owners
share
Non-controlling
interest
Total
Closing balance 31 December 2021
Changes in accounting policy (note 2)
Opening balance 1 January 2022
(24 )
(24 )
(24 )
(24 )
Profit (loss) for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payments (note 10)
Capital increase (note 29)
Net movement treasury shares (note 29)
Dividends to equity holders (note 28)
Closing balance
(1 900 )
(1 900 )
(46 )
(46 )
(38 )
(1 900 )
(38 )
(38 )
(1 938 )
2021
Amounts in NOK million
Share
capital
Other paid-in
capital
Total paid-in
capital
Foreign currency
translation
reserve
Cash flow
hedge reserve
Other retained
earnings
Total retained
earnings
Total owners
share
Non-controlling
interest
Total
Opening balance
(189 )
Profit (loss) for the year
Other comprehensive income for the year
Total comprehensive income for the year
(0 )
Share-based payments (note 10)
Capital increase (note 29)
Net movement treasury shares (note 29)
Dividends to equity holders (note 28)
Closing balance
(32 )
(96 )
(32 )
(96 )
(246 )
(246 )
(278 )
(96 )
(58 )
(278 )
(154 )
Notes to the consolidated financial statements
and whose shares are publicly traded on Oslo Børs. Elkem
ASA is owned 52.9% by Bluestar Elkem International Co. Ltd
domiciled in China.
material solutions shaping a better and more sustainable
future. The company develops silicones, silicon products
and carbon solutions by combining natural raw materials,
renewable energy and human ingenuity. Elkem helps its
customers create and improve essential innovations like
electric mobility, digital communications, health and personal
a strong track record since 1904, its global team of more
than 7,000 people has a joint commitment to stakeholders:
Delivering your potential. In 2022, Elkem achieved an operating
income of NOK 45,898 million.
(hereafter Elkem/the group), including notes, for the year 2022
were authorised for issue by the Board of Directors of Elkem
The consolidated financial statements are prepared and in
accordance with International Financial Reporting Standards
(IFRS) as endorsed by the European Union (EU) and effective
at 31 December 2022 . All accounting policies are used
consistently by all subsidiaries in the consolidated financial
statement. Relevant financial reporting principles are described
Preparation of consolidated financial statements
The consolidated financial statements are prepared on a
historical cost basis, with the exception of derivative financial
instruments and other financial assets measured at fair value.
The presentation currency of Elkem is Norwegian Krone
(NOK). All financial information is presented in NOK million,
unless otherwise stated. As a result of rounding adjustments,
the amounts shown in one or more rows and columns
included in the consolidated financial statements, may not
add up to the total.
In text, the current year's figures are presented outside
parentheses, followed by the comparative figures presented
in parentheses.
Foreign currency translation
based on the economic environment in which it operates,
and items included in the financial statements of each entity
are measured using that functional currency. When preparing
the financial statements of each individual group entity,
transactions in currencies other than the entity's functional
currency are recognised in the functional currency, using the
Monetary items denominated in foreign currencies are
translated to each entity's functional currency using the
closing rate at the end of the reporting period, and any gains
(losses) are reported in the statement of profit or loss. Non-
monetary items that are measured at fair value in a foreign
currency are translated using the exchange rate at the date
when the fair value was measured. Currency gains (losses)
related to operating activities, i.e. receivables, payables, bank
accounts for operating purposes including current intragroup
balances, are recognised as a part of other items. Currency
effects recognised in finance income and expenses are only
related to financing activities such as loans, lease liabilities,
long-term placements and dividends.
Foreign currency differences are recognised in other
comprehensive income for the following items:
→
a financial asset or liability designated as a hedging
instrument in a cash flow hedge, to the extent that the
hedge is effective
→
loans in foreign currencies designated as hedging
instruments in a hedge of a net investment in a
foreign operation
In consolidation of the statement of profit or loss and the
statement of financial position, separate group entities with
other functional currency than the group's presentation
currency, are translated directly into the presentation
currency as follows:
→
Assets and liabilities are translated using the exchange
rate at the end of the reporting period
→
Income and expenses are translated using an average
exchange rate per month
→
Equity transactions, except for profit or loss for the
period, are translated using the transaction date rates
All resulting exchange differences are booked as a separate
component in other comprehensive income (OCI)
Any goodwill arising on acquisition of a foreign operation and
any fair value adjustment to the carrying amount of assets and
liabilities arising on the acquisition, are treated as assets and
liabilities of the foreign operations. On disposal of a foreign
entity, the deferred cumulative amount recognised in other
comprehensive income relating to that particular foreign
operation, is recognised in the statement of profit or loss.
The statement of cash flows is prepared under the indirect
method. Cash inflows and outflows are shown separately for
investing and financing activities, while operating activities
include both cash and non-cash effect items. Interest received
and paid and other financial expenses, such as bank guarantee
expenses, are reported as a part of operating activities. Net
currency gains or losses related to financing activities are
reported as part of financing activities. Dividends received from
joint ventures and associates that do not operate within Elkem's
Dividend is recognised as a liability when the shareholders'
right to payment is established, which is when the dividend is
of material errors
Changes in accounting policies and correction of material errors
are recognised retrospectively by restating the comparative
amounts for the prior period presented, including the opening
balance of the prior year.
Changes in accounting policy
The IFRS Interpretations Committee (IFRIC) published an
agenda decision in April 2021 “Configuration or Customisation
Costs in a Cloud Computing Arrangement (IAS 38 Intangible
Assets)”, confirming that a cloud computing customer should
expense the costs of configuring or customising a supplier’s
application software in a Software as a Service arrangement.
From 1.1.2022 Elkem has applied this policy for costs related
to the implementation of cloud computing. Following the
accounting policy change NOK 24 million was adjusted
towards opening balance of equity in second quarter of 2022.
Due to materiality comparable figures are not restated.
Change in presentation
Presentation of realised hedge ineffectiveness is changed
from raw materials and energy for production to other items
in the statement of profit and loss. The change is done to
present realised effects together with unrealised effects from
ineffectiveness. The impact from realised ineffectiveness has
not been material in previous years. Comparable figures are
New or revised accounting standards and interpretations
implemented as of 1 January 2022 are among others Onerous
Contracts – Costs of Fulfilling a Contract (Amendments to IAS
37) and Proceeds before Intended Use (Amendments to IAS 16
Property, plant and equipment). The new or revised accounting
standards and interpretations do not represent a significant
-
not yet effective
The consolidated financial statements will be affected by
future changes in IFRS. No standards, interpretations or
amendments published at the balance sheet date are
3. Accounting estimates
The preparation of the consolidated financial statements
according to IFRS requires management to make judgments,
estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expenses. When management makes
estimates and assumptions concerning the future, the
resulting accounting estimates will, by definition, seldom equal
the actual outcome.
Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances. Revisions of reported
estimates are recognised in the period in which the estimates
are revised and in any future period affected. Changes
in accounting estimates are recognised prospectively by
including them in the statement of profit or loss in the period
of the change and future periods, if the change affects both.
The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
addressed in the different notes.
Information about judgements, assumptions and estimation
uncertainties at 31 December 2022 that have the most
significant effects on the amounts recognised in the financial
statements is included in the following notes:
→
Note 14 Taxes
→
Note 15 Property, plant and equipment
→
Note 19 Impairment assessment
→
Note 24 Provisions and other liabilities
→
Note 25 Financial assets and liabilities
Principle
Consolidation
The consolidated financial statements include the financial
statements of Elkem ASA and entities controlled directly or
indirectly by Elkem ASA. The group controls an entity when the
group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which the group obtains control,
and are deconsolidated from the date that control ceases.
Profit or loss and each component of OCI are attributed to
the equity holders of the parent of the group and to non-
controlling interests, presented on separate lines in the
financial statements.
All intra-group assets and liabilities, equity, income
and expenses and gains and losses are eliminated in
full on consolidation.
Business combinations are accounted for using the
acquisition method in accordance with IFRS 3. The
consideration transferred in a business combination is
measured at fair value, and goodwill is measured as the
excess of the sum of consideration transferred, and net
identifiable fair value of transferred assets and liabilities.
Elkem's contingent consideration is classified as a financial
liability and measured at fair value at the acquisition date.
The liability is subsequently measured at fair value at each
reporting date, with changes recognised in other items in
the statement of profit or loss. Acquisition-related costs are
expensed as incurred.
as transactions with owners in their capacity as owners, and
therefore no goodwill is recognised as a result. Adjustments
to non-controlling interests arising from transactions that do
not involve the loss of control, are based on a proportionate
During a measurement period of maximum one year
provisional amounts recognised at the acquisition date are
adjusted to reflect new information obtained about facts and
circumstances that existed on the date of acquisition. Any
adjustments of identified assets or liabilities in the acquisition
Business combinations under common control
Business combinations involving entities under common
control are accounted for on a historical cost basis. This
means applying book value accounting, which is applied in
the following manner:
→
Assets and liabilities of the combining entities are
reflected at their carrying amounts.
→
No new goodwill is recognised as a result of
the combination.
→
The statement of profit or loss reflects the result of
the combining entities for the full year, irrespective
of when the combination took place.
→
Comparative figures are restated.
→
The purchase price is booked against equity at
Business combinations
Elkem uses valuation models as a basis for the measurement of
the fair value of net identifiable value of transferred assets and
liabilities in a business combination. Fair values are normally not
readily observable in an active market for individual assets and
liabilities in the business which Elkem operates.
Property, plant and equipment is valued using the cost
approach and by estimating the current cost to purchase
or replace the asset, at today’s current condition. Intangible
assets are identified and valued based on a relief from
royalty method and multi-period excess earnings method,
whereby; the relief from royalty method considers the
discounted estimated royalty payments that are expected to
be avoided as a result of the patents being owned, and the
multi-period excess earnings method considers the present
value of net cash flows expected to be generated by the
customer relationships, by excluding any cash flows related to
contributory assets.
Valuations are subject to numerous assumptions, the fair value
estimates may impact assessment of possible impairment of
assets and / or goodwill in future periods.
Elkem ASA and the following subsidiaries and joint
operations make up the composition of the group and are
included in the consolidated financial statement
Company
Functional
currency
Country of
incorporation
31.12.2022
Equity
interests
31.12.2021
Equity
interests
Owner
Elkania DA (Joint operation)
NOK
Norway
50 %
50 %
Elkem ASA
Elkem (Thailand) Co., Ltd.
THB
Thailand
100 %
100 %
Elkem ASA
Elkem Carbon (China) Co., Ltd.
CNY
China
100 %
100 %
Elkem Carbon
Singapore Pte. Ltd.
Elkem Carbon AS
NOK
Norway
100 %
100 %
Elkem ASA
Elkem Carbon Malaysia Sdn. Bhd.
MYR
Malaysia
100 %
100 %
Elkem Carbon AS
Elkem Carbon Singapore Pte. Ltd.
SGD
Singapore
100 %
100 %
Elkem Carbon AS
Elkem Chartering Holding AS
NOK
Norway
80 %
80 %
Elkem ASA
Elkem Digital Office AS
NOK
Norway
100 %
100 %
Elkem ASA
Elkem Distribution Center B.V.
EUR
Netherlands
100 %
100 %
Elkem ASA
Elkem Dronfield Ltd.
GBP
United Kingdom
100 %
100 %
Elkem UK Holdings Ltd.
Elkem Egypt for Industry,
USD
Egypt
100 %
100 %
Elkem International AS
Contracting & Trading S.A.E.
Elkem Ferroveld JV (Joint operation)
ZAR
South Africa
50 %
50 %
Elkem Carbon AS
Elkem Foundry (China) Co., Ltd.
CNY
China
100 %
100 %
Elkem ASA
Elkem GmbH
EUR
Germany
100 %
100 %
Elkem ASA
Elkem Iberia S.L.U
EUR
Spain
100 %
100 %
Elkem ASA
Elkem International AS
NOK
Norway
100 %
100 %
Elkem ASA
Elkem International Trade (Shanghai) Co., Ltd.
CNY
China
100 %
100 %
Elkem International AS
Elkem Ísland ehf.
NOK
Iceland
100 %
100 %
Elkem ASA
Elkem Japan K.K.
JPY
Japan
100 %
100 %
Elkem ASA
Elkem Korea Co., Ltd.
KRW
Republic
100 %
100 %
Elkem ASA
of Korea
Elkem Ltd.
GBP
United Kingdom
100 %
100 %
Elkem UK Holdings Ltd.
Elkem Madencilik Metalurji Sanayi
EUR
Turkey
100 %
100 %
Elkem International AS
Ve Ticaret Ltd. STI
Elkem Materials, Inc.
USD
USA
100 %
100 %
NEH LLC
Elkem Materials Delaware, Inc.
USD
USA
100 %
100 %
Elkem Materials, Inc.
Elkem Materials Processing (Tianjin) Co., Ltd.
CNY
China
100 %
100 %
Elkem ASA
Elkem Materials Processing Services BV
EUR
Netherlands
100 %
100 %
Elkem ASA
Elkem Materials South America Ltda.
BRL
Brazil
100 %
100 %
Elkem Materials, Inc.
Elkem Metal Canada Inc.
CAD
Canada
100 %
100 %
Elkem ASA
Elkem Milling Services GmbH
EUR
Germany
100 %
100 %
Elkem ASA
Elkem Nordic A.S.
DKK
Denmark
100 %
100 %
Elkem ASA
Elkem Oilfield Chemicals FZCO Ltd.
AED
UAE
51 %
51 %
Elkem ASA
Elkem Paraguay S.A.
USD
Paraguay
100 %
100 %
3)
Elkem ASA
Elkem Participaçòes Indústria e Comércio Limitada
BRL
Brazil
100 %
100 %
Elkem Carbon AS
Elkem Processing Services S.A.
1)
EUR
Belgium
100 %
-
Elkem ASA
Elkem S.à r.l.
EUR
France
100 %
100 %
Elkem ASA
Elkem S.r.l.
EUR
Italy
100 %
100 %
Elkem ASA
Company
Functional
currency
Country of
incorporation
31.12.2022
Equity
interest
31.12.2021
Equity
interest
Owner
Elkem Silicon Materials (Lanzhou) Co., Ltd.
CNY
China
100 %
100 %
Elkem ASA
Elkem Silicon Product Development AS
NOK
Norway
100 %
100 %
Elkem ASA
Elkem Siliconas España S.A.U
EUR
Spain
100 %
100 %
Elkem ASA
Elkem Silicones (UK) Ltd.
GBP
United Kingdom
100 %
100 %
Elkem UK Holdings Ltd.
Elkem Silicones Brasil Ltda.
BRL
Brazil
100 %
100 %
Elkem ASA
Elkem Silicones Canada Corp.
CAD
Canada
100 %
100 %
Elkem ASA
Elkem Silicones Czech Republic, s.r.o.
CZK
Czech Republic
100 %
100 %
Elkem ASA
Elkem Silicones Finland OY
EUR
Finland
100 %
100 %
Elkem ASA
Elkem Silicones France SAS
EUR
France
100 %
100 %
Elkem ASA
Elkem Silicones Germany GmbH
EUR
Germany
100 %
100 %
Elkem ASA
Elkem Silicones Guangdong Co., Ltd.
CNY
China
100 %
100 %
Elkem ASA
Elkem Silicones Hong Kong Co., Ltd.
HKD
Hong Kong
100 %
100 %
Elkem ASA
Elkem Silicones Korea Co., Ltd.
KRW
Republic
of Korea
100 %
100 %
Elkem ASA
Elkem Silicones Material Zhongshan Co., Ltd.
CNY
China
100 %
100 %
Elkem Silicones
Guangdong Co., Ltd.
Elkem Silicones México S. De R.L. De C.V.
MXN
Mexico
100 %
100 %
Elkem ASA
Elkem Silicones Poland sp. z o.o.
PLN
Poland
100 %
100 %
Elkem ASA
Elkem Silicones Scandinavia AS
NOK
Norway
100 %
100 %
Elkem ASA
Elkem Silicones Services S.à r.l.
EUR
France
100 %
100 %
Elkem ASA
Elkem Silicones Shanghai Co., Ltd.
CNY
China
100 %
100 %
Elkem ASA
Elkem Silicones USA Corp.
USD
USA
100 %
100 %
Elkem ASA
Elkem Siliconi Italia S.r.l.
EUR
Italy
100 %
100 %
Elkem ASA
Elkem Singapore Materials Pte. Ltd.
SGD
Singapore
100 %
100 %
Elkem ASA
Elkem South Asia Private Limited
INR
India
100 %
100 %
Elkem ASA
Elkem UK Holdings Ltd.
GBP
United Kingdom
100 %
100 %
Elkem ASA
Elkem Uruguay S.A.
USD
Uruguay
100 %
100 %
Elkem ASA
Euro Nordic Logistics BV
EUR
Netherlands
80 %
80 %
Elkem Chartering
Holding AS
Euro Nordic Netherlands BV
EUR
Netherlands
80 %
80 %
Euro Nordic Logistics BV
Explotación de Rocas Industriales y
EUR
Spain
100 %
100 %
Elkem ASA
Minerales S.A. (ERIMSA)
Iniconce, S.L.
EUR
Spain
100 %
100 %
Explotación de Rocas
Industriales y Minerales S.A.
Jiangxi Bluestar Xinghuo Silicones Co., Ltd.
CNY
China
100 %
100 %
Elkem ASA
NEH LLC
USD
USA
100 %
100 %
Elkem ASA
NorenoComercial Importada e
BRL
Brazil
100 %
100 %
Elkem Participaçòes
Exportadora Limitada
Indústria e Comércio
Limitada
Norsil, S.A.
EUR
Spain
100 %
100 %
Iniconce, S.L
Tifwer Trade S.A.
USD
Uruguay
100 %
100 %
Elkem Uruguay S.A.
Vianode AS
2)
NOK
Norway
-
100 %
Elkem ASA
1)
Previously KeyVest Belgium S.A.
2)
See Loss of control.
3)
Elkem ASA owns 79% and Elkem Uruguay S.A owns 21%
Changes in composition of the group in 2022,
business combinations
31 January 2022 Elkem increased its ownership in Salten
Energigjenvinning AS (SEAS) from 50% to 100% by acquisition
from Kvitebjørn Energi AS. Salten Energigjenvinning AS
operates the Elkem Salten energy recovery plant. The
investment in the energy recovery plant further strengthens
Elkem's efforts to ensure environmentally friendly silicon and
ferrosilicon production with the lowest possible emissions and
lowest possible use of resources. Salten Energigjenvinning AS
was merged with Elkem ASA in 2022 and is presented within
the Silicon products operating segment.
The energy recovery plant has been built in partnership between
Elkem and Kvitebjørn Energi. The total investment in the energy
recovery plant has amounted to around NOK 1,180 million,
financed through a NOK 350 million grant from Enova, external
debt and some equity. The book value of Elkem's 50% equity
accounted joint venture was NOK 47 million at 31 January 2022.
The difference between the fair value and the book value of the
50% share results in a fair value gain of NOK 75 million. This
gain is partially offset by a loss on pre-existing relationships of
NOK 58 million related to delivery of heat from Elkem ASA to
Salten Energigjenvinning AS and a loss of NOK 13 million related
to the cash flow hedge reserve from an interest rate hedge in
SEAS which has been reclassified from other comprehensive
income to other items in profit and loss as a result of the
transaction (see note 12 Other items). If the company had been
part of the group from 1 January 2022 revenue would have
increased with NOK 1 million and profit after tax would have
decreased with NOK 6 million.
20 June 2022 Elkem acquired Elkem Processing Services
S.A (formerly KeyVest Belgium S.A), a specialist company in
the sourcing of materials and production of metal powders
to the refractory industry and other segments including
advanced ceramics. With the acquisition of Elkem Processing
Services S.A Elkem will enable further growth by providing
additional specialised products to our current customers,
improve service level and processing capabilities and grow
in adjacent segments. The acquisition will expand Elkem's
product portfolio and create a platform for further growth.
The production facility and related inventory amounts to
around NOK 30 million. After the acquisition date revenues
of NOK 37 million and profit after tax of NOK 1 million from
the company has been included in consolidated statement of
comprehensive income. If the company had been part of the
group from 1 January 2022 revenue and profit after tax would
have increased with NOK 96 million and NOK 16 million
respectively, including a NOK 5 million gain from bargain
purchase. Elkem Processing Services S.A is presented within
the Silicon Products operating segment.
Net cash outflow
2022
Cash transferred on acquisition
(156)
Cash and cash equivalents of the acquiree
48
Acquisition of subsidiaries, net of cash acquired
(108)
The table below summarise the total consideration and the
provisional amounts recognised for assets acquired and
liabilities assumed after the business combination:
Consideration
2022
Cash transferred on acquisition
156
Fair value of 50% pre-transaction ownership in SEAS
122
Total consideration
278
Assets acquired and liabilities assumed
Amounts in NOK million
Carrying amount
Excess value
Fair value
Property, plant and equipment
Other intangible assets
Deferred tax assets
Inventories
Trade receivables
Other assets, current
Cash and cash equivalents
Deferred tax liabilities
Interest-bearing liabilities, non-current
Derivatives, non-current
Trade payables
Income tax payables
Interest-bearing liabilities, current
Provisions and other liabilities, current
Total identifiable net assets
823
0
7
29
10
13
48
-
(650)
(87)
(7)
(3)
(10)
(46)
128
119
6
-
-
-
-
-
(28)
-
-
-
-
-
-
97
942
6
7
29
10
13
48
(28)
(650)
(87)
(7)
(3)
(10)
(46)
225
Loss on pre-existing relationship
Gain on bargain purchase
1)
Total recognised
-
-
128
-
-
97
58
(5)
278
1)
After the transaction process started, KeyVest delivered better than expected results. This was not fully reflected in the final purchase
price, resulting in a bargain purchase.
Acquisition-related costs of NOK 2 million is recognised in
other items in the statement of profit or loss in 2022.
Loss of control
6 April 2022 Elkem, Hydro and Altor (Altor Fund V) announced
a partnership with the intention to accelerate the growth of
Elkem ASA's subsidiary Vianode AS, a producer of sustainable
battery materials. The final regulatory approvals for the
transaction were received on the 14 September 2022 upon
which Elkem lost of control of Vianode. Elkem has recognised
a gain of NOK 150 million in the third quarter resulting from
the loss of control. The entire gain is attributable to the fair
value measurement of Elkem's retained investment in Vianode.
Following the transaction Elkem will classify the remaining
investment as a joint venture and measure the investment
using the equity method of accounting.
The value of the investment on initial recognition was NOK 576
million including the first tranche of capital injection on loss
of control, NOK 134 million. Vianode had a negative overdraft
position at the transaction date resulted in a positive cash
effect for the group on disposal of NOK 151 million.
Net cash inflow
2022
Cash received on disposal
-
Cash and cash equivalents of the subsidiaries
151
Disposal of subsidiaries, net of cash
151
Changes in composition of the group in 2021,
business combination
No business combinations took place in 2021.
Investments in joint arrangements are classified as either joint
operations or joint ventures, depending on the contractual
rights and obligations of each investor.
Joint ventures are accounted for using the equity method.
Under the equity method, the investment is initially recognised
at cost, and the carrying amount is increased or decreased
to recognise Elkem's share of the profit or loss, and other
comprehensive income of the investee after the date of
acquisition. In cases where a joint venture's loss or other
comprehensive income exceed the initially recognised cost
the carrying amount is presented to reflect Elkem's liability
to finance the joint venture only to the extent that Elkem has
an obligation to fund the investees operations. Any liability to
finance a joint venture is presented either as part of provisions
and other liabilities, current, or netted against Elkem's
receivables towards the joint venture.
The group's interest in joint operations is recognised in relation
to its interests in the joint operation:
→
Assets, including its share of any assets held jointly
→
Liabilities, including its share of any liabilities incurred jointly
→
Revenue from the sale of its share of the output arising
from the joint operation
→
Expenses, including its share of any expenses
Associates are those entities in which the group has significant
influence, but no control over the financial and operating
policies. Significant influence is presumed to exist when the
group holds between 20% and 50% of the voting power
of another entity. Investments in associates are accounted
for using the equity method. Under the equity method, the
investment is initially recognised at cost, and the carrying
amount is increased or decreased to recognise the investor’s
share of the profit or loss and other comprehensive income
of the investee after the date of acquisition. In cases where
an associates' loss or other comprehensive income exceed
the initially recognised cost the carrying amount is presented
to reflect Elkem's liability to finance the associate only to the
extent that Elkem has an obligation to fund the investees
operations. Any liability to finance an associate is presented
either as part of provisions and other liabilities, current, or
netted against Elkem's receivables towards the associate. The
group’s investments in associates includes goodwill identified
on acquisition.
Upon disposal of an associate that results in the group
losing significant influence over that associate, any retained
Share of profit from investments in associates
and joint ventures
Share of profit (loss) from investments in associates and
joint ventures is recognised in the statement of profit or loss
depending on the purpose of the investments. Investments
that are closely related to the group's main activities are
recognised as share of profit from equity accounted
companies, included in operating income. Investments in
associates and joint ventures that do not operate within
Elkem's main business areas are recognised as share of profit
Elkem has interests in the following joint
arrangements and associates
Name of entity
Business office
Country
Principal
actvities
Classification
% equity
interests
2022
% equity
interests
2021
Elkem Ferroveld JV
Ferrobank
South Africa
Electrode paste
Joint
50 %
50 %
Emalahleni
production
operation
Elkania DA
Hauge i Dalane
Norway
Microfine weighting
Joint
50 %
50 %
material
operation
North Sea Container Line AS
Haugesund
Norway
Shipping services
Joint venture
50 %
50 %
North-Sea Management AS
Haugesund
Norway
Shipping services
Joint venture
50 %
50 %
Salten Energigjenvinning AS
Oslo
Norway
Energy production
Joint venture
-
50 %
Klafi EHF
Grundartangi,
Iceland
Transportation /
Joint venture
50 %
50 %
Akranes
harbour services
Weldermate AS
Oslo
Norway
Robot welding systems
Joint venture
50 %
50 %
Vianode AS
Oslo
Norway
Battery materials
Joint venture
40 %
-
Jiangxi Guoxing Intelligence
Yangjialing
China
Energy production
Joint venture
35 %
-
Energy Co. Ltd
Euro Partnership BV
Moerdijk
Netherlands
Ship management
services
Associate
50 %
50 %
Combined Cargo
Moerdijk
Netherlands
Warehousing
Associate
33 %
33 %
Warehousing BV
Euro Nordic Agencies
Antwerpen
Belgium
Ship agencies services
Associate
50 %
50 %
Belgium NV
EPB Chartering AS
Oslo
Norway
Deep sea charter services
Associate
25 %
25 %
GIE Osiris
Roussillon
France
Business supplies
and equipment
Associate
25 %
25 %
Future Materials AS
Grimstad
Norway
Marketing of
research facilities
Associate
20 %
20 %
The share of equity interests are equal to Elkem's voting
rights, with the exception of Elkem's investments in Vianode
AS where the parties in accordance with the shareholder
agreement have 33,33% ownership influence. The shareholder
agreements for Jiangxi Guoxing Intelligence Energy Co. Ltd
requires a two-third majority in order to approve a majority
of business decision on behalf of the entity, making Elkem
together with one other party in control of the business.
Of the entities above, Salten Energigjenvinning AS (SEAS)
and Vianode AS is classified to not operate within Elkem's
main business areas.
There is no quoted market price for the investments.
31 January 2022 Elkem increased its ownership in Salten
Energigjenvinning AS (SEAS) from 50% to 100% by
acquisition from Kvitebjørn Energi AS. The total investment in
the energy recovery plant has amounted to around NOK 1,180
million, financed through a NOK 350 million grant from Enova,
external debt and some equity. The book value of Elkem's 50%
share was NOK 47 million at 31 January 2022. The difference
between the fair value and the book value of the 50% share
results in a fair value gain of NOK 75 million. This gain is
partially offset by a loss on pre-existing relationships of NOK
58 million and a loss of NOK 13 million related to the cash flow
reserve from an interest rate hedge in SEAS which has been
reclassified from other comprehensive income to other items
in profit and loss as a result of the transaction (see note 12
Other items). If the company had been part of the group from 1
January 2022 revenue would have increased with NOK 1 million
and profit after tax would have decreased with NOK 6 million.
6 April 2022 Elkem, Hydro and Altor (Altor Fund V) announced
a partnership with the intention to accelerate the growth of
Elkem ASA's subsidiary Vianode AS, a producer of sustainable
battery materials. The final regulatory approvals for the
transaction were received on the 14 September 2022 upon
which Elkem lost of control of Vianode. Elkem has recognised
a gain of NOK 149 million in the third quarter resulting from
the loss of control. The entire gain is attributable to the
fair value measurement of Elkem's retained investment in
Vianode. Following the transaction Elkem classified the
remaining investment as a joint venture and measure the
investment using the equity method of accounting. The value
of the investment on initial recognition was NOK 576 million
including the first tranche of capital injection on loss of control,
NOK 134 million.
Elkem has also committed to cover its proportion of total
capital injections in Vianode AS.
Elkem's proportion is NOK
534.5 million, whereof NOK 267 million is paid as of 31
December 2022.
At the end of 2022 Elkem invested in Jiangxi Guoxing
Intelligence Energy Co. Ltd (Jinangxi Energy) an entity
established to build a cogeneration production facility near
Elkem's plant Silicones Xinghuo. Elkem has committed to cover
its proportion of total estimated capital injections in Jinangxi
Energy of CNY 48.7 million, whereof CNY 17.5 million is paid
as of 31 December 2022. In addition Elkem has committed to
sell the land, buildings and equipment needed to establish the
cogeneration facility and when the facility is up and running
committed to supply excess steam from production.
See note 32 Related parties for commitments and transactions
related to the joint ventures and associates.
Movements in equity accounted investments
2022
2021
Joint
Joint
Amounts in NOK million
ventures
Associates
Total
ventures
Associates
Total
Opening balance
115
126
241
74
106
181
cquisition of and capital contribution to joint ventures
A
292
-
292
-
-
-
hange in equity interest, in relation to business combinations
C
(47)
-
(47)
-
-
-
hange in equity interest, in relation to disposal of subsidiaries
C
443
-
443
-
-
-
ividend received
D
(13)
(14)
(26)
(28)
(7)
(34)
hare of profit (loss) from equity accounted companies
S
42
93
135
19
31
49
hare of profit (loss) from equity accounted financial investments
S
(17)
-
(17)
37
-
37
art of other comprehensive income
P
7
7
15
12
-
12
urrency translation differences
C
0
5
5
1
(4)
(3)
Closing balance
822
217
1 039
115
126
241
Share of profit and loss and carrying amount for equity
accounted investments
2022
31.12.2022
2021
31.12.2021
Amounts in NOK million
Share of profit
Carrying amount
Share of profit
Carrying amount
North Sea Container Line AS
42
95
19
65
North-Sea Management AS
(0)
2
1
3
Salten Energigjenvinning AS
(6)
-
37
46
Klafi EHF
(0)
1
(1)
1
Weldermate AS
(0)
0
-
0
Vianode AS
(11)
699
-
-
Jiangxi Guoxing Intelligence Energy Co. Ltd
-
25
-
-
Euro Partnership BV
10
44
11
39
Combined Cargo Warehousing BV
1
6
1
5
Euro Nordic Agencies Belgium NV
1
4
18
36
EPB Chartering AS
80
117
(0)
2
GIE Osiris
-
46
-
44
uture Materials AS
F
-
0
-
0
Total
117
1 039
86
241
Cash-flow from operations, equity accounted investments
Amounts in NOK million
2022
2021
Share of profit (loss) from equity accounted investments
(135)
(49)
Dividend received
26
34
Equity accounted investments
(108)
(15)
Summary of financial information for joint ventures on a 100% basis
Amounts in NOK million
Vianode
AS
1)
Other
Total
2022
Other
Total
2021
Current assets,
including cash and cash equivalents NOK 784 million (NOK 92 million)
Non-current assets
Current liabilities, including current financial liabilities NOK 0 million (NOK 0 million)
Non-current liabilities, including non-current financial liabilities NOK 0 million
(NOK 651 million)
Net assets/equity
729
783
120
127
1 265
269
92
94
-
268
998
875
214
127
1 533
234
817
112
710
229
234
817
112
710
229
Excess value
Elkem's carrying amount
Total revenue
Total expenses, including depreciation and amortisation NOK 31 million
(NOK 5 million) and other items
Financial income, including interest income NOK 0 million (NOK 0 million)
Financial expenses, including interest expenses NOK 4 million (NOK 11 million)
Tax expense
Total profit for the year
193
699
0
(33)
5
(0)
0
(28)
-
123
907
(834)
3
(4)
(0)
71
193
822
907
(867)
8
(4)
(0)
43
-
115
777
(715)
125
(76)
(0)
110
-
115
777
(715)
125
(76)
(0)
110
Other comprehensive income
Total comprehensive income
-
(28)
(14)
57
(14)
29
24
134
24
134
Elkem's share of profit for the year
Elkem's share of other comprehensive income
(11)
-
36
7
24
7
55
12
55
12
1)
The figures for Vianode AS is based on preliminary figures for 2022
Summary of financial information for associates on a 100% basis
Amounts in NOK million
Total 2022
Total 2021
Total operating income
1 785
152
Total expenses
(1 437)
(53)
Total profit for the year
347
99
Other comprehensive income
29
-
Total comprehensive income
377
99
Elkem's share of profit for the year
93
31
Elkem's share of other comprehensive income
7
-
Net assets/equity
768
417
Elkem's carrying amount
217
126
Elkem identifies its segments according to the organisation
and reporting structure as decided and followed up by group
management. Operating segments are components of a
business that are evaluated regularly by the chief operating
decision maker, defined as the CEO, for the purpose of
assessing performance and allocating resources. Elkem's
operating segments represent separately managed business
areas with unique products serving different markets.
Segment performance is evaluated based on EBITDA which is
the primary segment result and operating profit (loss) before
other items (EBIT), see definitions below. Elkem's financing
and income tax are managed on group basis and are not
allocated to operating segments.
Transactions between operating segments are conducted on
an arm's length basis in a manner similar to transactions with
third parties.
Revenues are, in addition, disaggregated by geographical
market based on the location of the customer.
Non-current assets by geographical areas are based on the
location of the entity owning the assets.
The segment reporting is based on the accounting policies
applied for the group with the exception of:
Realised effects from hedge ineffectiveness and from
the discontinuation of hedging is included in other items
in Elkem's statement of profit and loss, but included in
operating expenses in the segment reporting. This is because
management follows up the operating segments including the
impact of the realised effects from power contracts. Elkem has
previously included realised effects from discontinuation of
hedging in other items for both group and operating segments.
The change in presentation does not impact comparable
figures for 2021.
Lease payments under internal lease agreements are
recognised as operating expenses on a straight-line basis over
Elkem's operating segments
Elkem identifies its segments according to the organisation
and reporting structure used by group management. Elkem
has three reportable segments; Silicones, Silicon Products and
Carbon Solutions.
The Silicones division produces and sells a range of silicone-
based products across various sub-sectors including release
coatings, engineering elastomers, healthcare products,
specialty fluids, emulsions and resins.
The Silicon Products division produces various grades of
metallurgical silicon, ferrosilicon, foundry alloys and microsilica
for use in a wide range of end applications.
The Carbon Solutions division produces carbon electrode
materials, lining materials and specialty carbon products for
metallurgical processes for the production of a range of metals.
Other comprise Elkem group management and centralised
functions within finance, logistics, power purchase,
technology, digital office and strategic projects such as
biocarbon and battery projects. The battery technology
company Vianode AS was de-consolidated in the third quarter
of 2022 and is now classified as a joint venture.
Eliminations comprise intersegment sales and profit. Elkem
follows internationally accepted principles for transactions
between related parties within the group. In general, Elkem
seeks to use transaction-based methods (comparable
uncontrolled price, transactional net margin method, cost
plus and resale price method) in order to set the price for the
transaction.
The main related party transactions between operating
segments in Elkem can be divided as follows:
→
Silicon Products sale of metallurgical silicon to Silicones.
Sales prices are based on sale to external customers and
CRU prices.
→
Carbon Solutions sale of electrode paste and lining
material to Silicon Products. Sales prices are based on
prices to external customers.
→
Other sale of management services e.g., logistics,
procurement, financial services, technical support and
R&D services. Prices are based on cost plus.
Major customers
Elkem has a range of customers, but no single customer
amounts to 10% or more of total operating income.
Main items by operating segment
2022
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Eliminations
Total
Revenue from sale of goods (note 7)
18 994
22 361
3 393
(87)
-
44 660
Other revenue (note 7)
66
72
21
199
-
358
Other operating income (note 7)
150
542
5
48
-
746
Share of profit from equity accounted companies (note 5)
-
(0)
(0)
135
-
135
Total operating income from external customers
19 210
22 974
3 419
295
-
45 898
Operating income from other segments
78
1 483
333
395
(2 289)
-
Total operating income
19 288
24 457
3 752
690
(2 289)
45 898
Operating expenses
(17 266)
(14 233)
(2 586)
(921)
2 032
(32 973)
EBITDA
2 022
10 224
1 166
(231)
(257)
12 925
EBIT
743
9 630
1 063
(281)
(257)
10 898
Cash flow from operations
1 271
7 802
620
(156)
14
9 551
Working capital
2 449
5 467
739
(648)
(371)
7 637
Capital employed
16 762
11 304
1 597
1 018
(371)
30 310
Reinvestments
(1 682)
Strategic investments
(2 797)
Movement CAPEX payables
421
Cash flow from investments in property, plant and equipment
and intangible assets, including received investment grants
(4 058)
Main items by operating segment
2021
Amounts in NOK million
Silicones
Silicon
Products
Carbon
Solutions
Other
Eliminations
Total
Revenue from sale of goods (note 7)
Other revenue (note 7)
Other operating income (note 7)
Share of profit from equity accounted companies (note 5)
Total operating income from external customers
17 206
43
117
-
17 366
13 557
96
422
(1)
14 074
1 917
21
5
-
1 943
64
179
41
51
335
-
-
-
-
32 743
340
586
49
33 717
Operating income from other segments
Total operating income
63
17 429
710
14 783
234
2 176
398
733
(1 404)
(1 404)
-
33 717
Operating expenses
(13 758)
(11 081)
(1 669)
(777)
1 358
(25 926)
EBITDA
3 672
3 702
508
(44)
(46)
7 791
EBIT
2 528
3 154
360
(97)
(46)
5 899
Cash flow from operations
1 448
Working capital
2 517
Capital employed
14 678
Reinvestments
Strategic investments
Movement CAPEX payables
Cash flow from investments in property, plant and equipment
and intangible assets, including received investment grants
2 273
3 487
8 169
376
276
1 003
3
(518)
839
0
(90)
(90)
4 100
5 673
24 599
(1 657)
(1 717)
245
(3 128)
Definitions
Segments performance are evaluated based on EBITDA
and EBIT. Elkem's definition of EBITDA may be different
from other companies.
EBITDA
is defined as Elkem’s profit (loss) for the period,
less income tax (expense) benefit, finance expenses, foreign
exchange gains (losses), finance income, share of profit
from equity accounted financial investments, other items
(except realised gains and losses from hedge ineffectiveness
and discontinuation of hedging), impairment losses and
amortisation and depreciation.
EBIT
is defined as Elkem’s profit (loss) for the period, less
income tax (expense) benefit, finance expenses, foreign
exchange gains (losses), finance income, share of profit from
equity accounted financial investments and other items
(except realised gains and losses from hedge ineffectiveness
and discontinuation of hedging).
Cash flow from operations
is EBITDA including reinvestments,
changes in working capital and equity accounted companies.
Reinvestments
generally consist of capital expenditure
to maintain existing activities or that involve investments
designed to improve health, safety or the environment.
Strategic investments
generally consist of investments which
result in capacity increases at Elkem’s existing plants or
that involve an investment made to meet demand in a new
geographic or product area.
Working capital
is defined as accounts receivable, inventory,
other current assets, accounts payable, current employee
benefit obligations and other current liabilities. Accounts
receivables are defined as trade receivables less bills
receivable. Other current assets are defined as other current
assets less current receivables to related parties, current
interest-bearing receivables, tax receivables, grants receivable,
assets at fair value through profit or loss and accrued interest
income. Accounts payable are defined as trade payables
less CAPEX payables. Other current liabilities are defined as
provisions and other current liabilities less current provisions,
contingent considerations, contract obligations and liabilities
to related parties.
Capital employed
consists of working capital as defined above,
property, plant and equipment, right-of-use assets, other
intangible assets, goodwill, equity accounted investments,
grants payable, trade payables and prepayments related to
purchase of non-current assets. The definition was changed
in 2022 to include right-of-use assets, goodwill and other
intangible assets. Comparable figures are restated.
Elkem's definitions may be different from other companies.
Below is a reconciliation of profit (loss) for the year against EBIT and EBITDA:
2022
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Eliminations
Elkem
Profit (loss) for the year
9 642
Income tax (expense) benefit
2 594
Finance expenses
313
Foreign exchange gains (losses)
(85)
Finance income
(67)
Share of profit from equity accounted financial investments
17
Other items
(2 151)
Operating profit (loss) before other items
10 263
Realised effects from hedge ineffectiveness and
discontinuation of hedging
635
EBIT
743
9 630
1 063
(281)
(257)
10 898
Impairment losses
28
Amortisation and depreciation
1 999
EBITDA
2 022
10 224
1 166
(231)
(257)
12 925
2021
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Eliminations
Elkem
Profit (loss) for the year
4 664
Income tax (expense) benefit
1 163
Finance expenses
276
Foreign exchange gains (losses)
(241)
Finance income
(40)
Share of profit from equity accounted financial investments
(37)
Other items
(10)
Operating profit (loss) before other items
5 775
Realised effects from hedge ineffectiveness and
discontinuation of hedging
124
EBIT
2 528
3 154
360
(97)
(46)
5 899
Impairment losses
76
Amortisation and depreciation
1 816
EBITDA
3 672
3 702
508
(44)
(46)
7 791
The table below show realised effects from Elkem's power and
foreign exchange hedging programme, including embedded
derivatives and realised effects from hedge ineffectiveness and
discontinuation of hedging, on the different group segments.
2022
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Eliminations
Elkem
Revenue from sale of goods (note 26)
0
37
-
(86)
(49)
Operating expenses (note 26)
-
982
44
(15)
1 012
Total realised effects from derivatives included in EBITDA
0
1 019
44
(100)
963
2021
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Eliminations
Elkem
Revenue from sale of goods (note 26)
-
27
-
65
92
Operating expenses (note 26)
-
295
2
17
315
Total realised effects from derivatives included in EBITDA
-
322
2
82
407
Total revenue by geographic
market based on customer location
Amounts in NOK million
2022
2021
Norway
Other Nordic countries
United Kingdom
Germany
France
Italy
Poland
Spain
Other European countries
Europe
Africa
USA
Canada
Brazil
Other South American countries
America
China
Japan
South Korea
India
Other Asian countries
Asia
Rest of the world
1 342
1 545
1 354
5 394
1 566
1 719
869
1 066
3 238
18 093
345
5 470
770
1 854
548
8 643
10 849
2 153
501
1 485
2 792
17 780
206
814
1 637
1 094
2 903
791
1 274
511
765
2 791
12 579
217
3 451
368
1 046
326
5 191
10 534
1 197
549
989
1 635
14 904
99
Total revenue before hedging effects
45 067
32 991
Realised effects from hedging
programs (note 26)
Total revenue
(49)
45 018
92
33 083
Non-current assets by geographic
areas based on entity location
Amounts in NOK million
2022
2021
Norway
5 744
4 606
Other Nordic countries
1
528
United Kingdom
38
37
Germany
97
49
France
4 133
3 535
Italy
134
126
Poland
0
1
Spain
324
281
Other European countries
177
70
Europe
10 647
9 232
Africa
112
89
USA
882
710
Canada
643
523
Brazil
357
255
Other South American countries
494
436
America
2 376
1 924
China
10 930
8 411
Japan
2
3
South Korea
230
222
India
79
71
Other Asian countries
48
49
Asia
11 288
8 757
Total non-current assets
24 423
20 001
Non-current assets are presented less derivatives and
deferred tax assets.
Operating income consists of:
a.
Revenue
b.
Other operating income
c.
Share of profit (loss) from equity
accounted investments (note 5)
(a) Revenue
Revenue is measured based on the consideration specified in
a contract with a customer. Elkem recognises revenue when
Elkem transfers control over a goods or service to a customer.
A five-step process is applied before revenue can be recognised:
→
identify contracts with customers
→
identify the separate performance obligation
→
determine the transaction price of the contract
→
allocate the transaction price to each of the separate
performance obligations, and
→
recognise the revenue as each performance obligation
is satisfied.
Sale of goods
Elkem's main performance obligation is related to sale of goods
where the obligation is to deliver agreed volume of products
within the agreed specification. Elkem has both short-term and
long-term contracts. Short-term contracts, normally within one
month, cover delivery of an agreed volume at market price at
the date the order is placed. These types of contracts are most
common for commodity products, such as sales of ferrosilicon
and silicones and sales to customers in China. The long-term
contracts cover a period of a few months and up to one year,
where the prices normally are fixed within a volume range.
Elkem has for sale of metallurgical silicon some contracts that
cover a period longer than one year. In these contracts the
prices are normally negotiated on an annual basis. Some of
Elkem's sales contracts include an element of freight services,
see separate section below for accounting policies.
Revenue is recognised when control of the goods is transferred
to the customer, at an amount that reflects the consideration
to which Elkem expects to be entitled in exchange for those
goods. Control is transferred to the buyer, according to the
agreed delivery term for each sale. Delivery terms are based
on Incoterms 2020 issued by International Chamber of
Commerce, and the main terms are:
"F" terms, where the buyer arranges and pays for the main
carriage. The risk is transferred to the buyer when the goods
are handed to the carrier engaged by the buyer.
"C" terms, where the group arranges and pays for the main
carriage but without assuming the risk of the main carriage.
The risk is transferred to the buyer when the goods are handed
over to the carrier engaged by the seller.
"D" terms, where the group arranges and pays for the
carriage and retains the risk of the goods until delivery at
the agreed destination. The ownership is transferred to the
buyer upon arrival at the agreed destination, usually the
purchaser's warehouse.
The goods are normally sold with standard warranties that
the goods comply with the agreed-upon specifications. These
standard warranties are accounted for using IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. Elkem does not
have any other significant obligations for returns or refunds.
Freight services included in sale of goods
Freight components included in sale of goods on incoterms
"C" terms are considered as a separate performance obligation
and recognised over the period the service is performed.
Shipping and handling services that occur before the
customer takes control of the goods for sales on "D" terms are
considered to be part of fulfilling the sale of the goods.
Sale of power and revenue connected to energy recovery
Sale of electric power and revenue connected to energy
recovery, mainly heat supply in the form of steam and hot
water, el-certificates and el-tax, are recognised in income
based on volume and price agreed with the customer. Revenue
connected to energy recovery is mainly based on long-term
contracts where the prices are regulated yearly based on
changes in CPI or government regulated prices, except for
the el-certificates where the price is based on the observable
market price at date of delivery.
Revenue from sale of services
Revenue from sale of services is recognised when the services
have been provided. Sale of services are mainly related to
management agreements with related parties based on a cost
plus a margin and sale of shipping and handling related services.
(b) Other operating income
Insurance settlements
Income from insurance settlements are recognised as other
operating income when it is virtually certain that the group will
receive the compensation. Expected cash flows from credit
insurance contracts where such contracts are deemed to be an
integral part of the sale transactions is presented net against
impairment losses trade and other receivables, included in
other operating expenses. See note 21 Trade receivables.
Grants
Details of revenue from contracts with customers
2022
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Total
Sale of goods, Silicones
Sale of goods, Silicon Products
Sale of goods, Carbon Solutions
Revenue from energy recovery and other energy related income
Service agreements with related parties (note 32)
Other revenue from contracts with customers
18 954
39
-
2
14
48
-
22 324
-
38
1
31
-
-
3 393
0
-
21
-
(1)
-
52
14
133
18 954
22 362
3 393
92
30
232
Total revenue from contracts with customers
19 057
22 395
3 413
197
45 063
Rental income
2
1
0
1
4
Realised hedging effects (note 26)
Total revenue
0
19 060
37
22 432
-
3 414
(86)
112
(49)
45 018
Details of revenue from contracts with customers
2021
Silicon
Carbon
Amounts in NOK million
Silicones
Products
Solutions
Other
Total
Sale of goods, Silicones
Sale of goods, Silicon Products
Sale of goods, Carbon Solutions
Revenue from energy recovery and other energy related income
Service agreements with related parties (note 32)
Other revenue from contracts with customers
17 111
94
-
19
2
21
-
13 529
-
32
8
55
-
-
1 917
1
12
7
-
-
-
57
50
71
17 111
13 623
1 917
108
73
155
Total revenue from contracts with customers
17 247
13 624
1 937
178
32 987
Rental income
2
1
-
1
4
Realised currency hedging effects (note 26)
Total revenue
-
17 249
27
13 652
-
1 937
65
244
92
33 083
Details of other operating income
Amounts in NOK million
2022
2021
Gain on disposal of fixed assets
0
0
Insurance settlements
19
27
Grants (note 8)
717
554
Other
10
5
Total other operating income
746
586
Grants are recognised when it is reasonably assured that
Elkem will comply with the conditions attached to them
and the grants will be received. Grants are recognised in the
statement of profit or loss as other operating income, over
the periods necessary to match them with the cost they are
intended to compensate.
Tax credits related to R&D projects are classified as
government grants in other operating income if they
ultimately are settled with cash, tax credits settled only via
taxes are classified as tax allowances. Grants relating to cost
of production of goods are recognised as other operating
income when the produced goods are sold. Grants relating to
property, plant and equipment (fixed assets) and intangible
assets are deducted from the carrying amount of the asset and
recognised in profit or loss as a reduction of the depreciation
Details of grants
2022
2021
Other
Deduction
Other
Deduction
Amounts in NOK million
operating
income
of carrying
amount FA/IA
operating
income
of carrying
amount FA/IA
R&D grants from the Norwegian government
59
-
59
15
R&D grants from the French government
71
-
59
-
Other R&D grants
13
-
14
-
CO
compensation from the Norwegian Environment Agency
2
Energy recovery related grants
497
-
-
-
367
-
-
14
Other government grants
72
93
54
43
Total government grants
712
93
553
72
Norwegian NO
x
Other grants
fund for reduced emission of NO
x
1
3
64
-
-
1
31
-
Total grants from other than governments
5
64
1
31
Total grants
717
157
554
103
Grants receivable related to fixed and intangible assets (note 22)
64
63
Grants receivable related to income (note 22)
862
633
Grants payable (note 24)
Grants, deferred income (note 24)
(16)
(8)
(15)
(18)
CO
2
allowances
CO
2
emission allowances allocated from the government are
classified as grants, measured at nominal value (zero). The CO
2
allowance scheme pertains to the group's plants in Europe. If
actual emissions exceed the number of allocated allowances,
additional allowances must be purchased and the cost is
inclued as a part of production cost of inventory. The allocation
of free allowances for the period 2021-2025 has been decided
by the national authorities.
CO
2
compensation
The Norwegian government has since 2013 had a CO
2
compensation scheme to partially compensate for CO
2
costs included in the power price for certain industries. The
compensation scheme is based on a corresponding scheme
for EU and are approved by the EFTA surveillance authority
ESA. The previous CO
2
compensation scheme ended 31
December 2020 and a new scheme for 2021-2025 has been
approved by ESA and implemented into Norwegian regulation.
The CO
2
compensation scheme applies for Elkem's Norwegian
Silicon and Ferrosilicon plants. The compensation is based
on the market price of CO
2
allowances and will as such vary
with the price development. As the grant compensates power
costs, which are costs recognised as part of the cost price of
inventory during the production process, the compensation
is recognised in the statement of profit or loss when the
produced goods are sold.
NO
x
Fund
The industry in Norway pays a fee for their emission of NO
x
to a public foundation run by 15 industry and commerce
associations. The foundation is self-financed by the fees and
the purpose is to support projects that reduces NO
x
emissions
from the industry in Norway.
Other
The remaining grants are mainly related to R&D and energy
recovery projects.
Employee benefits
Employee benefits are all forms of considerations given by an
entity in exchange for service rendered by employees or for
termination of employment.
Employee benefits include both current and non-current
benefits, and are expensed as incurred, together with any
social security taxes applicable.
Current benefits consist of wages and salaries, bonuses,
holiday payments and other short-term benefits that are
expected to be settled within 12 months after the reporting
period. Non-current benefits consist mainly of jubilee and
long-service benefits, post-employment benefits and post-
retirement benefits, not expected to be wholly settled within
the next 12 months.
Defined contribution plans
Defined contribution plans comprise of arrangements whereby
the company makes monthly contributions to the employees'
pension plans, and where the future pensions are determined by
the amount of the contributions and the return on the individual
pension plan asset. The contributions are expensed as incurred
and there is no further obligation related to the contribution
plans. Prepaid contributions are recognised as an asset.
Defined benefit plans
Defined benefit plans are pension plans where Elkem is
responsible for paying pensions at a certain level, based on
employees' salaries when retiring. Defined benefit plans are
recognised at present value of future liabilities considered
retained at the end of the reporting period, calculated
separately for each plan. Plan assets are measured at fair
value and deducted in calculating the net pension obligation.
Pension plans with a net asset and no offsetting rights are
presented as a part of other assets. Actuarial assumptions
are used to measure both the obligation and the expense and
effects of changes in estimates due to financial and actuarial
assumptions are recognised as other comprehensive income.
Past service costs arising due to amendments in benefit plans
are expensed as incurred. Service costs are recognised as
part of employee benefit expenses. Net interest is calculated
based on net pension obligations at the start of the period,
multiplied by the discount rate. Any difference between actual
return on pension assets and the interest income calculated
as a part of the net interest, will be recognised directly in other
comprehensive income. Interest on net pension obligations are
presented as a part of finance expenses.
Multi-employer defined benefit plans where available
information is insufficient to be able to calculate each
Judgements and estimates
Estimation uncertainty is mainly related to defined benefit
pension plans, where the calculation of pension obligations is
based on financial and actuarial assumptions, such as discount
rates, future salary and pension adjustments, expected turnover
and mortality. Deviations between applied assumptions
and actual results in future periods will have effects on the
calculated obligation. See information about sensitivity on
pension obligations based on changes in main actuarial
assumptions below.
Employee benefit expenses
Amounts in NOK million
2022
2021
Salaries, holiday pay and variable compensation
(3 755)
(3 459)
Employer's national insurance contributions / social security tax
(787)
(727)
Pension expenses
(168)
(137)
Share-based payments (note 10)
(24)
(28)
Other payments / benefits
(185)
(179)
Total employee benefit expenses
(4 919)
(4 530)
7 592
Amounts in NOK million
2022
2021
Fixed compensation
(33)
(31)
Variable compensation - STI
(20)
(29)
Variable compensation - LTI
(31)
(9)
Other benefits
(2)
(1)
Pension benefits
(4)
(4)
Total remuneration to corporate management
(90)
(75)
Remuneration provided to the board of directors
(5)
(5)
Remuneration provided to the committee remuneration
(1)
(0)
For more details on the remuneration to corporate
management see "Report on salary and other remuneration to
leading personnel in Elkem ASA for the financial year 2022".
The report is published on Elkem's website.
↗
Shares and options granted to corporate management and
board members
2022
2021
Number
Number of
Number
Number of
Name
Position
of shares
options
of shares
options
Helge Aasen
CEO
46 206
101 000
46 206
101 000
Morten Viga
CFO
46 896
408 380
46 896
800 000
Katja Lehland
SVP Human Resources
-
400 000
-
800 000
Asbjørn Søvik
SVP Green Ventures & Digital
10 000
400 000
10 000
900 000
Håvard Moe
SVP Elkem Technology
110 000
600 000
60 000
900 000
Louis Vovelle
SVP Innovation R&D
6 896
425 140
6 896
800 000
Frédéric Jacquin
SVP Business development
81 551
408 380
6 551
850 000
Inge Grubben-Strømnes
SVP Silicon Products
35 189
676 526
35 189
900 000
Luiz Simao
SVP Carbon Solutions
20 000
350 000
10 000
650 000
Larry Zhang
SVP Silicones
-
250 000
500 000
Zhigang Hao
1)
Chair
-
-
-
-
Dag Jakob Opedal
Vice chair
40 000
-
40 000
-
Olivier de Clermont-Tonnerre
1)
Board member
15 517
-
15 517
-
Yougen Ge
1)
Board member
-
-
-
-
Marianne Johnsen
Board member
-
-
15 000
-
Grace Tang
Board member
-
-
-
-
Nathalie Brunelle (from May)
Board member
-
-
-
-
Jin Wang Johnny Wu (from May)
1)
Board member
-
-
-
-
Terje Andre Hanssen
Board member (employee representative)
-
-
-
-
Marianne Færøyvik
Board member (employee representative)
4 950
-
4 950
-
Thomas Eggan (from July)
Board member (employee representative)
-
-
-
Heidi Feldborg
Observer (employee representative)
-
-
-
-
Jan Harald Karlsen (from July)
Observer (employee representative)
-
-
-
Anja Isabel Dotzenrath (until Apr)
Board member
-
-
-
-
Knut Sande (until June)
Board member (employee representative)
-
-
-
-
Per Roar Aas (until June)
Observer (employee representative)
-
-
-
-
1)
Employee benefit assets and obligations
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Pension plan assets, net
Pension contribution fund (note 22)
Employee prepayments etc.
Total employee benefit assets
40
1
-
41
-
1
-
1
-
2
5
7
-
2
8
10
Salaries, holiday pay and variable compensation
Employer's national insurance contributions / social security
Pension plan obligations, net
Other benefit plans
Total employee benefit obligations
tax
-
-
370
119
489
-
-
492
119
611
752
226
-
16
994
761
203
-
12
976
(a) Salaries, holiday pay and variable compensation
The obligations are related to incurred employee benefits,
not paid.
A profit-sharing plan is applicable for French entities with
more than 50 employees, where the bonus liability must be
calculated based on profit after tax, using a specific formula
given by the authorities. As at 31 December 2022 EUR 2 million
(EUR 0 million) is accrued related to the agreement.
The group has both defined contribution and defined benefit
plans. For defined contribution plans the cost is equal to the
group's contribution to the employee's pension savings during
the period. For defined benefit plans the cost is calculated
based on actuarial valuation methods, taking assumptions
related to the employee's salary, turnover, mortality, discount
rate, etc. into consideration.
Defined contribution plans
Defined contribution plans are the main pension plan for Elkem's
Norwegian entities, where the contribution to each individual
pension plan is 5% of annual salary up to 7.1G and 15% of annual
salary between 7.1-12G. 1G refers to the Norwegian national
insurance scheme's basic amount, which is NOK 111 477 as at
1 May 2022. Pension on salary above 12G is not supported by
external service providers and is therefore handled as a separate
plan and included under defined benefit plans.
In addition, a Norwegian multi-employer early retirement
scheme called AFP, where sufficient information to calculate
each participant's pension obligation is not available, is
accounted for as it is a defined contribution plan in accordance
with the Ministry of Finance's conclusion. The participants in the
pension plan are jointly responsible for 2/3 of the plan's pension
obligation, the government is responsible for the remaining part.
The pension premium in 2022 is 2.6% of the employees' salary
between 1 and 7.1G, covering this year's pension payments and
contribution to a security fund for future pension obligations.
The yearly premium for 2023 is set to 2.6%.
Defined benefit plans
Defined benefit plans are pension plans where the group is
responsible for paying pensions at a certain level, based on
employees' salaries when retiring. The group has funded and
unfunded benefit plans in Norway, France, Germany, UK,
Canada, Japan and South Africa. The pension scheme in UK
and two of Canada's schemes are overfunded and are net in an
asset position. The schemes that are underfunded and are net
in a liability position as at 31 December 2022 are distributed as
follows Norway 23%, France 51%, Canada 9%, other Europe
14%, other countries 3%. In Canada provisions are also made
for medical insurance as well as pension benefit plans.
The Norwegian pension plans are unfunded and comprise
pension on salaries above 12G, where the expense is 15%
of annual base salary that exceeds 12G plus interest on the
individual calculated pension obligation, and some individual
retirement schemes that are closed.
Breakdown of net pension expenses
Amounts in NOK million
2022
2021
Current service expenses
(43)
(40)
Administration expenses
(1)
(1)
Net pension expenses, defined benefit plans
(45)
(40)
Defined contribution plans
(102)
(78)
Early retirement scheme AFP (Norway)
(21)
(18)
Total pension expenses
(168)
(137)
In addition, interest expenses on net
(9)
(8)
pension liabilities are recognised as a
part of finance expenses
Net defined benefit obligations
Amounts in NOK million
2022
2021
Present value of funded pension obligations
(384)
(509)
Fair value of plan assets
425
487
Net funded pension obligations
40
(22)
Present value of unfunded pension obligations
(370)
(470)
Net value of funded and unfunded obligations
(329)
(492)
Movements in the defined benefit obligations and plan assets
2022
2021
Defined
Defined
Net
Defined
Defined
Net
benefit benefit plan pension plan
benefit
benefit plan
pension plan
Amounts in NOK million
obligations
assets
obligations
obligations
assets
obligations
Opening balance
(978)
487
(492)
(1 014)
460
(554)
Current service expenses
(43)
-
(43)
(40)
-
(40)
Interest (expenses) income
(22)
13
(9)
(18)
10
(8)
Administration expenses
-
(1)
(1)
-
(1)
(1)
Remeasurement gains (losses)
237
(91)
146
59
9
69
Contributions from employer
-
32
32
-
15
15
Benefits paid
85
(33)
52
40
(23)
17
Other changes
3
-
3
-
-
-
Currency translation differences
(36)
18
(19)
(5)
16
10
Closing balance
(754)
425
(329)
(978)
487
(492)
Breakdown of pension plan assets
31.12.2022
31.12.2021
Amounts in NOK million
Fair value of
Distribution%
plan assets
Fair value of
Distribution%
plan assets
Cash, cash equivalents and money market investments
Bonds
Shares
Property
Other plan assets
1)
Total pension plan assets
12 %
15 %
36 %
35 %
3 %
100 %
52
62
152
147
12
425
11 %
19 %
38 %
30 %
1 %
100 %
55
95
185
148
4
487
1)
Includes insurance contracts (Buy in policies and Annuity insured contracts)
Actual return on plan assets
-16.0 %
(78)
4.3 %
20
In addition, some Norwegian entities have pension
contribution funds, mainly based on excess pension assets
from settlement of the defined benefit plans in 2010. The
pension contribution funds are classified as non-current
pension funds, except next year's expected contributions
which are classified as current (see note 22 Other assets)
Principal assumptions used for the actuarial valuations in
2022 (2021)
Norway
France
Canada
Germany
UK
Discount rate
4.2%
(2.0%)
3.0%
(0.9%)
5.0%
(3.0%)
3.9%
(1.0%)
5.1%
(1.6%)
Expected rate of salary increase
na
(na)
3.0%
(2.1%)
3.5%
(3.5%)
3.0%
(3.0%)
na
(na)
Annual regulation of pensions paid
1.9%
(1.5%)
na
(na)
na
(na)
2.0%
(2.0%)
na
(na)
Assumptions regarding future mortality are based on actuarial
advice in accordance with published statistics and experience
in each country.
Sensitivity on pension obligations based on changes in main
actuarial assumptions
The defined benefit pension schemes expose the group to
actuarial risk such as investment risk, interest rate risk, salary
growth risk, mortality risk and longevity risk.
A decrease in corporate bond yields, a rise in inflation or
an increase in life expectancy would result in an increase
to plan liabilities.
The sensitivity analysis below shows estimated effects in the
defined pension obligation based on reasonable changes in
the main assumptions.
The calculations are based on a change in one assumption while
holding all other assumptions constant. Negative amounts show
an expected decrease in the net pension liability.
Assumption
Discount rate
Life expectancy
Salary growth
0.5%
0.5%
1 year
1 year
0.5%
0.5%
Amounts in NOK million
increase
decrease
increase
decrease
increase
decrease
2022: Effect on the pension obligation
(38)
42
14
(15)
10
(10)
2021: Effect on the pension obligation
(63)
71
25
(25)
24
(22)
As the group's main pension plans are defined contribution
plans, there are no group policies for funding of the defined
benefit plans. This is managed locally, based on the terms
and status for the individual plan.
average duration for the main defined benefit plans
Amounts in NOK million
Norway
France
Canada
Germany
UK
Contribution to be paid to defined pension plans next year
5
18
19
3
5
Weighted average duration of the defined benefit obligations
6 years
14 years
17 years
11 years
(c) Other benefit plans
Other employee benefits consist of provisions related to jubilee
and long-service benefits, and post-employment benefits to
be paid until ordinary retirement age for former employees in
Elkem’s Chinese entities.
Of total non-current provisions, NOK 64 million (NOK 74
million) relate to jubilee and long-service benefits in the
Silicones segment, mainly in France. Estimated duration of
the obligation is 13 years. Non-current provisions for other
employee benefits for Elkem’s Chinese entities, in the Silicones
segment, are calculated to NOK 35 million (NOK 30 million),
mainly consisting of post-employment benefits related to
employees laid off due to reorganisation. No further obligations
are expected to incur however in 2022 an addition of NOK 13
million has incurred related to update of estimate for future
health insurance premiums. The estimated remaining duration
for these two obligations is 16 years.
The fair value of options granted under the share-based
payment programme is recognised as an employee benefit
expense with a corresponding increase in equity for equity
settled awards. The total amount to be expensed is determined
by reference to the fair value of the options granted. The total
expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are
to be satisfied. At the end of each period, the entity revises its
estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions. It
recognises the impact of the revision to original estimates, if
any, in the statement of profit or loss, with a corresponding
adjustment to equity.
Social security contributions payable in connection with an
option grant are considered an integral part of the grant itself
Judgements and estimates
Estimating fair value for share based payment transactions
requires determination of the most appropriate valuation
model and assumptions to the valuation model. The fair value
at the grant date is determined using the Black-Scholes option
pricing model, which takes into account the exercise price, the
life of the option, the current price of the underlying shares, the
expected volatility of the share price, any dividends expected
on the shares and risk-free interest rate for the life of the
option. The expected share price volatility is based on historical
volatility for a selection of comparable listed companies
adjusted with a premium taking into account the maturity of
the peers compared to the Elkem. The risk-free interest rate is
based on Norwegian government bonds with same maturity as
the option.
Elkem's share option scheme
The group has in 2018 - 2021 granted share options to
corporate management and selected key employees. Each
option gives the right to acquire one share in Elkem ASA
on exercise. In 2022 the Board decided to terminate the
option scheme and replace it with a new Long-term Bonus
Scheme (LTBS). Please refer to the "Report on salary and
other remuneration to leading personnel in Elkem ASA for the
financial year 2022" for description of the new bonus scheme.
The previous granted options are still exercisable over the
exercise period.
The share options vest annually in equal tranches over a three-
year period following the date of grant, with one-third vesting
each year. The options will expire two years after vesting, in
total 5 years after the date of grant. No option holder may in
any calendar year realise a total gain on exercise of options
in excess of twice the option holder's base salary in the same
calendar year, however provided that the maximum gain for
Elkem's CEO shall be four times the CEO's base salary. See
note 9 Employee benefits for an overview of options granted to
Elkem's corporate management.
When the options are exercised, the corresponding number of
shares are transferred to the employee. The proceeds received
from the exercise of the options (net of any directly attributable
transaction costs) are credited directly to equity.
Components of share-based payments employee benefit expenses
Amounts in NOK million
2022
2021
Share-based payment
(24)
(28)
Social security contribution
(9)
(16)
Total expenses related to share-based payments
(33)
(44)
Parameters connected to share options granted in years respectively
Amounts in NOK million
2021
2020
2019
Number of options granted
7 451 000
8 000 000
8 000 000
Date of Grant
29 Jul 2021
29 Jul 2020
29 Jul 2019
Exercise price (NOK)
31.2
19.1
23.5
Share price (NOK)
32.9
17.2
24.7
Expected lifetime*
3.34
3.12
3.12
Volatility*
34.4 %
46.0 %
35.8 %
Interest rate*
0.9 %
0.2 %
1.3 %
Dividend*
6.5 %
6.5 %
6.5 %
FV per instrument*
5.19
2.95
4.08
Vesting conditions
Service
Service
Service
*Weighted average parameters of instruments
Outstanding instruments
31 December 2022
31 December 2021
Number of
Number of
Grant
instruments
Remaining
instruments
Remaining
Amounts in NOK million
Exercise price
outstanding
contractual life
outstanding
contractual life
2018 programme
38.52
2 300 000
0.72
4 650 000
1.21
2019 programme
23.53
612 688
1.57
2 967 500
2.37
2020 programme
19.10
2 945 140
2.38
5 411 272
2.94
2021 programme
31.20
5 778 375
2.85
7 451 000
3.58
Total outstanding
11 636 203
2.24
20 479 772
2.70
Quantity and weighted average prices
31 December 2022
31 December 2021
Overview of outstanding options
Amounts in NOK million
Number of
instruments
Weighted average
exercise price
Number of
instruments
Weighted average
exercise price
Outstanding options 1 January
20 479 772
28.55
22 767 000
26.76
Granted during the year
-
-
7 451 000
31.20
Exercised during the year
(6 443 569)
23.97
(6 271 228)
22.16
Forfeited during the year
(200 000)
30.01
(900 000)
21.16
Expired during the year
(2 200 000)
38.52
(2 567 000)
38.52
Outstanding options 31 December
11 636 203
29.18
20 479 772
28.55
Of which exercisable (vested)
4 368 870
32.47
5 728 772
35.30
Average share price at exercise date (NOK per share)
37.64
34.00
Details of operating expenses
Amounts in NOK million
2022
2021
Loss on disposal of fixed assets
(2)
(5)
Freight and commission expenses
(2 395)
(1 661)
Leasing short-term and low value contracts (note 16)
(70)
(56)
Machinery, equipment, spare parts and operating materials
(1 344)
(1 336)
External services
1)
(2 441)
(2 051)
Insurance expenses
(137)
(106)
Impairment losses trade and other receivables
(2)
9
Other operating expenses
2) 3)
(324)
(330)
Total other operating expenses
(6 714)
(5 536)
1)
Including services from auditor, see specification below
2)
Including changes in inventories of finished goods and work in progress of positive NOK 288 million (positive NOK 1 million)
3)
Including capitalised salary on fixed asset projects of positive NOK 125 million (positive NOK 114 million)
During 2022, Elkem expensed NOK 1,000 million (NOK 716
million) related to research and innovation activities, which
includes product and business development, technical
customer support and improvement projects. In addition,
Elkem capitalised development expenses of NOK 312 million
(NOK 300 million).
Grants relating to research and development amount to NOK
143 million (NOK 132 million) and are recognised in other
operating income. In addition NOK 91 million (NOK 15 million)
KPMG is the group auditor of Elkem.
Fees to KPMG and other audit firms
Amounts in NOK million
2022
2021
KPMG
Audit fee
(19)
(19)
Other assurance services
(1)
(1)
Tax services
-
(0)
Other services
-
-
Other audit firms
Audit fee
(2)
(2)
Other assurance services
(0)
(0)
Tax services
(2)
(1)
Other services
(0)
(1)
Total fees to KPMG and other audit firms
(25)
(24)
12. Other items
Other gains (losses)
Other gains (losses) consists of changes in fair value of financial
instruments that are not designated as a part of a hedging
relationship, any ineffective part of hedging relationships,
effects from discontinuation of hedging and foreign exchange
gains (losses) related to operating activities such as trade
receivables, trade payables, bank accounts / overdrafts. Foreign
exchange gains (losses) related to financing activities, mainly
interest-bearing liabilities and group loans, are classified as a
part of financial income and expenses.
Other income (expenses)
Other income and (expenses) consists of transactions and
events that are related to acquisition of business, gains /
(losses) on disposal of businesses, restructuring programme
and profit and loss effects from other shares. In addition,
performance incentives for Elkem employees related to such
items. Cost related to liquidated / wound-up businesses, costs
of public requirements or updated regulations related to events
/ periods before purchase of the business, e.g., environmental
measures, are included in other income and expenses.
Acquisition related costs may include both costs related to
acquisitions done, not completed and cancelled projects.
Investments in equity instruments with an ownership below
20% are normally classified as other shares. Dividends from
such shares are recognised when shareholders' right to receive
dividends is determined by the shareholder's meeting. Fair
value changes in other shares related to listed companies are
Details of other items
Amounts in NOK million
2022
2021
Changes in fair value commodity contracts (note 25)
Net gains (losses) on embedded EUR derivatives power contracts (note 25)
Ineffectiveness on cash flow hedges (note 26)
Net foreign exchange gains (losses) - forward currency contracts
Operating foreign exchange gains (losses)
(2)
218
1 471
9
387
(1)
3
127
14
20
Total other gains (losses)
2 084
163
Dividends from other shares
Change in fair value from other shares measured at fair value through profit or loss
Gains (losses) on acquisition and disposal of subsidiaries
Restructuring expenses (note 24)
Dismantling and environmental expenses (note 24)
1)
Other
2)
4
1
159
26
(72)
(50)
3
2
-
41
(181)
(17)
Total other income (expenses)
67
(153)
Total other items
2 151
10
1)
2022 includes NOK 70 million in restoration expense related to decommissioned business in Canada. 2021 Includes NOK 171 million related to
expenses in connection with relocation of workers buildings located in proximity to the Silicones Xinghuo plant, as required by the authorities.
2)
Mainly expenses related to business projects and acquisitions
Interest income is recognised on an accrual basis and is
classified as finance income.
including group loans are classified as a part of financial
income and expenses, and foreign exchange gains (losses)
related to operations are classified as a part of other items.
the effective interest method and are classified as financial
expenses. Interest is capitalised as a part of the carrying
amount of a self-constructed item of property, plant and
equipment when the construction period takes a substantial
period of time, meaning more than 9-12 months, depending on
the total amount, and borrowing costs are being incurred.
Financial expenses also include interest on net pension
liabilities, unwinding of discounted provisions and contingent
consideration acquisition of subsidiaries, and interest on lease
Details of net finance income (expenses)
Amounts in NOK million
2022
2021
Interest income on loans and receivables
65
34
Other financial income
1
6
Total finance income
67
40
Net foreign exchange gains (losses)
1)
85
241
Interest expenses on interest-bearing liabilities measured at amortised cost
(229)
(206)
Interest expenses from other items measured at amortised cost
2)
(50)
(23)
Capitalised interest expenses
20
5
Interest expenses on lease liabilities (note 16)
(30)
(26)
Unwinding of discounted liabilities
(10)
(8)
Interest expenses on net pension liabilities (note 9)
(9)
(8)
Other financial expenses
(5)
(10)
Total finance expenses
(313)
(276)
Net finance income (expenses)
(161)
6
1)
Some / part of loans are designated as a hedging instrument, hence the unrealised part of net foreign exchange gains (losses) are recognised
against OCI, see note 26 Hedging.
2)
Interest expenses from other items measured at amortised cost mainly consist of interest on bills payable and factoring agreements.
Principle
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the tax authorities.
Current tax payables includes any adjustment to tax payable
in respect of previous years. Income tax is recognised in the
statement of profit or loss except to the extent that it relates to
items recognised directly in equity or in other comprehensive
income. The group includes deductions for uncertain tax
positions when it is probable that the tax position will be
sustained in a tax review. The group records provisions relating
to uncertain or disputed tax positions at the amount expected
to be paid. The provision is reversed if the disputed tax position
is settled in favour of the group and can no longer be appealed.
Penalties and interest related to income taxes are recognised as
income tax (expense) benefit in the statement of profit or loss.
Accrued penalties and interest are recognised in the statement
of financial position in income tax payable and provisions for
Deferred tax assets and liabilities are calculated using the
liability method with full allocation of all temporary differences
between the tax base and the carrying amount of assets
and liabilities in the financial statements, including tax
losses carried forward. Deferred tax relating to items outside
statement of profit or loss are recognised in correlation with
the underlying transaction either in other comprehensive
income or directly in equity. Deferred tax assets and liabilities
are not recognised if the temporary difference arises from
the initial recognition of goodwill. Deferred tax assets are
recognised in the statement of financial position to the extent
that it is more likely than not that the tax assets will be utilised
against deferred tax liabilities or future taxable income.
Deferred tax assets arising from tax losses are recognised
when there is convincing evidence of recoverability. The tax
rates substantively enacted at the end of the reporting period
and undiscounted amounts are used. Deferred tax assets
and liabilities are offset if there is a legally enforceable right
to offset current tax liabilities and assets, and Elkem intends
to settle current tax liabilities and assets on a net basis, or to
realise the tax assets and settle the liabilities simultaneously.
Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the
related tax benefit will be realised; such reductions are reversed
Judgements and estimates
Part of the basis for recognising deferred tax assets is based on
applying the loss carried forward against future taxable income
in the group, which requires use of estimates for calculating
future taxable income. Deferred tax assets are not recognised
for start-up projects and entities with longer periods of losses
unless there is convincing evidence of recoverability. Elkem
recognises a previously unrecognised deferred tax asset to the
extent that it has become probable that future taxable profit will
allow the deferred asset to be recovered. For example, when
start up projects becomes profitable or the market condition
has changed so the entity has longer periods with historic
taxable profits and future forecasted taxable profits. When
estimating uncertain tax positions the most probable amount,
including interests and penalties, is used because in most cases
the outcome of the tax review is binary.
Income tax recognised in profit or loss
Amounts in NOK million
2022
2021
Profit (loss) before income tax
Current taxes
Deferred taxes
Total income tax (expense) benefit
12 236
(2 234)
(360)
(2 594)
5 827
(1 145)
(18)
(1 163)
Income taxes recognised in other comprehensive income (OCI)
Amounts in NOK million
2022
2021
Remeasurement of defined benefit pension plans
(33)
(10)
Hedging of net investment in foreign operations
31
(29)
Cash flow hedges
(125)
(153)
Total tax charged to OCI
(127)
(192)
Reconciliation of income tax (expense) benefit
Amounts in NOK million
2022
2021
Profit (loss) before income tax
Expected income taxes, 22% of profit before tax (22%)
Tax effects of:
Difference in tax rates for each individual jurisdiction
Preferential tax rates
Permanent differences
Tax effects of income from Norwegian controlled foreign companies (NOKUS)
Tax effects share of profit (loss) from equity accounted companies
Tax effects non-deductible expenses
Tax relief based on value of equity
Tax effects gains (losses) on acquisition and disposal of subsidiaries
Tax effects non-taxable income
Other effects
Tax effects of changes in unrecognised deferred tax assets
Tax effects of change in tax rate
Other current taxes paid
Previous year tax adjustment
Total income tax (expense) benefit
12 236
(2 692)
(99)
61
(16)
24
(12)
19
34
134
(32)
-
(10)
(5)
(2 594)
5 827
(1 282)
(94)
12
(8)
19
(24)
18
-
76
157
(19)
(35)
15
(1 163)
Effective tax rate
21 %
20 %
Three companies in China are taxed under the regulations for
"High and new technology company" which mean that the
tax rate is 15% compared to the regular 25%. The companies
have to confirm to the authorities every year that they fulfil the
conditions for "High and new technology company" in order to
apply the preferential tax rate.
Tax effect of non-taxable income is mainly related to R&D,
additional R&D deduction and non-taxable R&D grants, and
additional deduction on investments in fixed assets equipment.
Other current taxes paid relates mainly to taxes that are
indirectly calculated based on profit (loss) before income tax
and withholding taxes on dividends.
31.12.2022
31.12.2021
Amounts in NOK million
Temporary
difference
Deferred tax
Temporary
difference
Deferred tax
Derivatives including cash flow hedges
Property, plant and equipment and intangible assets
Pension liabilities
Trade receivables
Inventories
Provisions
Other differences
Debt waiver
Tax losses carried forward
Gross deferred tax assets
-
412
325
92
998
364
458
595
2 901
6 145
-
69
79
7
222
72
93
161
648
1 351
17
795
465
89
639
208
302
595
2 353
5 463
4
198
121
16
157
53
68
161
582
1 359
Unrecognised deferred tax assets for tax loss carried forward
Unrecognised debt waiver
Unrecognised deferred tax assets other items
(2 398)
(595)
(1 264)
(520)
(161)
(190)
(1 960)
(595)
(1 361)
(486)
(161)
(340)
Recognised deferred tax assets
1 888
480
1 548
372
Netting
(329)
(324)
Net deferred tax assets
151
48
Derivatives including cash flow hedges
Property, plant and equipment and intangible assets
Inventories
Other differences
2 162
3 451
284
683
476
775
62
139
560
2 734
210
243
123
610
46
50
Gross deferred tax liabilities
6 580
1 452
3 748
828
Netting
(329)
(324)
Net deferred tax liabilities
1 123
505
Net deferred tax (liabilities) assets recognised
(972)
(457)
Unrecognised deferred tax assets other items, are mainly
related to property, plant and equipment and inventories. The
tax assets are not recognised due to uncertainty regarding
future taxable income and the long period for which the tax
asset shall be amortised.
Movements in net deferred tax assets and deferred tax liabilities
Amounts in NOK million
2022
2021
Opening balance
(457)
(240)
Recognised in profit or loss for the year
(360)
(18)
Effect of business combination
(20)
-
Disposal of subsidiaries
2
-
Recognised in other comprehensive income
(127)
(192)
Currency translation differences
(10)
(7)
Closing balance
(972)
Tax losses carried forward
31 December 2022
Gross tax losses
Net tax losses
Unrecognised tax
Recognised deferred tax
Amounts in NOK million
carried forward
carried forward
losses
losses carried forward
France
1 803
451
(337)
114
China
490
74
(73)
-
Brazil
175
59
(59)
-
Paraguay
295
30
(31)
-
Malaysia
61
15
(14)
-
US
56
14
-
14
Canada
18
5
(5)
-
Mexico
3
1
(1)
-
Total tax losses to carried forward
2 901
649
(520)
128
Tax losses carried forward
31 December 2021
Gross tax losses
Net tax losses
Unrecognised tax
Recognised deferred tax
Amounts in NOK million
carried forward
carried forward
losses
losses carried forward
France
1 602
431
(347)
84
China
183
39
(28)
11
Brazil
170
58
(58)
-
Malaysia
96
23
(23)
-
Paraguay
298
29
(29)
-
Canada
3
1
(1)
-
Mexico
1
0
(0)
-
Total tax losses to carried forward
2 353
582
(486)
95
Tax losses carried forward by expiry date
31.12.2022
31.12.2021
Total
Total
Total
Total
unrecognised
recognised
unrecognised
recognised
Amounts in NOK million
losses
losses
losses
losses
Loss car.forw.which exp. within 1 year
(3)
-
-
-
Loss car.forw.which exp. within 2 years
(5)
-
-
-
Loss car.forw.which exp. within 3 years
(9)
-
-
-
Loss car.forw.which exp. within 4 years
(10)
-
(29)
-
Loss car.forw.which exp. within 5 years
(70)
-
-
-
Loss car.forw.which exp. within 5-10 years
(7)
-
-
11
Without maturity
(416)
128
(458)
84
Total tax losses carried forward
(520)
128
(486)
95
Pending tax issues with tax authorities
The Norwegian Tax Office decided in February 2021 to increase
Elkem ASA’s taxable income for the fiscal years 2016-2019 by in
total NOK 781 million, which would have lead to an increase in
the income tax expense of NOK 181 million. The reassessments
relate to loan arrangements / debt waiver agreements acquired
by Elkem ASA in 2016 through the cross-border parent-
subsidiary merger with Bluestar Silicones International Sarl.
Elkem is of the opinion that the reassessment is unfounded
and will appeal. Based on legal advice, Elkem’s assessment is
that the defence against the action will be successful, and the
increase in taxable income is therefore not recognised in profit
or loss. The amount was paid in first quarter of 2021 and a
corresponding receivable for the paid income tax is recognised
in 2021, see note 22 Other assets.
Debt waiver
Elkem Silicones France SAS has four Elkem internal debt
waiver agreements where internal loans were converted to
equity and the converted amounts were treated as taxable
income. Elkem Silicones France SAS can only reinstate the
loans to the extent that the company has an accounting
profit according to IFRS. All debt that is reinstated under the
agreements can be deducted against taxable income. The
gross taxable value of the agreements as of 31 December 2022
is NOK 595 million (NOK 595 million). Elkem Silicones France
SAS has not reinstated any loan amounts in 2022 or 2021 and
correspondingly no tax credit is recognised in 2022 or 2021.
Debt waiver 31 December 2022
Amounts in NOK million
2010
2012
2013
2014
Total
Gross value of debt waiver
54
186
149
207
595
Utilised 2022
-
-
-
-
-
Total debt that can be reversed
54
186
149
207
595
Deferred tax asset unrecognised
1)
15
50
40
56
161
The respective agreements expire in
3 years
5 years
6 years
7 years
Debt waiver 31 December 2021
Amounts in NOK million
2010
2012
2013
2014
Total
Gross value of debt waiver
54
186
149
207
595
Utilised 2021
-
-
-
-
-
Total debt that can be reversed
54
186
149
207
595
Deferred tax asset unrecognised
1)
15
50
40
56
161
The respective agreements expire in
4 years
6 years
7 years
8 years
1)
Based on tax rate 27.0% (28.4% ), which is applicable in France.
Property, plant and equipment
Property, plant and equipment (PPE) are stated in the
consolidated statement of financial position at cost less
accumulated depreciation and accumulated impairment
losses. PPE acquired in business combinations are recognised
at fair value at the acquisition date. PPE acquired in a business
combination under common control are reflected at their
carrying amounts. Assets in the course of construction are
carried at cost less any recognised impairment loss. Such
assets are classified to the appropriate categories of PPE when
completed and ready for the intended use. When significant
parts of an item of PPE have different useful lives, they are
accounted for as separate items.
Initial cost includes expenditures that are directly attributable
to the acquisition of the asset, cost of materials, direct labour,
any other costs directly attributable to bringing the assets
to working condition for their intended use and estimated
dismantling or removal charges.
or recognised as a separate asset, as appropriate, when future
benefits are probable and the cost can be measured reliably.
The carrying amount of the replaced part is derecognised.
Major periodic maintenance that is carried out less frequently
than every year, is capitalised and depreciated over the period
until the next periodic maintenance is performed. All other
repairs and maintenance are charged to the statement of profit
Depreciations are calculated based on estimated useful life
and expected residual value for each item of PPE and are
recognised in the statement of profit or loss using the straight-
line method. The estimated useful lives, residual values (if
any) and depreciation method are reviewed, and if necessary
adjusted, at least annually. Depreciation commences when the
assets are ready for their intended use.
An item of PPE is derecognised upon disposal or when no
future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on disposal
or retirement of PPE, determined as the difference between
the sales proceeds and the carrying amount of the asset, is
recognised under other operating income or other operating
expenses in the statement of profit or loss.
Accounting principle for impairment of assets, see Note 19
Judgements and estimates
Estimated useful lives, residual values (if any) included
in calculation of depreciation of PPE are reviewed and, if
necessary, adjusted at least annually.
Details of property, plant and equipment
2022
Amounts in NOK million
Land
Buildings
and other
property
Plant,
machinery,
equipment
and motor
vehicles
Office
and other
equipment
Construction
in progress
Total
Cost
Opening balance
Additions
Transferred from CiP
Reclassification
Business combinations (note 4)
Disposal of subsidiaries (note 4)
Disposals
Currency translation differences
217
1
2
-
1
-
(0)
13
8 064
13
475
1
185
-
(10)
229
23 043
34
1 271
1
749
-
(384)
691
866
5
181
(6)
0
-
(9)
40
2 819
4 091
(1 929)
(40)
7
(29)
(12)
116
35 009
4 143
-
(43)
942
(29)
(415)
1 088
Closing balance
233
8 957
25 406
1 078
5 022
40 696
Accumulated depreciation
Opening balance
Additions
Reclassification
Disposals
Currency translation differences
(2 999)
(263)
0
8
(68)
(13 085)
(1 293)
(1)
306
(365)
(430)
(137)
1
6
(20)
(16 514)
(1 693)
0
321
(453)
Closing balance
(3 322)
(14 437)
(580)
(18 339)
Impairment losses
Opening balance
Additions
Reclassification
Disposals
Currency translation differences
(11)
-
-
-
(1)
(419)
(10)
6
0
(13)
(2 315)
(13)
(6)
44
(68)
(1)
(0)
(0)
0
(0)
(28)
(5)
-
4
(1)
(2 774)
(28)
(0)
48
(82)
Closing balance
(11)
(435)
(2 358)
(1)
(30)
(2 836)
Carrying amount
Closing balance
222
5 200
8 610
497
4 991
19 520
Original cost of assets fully depreciated
but still in use
Estimated useful life
Depreciation plan
0
Indefinite
2 738
5–50 years
Straight-line
6 592
3–50 years
Straight-line
252
3–20 years
Straight-line
-
9 583
Capitalised interest is NOK 20 million in 2022. The weighted
average cost of capital for capitalisation of loan interest in
2022 is in the range of 2.5% and 3.7% per annum.
Details of property, plant and equipment
2021
Amounts in NOK million
Land
Buildings
and other
property
Plant,
machinery,
equipment
and motor
vehicles
Office
and other
equipment
Construction
in progress
Total
Cost
Opening balance
Additions
Transferred from CiP
Reclassification
Business combinations (note 4)
Disposals
Currency translation differences
184
17
21
-
-
(0)
(5)
7 474
55
344
7
-
(21)
205
21 720
67
1 122
1
-
(290)
423
582
132
186
(14)
-
(12)
(8)
1 799
2 762
(1 674)
(105)
-
(6)
42
31 759
3 033
-
(110)
-
(328)
656
Closing balance
217
8 064
23 043
866
2 819
35 009
Accumulated depreciation
Opening balance
Additions
Reclassification
Disposals
Currency translation differences
(2 738)
(236)
(6)
17
(37)
(11 929)
(1 211)
(2)
228
(171)
(377)
(76)
9
10
4
(15 043)
(1 523)
1
255
(203)
Closing balance
(2 999)
(13 085)
(430)
(16 514)
Impairment losses
Opening balance
Additions
Reclassification
Disposals
Currency translation differences
(11)
-
-
-
0
(384)
(9)
-
0
(25)
(2 162)
(54)
(0)
35
(134)
(0)
(1)
0
0
(0)
(26)
(3)
-
2
(2)
(2 584)
(67)
-
38
(160)
Closing balance
(11)
(419)
(2 315)
(1)
(28)
(2 774)
Carrying amount
Closing balance
206
4 646
7 644
435
2 790
15 722
Original cost of assets fully depreciated
but still in use
Estimated useful life
Depreciation plan
0
Indefinite
1 368
5–50 years
Straight-line
6 455
3–50 years
Straight-line
126
3–20 years
Straight-line
-
7 950
Capitalised interest is NOK 5 million in 2021. The weighted
average cost of capital for capitalisation of loan interest in 2021
is in the range of 2.5% and 3.1% per annum.
Elkem has decided to transfer the production at Elkem Carbon
Malaysia to other Elkem Carbon Solutions production sites.
An impairment loss of NOK 60 million was recognised in
2021 due to the transfer, of which NOK 55 million is related
to impairment of property, plant and equipment and NOK
5 million to right-of-use assets. The impairment loss of PPE
is mainly related to plant, machinery, equipment and motor
vehicles and buildings and other property.
Right-of-use assets are presented separately in the statement
of financial position, whereas lease liabilities are recognised in
interest-bearing liabilities.
Right-of-use-assets
Elkem`s policy in general is to own critical assets related to
the production cycle, including production buildings and
land where this is not controlled by the local government or
other parties. The group`s main lease contracts comprise
office buildings and machinery / storage assets to be used at
production sites. The less significant lease contracts comprise
employee cars, machinery and equipment.
Elkem assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration.
Elkem applies single recognition and measurement approach
for all leases, except for:
→
Lease contracts for which the lease term ends within
12 months as of the date of initial application are not
capitalised (short-term leases). Elkem's short-term
lease commitments are mainly related to rental
of equipment in connection with maintenance or
installation of new equipment.
→
Lease contracts for which the underlying asset is of low
value, mainly office equipment, are not capitalised.
→
Lease of intangible assets are not capitalised.
→
Lease payments on contracts that are not capitalised
are recognised as other operating expenses on a straight-
line basis over the lease term.
Elkem recognise right-of-use assets at the commencement
date of the lease (i.e., the date the underlying assets is
available for use). Right-of-use assets are measured at cost,
less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a
straight-line basis from the commencement date to the earlier
of the lease term and the remaining useful life of the right-of-
use asset for assets where Elkem does not obtain ownership
of the leased asset at the end of the lease term. Depreciation
expense on the right-of-use asset is presented as depreciation
in the statement of profit or loss. Right-of-use assets are
subject to impairment assessments as described in note 19
Impairment assessment.
Lease liabilities
At the commencement date of a lease, Elkem recognise
lease liabilities measured at the present value of the lease
payments to be made over the lease term. The lease payments
include fixed payments (less any lease incentives receivable),
variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees.
Non-lease components like insurance, electricity and other
property-related expenses to be paid to landlord are excluded
from the lease commitment for offices. The lease payments
also include the exercise price of a purchase option reasonably
certain to be exercised by Elkem and payments of penalties
for terminating the lease, if the lease term reflects exercising
the option to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as expenses in
the period in which the event or condition that triggers the
payment occurs. Elkem uses the incremental borrowing rate
at the lease commencement date if the interest rate implicit
in the lease cannot be readily determined. The incremental
borrowing rate is based on the respective country's risk-free
rate for the term corresponding to the lease term, adjusted
for own credit risk. Updated incremental borrowing rates are
applied to new lease contracts recognised on a quarterly basis.
Lease liability is remeasured upon the occurrence of certain
events like change in the lease term, lease payments or
reassessment of options which in general implies a change in
the carrying amount of the right-of-use asset. If any changes
to the contractual terms and conditions; like increase of scope
Elkem needs to assess whether the change implies a separate
lease if the change has a standalone price. The existing right-
of-use asset is adjusted if the increase of scope does not
Judgements and estimates
The lease term is determined as the non-cancellable period
of a lease, together with any periods covered by an option
to extend the lease if Elkem is reasonably certain to exercise
that option and any periods covered by an option to terminate
the lease if the lessee is reasonably certain not to exercise
that option. Elkem's main renewal options relate to lease
of buildings for office and production purpose, included in
Plant, buildings and other property, and lease of land and it is
reasonably certain that the renewal option will be used. Elkem
reassesses the lease term if there is a significant event or
change in circumstances that is within its control and affects
its ability to exercise, or not to exercise, the option to renew.
Details of right-of-use assets
2022
Buildings
Plant, machinery,
and other
equipment and
Office and other
Amounts in NOK million
Land
property
motor vehicles
equipment
Total
Cost
Opening balance
432
730
138
11
1 310
Additions / lease modifications / remeasurements
4
105
21
0
131
Disposal of subsidiaries (note 4)
(118)
(145)
-
-
(264)
Partial or full termination of agreements
(0)
(46)
(15)
(9)
(71)
Currency translation differences
9
15
7
1
31
Closing balance
326
659
150
2
1 138
Accumulated depreciation
Opening balance
(66)
(143)
(75)
(5)
(288)
Additions
(8)
(79)
(32)
(1)
(119)
Disposal of subsidiaries (note 4)
8
10
-
-
18
Reclassification
(3)
(7)
-
-
(10)
Partial or full termination of agreements
0
32
15
5
53
Currency translation differences
(2)
(6)
(4)
(0)
(12)
Closing balance
(70)
(191)
(96)
(1)
(359)
Impairment losses
Opening balance
-
(1)
-
(4)
(5)
Disposals
-
1
-
4
5
Currency translation differences
-
(0)
-
(0)
(0)
Closing balance
-
(0)
-
-
0
Carrying amount
Closing balance
256
468
55
1
779
Estimated useful life
8–99 years
2–25 years
2–6 years
3-4 years
Depreciation plan
Straight-line
Straight-line
Straight-line
Straight-line
Details of right-of-use assets
2021
Amounts in NOK million
Land
Buildings
and other
property
Plant, machinery,
equipment and
motor vehicles
Office and other
equipment
Total
Cost
Opening balance
Additions / lease modifications / remeasurements
Reclassification
Partial or full termination of agreements
Currency translation differences
415
0
(0)
-
17
529
239
0
(41)
2
134
18
0
(10)
(5)
10
2
(1)
-
(0)
1 087
260
-
(51)
14
Closing balance
432
730
138
11
1 310
Accumulated depreciation
Opening balance
Additions
Reclassification
Partial or full termination of agreements
Currency translation differences
(51)
(4)
(7)
-
(3)
(105)
(77)
(0)
40
(1)
(53)
(34)
0
9
2
(3)
(2)
0
-
0
(212)
(116)
(7)
49
(2)
Closing balance
(66)
(143)
(75)
(5)
(288)
Impairment losses
Opening balance
Additions
Currency translation differences
-
-
-
-
(1)
(0)
-
-
-
-
(4)
(0)
-
(5)
(0)
Closing balance
-
(1)
-
(4)
(5)
Carrying amount
Closing balance
366
586
62
2
1 017
Estimated useful life
Depreciation plan
1–99 years
Straight-line
1–25 years
Straight-line
2–5 years
Straight-line
3-6 years
Straight-line
Carrying amounts of lease liabilities and the movements during the period
Amounts in NOK million
2022
2021
Opening balance
801
663
Additions / lease modifications / remeasurements
124
260
Partial or full termination of agreements
(6)
(2)
Disposal of subsidiaries
(238)
-
Payments
(146)
(144)
Interest expenses on lease liabilities
30
26
Currency translation differences
13
(2)
Closing balance (note 23)
578
801
The maturity analysis of lease liabilities is disclosed in note 23
Interest-bearing assets and liabilities
Amounts recognised in consolidated statement of profit or loss
Amounts in NOK million
2022
2021
Depreciation of right-of-use assets
(119)
(116)
Interest expenses on lease liabilities (note 13)
(30)
(26)
Leasing expenses, short-term leases (note 11)
(56)
(44)
Leasing expenses, low value assets (note 11)
(13)
(11)
Leasing expenses, variable lease payments (note 11)
(2)
(2)
Total amount recognised in consolidated statement of profit or loss
(219)
(199)
Intangible assets are stated in the consolidated financial
statements at cost less accumulated amortisation and
accumulated impairment losses. Intangible assets acquired
in business combinations are recognised at fair value at the
acquisition date. Intangible assets with a finite useful life are
amortised, using the straight-line method, commencing when
the asset is available for use. Assets that are an integral part of
a group of assets are amortised from the date the related asset
group as a whole is ready for its intended use. Such assets are
impairment tested annually.
The estimated useful lives are reviewed at the end of each
reporting period.
An intangible asset is derecognised on disposal, or when the
group expects no future economic benefits to be derived from
its use. Gain or loss arising from derecognition of an intangible
asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, is recognised
in other operating income or other operating expenses in the
statement of profit or loss.
in the period in which it is incurred. An intangible asset arising
from an internal development project is recognised in the
statement of financial position if the group can demonstrate
technical feasibility of completing the intangible asset, has the
intention to complete it, ability to use it, can demonstrate that
it will generate probable future economic benefits and the cost
can be reliably measured. Expenditures related to research and
Accounting principle for impairment of assets, see Note 19
Judgements and estimates
Estimated useful lives are used in calculation of amortisation
of intangible assets, these are reviewed, and if necessary
adjusted, at least annually.
Details of intangible assets
2022
Intangible
Land use
Technology
Other assets under
Amounts in NOK million
rights
and licences
Software Development
intangible
1)
construction
Total
Cost
Opening balance
Additions
2)
103
-
828
-
567
24
775
1
335
0
568
310
3 175
335
Transferred from CiP
-
-
5
58
-
(63)
-
Reclassification
-
3
43
-
(1)
7
53
Business combinations (note 4)
-
0
-
-
6
-
6
Disposal of subsidiaries (note 4)
-
-
-
-
-
(460)
(460)
Disposals
-
-
(30)
-
-
(3)
(33)
Currency translation differences
5
36
18
46
11
18
134
Closing balance
108
868
627
880
350
377
3 209
Accumulated amortisation
Opening balance
(55)
(513)
(398)
(519)
(87)
(1 572)
Additions
(2)
(41)
(54)
(57)
(33)
(186)
Reclassification
-
-
(1)
-
1
(0)
Disposals
-
-
8
-
-
8
Currency translation differences
(3)
(26)
(12)
(30)
(3)
(74)
Closing balance
(59)
(579)
(457)
(606)
(122)
(1 824)
Impairment losses
Opening balance
(1)
-
-
-
-
-
(1)
Currency translation differences
(0)
-
-
-
-
-
(0)
Closing balance
(1)
-
-
-
-
-
(1)
Carrying amount
Closing balance
48
288
170
273
228
377
1 385
Estimated useful life
3–10 years
3–15 years
3–10 years
3–16 years
3–10 years
Amortisation plan
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
1)
Other intangible assets consists mainly of customer relationships.
2)
Additions in 2022 consists mainly of capitalisation of development projects of NOK 312 million of which NOK 230 million is related to Elkem's
biocarbon initiative and battery projects.
Details of intangible assets
2021
Intangible
Land use
Technology
Other assets under
Amounts in NOK million
rights
and licences
Software Development
intangible
1)
construction
Total
Cost
Opening balance
Additions
2)
108
-
836
1
469
16
714
-
322
-
305
324
2 753
342
Transferred from CiP
-
2
6
80
-
(87)
-
Reclassification
-
8
81
-
-
29
118
Business combinations (note 4)
-
-
-
-
-
-
-
Disposals
-
-
(9)
-
(0)
-
(9)
Currency translation differences
(5)
(19)
4
(19)
12
(2)
(28)
Closing balance
103
828
567
775
335
568
3 175
Accumulated amortisation
Opening balance
(56)
(487)
(349)
(486)
(55)
(1 433)
Additions
(1)
(41)
(50)
(53)
(31)
(177)
Reclassification
-
-
(1)
-
-
(1)
Disposals
-
-
5
-
0
5
Currency translation differences
3
15
(3)
21
(1)
35
Closing balance
(55)
(513)
(398)
(519)
(87)
(1 572)
Impairment losses
Opening balance
(1)
-
-
-
-
-
(1)
Additions
-
-
(4)
-
-
-
(4)
Disposals
-
-
4
-
-
-
4
Currency translation differences
0
-
-
-
-
-
0
Closing balance
(1)
-
-
-
-
-
(1)
Carrying amount
Closing balance
47
315
169
256
248
568
1 602
Estimated useful life
3–10 years
3–15 years
3–10 years
3–16 years
3–10 years
Amortisation plan
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
1)
Other intangible assets consists mainly of customer relationships.
2)
Additions in 2021 consists mainly of capitalisation of development projects of NOK 300 million of which NOK 228 million is related to Elkem's
biocarbon initiative and battery projects.
Goodwill
Goodwill is initially measured as the excess of the cost of an
acquisition over the group's share of the fair values of the
acquired entity's net identifiable assets at the acquisition
date. If the fair value of the group’s interest in the net assets
of the acquired subsidiary exceeds the cost of the acquisition
(negative goodwill), the differences are recognised directly in
the statement of profit or loss as other items. Goodwill is carried
at cost less accumulated impairment losses. Goodwill is tested
for impairment annually, or more frequently when there is an
indication of impairment. An impairment loss recognised for
goodwill is not reversed in subsequent periods.
Accounting principle for impairment of assets, see Note 19
Judgements and estimates
The fair value of an acquired entity's net identifiable
assets used to initially measure goodwill are dependent on
assumptions such as future cash flows and discount rate. See
note 4 Composition of the group.
Judgments and estimates for impairment of assets, see Note
19 Impairment assessment.
Details of goodwill
Amounts in NOK million
2022
2021
Opening balance
941
919
Currency translation differences
43
22
Closing balance
984
941
Origin of goodwill per CGU
31 December 2022
Amounts in NOK million
Silicones
Silicon Products
Carbon Solutions
Total
Elkem Silicones Guangdong Co., Ltd.
499
-
-
499
Elkem Silicones Korea Co., Ltd
126
-
-
126
Elkem Silicones
80
-
-
80
Elkem Rana AS
-
40
-
40
Elkem Nagpur
-
38
-
38
Elkem Oilfield Chemical FZCO
-
23
-
23
Elkem Dronfield Ltd.
-
16
-
16
Elkem Materials Process Services BV
-
0
-
0
Ferroveld JV
-
-
43
43
Elkem Partiçipacòes Indústria e Comércio Limitada
-
-
8
8
Elkem Carbon (China) Co., Ltd.
-
-
1
1
NEH LLC
-
93
17
110
Total goodwill
705
209
69
984
Origin of goodwill per CGU
31 December 2021
Amounts in NOK million
Silicones
Silicon Products
Carbon Solutions
Total
Elkem Silicones Guangdong Co., Ltd.
485
-
-
485
Elkem Silicones Korea Co., Ltd
119
-
-
119
Elkem Silicones
76
-
-
76
Elkem Rana AS
-
40
-
40
Elkem Nagpur
-
37
-
37
Elkem Oilfield Chemical FZCO
-
21
-
21
Elkem Dronfield Ltd.
-
16
-
16
Elkem Materials Process Services BV
-
0
-
0
Ferroveld JV
-
-
41
41
Elkem Partiçipacòes Indústria e Comércio Limitada
-
-
7
7
Elkem Carbon (China) Co., Ltd.
-
-
1
1
NEH LLC
-
83
15
98
Total goodwill
680
197
64
941
Impairment exists when the carrying value of an asset or
cash generating unit (CGU) exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and
its value in use. The fair value less cost of disposal calculation
is based on data from binding sales transactions, conducted
at arm’s length for similar assets or observable market prices
less incremental costs of disposing the asset. The value in
use calculation is based on a DCF model. The cash flows are
derived from the budget for the next five years and do not
include restructuring activities that Elkem is not yet committed
to or significant future investments that will enhance the
performance of the assets of the CGU being tested. A long-
term growth rate is calculated and applied to project future
cash flows after the fifth year.
A CGU is the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets.
Indicators of impairment will typically be changes in
technological development, changes in market conditions and
changes in the competitive situation.
Impairment loss and reversal of previous impairment losses
are recognised as impairment losses in the statement of
profit or loss.
Goodwill
Goodwill arising from a business combination is allocated
to CGUs or groups of CGUs that are expected to benefit
from the synergies of the combination. Goodwill is tested
for impairment annually, or more frequently when there is an
indication of impairment. An impairment loss recognised for
goodwill is not reversed in subsequent periods.
Intangible assets, property plant and equipment and
right-of-use assets
Intangible assets with indefinite useful lives are tested for
impairment annually, or more frequently when there is an
indication of impairment. For the other non-financial assets
Elkem assess, at each reporting date, whether there is
an indication that an asset may by impaired. A previously
recognised impairment loss is reversed only if there has been
a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised
Judgements and estimates
There is significant judgment required to determine the CGU for
impairment testing. For goodwill the determination of the CGU
is based on the level where synergies are expected to be realised
following a business combination. The CGU for impairment
testing of goodwill is determined to be the operating segments
as presented in note 6 Operating segments.
For impairment testing of fixed, intangible and right of use
assets the CGU the lowest level that generates ingoing cash
flows. This can be both a single plant or a combination of
plants depending on the facts and circumstances.
The recoverable amounts of assets of CGUs subject to
impairment testing are determined based on value-in-use
calculations, which are based on estimated future cash flows.
The uncertainty in the cash flows relates to future prices for
both key input factors in the production and market prices for
the sale of Elkem's products. There is uncertainty regarding
these factors both for the next 12 months and for the rest
of the forecast period. The estimated future cash flows are
discounted using a discount rate before tax. The estimation
uncertainty in the discount rate relates to the determination
of the risk free rate and the beta. Elkem have performed
sensitivity analysis in the impairment test to reflect the
uncertainty in the estimates.
(a) Impairment test of goodwill
Discounted cash flow models are applied to determine the
value in use for the cash-generating unit. Key assumptions
used in the calculation of value in use are growth rate, EBITDA
levels, capital expenditure and discount rates.
Growth rates
The expected growth rates for a cash-generating unit converge
from its current level experienced over the last few years, to
the long-term growth level in the market in which the entity
operates. The growth rates used to extrapolate cash flow
projections beyond the explicit forecast period are based
on management’s past experience, assumptions in terms of
market share and expectations for the market development in
which the entity operates. Growth rate used in Elkem’s DCF
models is 1.5% (2.0%).
EBITDA levels
EBITDA level represents the operating profit (loss) before
depreciation and amortisation. The key assumptions used in
reaching the forecast figures are sales prices, volume mix,
operating costs and productivity targets.
Sales prices, volume and product mix:
The 2023 budget is
used as a basis for the forecast the next four years. Elkem
experienced an increase in sales prices for most of Elkem’s
products in the first part of the year, but prices declined in
the latter part of 2022. For Elkem's Silicones business the
sales prices in China have been very volatile in 2022. In the
impairment assessment Elkem has assumed sales prices will
normalise and the price assumptions are below the current
market situation for Silicon Products and Carbon Solutions.
For Silicones the assumption is an increase in volume and
prices compared to the current level, especially within specialty
products. There are no observable long-term market prices for
Elkem’s products, but there are external independent sources
such as CRU for the Silicon Products market that are used as a
basis for the budget. Elkem works continuously to improve the
specialty ratio and this is reflected in the impairment models.
Sales volumes are adjusted for necessary maintenance stops.
Raw materials and energy for smelting:
Most of Elkem’s plants
have long term energy contracts that covers their future need
of power. The contract prices is used in the estimate of future
cash flows. For Elkem’s spot exposure observable market
prices are used adjusted for CPI. Raw material prices are based
on 2023 budget and are adjusted to reflect expected volume /
mix changes.
Climate related risk:
The calculation of value in use reflects
the expected development in both the cost of CO
2
quotas and
the income from CO
2
compensation going forward in line with
the current regulatory framework. Outside of this no climate
related legislation has been passed at the current time that
will impact the group. However, there is an expectation that
any increase in cost due to new legislation will be covered by
increased sales prices, full or partial compensation by incentive
schemes or increased effectiveness resulting in limited impact
on operating cash flows.
Other operating costs:
These are estimated based on the
current level and adjusted for committed operational efficiency
programs. Changes to the outcome of these initiatives may
affect future estimated EBITDA levels.
Capital expenditure (“Capex”)
A normalised capex is assumed in the long run and are based
on today’s maintenance level and technology. Estimated
capital expenditures do not include capital expenditures that
significantly enhance the current performance, as such effects
are not included in the cash flow projections.
Currency rates and inflation
The value-in-use calculation is performed in the functional
currency for the CGU. The currency rates used to translate
future incomes and expenses in other currencies than the
functional currency are based on official forward rates from
Reuters. The long-term inflation (CPI) are based on external
predictions and reflect the CPI which each CGU is located.
Discount rates
The required rate of return is calculated by the WACC method.
The cost of a company's equity and liabilities, weighted to
reflect its capital structure of 50:50, respectively, derive
from its weighted average cost of capital. The WACC rates
are based on 10-year risk-free interest rate for the relevant
currency of the CGU. The rates are adjusted for inflation
differential and country risk premium. The discount rates also
take into account the debt premium, market risk premium,
corporate tax rate and asset beta. The WACC are adjusted for
tax to determine a pre-tax rate that is used for discounting the
estimated future cash flows.
Goodwill acquired through business combination are allocated
to the operating segments Silicones, Silicon Products and
Carbon Solutions. Impairment testing of goodwill is done for
a group of CGUs that is included in the respective operating
segments. The following table give an overview of carrying
amount of goodwill allocated to each of the operating
segments. The table also includes the pre-tax discount rate for
each operating segment.
Cash Generating Units
Carrying amount
Pre-tax discount rate
Amounts in NOK million
31 December 2022
31 December 2021
31 December 2022
31 December 2021
Silicones
705
680
10.5 %
9.2%
Silicon Products
209
197
10.1 %
8.5%
Carbon Solutions
69
64
10.2 %
9.6%
Goodwill
984
941
Sensitivity for test of goodwill
→
An increase of 4% points in discount rate, for each
operating segment's discount rate, will not result
in impairment.
→
A growth rate equal to zero for the terminal period, for
the cash-flows for each operating segment will not
result in impairment.
→
A decrease in the forecasted EBITDA levels of 30% for
the cash-flows for each operating segment will not
result in impairment.
(b) Impairment test for intangible assets, property plant
and equipment and right-of-use assets
For the assets with impairment indicators the recoverable
amount was determined estimating the value in use of the
assets, see the goodwill section above for assumption used.
In 2022 Elkem has identified impairment indicators for one
of its CGUs, see below. The CGU was not assessed to be
impaired, as the recoverable amount exceed the carrying
amount for the CGUs.
In 2021 Elkem identified impairment indicators within the
Silicones segment, Silicones excluding Jiangxi Bluestar
Xinghuo Silicones, Elkem Silicon Materials (Lanzhou), Elkem
Silicones Korea and Elkem Silicones Guangdong, which are
tested separately. The CGU have performed better in 2022
than in 2021, and no new impairment indicators are identified.
Elkem Silicones Guangdong
Elkem has identified impairment indicators within Elkem
Silicones Guangdong. The total carrying amount of the CGU is
NOK 187 million. The impairment indicators are largely due to
deterioration of EBITDA margins in 2022 due to significantly
increased raw material prices and limited pass-through
opportunities for the specialty part of their sales portfolio. Raw
material prices have come down and is expected to remain at a
lower level with stable sales prices ensuring improved margins
going forward.
The assumptions applied follow the assumptions as applied
for the goodwill, see section above. It is assumed stable
production and sales prices and somewhat reduced cost in
2023 compared to 2022. The contribution margin for the
following years are on the same level as for 2022. Pre-tax
discount rate used in the DCF calculation for the CGU is 9.5%.
An increase of 4% points in discount rate, a growth rate used
to extrapolate the cash-flows after five years equal to zero or a
decrease in forecasted EBITDA of 30% points, will not result in
an impairment for the CGU.
Inventories are measured at the lower of cost and net realisable
value. Inventory consists of raw materials, semi-finished
goods and finished goods, in addition to operating materials
and spare parts that do not meet the definition of property,
plant and equipment. Raw materials, and operating materials
and spare parts, are recognised at cost of purchase including
transport and handling to their present location. Finished and
semi-finished goods are measured at cost of raw materials,
energy for production and cost of conversion up to the actual
completion stage. Cost of conversion comprise operating
expenses directly related to production of the products and
an allocation of direct fixed operating expenses. The cost of
CO
2
allowances that Elkem needs to purchase in addition to
allowances received from the government (note 8), are based
on estimated production / emissions for the year. The cost is
allocated to cost of conversion proportionally over the year as
the number of allocated allowances will not be revised unless
there is a substantial change in the production level at the
plants. Net realisable value represents the estimated selling
price for inventories less estimated costs of completion and
variable selling expenses.
Cost of goods sold is recognised in different lines in the
statement of profit or loss based on nature; raw materials and
energy for production, employee benefits and other operating
expenses. Actual cost of conversion related to goods sold is
reported net of change in cost of conversion in inventory and is
included in other operating expenses.
Entities within the group sell goods to other group entities,
consequently finished goods from one entity become raw
materials or semi-finished goods for another group entity. The
classification of goods in the group's statement of financial
Judgements and estimates
The assessment of net realisable value for the inventory is
based on estimated market prices in the period the inventory is
expected to be sold. The actual market price will differ from the
estimates used.
Details of inventory
31.12.2022
31.12.2021
Amounts in NOK million
Cost price
Provision
Net total
Cost price
Provision
Net total
Raw materials
3 322
(12)
3 310
2 767
(74)
2 693
Semi-finished goods
402
(41)
361
343
(41)
302
Finished goods
6 035
(142)
5 893
4 198
(63)
4 135
Operating materials and spare parts
792
(31)
761
610
(23)
586
Total inventories
10 550
(226)
10 325
7 918
(202)
7 716
This year's change in provision for impairment of inventory, a
loss of NOK 14 million (loss of NOK 87 million), is recognised as
a part of raw materials and energy for production.
Trade and bills receivables are initially recognised at transaction
price, which in most cases corresponds to their nominal amount.
The carrying amount is subsequently measured at amortised
cost using the effective interest rate method, less any provision
for expected credit losses. Current receivables with no stated
interest rate are recognised at their nominal amount.
A bill receivable is a document where the customer formally
agrees to pay for delivered goods or services at maturity
date and are normally guaranteed by a financial institution.
A bill receivable is transferable and can be used to pay trade
payables (endorsed) or be settled in cash with a finance
institution (discounted). The bills receivables-document
effectively replaces, for the specified amount, the trade
receivable exchanged for the bill. Bills receivables (mainly bank
acceptance bills that are guaranteed by a financial institution)
are primarily used by Elkem's Chinese entities and the duration
is normally below six months.
Trade receivables are derecognised when settled, replaced
by bills receivable or when transferred to a third party and
the group has no further risk related to the receivables. Bills
receivables are derecognised when they are settled on due
date or when the risk and reward are transferred to a third
party. Transferral to a third party can be done by discounting
a bill receivable before due date or by endorsing the bill
receivable, meaning that it is accepted by the supplier as
payment for goods or services received.
Elkem calculates the expected credit losses (ECL) for trade
receivables and bills receivables in accordance with the
simplified approach. All expected cash flows, including cash
flows from credit insurance contracts where such contracts
are deemed to be an integral part of the transactions, is taken
into consideration. The assessment is based on historical
experienced losses adjusted for forward-looking estimates on
changes in risk / probability that credit losses will occur for the
Judgements and estimates
Judgement is applied when determining expected credit loss
on trade receivables. The judgement is based on experienced
losses in the past and expectations about future economic
conditions for the different customer groups / business areas.
Calculation of expected credit losses takes into account cash
flows from credit insurance contracts when such contracts
are deemed to be an integral part of the transaction. Elkem
generally secures its trade receivables by credit insurance
from a reputable credit insurance company, see note 27
Financial risk.
Details of trade receivables
Amounts in NOK million
31.12.2022
31.12.2021
Trade receivables
3 208
3 343
Trade receivables, related parties (note 32)
19
33
Allowance for expected credit losses
(65)
(69)
Bills receivable
1 086
990
Total trade receivables
4 248
4 297
Elkem has entered into factoring agreements with a
credit limit of a total of EUR 162 million (EUR 127), NOK
1,698 million (NOK 1,265 million), to sell on continuing
basis trade receivables that meet specific conditions. The
agreements include a recourse clause for maximum 5%
-10%, depending on the agreement, of the face value of the
individual receivables sold. The non-recourse amount of the
receivables sold is derecognised and the recourse amount
is recognised as a current liability when the title to the
receivables is transferred. As of 31 December 2022, NOK 106
million (NOK 57 million) is recognised as current liability (see
note 24 Provisions and other liabilities). In addition, Elkem
has entered into factoring agreements without recourse for
some specific customers. Receivables that are sold without
recourse are derecognised in its entirety when the title is
transferred, as there is no remaining credit risk after transfer.
As at 31 December 2022 NOK 1,777 million (NOK 1,467
million) of Elkem’s trade receivables are derecognised under
these agreements.
Bills receivable consist of NOK 1,086 million (NOK 989 million)
bank acceptance bills and NOK 0 million (NOK 2 million)
commercial acceptance bills.
A total of NOK 4,033 million (NOK 4,253 million) in unmatured
bills receivables are endorsed to a third party where the final
payment of the bill is guaranteed by a highly rated financial
institution. Elkem will only suffer losses on an endorsed bill if
the bank that have issued the bill or all companies that have
endorsed the bill before Elkem goes bankrupt. These bills are
derecognised as there is very low remaining credit risk related
to endorsed bills.
Analysis of gross trade receivables by age, presented based on the due date
Amounts in NOK million
31.12.2022
31.12.2021
Not due
2 392
2 883
Overdue by:
1–30 days
527
352
31–60 days
92
48
61–90 days
124
27
More than 90 days
91
66
Total trade receivables
1)
3 227
3 376
1)
Bills receivable is not included in the ageing table
Movements in allowance for expected credit losses
Amounts in NOK million
2022
2021
Opening balance
(69)
(92)
Business combinations (note 4)
-
-
Realised losses during the year / Received on earlier losses
5
12
Provision for expected credit losses
(27)
(10)
Reversal of earlier provisions
29
24
Currency translation differences
(2)
(4)
Closing balance
(65)
(69)
Analysis of allowance for expected credit losses, presented
based on related trade receivables
Amounts in NOK million
31.12.2022
31.12.2021
Not due
(13)
(14)
Overdue by:
1–30 days
(1)
(1)
31–60 days
(0)
(0)
61–90 days
(3)
(4)
More than 90 days
(48)
(50)
Total allowance for expected credit losses
(65)
(69)
Principle
Investments in equity instruments with an ownership below
20% are normally classified as other shares and recognised in
other non-current assets in the statement of financial position.
Other shares consist of equity investments in both listed and
unlisted companies. Shares in listed companies are measured
at fair value through profit or loss. Investments in equity
instruments that do not have a quoted market price in an
active market are classified as financial assets measured at fair
value through other comprehensive income (OCI). Changes in
fair values recognised in OCI cannot be subsequently recycled
to statement of profit or loss. Dividends from such investments
Financial assets
A financial asset is recognised in the statement of financial
position when Elkem becomes party to a contract. Assets to
be acquired in relation to a firm commitment to sell goods
or services are recognised at the time Elkem has performed
under the agreement.
At initial recognition, the financial assets are carried in the
statement of financial position at fair value plus any transaction
costs directly attributable to the acquisition or issue of the
asset. Financial assets are derecognised once the right to
future cash flows have expired or been transferred to a third
party, and Elkem has transferred substantially all the risk and
rewards of control of these assets. Any rights or obligations
retained in any transferred assets are booked separately as
assets or liabilities.
Financial assets with a maturity exceeding one year are
classified as non-current financial assets. Short-term
investments that do not meet the definitions of a cash
equivalent, and financial assets with a maturity of less than
one year, are classified as current financial assets.
Loans and receivables are non-derivative hold to collect
financial assets with fixed or determinable payments that are
not quoted in a regulated market. After initial recognition, they
are recognised at amortised cost using the effective interest
method. Gains and losses are recognised in the statement of
profit or loss when the loans and receivables are derecognised
or impaired, as well as through the amortisation process.
If there is objective evidence of impairment, or if there is a risk
that the group may not recover the contractual amounts at the
contractual maturity dates, an impairment loss is recognised
in the statement of profit or loss. The provision is equal to the
difference between the carrying amount and the estimated
Current assets
Current receivables are initially recognised at fair value, which
in most cases corresponds to their nominal amount. The
carrying amount is subsequently measured at amortised cost
using the effective interest rate method, less any provision
for expected credit losses. Current receivables with no stated
interest rate are recognised at their nominal amount.
Judgements and estimates
Judgement is applied when assessing the value of shares
in unlisted companies. For estimates related to valuation of
financial assets, see note 25 Financial assets and liabilities.
Judgement is applied when determining the estimated
expected credit loss on other receivables and prepayments.
The judgement is based on experienced losses in the past
and expectations about future economic conditions for the
different counterparties.
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Other shares
Restricted deposits
Other deposits
Pension assets, defined benefits and contribution plans (note 9)
Prepayments for construction of fixed assets
Prepayments for goods and equipment
Prepayments for other expenses
Prepayments to related parties (note 32)
Receivables from related parties, interest-bearing (note 32)
Receivables from related parties, interest free (note 32)
Grants receivable (note 8)
Value added tax
Corporate income tax
Interest receivables
Other receivables
Assets at fair value through profit or loss
Other assets
Total other assets
24
46
10
41
99
-
77
-
1
-
306
64
-
-
8
-
39
716
32
41
34
1
24
-
72
-
1
-
202
47
-
-
8
-
15
478
-
-
-
2
-
150
90
15
-
7
620
418
338
0
47
-
11
1 698
-
-
-
2
-
169
87
18
-
1
493
361
237
1
155
14
14
Provision for impairment included in total other assets, mainly
prepayments.
(75)
(69)
Restricted deposits mainly consist of restricted deposits
related to the ongoing tax litigation in Elkem's business
in Brazil of NOK 15 million (NOK 14 million), see note 24
Provisions and other liabilities, and deposit for pension
guarantee, related to unfunded pension liabilities for
salaries above 12G, of NOK 31 million (NOK 27 million).
Other receivables includes NOK 12 million (NOK 87 million)
related to settlement of power derivatives.
Corporate income tax receivable partly consists of Elkem
ASA's pending tax issues with tax authorities (see note 14
Taxes). Elkem’s assessment is that the defence against the
action will be successful, but that the case consideration might
take up to 3 years. Parts of Elkem's income tax receivables is
correspondingly expected to be settled later than one year.
Principle
Interest-bearing liabilities
The liabilities are initially recognised at fair value of the amount
required to settle the associated obligation, net of prepaid
costs directly attributable to the liability. Subsequently and
insofar, as they are not designated as liabilities at fair value
through profit or loss, such liabilities are recognised at
amortised cost using the effective interest rate method.
Financial assets are derecognised when the rights to
receive cash flows from the assets have expired or have
been transferred to a third party. Financial liabilities are
derecognised when they are extinguished.
Bills payable
A bill payable is a document where the buyer formally agrees
to pay for purchased goods or services at maturity date and
are normally guaranteed by a financial institution. The bills
payable are initially recognised when the supplier accepts
the bill of exchange and is recognised at the amount equal
to the trade payables it replaces. Bills payable are used
by Elkem's Chinese entities, and the duration is normally
below six months. When the bill payable is guaranteed by a
financial institution it is normally required to deposit a certain
per centage of the nominal value of the bill payable into a
restricted bank account. All bills payable in Elkem are bank
acceptance bills which is guaranteed by a financial institution.
Cash and cash equivalents are held for the purpose of meeting
short-term fluctuations in liquidity. Deposits with a term of 3
months or less on acquisition are included. Bank overdrafts
are presented within interest-bearing current liabilities in
the statement of financial position. Restricted deposits are
presented separately in the statement of financial position
and excluded from cash and cash equivalents presented in the
Lease liabilities
See note 16 Leases for accounting policies for right-of-use
assets and lease liabilities.
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Interest-bearing liabilities
Lease liabilities (note 16)
Loans from external parties, other
Bank financing
Accrued interest
than bank
475
3 697
6 160
-
685
3 125
4 599
-
103
10
74
17
116
1 264
572
20
Total interest-bearing liabilities
10 331
8 409
204
1 972
Total bills payable
-
-
1 742
2 096
Total interest-bearing liabilities including bills payable
10 331
8 409
1 946
4 067
Interest-bearing assets
Cash and cash equivalents
Restricted deposits bills payable
Other restricted deposits
Receivables from related parties
Loans to external parties
Accrued interest income
-
-
46
1
8
-
-
-
41
1
8
-
9 255
395
12
-
-
0
7 040
601
8
-
-
1
Total interest-bearing assets
55
50
9 663
7 650
Net interest-bearing assets / (liabilities)
(10 276)
(8 359)
7 717
Interest-bearing liabilities by currency
31.12.2022
31.12.2021
Amounts in NOK million
Currency amount
NOK
Currency amount
NOK
EUR
630
6 620
608
6 083
USD
3
31
4
38
NOK
2 753
2 753
3 038
3 038
CNY
1 963
2 809
2 333
3 240
Other currencies
-
66
-
77
Total interest-bearing liabilities
12 278
12 476
Maturity of interest-bearing liabilities
31 December 2022
2028
Amounts in NOK million
2023
2024
2025
2026
2027
and later
Total
Lease liabilities
103
74
57
47
40
257
578
Loans from external parties, other than bank
10
916
1 234
942
500
105
3 706
Bank financing
74
9
39
63
5 335
755
6 276
Bills payable
1 742
1 742
Accrued interest
17
17
Total interest-bearing liabilities excluding prepaid loan fees
1 946
1 000
1 330
1 052
5 875
1 117
12 320
Prepaid loan fees
(42)
Total interest-bearing liabilities
12 278
Maturity of interest-bearing liabilities
31 December 2021
2027
Amounts in NOK million
2022
2023
2024
2025
2026
and later
Total
Lease liabilities
116
101
80
64
53
387
801
Loans from external parties, other than bank
1 264
7
1 118
1 000
500
500
4 389
Bank financing
572
4 398
206
3
3
4
5 186
Bills payable
2 096
2 096
Accrued interest
20
20
Total interest-bearing liabilities excluding prepaid loan fees
4 067
4 506
1 404
1 067
557
891
12 492
Prepaid loan fees
(16)
Total interest-bearing liabilities
12 476
Loan agreements
The main non-current loan agreements as of 31 December
2022 are a term loan of EUR 500 million (EUR 400 million), a
term loan of EUR 0 million (EUR 5 million), issued bond loans
of a total of NOK 2,500 million (NOK 2,500 million) and a
series of loans issued in the Schuldschein market of EUR 113
million (EUR 61 million). The main loan agreements are granted
to Elkem ASA. In addition Elkem Silicones Xinghuo financing
is parts of its upgrade of property, plant and equipment with a
unsecured term loan of CNY 650 million (CNY 0 million). The
interest rates for the non-current loan agreements are in the
range of 4.38% to 4.78% for the bond loans, 1.82% to 4.5% for
the loans in the Schuldschein market and 3.45% to 3.95% for
the PPE loans. For the term loan the interest rate is 3.44%.
Elkem placed EUR 200 million in the Schuldschein market
on 4 and 6-year tenors in December 2022, where of EUR
52 million was disbursed in December 2022, while EUR 148
million was disbursed in January 2023. In June Elkem signed
new bank facilities with a term loan of EUR 500 million and a
credit facility of EUR 500 million, refiniancing the term loan
of EUR 400 million from prior year. Later in 2022 the facilities
was linked to two sustainability KPIs, KPI 1 Lost Time Injury
Rate and KPI 2 – Product Group Carbon Footprint. The margin
of the RCF and term loan shall be reduced by 0.025% if both
KPIs are met, and increased by 0.025% if none of the KPIs are
met. If one KPI is met there shall be no change to the margin.
The sustainability KPIS will first be tested for 2023 with effect
from 2024.
One of the loans issued in the Schuldschein market (EUR 15
million), is a fixed rate loan with a fixed rate of 1.8160%. Given
the market conditions as at 31 December 2022 the loan would
have been approximately EUR 0.7 million lower, due to the
difference between fixed and market rate.
The bond loans are listed on Oslo Børs. There are no covenants
related to the bond loans. There are no material differences
between fair value of the bond loans and book values.
The loan facilities are unsecured, but part of the loans has
financial covenants related to them, see below.
Credit facilities
As of 31 December 2022 the group is granted credit facilities
of NOK 6,356 million. At 31 December 2022 NOK 14 million
is drawn.
As of 31 December 2021 the group is granted credit facilities
of NOK 3,144 million. The credit facilities are undrawn at 31
December 2021.
The main revolving credit facilities are granted to Elkem
ASA, but the facilities can be utilised by Elkem ASA and its
subsidiaries. The main facilities amount to EUR 500 million,
CNY 199 million, CNY 300 million and NOK 250 million
respectively. See note 27 Financial risk, section (c) liquidity risk
for more information.
Hedging
Some / part of loans are designated as a hedging instrument,
see note 26 Hedging.
Loan covenant
Elkem has financial covenants related to its main bank
financing and parts of loans from external parties, other than
bank (Schuldschein), in Norway. The interest-bearing loans in
China have no connected financial covenants. In addition to
the covenants on these loan facilities in Norway there are loan
covenants related to the credit facilities in Elkem Metal Canada
Inc of CAD 2 million. Elkem and Elkem Metal Canada Inc. are
compliant with their covenants at the end of 2022 and 2021.
The covenants for the interest-bearing loan facilities in Norway
relate to the financial performance of Elkem and are as
specified in the table below.
Covenant Elkem related to drawn loan of NOK 6,501 million
(NOK 5,971 million) in Elkem ASA
Amounts in NOK million
31.12.2022
31.12.2021
Loan covenant
Equity ratio
55 %
47 %
> 30%
Interest cover ratio
58.38
37.33
> 4.00
Movements in interest-bearing liabilities 2022
Cash
flows
Non-cash changes
Additions, lease
modifications,
Acquisition
Currency
Receipts/ remeasurements
/ Disposal of
translation
Amounts in NOK million
31.12.2021
Payments
and terminations
subsidiaries Reclassification
differences
31.12.2022
Lease liabilities
685
-
118
(218)
(117)
8
475
Loans from external parties
3 125
547
-
-
(9)
34
3 697
Bank financing
4 615
902
-
650
(189)
223
6 202
Total movements non-current
8 425
1 449
118
432
(315)
266
10 374
Lease liabilities
116
(116)
-
(20)
117
5
103
Loans from external parties
1 264
(1 328)
-
-
9
64
10
Bank financing
572
(710)
-
10
189
13
74
Total movements current
1 952
(2 153)
-
(9)
315
82
187
Total
10 376
(704)
118
423
-
348
10 561
Movements in interest-bearing liabilities 2021
Cash
flows
Non-cash changes
Additions, lease
modifications,
Currency
Receipts/
remeasurements
translation
Amounts in NOK million
31.12.2020
Payments
and terminations
Reclassification
differences
31.12.2021
Lease liabilities
566
-
258
(138)
(1)
685
Loans from external parties
1 996
2 464
-
(1 266)
(69)
3 125
Bank financing
4 652
132
-
(5)
(164)
4 615
Total movements non-current
7 214
2 596
258
(1 409)
(233)
8 425
Lease liabilities
97
(118)
-
138
(1)
116
Loans from external parties
2 407
(2 373)
-
1 266
(36)
1 264
Bank financing
762
(226)
-
5
31
572
Total movements current
3 266
(2 717)
-
1 409
(6)
1 952
Total movements
10 479
(122)
258
-
(239)
10 376
Principle
A provision is recognised when the group has a present
obligation (legal or constructive) and it is probable that an
outflow of resources is required to settle the obligation. The
amount recognised is the best estimate of the consideration
required to settle the obligation, taking into account the risks
and uncertainties surrounding the obligation, known at the end
of the reporting period. Provisions are measured at present
Contract obligations
Contract obligations are liabilities assumed in business
combinations, liabilities related to cancellation of contracts and
contracts that includes guarantees for losses.
The liabilities are initially recognised at fair value of the amount
required to settle the associated obligation, net of prepaid
Contingent liabilities are liabilities which are not recognised
because they are possible obligations that have not yet been
confirmed, or they are present obligations where an outflow of
resources is not probable. Any significant contingent liabilities
are disclosed in the notes.
Contingent assets
Contingent assets are not recognised but disclosed in the
Judgements and estimates
Elkem has several types of provisions due to its operations.
Such liabilities are normally uncertain in timing and amount,
and recognised amounts are estimates based on available
information at the end of the reporting period. The estimated
liability is based on expected cash flows necessary to settle
the obligation, adjusted for any related risk and discounted by
using the pre-tax interest applicable for the specific entity. The
estimates are updated when new or updated information is
available, or at a minimum at each reporting date. The actual
outcome will differ from the estimate.
Details of provision and other liabilities
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Employee withholding taxes and other public taxes
-
-
160
133
Value added tax
-
-
137
223
Prepayments
-
-
356
375
Prepayments from related parties (note 32)
-
-
17
10
Liabilities to related parties (note 32)
-
-
30
32
Provisions
216
127
102
287
Contract obligations power
-
-
-
4
Contingent consideration acquisition of subsidiaries
-
40
42
163
Accrued expenses
-
-
516
320
Grants, deferred income (note 8)
-
-
8
18
Grants payable (note 8)
16
15
-
-
Recourse liability factoring agreement (note 21)
-
-
106
57
Other liabilities
-
-
72
35
Total provisions and other liabilities
232
182
1 545
1 657
The contingent consideration acquisition of subsidiaries relates
to the acquisition of Polysil on 1 April 2020. The payments of
the contingent consideration was due in installements and the
payments have not differed significantly from the maximum
that was recognised intially.
Movements in contingent consideration
Amounts in NOK million
2022
2021
Opening balance
203
261
Fair value adjustment of contingent consideration upon payment
(0)
1
Unwinding
4
6
Payments
(176)
(78)
Currency translation differences
12
13
Closing balance
42
203
Movements in provision
2022
Amounts in NOK million
Restructuring
Site
restoration
Environmental
measures
Litigations
Customers
Other
provisions
Total
provisions
Opening balance
Additional provisions recognised
Used during the year
Reversal of provisions recognised
Currency translation differences
Closing balance
70
-
(31)
(26)
3
17
32
2
(0)
-
0
34
109
83
(2)
(1)
0
190
66
7
(17)
(1)
7
62
4
6
(1)
(1)
1
9
134
0
(127)
-
0
7
415
99
(180)
(28)
12
318
Hereof non-current
Hereof current
Closing balance
-
17
17
34
-
34
131
58
190
50
12
62
-
9
9
1
6
7
216
102
318
Movements in provision
2021
Amounts in NOK million
Restructuring
Site
restoration
Environmental
measures
Litigations
Customers
Other
provisions
Total
provisions
Opening balance
Additional provisions recognised
Used during the year
Reversal of provisions recognised
Currency translation differences
Closing balance
127
-
(17)
(41)
1
70
31
2
(0)
-
(0)
32
94
16
-
-
(0)
109
60
10
(1)
-
(3)
66
9
0
(5)
-
(0)
4
12
171
(47)
-
(2)
134
332
199
(72)
(41)
(4)
415
Hereof non-current
Hereof current
Closing balance
-
70
70
32
0
32
55
54
109
40
26
66
-
4
4
0
134
134
127
287
415
Restructuring
The provision is related to Elkem's group wide productivity
improvement programme launched in first quarter of 2020.
Site restoration
The site restoration provisions are related to the necessary site
remediation work that Elkem will have to undertake in respect
of its quartz mines.
Environmental measures
Elkem has worldwide operations representing potential
exposure towards environmental consequences. Elkem has
established clear procedures to minimise environmental
emissions, well within public emission limits. The provisions
relate to clean up costs for a closed down production site and
landfills, mainly in Canada and Norway, and also estimated
cost for clean-up cost of polluted soil and fjord in relation to
production sites in Norway and France. The additional provision
recognised in 2022 includes NOK 70 million in restoration
expense related to decommissioned business in Canada.
Litigations
The provisions due to litigations are mainly related to business
tax cases in the Carbon division in Brazil.
Tax cases in Brazil can take a substantial amount of time before
resolution by the tax authorities, hence the time of settlement
is uncertain. Provisions are made for each case based on the
estimated amount expected to be paid, including interest and
penalties. In accordance with Brazilian regulations, agreed
amounts have been transferred to restricted bank accounts and
are adjusted for interest. The restricted cash is recognised in
other non-current assets, see note 22 Other assets.
Customers
The provisions are related to customer complaints, mainly in
the Silicones division.
Other provisions
Consist mainly of a provision related to relocation of workers
buildings located in proximity to the Silicones Xinghuo plant,
required by the authorities. The provision was settled in 2022.
Due to its operations Elkem could be included in criminal or
civil proceedings related to, among others, product liability,
environment, health and safety, anti-competitive, anti-
corruption, trade sanctions or other similar laws or regulations
or other forms of commercial disputes which could have a
material adverse effect on Elkem. See section litigation above
for ongoing cases and see note 14 Taxes for ongoing tax audits
Financial assets
A financial asset or a financial liability is recognised in the
statement of financial position when Elkem becomes party to
a contract. Assets to be acquired and liabilities to be incurred
as a result of a firm commitment to purchase or sell goods
or services are recognised at the time one of the parties has
performed under the agreement.
At initial recognition, the financial assets are carried in
the statement of financial position at fair value plus any
transaction costs directly attributable to the acquisition or
issue of the asset. Financial assets are derecognised when
the right to future cash flows have expired or been transferred
to a third party, once the group has transferred substantially
all the risk and rewards of control of these assets. Any rights
or obligations retained in any transferred assets are booked
separately as assets or liabilities.
Financial assets with a maturity exceeding one year are
classified as non-current financial assets. Short-term
investments that do not meet the definitions of a cash
equivalent, and financial assets with a maturity of less than
one year, are classified as current financial assets.
Financial liabilities
Non-derivative financial liabilities include interest-bearing
liabilities, bills payable and trade payables. The liabilities are
initially recognised at fair value of the amount required to
settle the associated obligation, net of prepaid costs directly
attributable to the liability. Subsequently and insofar, as they
are not designated as liabilities at fair value through profit or
loss, such liabilities are recognised at amortised cost using the
effective interest rate method.
Derivative financial assets and liabilities include financial
instruments or contracts where the value changes in
response to the change of a specified rate, price or index and
commodity contracts within the scope of IFRS 9.
Derivatives are initially recognised at fair value at the date
when the derivative contracts are entered into. Transaction
costs that are directly attributable to the acquisition of
financial assets or liabilities at fair value through profit or loss,
are recognised immediately in the statement of profit or loss.
Subsequently the derivatives are remeasured to their fair value
at the end of each reporting period. The resulting gain or loss
is recognised in the statement of profit or loss immediately,
unless the derivative is designated and is effective as a
hedging instrument, in which case the change in fair value is
recognised in statement of profit or loss in the same period(s)
as the hedged objects affects the profit or loss.
Derivatives are presented as current assets or liabilities, unless
they are expected to be realised more than 12 months after
the reporting period. In that case, they are classified as non-
current assets or liabilities.
Embedded derivatives
An embedded derivative is a component of a hybrid instrument
that also includes a non-derivative host contract with the effect
that some of the cash flows of the combined instrument vary in
a way similar to a stand-alone derivative. Derivatives embedded
in financial liability of a non-financial host are separated from
the host and accounted for as separate derivatives if; the
economic characteristics and risks are not closely related to
the host, a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative
and the hybrid contract is not measured at fair value through
profit and loss. Elkem has long-term power contracts settled
in other currencies than the entity’s functional currency. The
currency portion of these contracts is an embedded derivative
and is recognised and presented as an independent derivative,
Commodity contracts within the scope of IFRS 9
Non-financial commodity contracts where the relevant
commodity is readily convertible to cash and where the
contracts are not for own use, fall within the scope of IFRS 9
Financial instruments - recognition and measurement. The
group currently has energy contracts in Norway that do not
meet the own use criteria, since the power under the contracts
is delivered in another grid area to where the plants are located.
Transfer between different grid areas is assessed to be net
settlement and considered to be two different transactions.
Such contracts are therefore measured at fair value through
profit or loss and classified as derivatives, unless they are
Judgements and estimates
Estimates are used for financial assets and liabilities where
there are no listed prices or direct observable prices.
Calculation of fair value is in such cases based on observable
prices for similar contracts, as far as possible. For contracts
with a duration beyond the period of observable prices, the
assumptions are derived based on the latest observable data.
Due to the current market situation in the energy market
with very high prices and high volatility there is significant
uncertainty in the estimation of forward power prices with
direct impact on the value of the power contracts classified
as financial instruments. The estimated value of the power
contracts can be impacted by the changes in the power prices
both within the next 12 months, but also in the period beyond
12 months. There is also uncertainty related to the discount
rate used for discounting future cash flows and the expectation
to the development in the consumer price index going forward.
See assumptions used at the balance sheet date in chapter
(a) Fair value measurement below, and sensitivity of the main
power contracts in note 27 Financial risk.
Assets by category
31 December 2022
Assets at fair value
Assets at fair
Assets at fair
through other
Loans and
Non-
value through
value - hedging
comprehensive
receivables at
financial
Amounts in NOK million
Note
profit or loss
instruments
income
amortised cost
assets
Total
Derivatives, non-current
822
740
-
-
-
1 562
Other assets,
non-current
22
7
-
18
65
627
716
Trade receivables
21
-
-
-
4 248
-
4 248
Derivatives, current
284
427
-
-
-
711
Other assets, current
22
-
-
-
54
1 644
1 698
Restricted deposits
23
-
-
-
408
-
408
Cash and cash equivalents
23
-
-
-
9 255
-
9 255
Total
1 113
1 167
18
14 030
2 271
Liabilities by category
31 December 2022
Liabilities
at fair value
Liabilities at fair
through
value - hedging
Liabilities at
Non-financial
Amounts in NOK million
Note
profit or loss
instruments
amortised cost
liabilities
Total
Interest-bearing liabilities, non-current
1)
23
-
-
10 331
-
10 331
Provisions and other liabilities, non-current
24
-
-
-
232
232
Trade payables
-
-
5 335
-
5 335
Interest-bearing liabilities, current
1)
23
-
8
196
-
204
Bills payable
23
-
-
1 742
-
1 742
Derivatives, current
2)
(27)
136
-
-
109
Provisions and other liabilities, current
24
42
-
724
779
1 545
Total
15
144
18 329
1 011
Assets by category
31 December 2021
Assets at fair value
Assets at fair
Assets at fair
through other
Loans and
value through
value - hedging
comprehensive
receivables at
Non-financial
Amounts in NOK million
Note
profit or loss
instruments
income
amortised cost
assets
Total
Derivatives, non-current
(4)
308
-
-
-
304
Other assets, non-current
22
6
-
27
84
362
478
Trade receivables
21
-
-
-
4 297
-
4 297
Derivatives, current
2)
(2)
285
-
-
-
283
Other assets, current
22
14
-
-
157
1 381
1 551
Restricted deposits
23
-
-
-
609
-
609
Cash and cash equivalents
23
-
-
-
7 040
-
7 040
Total
14
593
27
12 187
1 743
Liabilities by category
31 December 2021
Liabilities
at fair value
Liabilities at fair
through
value - hedging
Liabilities at
Non-financial
Amounts in NOK million
Note
profit or loss
instruments
amortised cost
liabilities
Total
Interest-bearing liabilities, non-current
1)
23
-
3
8 406
-
8 409
Derivatives, non-current
2)
(71)
88
-
-
18
Provisions and other liabilities, non-current
24
40
-
-
142
182
Trade payables
-
-
4 614
-
4 614
Interest-bearing liabilities, current
1)
23
-
8
1 964
-
1 972
Bills payable
23
-
-
2 096
-
2 096
Derivatives, current
2)
(16)
40
-
-
23
Provisions and other liabilities, current
24
163
-
448
1 047
1 657
Total
116
138
17 527
1 189
1)
In addition to the hedging instruments included in derivatives, currency effect of EUR loan is designated as a hedging instrument in a cash
flow hedge of highly probable future sales. See note 26 Hedging.
2)
The group applies hedge accounting for certain currency contracts and certain parts of power contracts. The negative value reported as
assets and liabilities at fair value is representing the value of parts of power contracts where hedge accounting is not applied.
There are no material differences between fair value and the
carrying amount for financial liabilities and financial assets at
amortised cost.
Elkem's financial instruments measured to fair value are
categorised into three levels based on the inputs to the
valuation techniques used to measure fair value.
Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities that the entity can access at the
measurement date.
Level 2 inputs are inputs, other than quoted prices included
within level 1, that are observable for the asset or liability, either
directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
Assets and liabilities measured at fair value 31.12
Amounts in NOK million
Level 1
Level 2
Level 3
Total
2022
Level 1
Level 2
Level 3
Total
2021
Financial assets at fair value through profit or loss
Derivatives designated in a hedging relationship
Assets at fair value through other comprehensive income
Total assets
7
-
-
7
287
(55)
-
233
819
1 222
18
2 058
1 113
1 167
18
2 297
6
-
-
6
39
175
-
214
(31)
418
27
414
14
593
27
634
Financial liabilities at fair value through profit or loss
Derivatives designated in a hedging relationship
Total liabilities
-
(27)
-
144
-
117
42
-
42
15
144
159
-
(87)
-
138
-
51
203
-
203
116
138
254
Level 1:
Financial assets measured at level 1 apply to external quoted
shares, which are measured based on the quoted prices.
Dividends from the external shares are classified as other items.
Level 2:
Financial assets and liabilities measured at level 2 applies
to forward currency contracts, commodity contracts and
embedded currency derivatives.
The contracts are measured at fair value by estimating the
future cash flows.
Level 3:
The financial assets and liabilities at fair value through profit
or loss measured at level 3 consist of power contracts,
contingent consideration and shares in unlisted companies.
The power contracts are assessed to be settled net in cash
and are therefore within the scope of IFRS 9 and recognised as
financial instruments.
When valuing the power contracts observable data is used,
such as power price, currency rates, CPI and CfD, when
available. The power prices for long-term electricity contracts
in Norway are not directly observable in the market for the
whole contract length. Power prices are observable until 2031,
CfD prices are only observable for a short time period and
currency rates are observable until 2026. Valuation of the
contracts for the remaining periods are based on the latest
observable data adjusted for CPI, if relevant.
Overview of contracts and the assumptions used for
assessment of fair value for the level 3 contracts
Power contract "30-øringen"
"30-øringen" power contract lasts until 31 December 2030
and the power from the contract is restricted to be used at
Elkem ASA plants. For the years 2019 - 2020 the price under
the contract was fixed except if the spot price at the relevant
grid points exceeds a certain threshold, in which case the price
equals the spot price. For the last 10 years of the contract,
starting 1 January 2021, the price is fixed based on the average
spot price the five years preceding 1 January 2021, adjusted
for inflation. The fixed price and the threshold price are
based on a start date and thereafter adjusted with inflation
annually. Changes in fair value for the "30-øringen" contract
was classified as other items before 1 January 2021. Due to the
change in the contact's price structure of the instrument from
2021, the contract is designated as a hedging instrument from
1 January 2021. This means that fair value changes from the
effective part of the hedging relationship from 1 January 2021
is recognised as raw materials and energy for production in
statement of profit or loss in the same period(s) as the hedged
objects affects the profit or loss. The ineffective part of the
hedging relationship is recognised in other items.
Power contract with Salten Energigjenvinning AS
On 31 January 2022 entered into agreement to purchase the
remaining 50% of the shares in Salten Energigjenvinning AS.
The company was subsequently merged into Elkem ASA. The
power contract was therefore de-recognised at the date of
the merger.
Assumptions for valuation of the contracts
→
Discount rate: 4,87% (3.5%) p.a. for the "30-øringen"
power contract. The assumptions are based on the
estimated risk of the contract, including credit risk.
→
Inflation: 2% (2%) p.a.
→
Power prices: Market prices per 31 December 2022
until 2031.
→
CfDs: 4-year average historic CfD prices based on Nord
Pool prices.
→
Exchange rate EUR: Observable rates for the next 5
years, thereafter calculated rates based on long-term
interest rates.
For external shares measured at level 3, book value of equity
adjusted for excess values at purchase date is used as an
approximation of fair value.
See note 24 Provision and other liabilities for value of
contingent liabilities.
Movements in fair value measurement level 3
Amounts in NOK million
2022
2021
Opening balance
212
(348)
Acquisition / business combinations
(58)
-
Transfer to / from other levels
3
-
Change in fair value recognised in OCI, cash flow hedges
1 227
737
Hedge ineffectiveness
1 391
-
Disposal
(5)
-
Settlement / realised effects
(735)
(157)
Other changes in fair value through profit or loss, unrealised
(7)
(9)
Currency translation differences
(12)
(13)
Closing balance
2 016
(b) Details of financial instruments
Details of currency exchange contracts
31 December 2022
Notional
Purchase
Purchase
Sale
Sale
Type of
Currency
Fair value
amount
1)
currency
ccy million
currency
ccy million
instrument
deal rate
Due
NOK
NOK
CAD
40
USD
31
Fwd
1,3101
2023
(9)
301
NOK
1 750
EUR
170
Fwd
10,2788
2023
(44)
1 790
NOK
189
JPY
2 014
Fwd
0,0938
2023
36
151
NOK
426
JPY
4 242
Fwd
0,1005
2024-2026
88
317
NOK
764
USD
79
Fwd
9,6767
2023
(10)
780
USD
1
JPY
123
Fwd
0,0072
2023
(0)
9
NOK
719
EUR
69
Embedded
2)
10,4520
2023
(22)
723
NOK
3 688
EUR
335
Embedded
2)
11,0169
2024-2034
42
3 520
Total fair value
3)
80
Details of currency exchange contracts
31 December 2021
Notional
Purchase
Purchase
Sale
Sale
Type of
Currency
Fair value
amount
1)
currency
ccy million
currency
ccy million
instrument
deal rate
Due
NOK
NOK
CAD
40
USD
32
Fwd
1,2549
2022
(4)
284
NOK
1 231
EUR
120
Fwd
10,2303
2022
20
1 203
NOK
2
GBP
0
Fwd
11,6549
2022
(0)
2
NOK
169
JPY
1 844
Fwd
0,0916
2022
27
141
NOK
615
JPY
6 256
Fwd
0,0984
2023-2026
112
479
NOK
392
USD
45
Fwd
8,6557
2022
(9)
399
USD
1
JPY
102
Fwd
0,0088
2022
0
8
NOK
709
EUR
69
Embedded
2)
10,3355
2022
1
686
NOK
4 039
EUR
371
Embedded
2)
10,8877
2023-2034
(18)
3 709
Total fair value
3)
129
1)
Notional value of the contracts, based on currency rates 31 December.
2)
Embedded EUR derivatives in own use power contracts.
3)
The spot element of forward currency contracts with duration more than 3 months are designated as hedging instruments in a cash flow
hedge of highly probable future sales, hence this part is classified as "Derivatives used for hedging" in the table "Assets and liabilities classified
by category" above. The interest element of these contracts and contracts of duration < 3 months are classified as "Assets/liabilities at fair
value through profit or loss".
Details of power contracts and other commodity
contracts within the scope of IFRS 9
31 December 2022
Notional
Amounts in NOK million
Volume GWh / Oz
Due
Fair value
amount
1)
Forward power contracts financial institutions
44
2023
43
15
Power contract "30-øringen"
501
2023
608
158
Power contract "30-øringen"
3 510
2024-2030
1 430
1 199
Equity warrants
2023
3
3
Commodity contracts Platinum
2 380
2023
1
7
Total fair value contracts within scope of IFRS 9
2)
2 085
Details of power contracts and other commodity
contracts within the scope of IFRS 9
31 December 2021
Notional
Amounts in NOK million
Volume GWh / Oz
Due
Fair value
amount
1)
Forward power contracts financial institutions
98
2022
23
52
Forward power contracts financial institutions
44
2023
4
15
Power contract "30-øringen"
501
2022
167
157
Power contract "30-øringen"
4 011
2023-2030
163
1 378
Power contract with Salten Energigjenvinning AS (note 32)
124
2022
35
32
Power contract with Salten Energigjenvinning AS (note 32)
1 733
2023-2036
22
555
Equity warrants
2022
3
3
Commodity contracts Platinum
8 954
2022
0
7
Total fair value contracts within scope of IFRS 9
2)
417
1)
Notional value of underlying asset at the end of reporting period, calculated as volume * price * currency rate as at 31 December (if other
currencies than NOK).
2)
Certain power contracts are designated as hedging instruments, the remaining contracts / parts of contracts are classified as "Assets/
liabilities at fair value through profit and loss".
Financial assets
31 December 2022
Amounts in NOK million
Gross
amount of
financial
assets
Gross amount
of financial
liabilities set
off in the
statement
of financial
position
Net
amounts
of financial
assets
recognised /
presented
Financial
instruments
not set off in
the statement
of financial
position
Cash
collateral
pledged
Net
amount
Power contracts including embedded derivatives
Forward currency contracts
Total
2 123
147
2 269
(1)
-
(1)
2 122
147
2 268
-
21
21
-
-
-
2 122
168
2 289
Financial liabilities
31 December 2022
Amounts in NOK million
Gross
amount of
recognised
financial
liabilities
Gross amount
of recognised
financial assets
set off in the
statement
of financial
position
Net
amounts
of financial
liabilities
presented
Financial
instruments
not set off in
the statement
of financial
position
Cash
collateral
pledged
Net
amount
Power contracts including embedded derivatives
Forward currency contracts
Total
23
86
109
(1)
-
(1)
22
86
108
-
21
21
-
22
-
108
-
129
Financial assets
31 December 2021
Amounts in NOK million
Gross
amount of
financial
assets
Gross amount
of financial
liabilities set
off in the
statement
of financial
position
Net
amounts
of financial
assets
recognised /
presented
Financial
instruments
not set off in
the statement
of financial
position
Cash
collateral
pledged
Net
amount
Power contracts including embedded derivatives
Forward currency contracts
Total
414
170
585
-
-
-
414
170
585
-
16
16
-
-
-
414
186
601
Financial liabilities
31 December 2021
Amounts in NOK million
Gross
amount of
recognised
financial
liabilities
Gross amount
of recognised
financial
assets set
off in the
statement
of financial
position
Net
amounts
of financial
liabilities
presented
Financial
instruments
not set off in
the statement
of financial
position
Cash
collateral
pledged
Net
amount
Power contracts including embedded derivatives
Forward currency contracts
Total
17
24
41
-
17
-
24
-
41
-
16
16
-
17
-
40
-
Hedge accounting
Elkem has applied IFRS 9 for hedge accounting. According
to Elkem's policy, derivatives can be designated as hedging
instruments for fair value hedges and cash flow hedges. At the
inception of the hedge relationship, the entity documents the
relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its
strategy for undertaking various hedge transactions.
i) Cash flow hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges, are
recognised in other comprehensive income and accumulated
under the heading of cash flow hedging reserve. The gain
or loss relating to the ineffective portion is recognised
immediately in the statement of profit or loss and classified as
other items. Realised effects are recognised through statement
of profit or loss, in the same line item as the hedged objects.
ii) Net investment hedges
Hedges of net investments in foreign operations are accounted
for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the
hedge is recognised in other comprehensive income and
included in foreign currency translation reserve in equity. The
gain or loss relating to the ineffective portion is recognised
immediately in the statement of profit or loss within other
items. Gains and losses accumulated in equity are reclassified
to the statement of profit or loss when the foreign operation is
partially disposed of or sold.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in comprehensive income at
that time remains in equity and is recognised in the statement
of profit or loss when the forecast transaction is ultimately
recognised in the statement of profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain
or loss reported in equity is immediately transferred to the
Elkem's hedging instruments
Cash flow hedge
Elkem has forward currency contracts, embedded EUR
derivatives in power contracts and a EUR loan amounting
to EUR 5 million (EUR 11 million) where the spot element
is designated as hedging instruments and Elkem's highly
probable future revenue in corresponding currencies is
designated as the hedging objects in this hedging relationship,
defined as a cash flow hedge. In addition certain power
commodity contracts, defined as financial instruments, are
designated as hedging instruments in a cash flow hedge of
price fluctuations for highly probable future purchases. Hence,
the effective part of changes in fair value of the financial
instruments is booked against OCI, and recycled to profit or
loss as an adjustment of revenue and power cost (included in
raw materials and energy for production) when realised. The
ineffective part of changes in the fair value of the financial
instrument is recognised in other items in the statement of
profit and loss.
Net investment hedge
Elkem entered in 2017 into a bank loan amounting to EUR
275 million. In 2018 the bank loan of EUR 275 million was re-
financed and increased to EUR 400 million. In 2022 the loan
was refinanced again and increased to EUR 500 million. The
spot rate of the initial loan amount, EUR 275 million, has been
designated as a hedge of the net investment in the group’s
subsidiaries with EUR as functional currency. The fair value
and carrying amount of the borrowing at 31 December 2022
was NOK 2,891 million (NOK 2,749 million). The change foreign
exchange gain of NOK 142 million (a gain of NOK 130 million)
on translation of the borrowing from EUR to NOK at the end
of the reporting period is recognised in other comprehensive
income and accumulated in the foreign currency translation
reserve in the statement of changes in equity. There was no
ineffectiveness to be recorded from net investment hedges.
See note 27 Financial risk for Elkem's hedging policy.
Cash flow hedging instruments, by type
Amounts in NOK million
31.12.2022
Assets
fair value
31.12.2022
Liabilities
fair value
31.12.2021
Assets
fair value
31.12.2021
Liabilities
fair value
Forward currency contracts
Power contracts financial institutions
Power contract "30-øringen"
Power contract Salten Energigjenvinning AS
Power contracts embedded derivatives
Currency effect loan EUR
Commodity contracts Platinum
Total hedging instruments
110
28
1 235
-
(207)
-
1
1 167
80
-
-
-
56
8
-
144
146
27
364
58
-
-
-
593
18
-
-
-
110
10
-
138
Less non-current portion:
Forward currency contracts
Power contracts financial institutions
Power contract "30-øringen"
Power contract Salten Energigjenvinning AS
Power contracts embedded derivatives
Currency effect loan EUR
Commodity contracts Platinum
Current portion of hedging instruments
87
-
861
-
(207)
-
-
427
-
-
-
-
-
-
-
144
102
4
180
22
-
-
-
285
-
-
-
-
88
5
-
45
As at 31 December 2022 financial power contracts designated
in a hedging relationship comprise 15% of expected
consumption in Norway in 2023 and about 14% in the period
2024 - 2030.
Elkem has hedged approximately 19% of the expected
revenues in EUR and approximately 7% of expected revenues
in USD for 2023. For the years 2024-2034 EUR is hedged at a
range of 1 - 5%.
Financial instruments
31 December 2022
Effects to be recycled from OCI
Hereof
Within
Net fair
recognised
Within
Within
Within
4 years
Amounts in NOK million
value
in OCI
1 year
2 years
3 years
or more
Forward currency contracts
60
30
(57)
33
46
7
Embedded EUR derivatives
20
(263)
(56)
(51)
(49)
(108)
Power contracts
2 080
1 263
402
229
167
464
Warrants
2)
3
-
-
-
-
-
Commodity contracts Platinum
1
1
1
-
-
-
Total
1)
2 164
1 031
291
211
165
364
EUR loan designed as cash flow hedging instrument
(56)
(8)
(8)
-
-
-
Total
1 023
283
211
165
364
Financial instruments
Effects to be recycled from OCI
31 December 2021
Hereof
Within
Net fair
recognised in
Within
Within
Within
4 years
Amounts in NOK million
value
OCI
1 year
2 years
3 years
or more
Forward currency contracts
146
127
25
24
29
49
Embedded EUR derivatives
(17)
(110)
(21)
(21)
(19)
(48)
Power contracts
414
448
242
57
32
117
Warrants
2)
3
-
-
-
-
-
Commodity contracts Platinum
0
0
0
-
-
-
Total
1)
547
465
245
60
42
118
EUR loan designed as cash flow hedging instrument
(107)
(10)
(5)
(5)
-
-
Total
455
240
54
42
118
1)
Hedge accounting is applied for certain contracts and for parts of contracts.
2)
Subscription SAFE (Simple Agreement for Future Equity)
Of total changes in fair value of power contracts designated
as hedging instruments NOK 1,471 million (NOK 124 million) is
recognised in profit or loss, and classified as other items (see
note 12 Other items), due to ineffectiveness in the hedging
relationship and discontinuation of hedging. The ineffectiveness
on cash flow hedges relates to Elkem's hedges of future power
purchase. The ineffectiveness is caused by the extraordinary
developments in the Norwegian power market with significant
differences in prices between the different price areas.
Consequently, the cumulative change in fair value of some of the
hedging instruments are higher than the cumulative changes
in the present value of the hedge objects from the inception of
the hedge. The difference between the two is the recognised
as ineffectiveness. Of the NOK 1,471 million recognised in 2022,
NOK 1,422 million relates to hedge ineffectiveness caused by
these price differences. The remaining gain of NOK 49 million
is related to discontinuation of power hedging caused by
furnace closures in Norway. For 2021 the entire ineffectiveness
of NOK 124 million is caused by price differences. Effects from
recognition of ineffectiveness from forward currency contracts
are NOK 0 million (NOK 3 million).
Realised effects hedge accounting
Amounts in NOK million
31.12.2022
31.12.2021
Realised effects from forward currency contracts, recognised in revenue
(14)
127
Realised effects from embedded derivatives EUR, recognised in revenue
(29)
(31)
Realised effects from EUR loans, recognised in revenue
(5)
(4)
Realised effects from platinum contracts, included in Revenues
0
-
Realised effects from power contracts, recognised in raw materials and energy for production
377
190
Realised effects hedge discontinuation, recognised in other items
38
-
Realised effects Salten Energigjenvinning, business combination (note 4)
58
-
Total realised effects hedge accounting
424
282
In addition, Elkem applies hedge accounting principles related
to currency risk from a net investment in foreign operation, see
note 23 Interest-bearing assets and liabilities.
Movements in OCI related to hedging instruments
2022
Opening
Net change
Reclassified
Closing
Amounts in NOK million
balance
in fair value
to P&L
balance
Hedging of future sales, forward currency contracts
127
(112)
14
30
Hedging of future need for power, contracts with financial institutions
27
57
(56)
28
Hedging of future need for power, contract "30-øringen"
2)
364
1 230
(359)
1 235
Hedging of future need for power, contract Salten Energigjenvinning,
business combination (see note 4)
58
0
(58)
-
Hedging of future sales, embedded EUR derivatives in own use power contracts
1)
(110)
(182)
29
(263)
Hedging of future sales, currency effects EUR loan
(10)
(3)
5
(8)
Hedging of future sales, platinum contracts
2)
0
2
(0)
1
Total (before tax)
455
992
(424)
1 023
Movements in OCI related to hedging instruments
2021
Amounts in NOK million
Opening
balance
Net change
in fair value
Reclassified
to P&L
Closing
balance
Hedging of future sales, forward currency contracts
Hedging of future need for power, contracts with financial institutions
Hedging of future need for power, contract "30-øringen"
2)
Hedging of future need for power, contracts with Statkraft (swap)
1)
Hedging of future need for power, contract with Salten Energigjenvinning
Hedging of future sales, embedded EUR derivatives in own use power contracts
1)
Hedging of future sales, currency effects EUR loan
Hedging of future sales, platinum contracts
2)
Total (before tax)
150
(6)
-
(3)
(29)
(332)
(23)
-
(242)
104
65
501
15
94
191
8
0
979
(127)
(33)
(138)
(12)
(8)
31
4
-
(282)
127
27
364
0
58
(110)
(10)
0
455
1)
Hedge accounting from 2016.
2)
Hedge accounting from 2021.
Elkem is exposed to financial risks from fluctuations in market
prices for finished goods, raw materials, currency exchange
rates and interest rates (a) Market risk. In addition, Elkem is
exposed to financial risks related to (b) Counterparty credit
risk (c) Liquidity risk and (d) Climate risk. This may have
considerable impact on Elkem’s financial performance.
Elkem’s principle is to organise resources close to the value
chain. Risk management is an integrated part of Elkem’s
business activities, included in the line management’s
responsibility. Financial risks, including financing, liquidity,
currency, interest rates, and counterparty risks are generally
managed centrally by Group Finance and Treasury. Elkem has
financial risk policies in place, approved by the board
of directors.
Elkem’s financial risk exposure and business performance are
evaluated regularly, and the main risks are analysed in terms
of impact, likelihood and correlation. Based on the overall risk
evaluation Elkem may accept or seek to further reduce the
risks arising from operational activities.
(i) Price risk
Commodity prices
Elkem is exposed to fluctuations in market prices for finished
goods and raw materials. The market risk assessment is
based on a holistic approach as prices for Elkem’s products
tend to fluctuate with underlying macroeconomic conditions.
The same dynamics tend to apply to prices for the main raw
materials, giving Elkem a certain degree of natural hedging.
For the main upstream products and raw materials Elkem
seeks to reduce the risk exposure by entering sales and
purchase contracts for corresponding time periods and
volumes. The goal is to partly offset changes in sales prices
through changes in raw material costs.
A significant part of Elkem's sales consist of specialised
products. These products have generally more stable pricing.
Elkem’s integrated value chain mitigates the supply chain and
pricing risks and also give flexibility to realise value at various
levels through the value chain. Elkem aims to ensure sales
volumes and raw material supply by entering into long-term
customer relationships.
Power
Electric power is a key input factor and Elkem enters into long-
term power contracts to reduce the future exposure to changes
in power prices, particularly in Norway where electricity prices
based on hydro power tend to have different pricing dynamics
than for Elkem’s products and other raw materials.
Normally all plants have covered their main future need
for power by entering into power contracts, primarily
classified as own use contracts according to IFRS 9, hence
such contracts are off-balance. In addition to the own use
contracts certain financial power contracts are classified as
derivatives and designated in a cash flow hedging relationship
in accordance with IFRS (see notes 25 and 26). For plants
located in Norway, Elkem’s policy is that minimum 80% of the
expected power consumption shall be covered by fixed price
contracts for current and next year. This includes both own
use and derivative contracts at fair value. For the following
periods, the ratio extends until 4 years ahead, declining with
10%-point per year ending at 50%. Elkem currently fulfils this
minimum hedge policy, and also has a substantial amount
of contracts at fixed price for the later years. Optimisation
of 24-hour-, seasonal- and capacity utilisation variations are
solved through utilising financial and physical contracts that
are traded bilaterally. The purpose of entering into long term
power contracts is to reduce volatility in the power cost and
to increase the predictability of the cost base. Fair value of
commodity contracts is especially sensitive for future changes
in energy prices.
Changes in fair value of commodity contracts, classified as
financial instruments, reflect unrealised gains or losses, and
are calculated as the difference between market price and
contract price, discounted to present value. Valuations are
based on market information where this is available, if not,
valuations are based on estimated market price for non-
observable parameters.
Valuation of the power contracts
The assumptions for the fair value measurement of power
contracts are described in note 25 Financial assets and liabilities.
Sensitivity analysis - power contracts
Sensitivity on the "30-øringen" contract is as follows.
"30-øringen" contract
31.12.2022
31.12.2021
Amounts in NOK million
Fair value
Adjusted NPV
Fair value
Adjusted NPV
Discount rate (used 4.9% (3.5%))
change with -3.5 %-point
2 037
2 239
330
360
Discount rate (used 4.9% (3.5%))
change with +3.5 %-point
2 037
1 869
330
319
CPI (used 2.0%)
change to 1%
2 037
2 084
330
379
CPI (used 2.0%)
change to 3%
2 037
1 988
330
279
Power price
decrease -10%
2 037
1 721
330
166
Power price
increase + 10%
2 037
2 353
330
494
(ii) Currency risk
Elkem has revenues and operating costs in various currencies.
The prices of finished goods are to a large extent determined
in international markets, primarily denominated in US dollar,
Chinese yuan and Euro. This is partly offset by purchases of
raw materials denominated in the same currencies. Elkem
aims to establish natural hedging positions if this is possible
and economically viable. Financial derivatives are then used
to hedge the remaining net currency risk exposures. Elkem
has net positive operating cash flows in mainly Euro, US
dollar, Chinese yuan and Brazilian real. Due to the location
of its plants, Elkem has net cost positions in certain other
currencies, mainly Norwegian krone, but also Canadian
dollar and Icelandic krona.
Elkem's policy is to hedge the net positive cash flows in
foreign currencies against NOK to even out fluctuations in
result and cash flow. The target is to hedge expected net
cash flow for 0–3 months on a 90% hedging ratio. Expected
net cash flow for 4–12 months should be hedged on a rolling
basis targeting a 45% hedging ratio. The hedging ratio for
4–12 months may vary subject to internal approval. Chinese
yuan (CNY) is not included in the hedging programme. Elkem
has hedged Japanese yen until 2026, related to a long-term
customer contract. Elkem uses hedge accounting for all cash
flow hedges over 3 months. Embedded EUR derivatives in
power contracts are included in the foreign exchange hedging
programme. To ensure an effective hedge, according to the
hedge accounting principles, the spot element of the forward
currency contracts is designated as hedging instruments and
highly probable future revenue as hedging object in a hedging
relationship, covering the exposure beyond 3 months.
Elkem realised a loss of NOK 49 million from hedging
programme (gain of NOK 92 million).
Elkem aims to mitigate the currency risk in the statement of
financial position by keeping interest-bearing debt in the same
currencies as the group’s assets. Elkem has mainly interest-
bearing debt in Euro, Chinese yuan and Norwegian krone.
Currency effects recognised in total comprehensive income
for the year, excluding effects from cash flow hedging
Amounts in NOK million
2022
2021
Net foreign exchange gains (losses) - forward currency contracts - recognised in other items
9
14
Operating foreign exchange gains (losses) - recognised in other items
387
20
Net foreign currency exchange gains (losses) on financing activities - recognised in foreign exchange gains (losses)
85
241
Currency translation differences - recognised in other comprehensive income
765
358
Hedging of net investment in foreign operations - recognised in other comprehensive income
(142)
130
Total
1 104
764
Currency exposure
The amounts in the tables below are translated to NOK using
exchange-rates against NOK per 31 December.
Exchange rates against NOK per 31 December
2022
2021
USD
9.8714
8.8242
EUR
10.5130
9.9978
CNY
1.4309
1.3891
CAD
7.2879
6.9449
Currency exposure affecting statement of profit or loss
The tables show carrying amount of assets and liabilities
denominated in foreign currencies different from the entities
functional currency, where changes in currency rates will affect
profit and loss. The tables include notional amount of currency
exchange contracts (note 25 Financial assets and liabilities).
Amounts are presented in NOK based on currency rates as at
31 December.
31 December 2022
Amounts in NOK million
USD
EUR
CNY
CAD
NOK
Other
Total
Other non-current assets
-
-
-
-
-
-
-
Trade receivables
662
98
-
-
-
-
759
Other assets
-
-
-
-
-
-
-
Restricted deposits
-
-
-
-
-
-
-
Cash and cash equivalents
1 658
3 124
489
(265)
0
459
5 466
Total monetary assets
2 320
3 222
489
(265)
0
459
6 225
Interest-bearing liabilities
-
6 505
-
-
-
-
6 505
Other liabilities
-
-
-
-
-
-
-
Trade payables
592
232
-
-
-
37
862
Bills payable
-
-
-
-
-
-
-
Total monetary liabilities
592
6 738
-
-
-
37
7 367
Derivatives, notional value
780
6 033
-
-
-
468
7 281
Net currency exposure financial position
948
(9 549)
489
(265)
0
(46)
(8 423)
31 December 2021
Amounts in NOK million
USD
EUR
CNY
CAD
NOK
Other
Total
Other non-current assets
-
-
-
-
-
-
-
Trade receivables
927
457
-
-
0
98
1 483
Other assets
-
-
-
-
-
-
-
Restricted deposits
-
-
-
-
-
-
-
Cash and cash equivalents
1 172
25
80
(95)
0
387
1 570
Total monetary assets
2 100
482
80
(95)
0
485
3 052
Interest-bearing liabilities
-
6 773
-
-
-
-
6 773
Other liabilities
-
-
-
-
-
-
-
Trade payables
442
117
3
0
2
56
620
Bills payable
-
-
-
-
-
-
-
Total monetary liabilities
442
6 890
3
0
2
56
7 393
Derivatives, notional value
399
5 598
-
-
-
631
6 629
Net currency exposure financial position
1 258
(12 006)
77
(95)
(1)
(202)
(10 969)
Sensitivity on profit and loss from
financial assets and liabilities
The following tables demonstrate the sensitivity to a reasonable
possible change in EUR and USD exchange rates by 5%, with
all other variables held constant. The impact on Elkem’s profit
before tax is due to changes in the fair value of monetary
assets and liabilities including foreign currency derivatives and
embedded derivatives not designated for hedging. The impact
on Elkem’s pre-tax equity is due to changes in the fair value of
forward exchange contracts designated as cash flow hedges
and net investment hedges. The impact on pre-tax equity
would be booked against OCI and recycled through profit
before tax, when the hedged items are realised. In addition the
profit and loss will be affected by translation differences on
intra group balances, mainly in EUR, USD and CNY.
Currency
31.12.2022
31.12.2021
Amounts in NOK million
Change in
FX rate
Effect on profit
Effect on
before tax
pre-tax equity
Effect on profit
Effect on
before tax
pre-tax equity
EUR
5 %
(46)
(431)
(194)
(410)
EUR
-5 %
46
431
194
410
USD
5 %
79
(31)
70
(16)
USD
-5 %
(79)
31
(70)
16
Currency exposure affecting currency
translation differences / equity
The table shows Elkem's total assets and liabilities
denominated in the group's main currencies translated to NOK
at the currency rates at 31 December and gives an overview
of the group's total currency exposure that will affect currency
translation differences both in the consolidated statement of
comprehensive income and / or profit and loss.
31 December 2022
Amounts in NOK million
USD
EUR
CNY
CAD
NOK
Other
Total
Other non-current assets
64
399
113
40
67
34
716
Trade receivables
1 451
452
1 644
29
3
668
4 248
Other assets
64
215
236
32
938
213
1 698
Restricted deposits
7
0
400
-
-
1
408
Cash and cash equivalents
2 017
3 363
2 083
(60)
998
854
9 255
Total monetary assets
3 603
4 429
4 476
41
2 006
1 771
16 325
Asset non-monetary items
2 828
5 917
12 311
1 278
12 264
1 858
36 455
Total assets
6 431
10 345
16 787
1 319
14 270
3 628
52 781
Interest-bearing liabilities
31
6 620
1 066
-
2 753
66
10 535
Other liabilities
25
193
334
36
605
351
1 545
Trade payables
778
1 277
2 341
96
630
212
5 335
Bills payable
-
-
1 742
-
-
-
1 742
Total monetary liabilities
834
8 090
5 485
132
3 988
628
19 158
Liabilities non-monetary items
169
694
310
391
3 080
204
4 849
Total liabilities
1 004
8 785
5 794
524
7 069
832
24 007
31 December 2021
Amounts in NOK million
USD
EUR
CNY
CAD
NOK
Other
Total
Other non-current assets
47
285
43
-
72
31
478
Trade receivables
1 387
660
1 549
21
184
497
4 297
Other assets
20
185
262
12
939
134
1 551
Restricted deposits
2
-
604
-
3
-
609
Cash and cash equivalents
1 438
219
1 448
221
3 066
647
7 040
Total monetary assets
2 894
1 349
3 906
254
4 264
1 308
13 976
Asset non-monetary items
1 864
4 878
11 162
837
7 710
1 423
27 874
Total assets
4 758
6 227
15 068
1 092
11 974
2 731
41 850
Interest-bearing liabilities
38
6 083
1 144
-
3 038
77
10 380
Other liabilities
39
225
469
25
664
235
1 657
Trade payables
567
1 049
1 705
95
1 011
186
4 614
Bills payable
-
-
2 096
-
-
-
2 096
Total monetary liabilities
644
7 357
5 414
121
4 714
498
18 747
Liabilities non-monetary items
Total liabilities
139
782
709
8 065
606
6 020
188
308
1 403
6 117
184
683
3 228
21 976
(iii) Interest rate risk
Elkem's interest rate risk arises from interest-bearing liabilities
granted by external financial institutions. Elkem's liabilities are
mainly drawn in Euro, Chinese yuan and Norwegian krone.
Elkem has a floating interest rate policy and is hence exposed
to fluctuating interest rates. Prices and sales volumes for
Elkem's core products tend to correlate with general economic
conditions. A floating interest rate policy is therefore seen as
appropriate from a financial risk perspective. Interest rates
have stayed low for a number of years due to a low-rate
economic environment. During 2022 the interest rate has
increased as many central banks have inflation targets and
have adjusted interest rates to control a higher rise in the price
level than targeted. With floating interest rates the group will
normally be in a position to benefit from lower interest rates in
an economic downturn, but a floating rate policy will also leave
the group exposed to futhure interest rate hikes.
Elkem has the following interest-bearing assets and liabilities
31 December 2022
Amounts in NOK million
Floating
Fixed
Total
Interest-bearing liabilities
12 120
158
12 278
Interest-bearing assets
9 718
-
9 718
Net exposure
2 402
158
2 559
Sensitivity
The interest rate sensitivity is based on a parallel shift in the
interest rates that Elkem is exposed to. If interest rates had
been 100 basis points higher for a full year, based on net debt
as at 31 December 2022, with all other variables held constant,
the profit (loss) for the year would have been NOK 20 million
(NOK 38 million) lower. An overview of Elkem's debt portfolio is
Credit risk is the risk of financial losses to the group if a
customer or counterparty fails to meet contractual obligations.
For Elkem this arises mainly to trade receivable and financial
trading counterparties.
Trade receivables are generally secured by credit insurance
from a reputable credit insurance company. For customers
where credit insurance cannot be obtained, other methods
are generally used to secure the sales proceeds, such as
prepayment, letter of credit, documentary credit or guarantees.
In particular, when sales are made in countries with a high
political risk, or to remote customers, trade finance products
are used to reduce the credit risk. Of Elkem's revenue outside
China 85% - 95% is covered by credit insurance or other trade
finance tools.
Elkem realised credit losses of NOK 5 million (NOK 12 million)
trade receivables. The maximum exposure to credit risk for
trade receivables for the group is NOK 4,257 million per 31
December 2022 (NOK 4,306 million). Please also refer to note
21 Trade receivables.
Evaluation of financial counterparties is based on external credit
ratings from Moody's and / or Standard and Poor's. The general
policy is that financial counterparties should have a rating
equal to, or higher than, A- (or the equivalent) from the rating
agencies, but exceptions may be made on a case-by-case basis,
mainly for local banks in emerging markets. Elkem has not had
Liquidity risk is the risk that the group will encounter difficulty
in meeting the obligations associated with its financial
liabilities. Elkem is exposed to liquidity risk related to its
operations and financing.
Elkem's cash flow will fluctuate due to economic conditions
and financial performance. In order to assess its future
operational liquidity risk, short-term and long-term cash flow
forecasts are provided. The short-term forecast is updated
each week, and the long-term cash flow projection is updated
each quarter.
In order to mitigate the operational liquidity risk, Elkem
has cash and revolving credit facilities with banks. As at 31
December 2022 Elkem has unrestricted cash of NOK 9,255
million (NOK 7,040 million). In addition, revolving credit
facilities amount to NOK 6,356 million (NOK 3,144 million), of
which NOK 6,342 million is undrawn (NOK 3,144 million).
The external loan agreements contain two financial covenants.
The ratio of EBITDA to consolidated Net interest payable,
as defined herein, for each measurement period, where the
period is calculated as the 12 months ending on the last day
of a financial quarter, must exceed 4. Additionally, the ratio of
total equity to total assets must be more than 30% at all times.
Elkem complies with these covenants as of 31 December 2022
and also complied with the covenants as of 31 December 2021,
see note 23 Interest-bearing assets and liabilities.
The policy is to have cash and available credit facilities to cover
known capital needs and generally not less than 10% of annual
total operating income. In addition, the policy is to ensure that
the main credit facilities have a remaining maturity of at least
12 months. The maturity profile of the credit facilities per 31
December 2022 for Elkem is shown in the table below.
Year / maturity
Amounts in NOK million
2023
2027
Total
Total amount of credit facilities
1 100
5 257
6 356
The table below analyses the group's financial liabilities and
assets into relevant maturity groupings based on the remaining
period at the date of the statement of financial position to the
contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows, and the amounts
are including interest payments.
31 December 2022
Amounts in NOK million
2023
2024
2025
2026
2027
2028
and later
Total
Carrying
amount
Trade receivables
Derivative assets
Total assets
4 248
698
4 946
-
434
434
-
346
346
-
306
306
-
287
287
-
482
482
4 248
2 554
6 802
4 248
2 273
6 521
Trade payables
Derivative liabilities
Lease liabilities
Loans from external parties, other
Bank financing
Bills payable
Total liabilities
than bank
5 335
109
103
103
140
1 742
7 532
-
8
101
1 009
73
-
1 191
-
-
79
1 299
102
-
1 480
-
-
65
979
125
-
1 169
-
-
55
518
5 395
-
5 968
-
-
291
105
827
-
1 223
5 335
117
695
4 014
6 661
1 742
18 564
5 335
109
578
3 706
6 276
1 742
17 747
31 December 2021
Amounts in NOK million
2022
2023
2024
2025
2026
2027
and later
Total
Carrying
amount
Trade receivables
Derivative assets
Total assets
4 297
269
4 567
-
62
62
-
37
37
-
54
54
-
18
18
-
154
154
4 297
594
4 891
4 297
588
4 885
Trade payables
Derivative liabilities
Lease liabilities
Loans from external parties, other
Bank financing
Bills payable
Total liabilities
than bank
4 614
23
116
1 334
671
2 096
8 854
-
2
123
64
4 477
-
4 666
-
(1)
99
1 174
214
-
1 486
-
4
80
1 037
4
-
1 124
-
7
68
519
4
-
597
-
8
427
509
4
-
948
4 614
43
912
4 637
5 374
2 096
17 675
4 614
41
801
4 389
5 186
2 096
(d) Climate risk
Climate-related issues represent important risk factors to the
business, as well as attractive business opportunities since
our products can be key enablers for lower greenhouse gas
emissions through amongst other things renewable energy,
energy storage and electrification of transportation. Elkem's
board of directors and management conduct regular reviews of
the group's strategy, which includes processes for identifying,
assessing, and responding to climate-related risks and
opportunities. Climate-risk assessments are also integrated
into our multi-disciplinary company-wide risk management
process and each year a mapping is performed to identify
the top risks for each division and corporate function. The
individual risks are then organised into categories and
aggregated on group level. The process for identifying climate
Elkem focuses on having a balanced capital structure, which
seeks to reflect the return requirements for the shareholders
and the need for a strong financial position to facilitate the
group’s strategy for growth and specialisation. The target is
to have a leverage between 1.0x and 2.0x over a cycle. The
leverage ratio is defined as net interest-bearing assets, less
non-current interest-bearing assets (see note 23 Interest-
bearing assets and liabilities), divided by EBITDA, as defined
in the APM section.
Elkem is managing its financing and liquidity position to
reduce liquidity risk and to ensure that the company can meet
its financial obligations at all times. Elkem has centralised the
responsibility for group financing and liquidity handling. The
policy is to raise financing at parent company level however,
country specific exceptions may be made due to local
legislation or currency restrictions. Loan maturities are subject
to liquidity and refinancing risk and the company aims to have
a long-term and smooth maturity profile on its loan portfolio.
Cash pooling is used to secure availability and access
to cash across the group. Due to local legislation, not all
subsidiaries are able to participate in international cash pooling
arrangements. In these cases, repatriation of excess cash
is mainly executed through dividend payments and inter-
company deposits, while liquidity needs are covered through
capital injections and inter-company loans. Liquidity forecasts
are prepared and updated on a regular basis. The short-
term forecasts are updated weekly. Elkem's cash position
is reported on a daily basis and tracked against respective
forecasts. The policy is that available liquidity reserves, defined
as cash and cash equivalents and available long-term credit
facilities, should exceed 10% of total operating income.
Financial covenants are applicable in some of Elkem’s loan
agreements. Financial covenants, if required, are standardised
across all loan agreements. Financial covenants and other
financial policy targets are monitored monthly and included in
the company’s management reports.
Elkem intends to pay dividends reflecting the underlying
earnings and cash flow. Elkem envisages a dividend pay-
out ratio of 30 - 50% based on profit for the year. When
deciding the annual dividend level, Elkem's leverage, capital
expenditure plans and financing requirements will be
taken into consideration. Focus will also be on maintaining
appropriate strategic flexibility. For the year 2021 Elkem
distributed NOK 3.00 per share in dividends and for the year
2022 the proposed dividend is NOK 6.00 per share.
As at 31 December 2022, Elkem's equity was NOK 28,773
million, including minority interests of NOK 134 million. The
The development in share capital and other paid-in equity is
set out in the consolidated statement of changes in equity.
The largest shareholders are listed in note 21 to the financial
statement of Elkem ASA.
Number of shares
2022
2021
Shares
Treasury
Total issued
Shares
Treasury
Total issued
outstanding
shares
shares
outstanding
shares
shares
Opening balance
633 037 606
6 403 772
639 441 378
581 310 344
-
581 310 344
Capital increase
-
-
-
58 131 034
-
58 131 034
Increase in treasury shares
(5 000 000)
5 000 000
-
(6 403 772)
6 403 772
-
Sale of treasury shares
6 439 379
(6 439 379)
-
Closing balance
634 476 985
4 964 393
639 441 378
633 037 606
6 403 772
639 441 378
The share capital of Elkem ASA is NOK 3,197,206,890 divided
on 639,441,378 shares of NOK 5 par value. Of this amount
Elkem ASA held 4,964,393 treasury shares, 0.7% of total
issued shares. Elkem has in 2022 acquired 5,000,000 own
shares that will be used as settlement in Elkem's share option
scheme. Total transaction value was NOK 192 million. Elkem
has in 2022 sold 6,439,379 shares in connection with Elkem's
share option scheme. Total consideration was NOK 154 million.
In the annual general meeting held on 27 April 2022, the board
of directors was granted an authorisation to repurchase the
company’s own shares within a total nominal value of up to NOK
319,720,689. The maximum amount that can be paid for each
share is NOK 150 and the minimum is NOK 1. The authorisation
is valid until the annual general meeting in 2023, but not later
than 30 June 2023. The authorisation can be used to acquire
shares as the board of directors deems appropriate, provided
however, that acquisition of shares shall not be by subscription.
In the annual general meeting held on 27 April 2022, the
board of directors was granted an authorisation to increase
the company’s share capital with an amount up to NOK
319,720,689 - corresponding to 10 per cent of the current
share capital. The authorisation is valid until the annual
general meeting in 2023, but not later than 30 June 2023. The
authorisation can be used to cover share capital increases
against contribution in kind and in connection with mergers.
In the annual general meeting held on 27 April 2022, the board
of directors was granted an authorisation to increase the share
capital by up to NOK 40,000,000 to be used in connection
with the issuance of new shares under share incentive scheme.
The authorisation is valid until the annual general meeting in
2023, but not later than 30 June 2023. The authorisation does
not cover capital increases against contribution in kind or
The calculation of basic earnings per share (EPS) has been
based on profit attributable to ordinary shareholders and
weighted-average number of ordinary shares outstanding. The
calculation of diluted EPS has been based profit attributable
to ordinary shareholders and weighted-average number of
ordinary shares outstanding after adjustment for the effects of
2022
2021
Weighted average number of shares outstanding
633 563 574
618 160 299
Effects of dilution
2 025 138
3 876 305
Weighted average number of shares outstanding - diluted
635 588 712
622 036 604
Owners of the parent's share of profit (loss) (NOK million)
9 561
4 628
Earnings per share (NOK)
15.09
7.49
Diluted earnings per share (NOK)
15.04
7.44
The following table gives an detailed overview of changes in
working capital in the statement of cash flow. Working capital
is defined as accounts receivable, inventory, other current
assets, accounts payable, current employee benefit obligations
and other current liabilities. Accounts receivable are defined
as trade receivables less bills receivable. Other current assets
are defined as other current assets less current receivables
to related parties, current interest-bearing receivables, tax
receivables, grants receivable, assets at fair value through
profit or loss and accrued interest income. Accounts payable
are defined as trade payables less trade payables related to
purchase of non-current assets. Other current liabilities are
defined as provisions and other current liabilities less current
provisions, contingent considerations, contract obligations and
liabilities to related parties.
Changes in working capital
Amounts in NOK million
2022
2021
Changes in accounts receivable
324
(1 374)
Changes in inventory
(2 258)
(2 358)
Changes in other current assets
99
(205)
Changes in accounts payable
134
1 213
Changes in other current liabilities including employee benefit obligations
118
704
Total
(1 583)
(2 020)
Liquidity effects of contingent considerations
Amounts in NOK million
2022
2021
Settlement of contingent consideration
160
83
Discounting element on settlement of contingent consideration
12
3
Fair value adjustment on settlement of contingent consideration
(0)
1
Foreign exchange gains (losses) from date of control
4
(9)
Total payment of contingent consideration related to acquisitions (IFRS 3)
176
Related parties' relationships are defined to be entities outside
Elkem group that are under control (either directly or indirectly),
joint control or significant influence by the owners of Elkem.
Elkem ASA is owned 52.9% by Bluestar Elkem International
Co. Ltd S.A., Luxembourg, which is under control of Sinochem
Holdings Co., Ltd (Sinochem), a company registered and
domiciled in China. All companies under control by Sinochem
are considered to be related parties, including among others
China Blue Chemicals Ltd and Jiangxi Xinghuo spaceflight
New Material Co., Ltd.. On 1 February 2022 Elkem purchased
the remaining shares in Salten Energigjenvinning AS and
transactions from that date are eliminated.
Elkem also consider equity accounted companies as related
parties. On 14 September 2022 Elkem lost control of Vianode
AS and transactions are from that date considered to be
related party transactions.
The structure of Elkem group is disclosed in note 4
Composition of the group and note 5 Equity accounted
investments and joint operation.
Transactions with related parties
2022
Sale of
Purchase
Sale of
Purchase of
Interest
Financial
Amounts in NOK million
goods
of goods
services
1)
services
income
expenses
Bluestar Elkem International Co. Ltd S.A.
-
-
-
-
-
-
Joint ventures and associates
-
(280)
15
(191)
0
-
Related parties within Sinochem
336
(434)
14
(126)
-
-
Other related parties
-
(21)
-
(18)
-
-
Total
336
(735)
30
(335)
0
-
1)
Including sub-lease
Transactions with related parties
2021
Sale of
Purchase
Sale of
Purchase of
Interest
Financial
Amounts in NOK million
goods
of goods
services
1)
services
income
expenses
1)
Bluestar Elkem International Co. Ltd S.A.
-
-
-
-
-
-
Joint ventures and associates
-
(158)
32
(184)
0
-
Related parties within Sinochem
581
(414)
41
(153)
-
-
Other related parties
0
(18)
-
(16)
-
-
Total
581
(591)
73
(354)
0
-
1) Including sub-lese
Balances with related parties
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Receivables from joint ventures and associates, interest-bearing
1
1
-
-
Receivables from related parties within Sinochem, interest free
-
-
7
1
Liabilities to related parties within Sinochem, interest free
-
-
(30)
(32)
Trade receivables, related parties within Sinochem
-
-
4
17
Trade receivables, joint ventures and associates
-
-
15
16
Trade payables, Bluestar Elkem Investment Co. Ltd. S.A
-
-
(5)
(5)
Trade payables, related parties within Sinochem
-
-
(79)
(56)
Trade payables, joint ventures and associates
-
-
(71)
(43)
Prepayments to related parties within Sinochem
-
-
15
18
Prepayments from joint ventures and associates
-
-
(17)
(10)
Financial power contract with joint ventures and associates
-
22
-
35
Net balances with related parties
1
23
(161)
(60)
Outstanding balances at year-end are unsecured, and the
current receivables and payables are interest-free, with an
exception of the non-current receivables. The interest rate
for the non-current receivables to the joint ventures and
associates are currently 3.0% (2.5%).
Information about main transactions with related parties:
Related parties within Sinochem
→
Sale of silicone to China Bluestar International
Chemical Ltd,
Jiangxi Xinghuo Spaceflight New
Material Co., Ltd and other companies within Sinochem
→
Purchase of raw materials from companies
within Sinochem
Equity accounted companies
Vianode AS
The group has entered into a investment agreement
and committed to cover its proportion of total estimated
capital injections in Vianode AS. Elkem's proportion is
NOK 534.5 million, whereof NOK 267 million is paid as of
31 December 2022.
Jiangxi Guoxing Intelligence Energy Co. Ltd
Elkem has committed to cover its proportion of total estimated
capital injections in Jinangxi Energy of CNY 48.7 million,
whereof CNY 17.5 million is paid as of 31 December 2022.
In addition Elkem has committed to sell the land, buildings and
equipment needed to establish the cogeneration facility and
when the facility is up and running committed to supply steam.
Other equity accounted companies
→
Purchase of short and deep sea transport from North Sea
Containerline AS and EPB Chartering AS
→
Purchase of warehousing for Combined Cargo
Warehousing BV
→
Purchase of services related to shared infrastructure such
as laboratory analysis, IT and telephone, warehousing
and purchase of basic chemistry products such as gas,
nitrogen, compressed air from GIE Osiris
There are no other contingent liabilities or commitments
related to the joint ventures and associates.
Key management personnel and board of directors
Information on transactions with key management personnel,
see note 9 Employee benefits and "Report on salary and
other remuneration to leading personnel in Elkem ASA for the
financial year 2022".
Pledges
The main part of Elkem's interest-bearing liabilities are not
pledged. Details of liabilities that have pledged assets or
guarantees related to them are stated below.
Pledged liabilities
Amounts in NOK million
31.12.2022
31.12.2021
Pledged liabilities
125
79
Book value pledged assets
Amounts in NOK million
31.12.2022
31.12.2021
Building
30
28
Machinery and plant
0
0
Other assets
106
57
Elkem makes limited use of guarantees, see specification below.
Guarantee commitments
Amounts in NOK million
31.12.2022
31.12.2021
Guarantee commitment KLIF (Climate and Pollution Agency)
40
40
Guarantee commitment tax cases Brazil
38
Presentation of realised hedge ineffectiveness is changed from
raw materials and energy for production to other items in the
statement of profit or loss. The impact on comparable figures
in the statement of profit or loss are shown in the tables below.
The change in presentation will not affect accounting policies
for operating segments, see note 6 Operating segments.
Consolidated statement of profit or loss
2022
2022
before
After
Amounts in NOK million
change
Impact
change
Raw materials and energy for production
(21 378)
(597)
(21 976)
Other items
1 554
597
2 151
Operating profit (loss)
12 414
-
12 414
Consolidated statement of profit or loss
2021
Financial
Impact
2021
Amounts in NOK million
statement
of change
Restated
Raw materials and energy for production
(15 861)
(124)
(15 985)
Other items
(114)
124
10
Operating profit (loss)
5 785
-
Principle
Events after the reporting period
Events after the reporting period related to the group’s financial
position at the end of the reporting period, are considered in
the financial statements. Events after the reporting period that
have no effect on the group’s financial position at the end of
the reporting period, but will have effect on future financial
position, are disclosed if the future effect is material.
No events have taken place after the reporting period that
would have had a material impact on the financial statements
Contents
Financial statements
Income statement
256
Balance sheet
257
Cash flow statement
258
Genereal information
Note 1
General information
259
Note 2
Significant accounting policies
259
Note 3
Accounting estimates
264
Income statement
Note 4
Operating income
264
Note 5
Grants
265
Note 6
Employee benefit expenses
266
Note 7
Employee retirement benefits
267
Note 8
Other operating expenses
268
Note 9
Operating lease
269
Note 10
Other gains (losses) related to operating activities
269
Note 11
Finance income and expenses
270
Note 12
Taxes
270
Balance sheet
Note 13
Property, plant and equipment
272
Note 14
Intangible assets
273
Note 15
Investment in subsidiaries
274
Note 16
Investment in joint ventures
275
Note 17
Inventories
277
Note 18
Trade receivables
277
Note 19
Other assets
278
Note 20
Equity
279
Note 21
Shareholders
280
Note 22
Interest-bearing assets and liabilities
280
Note 23
Provisions and other liabilities
283
Note 24
Financial instruments
284
Other information
Note 25
Financial Risk
286
Note 26
Related parties
286
Note 27
Pledge of assets and guarantees
288
Note 28
Merger
288
Note 29
Change in presentation
289
Income statement - Elkem ASA
Amounts in NOK million
Note
2022
2021 Restated
1)
1 January - 31 December
Revenue
Other operating income
Total operating income
4
4, 5
15 912
543
16 455
9 309
431
9 740
Raw materials and energy for production
Employee benefit expenses
Other operating expenses
Other gains (losses) related to operating activities
Amortisation and depreciation
Impairment losses
Total operating expenses
6,7
8,9
10
13,14
13,14
(6 183)
(1 348)
(2 684)
1 712
(407)
(3)
(8 912)
(4 392)
(1 257)
(2 172)
253
(359)
(14)
(7 941)
Operating profit (loss)
7 543
1 799
Income from subsidiaries
Income (loss) from joint ventures
Finance income
Foreign exchange gains (losses)
Finance expenses
Profit (loss) before income tax
15
16
11
11
11
229
(17)
166
(62)
(267)
7 593
126
37
134
377
(198)
2 274
Income tax (expenses) benefit
Profit (loss) for the year
12
(1 603)
5 990
(501)
1 773
1)
See note 29 Changes in presentation
Balance sheet - Elkem ASA
Amounts in NOK million
Note
31.12.2022
31.12.2021
Assets
Property, plant and equipment
Goodwill
Intangible assets
Investments in subsidiaries
Investments in joint ventures
Derivatives
Other assets
Total non-current assets
13
14
14
15
16
24
19
4 098
16
81
12 604
639
1 559
4 278
23 275
3 003
20
111
11 982
46
301
3 322
18 785
Inventories
Trade receivables
Derivatives
Other assets
Cash and cash equivalents
Total current assets
17
18
24
19
22
2 753
1 582
709
1 786
5 316
12 145
1 677
1 739
283
1 136
4 260
9 095
Total assets
35 420
27 880
Equity and liabilites
Paid-in capital
Retained earnings
Total equity
20, 21
20
3 493
10 515
14 009
6 178
5 104
11 283
Interest-bearing liabilities
Deferred tax liabilities
Pension liabilities
Derivatives
Provisions and other liabilities
Total non-current liabilities
22
12
7
24
23
9 074
741
80
-
82
9 977
7 292
306
85
18
109
7 810
Trade payables
Income tax payables
Interest-bearing liabilities
Derivatives
Dividend
Provision and other liabilities
Total current liabilities
12
22
24
20
23
1 353
1 330
3 903
108
3 813
927
11 435
1 553
446
3 945
23
1 918
902
8 788
Total equity and liabilities
35 420
27 880
Oslo, 8 March 2023
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Jingwan Wu
Board member
Grace Tang
Board member
Marianne
Elisabeth Johnsen
Board member
Nathalie Brunelle
Board member
Thomas Eggan
Board member
Terje Andre Hanssen
Board member
Marianne Færøyvik
Board member
Helge Aasen
CEO
Cash flow statement - Elkem ASA
Amounts in NOK million
Note
2022
2021 Restated
1)
1 January - 31 Desmeber
Operating profit (loss)
Changes fair value financial instruments
Amortisation, depreciation and impairment losses
Changes in working capital
2)
Changes in provisions, pension obligations and other
Interest payments received
Interest payments made
Income taxes paid
Cash flow from operating activities
13, 14
7 543
(1 042)
410
(875)
(94)
91
(269)
(450)
5 314
1 799
6
373
(481)
2
63
(170)
(213)
1 380
Investments in property, plant and equipment and intangible assets
Received investment grants
Proceeds from sale of property, plant and equipment
Cash effect from merged companies
Acquisition and capital increase in subsidiaries
Acquisition of and cash contributions to joint ventures
Increase in loans to subsidiaries
Re-payment on loans to subsidiaries
Dividends and group contributions
Other investments / sales
Cash flow from investing activities
13, 14
5
13
28
15
16
22,26
22,26
15
(619)
42
5
38
(913)
(267)
(1 848)
334
138
0
(3 089)
(467)
90
0
-
(481)
-
(291)
201
234
0
(714)
Dividend paid to owners
Capital increase
Net sale (purchase) of treasury shares
New interest-bearing loans and borrowings
Repayment of interest-bearing loans and borrowings
New cash deposits to / from subsidiaries
Repayment of cash deposits to / from subsidiaries
Cash flow from financing activities
20
20
20
22
22
22,26
22,26
(1 900)
-
(38)
5 702
(6 131)
1 578
(380)
(1 169)
(96)
1 900
(278)
2 500
(2 426)
910
(715)
1 795
Change in cash and cash equivalents
1 056
2 461
Currency translation differences
Net change in cash and cash equivalents
0
1 056
(0)
2 461
1 799
Cash and cash equivalents opening balance
22
4 260
4 260
Cash and cash equivalents closing balance
22
5 316
1)
See note 29 Changes in presentation
2)
Working capital is defined as trade receivables, inventory, other current assets, trade payables and other current liabilities. Other current
assets is defined as other current assets less current receivables to related parties, current interest-bearing receivables, tax receivables, grants
receivable and accrued interest income. Accounts payable is defined as trade payables less accounts payable related to purchase of non-
current assets. Other current liabilities is defined as other current liabilities less provisions.
Notes to the financial statement - Elkem ASA
1. General information
Elkem ASA is a limited liability company located in Norway,
whose shares are publicly traded on Oslo Børs. The main
activities are related to production and sale of silicon materials,
ferrosilicon, specialty alloys for the foundry industry and
microsilica. Elkem ASA is owned 52.9% by Bluestar Elkem
International Co. Ltd S.A., Luxembourg, which is under the
control of Sinochem Holdings Co., Ltd (Sinochem), a company
registered and domiciled in China.
The presentation currency of Elkem ASA is Norwegian Krone
(NOK). All financial information is presented in NOK million,
unless otherwise stated. As a result of rounding adjustments,
the amounts shown in one or more columns included in the
financial statements may not add up to the total. In text the
current year's figures are presented outside parentheses,
followed by the comparative figures presented in parentheses.
2. Significant accounting policies
The financial statements have been prepared in accordance
with the Norwegian Accounting Act and generally accepted
accounting principles in Norway. The accounts are prepared
based on a going concern assumption.
Changes in accounting policies
Changes in accounting policies are recognised directly in
equity and the opening balance is adjusted as if the new
accounting policy had always been applied. Last year's figures
are changed correspondingly, for comparative purposes.
Change in presentation
Presentation of realised hedge ineffectiveness is changed
from raw materials and energy for production to other gains
(losses) related to operations in the statement of profit and
loss. Comparable figures are restated. See note 29 Changes
in presentation.
Elkem has changed from net to gross presentation of cash
flows from loans and deposits against subsidiaries. Comparable
figures are restated. See note 29 Changes in presentation.
Accounting estimates
In the event of uncertainty, the best estimate is applied, based
on the information available when the financial statements are
prepared. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and
in any future periods affected. See note 3 Accounting estimates.
Foreign currency translation
Elkem ASA's functional currency is Norwegian Krone (NOK).
Transactions in currencies other than the entity's functional
currency are translated using the transaction date's currency
rate. Monetary items in foreign currencies are presented
at the exchange rate applicable on the balance sheet date.
Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rate at the date fair
value is measured. If the currency exposure of a transaction
is designated as a part of a hedging relationship, realised
effects from the associated hedging instrument is classified
in the same line in the financial statements as the hedged
transaction. Currency gains (losses) related to operating
activities, i.e. receivables, payables, bank accounts for operating
purposes, are classified as a part of other gains (losses) related
to operating activities. Currency effects included in finance
income and expenses are related to loans and dividends.
Revenue recognition
Sale of goods
Revenue is recognised when it is earned and the revenue can
be measured reliably. Revenue is measured at the fair value
of the consideration received or receivable, net of any taxes,
rebates and discounts. Expenses are recognised in the same
period as the related revenue. When products are sold with
warranties, the expected warranty amounts are recognised
as expenses at the time of the sale, and are subsequently
adjusted for any changes in estimates or actual outcome.
Revenue from sale of goods is recognised when the significant
risk and reward of the ownership of the goods has passed
to the buyer, according to the agreed delivery term for each
sale. Delivery terms are based on Incoterms 2020 issued by
International Chamber of Commerce, and the main terms are:
"F" terms, where the buyer arranges and pays for the main
carriage. The risk and reward is passed to the buyer when the
goods are handed over to the carrier engaged by the buyer.
"C" terms, where the group arranges and pays for the main
carriage but without assuming the risk of the main carriage.
The risk and reward is passed to the buyer when the goods are
handed over to the carrier engaged by the seller.
"D" terms, where the group arranges and pays for the carriage
and retain the risk and reward of the goods until delivery at
agreed destination. The risk is transferred to the buyer upon
arrival at agreed destination, usually the purchaser's warehouse.
Sale of power and revenue connected to energy recovery
Sale of electric power and revenue connected to energy
recovery, mainly heat supply in form of steam and hot water,
el-certificates and el-tax, are recognised in income based
on volume and price agreed with the customer. Revenue
connected to energy recovery is mainly based on long-term
contracts where the prices are regulated yearly based on
changes in CPI or government regulated prices, except for
the el-certificates where the price is based on the observable
market price at date of delivery.
Revenue from sale of services
Revenue from sale of services is recognised when the services
have been provided. Sale of services are mainly related to
management agreements with related parties, based on cost
plus a margin.
Other
Income from insurance settlements are recognised when it is
virtually certain that the group will receive the compensation,
and is recognised as other operating income. Cash flows
from credit insurance contracts where such contracts are
deemed to be an integral part of the sale transactions is
presented as reduction of net against impairment losses
assets / receivables, included in other operating expenses.
Interest income is recognised on accrual basis. Dividends are
recognised when shareholders' right to receive dividends is
determined by the shareholders' meeting.
Grants
Grants are recognised when it is reasonably assured that the
company will comply with the conditions attached to them
and the grants will be received. Grants are recognised in the
income statement over the periods necessary to match them
with the cost they are intended to compensate. Grants relating
to cost of production of goods are recognised in profit or loss
when the produced goods are sold. Grants relating to property,
plant and equipment and intangible assets are deducted
from the carrying amount of the asset, and recognised in the
income statement over the lifetime of a depreciable asset by
reducing the depreciation charge. Grants related to expenses
are classified as other operating income.
Investment in subsidiaries, associates and
jointly controlled entities
Subsidiaries are companies in which Elkem ASA has
controlling interests, normally obtained when Elkem ASA
owns more than 50% of the shares.
Associates are those entities in which Elkem ASA has
significant influence, but no control, over the financial and
operating policies. Significant influence is presumed to exist
when Elkem ASA holds between 20% and 50% of the voting
power of another entity. Jointly controlled entities are those
entities over whose activities Elkem ASA has joint control,
established by contractual agreement and requiring unanimous
consent for strategic financial and operating decisions.
Subsidiaries
Interests in subsidiaries are recognised at cost less any write-
down for impairment.
Associates
Investments in associates are valued at cost less any write-
down for impairment. Dividends received from associated
companies are included in the income statement.
Joint ventures
Elkem ASA's interests in jointly controlled entities, which
operates within Elkem ASA's main business areas (silicon
materials and foundry products), are accounted for using
the gross method, meaning that the company's share of the
income, expense, assets and liabilities are recognised. Elkem
ASA combines its share of the joint ventures' individual income
and expenses, assets and liabilities and cash flows on a line-
by-line basis with similar items in the financial statements.
Elkem ASA's interests in joint controlled entities, which do
not operate within Elkem ASA's main business areas, are
accounted for using the equity method. Under the equity
method, the investment is initially recognised at cost, and the
carrying amount is increased or decreased to recognise the
investor’s share of the profit or loss and other comprehensive
income of the investee after the date of acquisition. In cases
where a joint ventures' loss increases the initially recognised
cost, the carrying amount is presented to reflect Elkem's
liability to finance the joint venture. Any liability to finance
a joint venture is presented either as part of provisions and
other liabilities, current, or netted against Elkem's receivables
towards the joint venture.
Impairment of investment in subsidiaries,
associates and jointly controlled entities
Impairment loss is recognised if the carrying amount exceeds
the recoverable amount and the impairment is not considered
to be temporary. The recoverable amount is the higher of fair
value less costs to sell, or its value in use. Value in use is the
present value of the future cash flow expected to be derived
from the asset or the cash generating unit to which it belongs,
after taking into account all other relevant information. The
impairment is reversed if the basis for the write-down is no
longer present.
Intangible assets
Intangible assets are stated in the balance sheet at cost
less subsequent accumulated amortisation and subsequent
accumulated impairment losses. Intangible assets with a finite
useful life are amortised, using the straight-line method. The
estimated useful life and amortisation method is reviewed at
the end of each reporting period.
An intangible asset is derecognised on disposal, or when no
future economic benefits from its use are expected to be
derived. Gain or loss arising from derecognition of an intangibl
asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset,
is recognised in the income statement.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred. An intangible asset arising
from an internal development project is recognised if the
company can demonstrate technical feasibility of completing
the intangible asset, has intention to complete it, ability to
use it, can demonstrate that it will generate probable future
economic benefits and the cost can be reliably measured.
Property, plant and equipment
Property, plant and equipment is presented at cost, less
accumulated depreciations and any accumulated impairment
losses. Construction in progress is carried at cost, less any
recognised impairment loss. Such assets are classified to
the appropriate class of property, plant and equipment when
completed and ready for its intended use. Significant parts of
an item of property, plant and equipment which have different
useful life, are accounted for as separate items. Depreciation
commences when the assets are ready for their intended use.
Initial cost includes expenditures that are directly attribut-
able to the acquisition of the asset, cost of materials, direct
labour, any other costs directly attributable to bringing
the assets to working condition for their intended use and
estimated dismantling or removal charges, and capitalised
borrowing costs.
Subsequent costs are included in the asset's carrying amount
or recognised as a separate asset, as appropriate, when future
benefits are probable and the cost can be measured reliably.
The carrying amount of the replaced part is derecognised.
Major periodic maintenance that is carried out less frequently
than every year, is capitalised and depreciated over the period
until the next periodic maintenance is performed. All other
repairs and maintenance are charged to the income statement
when incurred.
Depreciation is recognised using the straight-line method. The
estimated useful life, residual values and depreciation method
is reviewed at the end of each reporting period.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss from
disposal or retirement is determined as the difference between
the sales proceeds and the carrying amount of the asset, and is
recognised in the income statement.
Impairment of tangible and intangible assets
At the end of each reporting period, the carrying amounts
of tangible and intangible assets are reviewed to determine
whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the individual asset
is estimated in order to determine the extent of the impairment
loss. If it is not possible to estimate the recoverable amount
of the individual asset, the recoverable amount of the lowest
possible cash generating unit, to which the asset belongs, is
estimated. The recoverable amount is the higher of fair value
less costs to sell, or its value in use. Value in use is the present
value of the future cash flows expected to be derived from use
of the cash generating unit, after taking into account all other
relevant information. If an impairment loss for assets other
than goodwill is recognised in a previous period, the entity
assesses whether there are indications that the impairment may
have decreased or no longer exists. If so, the impairment loss
is reversed, based on an updated estimate of the recoverable
amount, but not exceeding the carrying amount that would have
been determined had no impairment loss been recognised for
the asset. Any impairment of goodwill is not reversed.
Leasing
Leases are classified as financial leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases and expenses are recognised as incurred.
Assets held under finance leases are initially recognised as
assets at the present value of the minimum lease payment.
The corresponding liability to the lessor is included in the
financial statements as a finance lease obligation. Each lease
payment is allocated between the liability and finance charges
so as to achieve a constant rate on the obligation.
Non-derivative financial assets and liabilities
A financial asset or a financial liability is recognised in the
balance sheet when the entity becomes party to a contract.
Assets to be acquired and liabilities to be incurred as a result
of a firm commitment to purchase or sell goods or services
are recognised at the time one of the parties has performed
under the agreement.
Financial assets are initially recognised in the balance sheet
at fair value plus any transaction costs directly attributable
to the acquisition or issue of the asset. Financial assets are
derecognised once the right to future cash flows has expired or
when substantial all risks and rewards related to control of the
assets are transferred to a third party.
Financial assets with a maturity exceeding one year are
classified as non-current financial assets. Short-term
investments that do not meet the definitions of a cash
equivalent and financial assets with a maturity of less than
one year are classified as current financial assets. Non-current
financial assets are recognised and subsequently measured at
cost less any impairment loss, if the impairment is assessed
not to be temporary.
Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in a
e
regulated market. They are recognised at amortised cost using
the effective interest method. Gains and losses are recognised
in the income statement when the loans and receivables are
derecognised or impaired, as well as through the amortisation
process. An impairment loss is recognised when the carrying
amount exceeds the estimated recoverable amount.
The category includes trade receivables, deposits, guarantees
and loans. These assets are classified in the balance sheet as
either other non-current assets or other current assets. Other
current assets are receivables with maturity less than one year.
Trade and other receivables are recognised at nominal value
less provisions for doubtful accounts.
Cash and cash equivalents
Cash and cash equivalents are held for the purpose of meeting
short-term fluctuations in liquidity, rather than for investment
purposes. Cash and cash equivalents comprise cash funds
and short-term deposits with a term of 3 months or less on
acquisition. Bank overdrafts are shown within current interest-
bearing liabilities in the balance sheet. Elkem ASA's deposits
and drawings within the group cash pool are netted by
offsetting deposits against withdrawals.
The subsidiaries' deposits and drawings are classified as
current assets / liabilities.
Derivative financial instruments
Currency derivatives are initially recognised at fair value on
the date the derivative contracts are entered into, and are
subsequently remeasured to their fair value at the end of the
reporting period. The resulting gain or loss is recognised in the
income statement immediately, unless when the derivative
is designated and is effective as a hedging instrument. If the
derivative is designated as a hedging instrument, timing of
recognition in the income statement depends on the nature of
the hedging relationship.
The part of commodity derivative contracts that do not qualify
as hedging instruments and are not held for trading are booked
at the lower of cost and fair value.
Embedded currency derivatives are separated from the host
contract and booked at fair value, as an independent derivative.
Contracts for the entity's own use are contracts which are
entered into and continue to be held for the purpose of the
receipt of a non-financial item according to the company's
usage requirements. This applies to power purchase contracts
intended for use in the plant’s production processes. Such
contracts are booked in the balance sheet at cost and in the
income statement on realisation.
Hedge accounting
Elkem ASA may designate certain derivatives as hedging
instruments for fair value hedges and cash flow hedges. At the
inception of the hedging relationship, the entity documents
the relationship between the hedging instrument and the
hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions. Elkem
ASA applies IFRS 9 for all hedge accounting.
Cash flow hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges, are
recognised in the equity and accumulated under the heading
of cash flow hedge reserve. Gains / losses recognised in
equity are reclassified into the income statement in the same
period(s) as the forcasted transaction occurs. The unrealised
gains / loss relating to the ineffective portion is recognised
immediately in the income statement.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in the equity at that time
remains in equity until the forecast transaction is ultimately
recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain
or loss that was reported in equity is immediately transferred
to the income statement.
Inventories
Inventories are recognised at the lowest of cost and net
realisable value. The cost of inventory comprises of the costs
incurred in bringing the goods to their current condition and
location, such as raw materials, energy for production, direct
labour, other direct costs and production overhead costs
based on normal capacity. Net realisable value represents the
estimated selling price for inventories less estimated costs of
completion and variable selling expenses.
Cost of goods sold is included in different lines in the income
statement based on nature; raw materials and energy for
production, employee benefits and other operating expenses,
for the remaining part.
The cost of CO
2
allowances that Elkem needs to purchase in
addition to allowances received from the government (note 5),
are based on estimated production / emissions for the year.
The cost is allocated to cost of producing semi-finished and
finished goods proportionally over the year, as the number
of allocated allowances will not be revised unless there is a
substantial change in the production level at the plants.
Taxation
Income taxes
Current tax assets and liabilities are measured at the amount
expected to be recovered or paid to the tax authorities.
Current tax payable includes any adjustment to tax payable
in respect of previous years. Income tax is recognised in the
income statement except to the extent that it relates to items
recognised directly in equity. Income tax relating to items
recognised directly in equity is recognised in equity.
Uncertain tax positions are included when it is virtually certain
that the tax position will be sustained in a tax review, and
provisions are made relating to uncertain or disputed tax
positions at the amount expected to be paid. The provision is
reversed when the disputed tax position is settled in favour of
Elkem and can no longer be appealed.
Deferred tax
Deferred tax assets and liabilities are calculated using the
liability method with full allocation for all temporary differences
between the tax base and the carrying amount of assets
and liabilities in the financial statements, including tax
losses carried forward. Deferred tax items are recognised in
correlation to the underlying transaction either in the income
statement or directly in equity.
Deferred tax assets are recognised in the balance sheet to
the extent it is more likely than not that the tax assets will be
utilised. The enacted tax rate at the end of the reporting period
and undiscounted amounts are used. Deferred tax assets
arising from tax losses are recognised when there is convincing
evidence of recoverability. Deferred tax assets and liabilities
items are offset if there is a legally enforceable right to offset
current tax liabilities and assets.
Employee benefits
Employee benefits consist of wages and salaries, bonuses,
holiday payments, share-based payments and other
considerations paid in exchange for services rendered from
employees, and are expensed as incurred together with any
social security tax applicable.
Employee retirement benefits
Defined contribution plans
Defined contribution plans comprise arrangements whereby
the company makes monthly contributions to the employees'
pension plans, and where the future pensions are determined
by the amount of the contributions and the return on the
individual pension plan asset. Payments related to the
contribution plans are expensed as incurred, as a part of
employee benefit expenses.
Defined benefit plans
Defined benefit plans are recognised at present value of
future liabilities considered retained at the end of the reporting
period, calculated separately for each plan. Social security tax
related to pension payments is included in estimated pension
liability. Plan assets are measured at fair value and deducted in
calculating the net pension obligation. Actuarial assumptions
are used to measure both the obligation and the expense
and effects of changes in estimates due to financial and
actuarial assumptions that are recognised in equity. Service
costs are classified as part of employee benefit expenses and
net interest on pension liabilities / assets are presented as
a part of finance expenses. Past service cost arising due to
amendments in benefit plans are expensed as incurred.
Multi-employer defined benefit plans where available
information is insufficient to be able to calculate each
participant's obligation, are accounted for as contribution plans.
Share-based payment
The fair value of options granted under the share-based
payment program is recognised as an employee benefit
expense with a corresponding increase in equity. The total
amount to be expensed is determined by reference to the fair
value of the options granted. The total expense is recognised
over the vesting period, which is the period over which all of
the specified vesting conditions are to be satisfied. At the end
of each period, the entity revises its estimates of the number
of options that are expected to vest based on the non-market
vesting and service conditions. It recognises the impact of the
revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
Social security contributions payable in connection with an
option grant are considered an integral part of the grant itself
and the charges are treated as cash-settled transactions.
Provisions
A provision is recognised when a present obligation exists and
it is probable that an outflow of resources is required to settle
the obligation. The amount recognised is the best estimate of
the consideration required to settle the obligation, taking into
account the risks and uncertainties surrounding the obligation,
known at the end of the reporting period. Provisions are
measured at present value, unless the time value is assessed to
be immaterial.
Contingent assets and liabilities
Contingent liabilities are liabilities which are not recognised
because they are possible obligations that have not yet been
confirmed, or they are present obligations where an outflow
of resources is not probable. Contingent assets are not
recognised. Any significant contingent assets and liabilities are
disclosed in the notes.
Events after the reporting period
Events after the reporting period related to Elkem ASA's
financial position at the end of the reporting period, are
considered in the financial statement. Events after the reporting
period that have no effect on the company's financial position
at the end of the reporting period, but will have effect on future
financial position, are disclosed if the future effect is material.
3. Accounting estimates
In the event of uncertainty the best estimate is applied,
based on the information available when the annual accounts
are prepared.
Property, plant and equipment
The estimated useful lives, residual values (if any) and
depreciation method are reviewed, and if necessary adjusted,
at least annually.
Financial instruments
Elkem ASA holds financial instruments such as forward
currency contracts and commodity contracts, which are
booked at fair value. For commodity contracts denominated in
EUR, the embedded EUR derivative is separated from the host
contract and booked at fair value. Hedge accounting is applied
for these contracts. Commodity contracts that do not qualify
as hedging instruments are booked at the lower of cost and
fair value. Fair value for the contracts is based on observable
prices and assumptions derived from observable prices for
comparable instruments. For assumptions applied in fair value
measurement of the contracts see details in note 25 Financial
assets and liabilities in the consolidated financial statement.
Net book value of contracts booked at fair value as at 31
December 2022 is in total positive NOK 2,160 million (positive
NOK 544 million), see note 24 Financial instruments.
4. Operating income
Operating income by type
Amounts in NOK million
2022
2021
Revenue from sale of goods, Silicon Products
12 227
7 269
Revenue from sale of goods to related parties
2 985
1 465
Other operating revenue
134
118
Other operating revenue to related parties
565
457
Total revenue
15 912
9 309
Sale of fixed assets
1
-
Insurance settlement
12
25
Grants (note 5)
530
406
Total other operating income
543
431
Total operating income
16 455
9 740
Operating income by geographic market
Amounts in NOK million
2022
2021
Nordic countries
United Kingdom
Germany
France
Italy
Poland
Spain
Netherlands
Other European countries
2 569
795
3 408
2 166
677
224
445
85
1 759
1 681
633
1 753
802
522
179
319
74
1 382
Europe
12 129
7 345
Africa
29
35
North America
South America
1 458
51
565
41
America
1 509
606
China
Japan
South Korea
Other Asian countries
397
1 040
126
1 207
284
696
113
642
Asia
2 770
1 734
The rest of the world
18
20
Total operating income
16 455
9 740
5. Grants
2022
2021
Other
Deduction
Other
Deduction
Amounts in NOK million
operating
income
of carrying
amount FA
operating
income
of carrying
amount FA
R&D grants from the Norwegian government
28
-
39
-
CO
Compensation from the Norwegian Environment Agency
2
Energy recovery related grants
497
-
-
-
367
-
-
6
Other government grants
2
-
-
-
Total government grants
527
-
406
6
Norwegian NO
x
Other grants
fund for reduced emission of NO
x
1
1
64
-
-
-
31
-
Total other grants
3
64
-
31
Total grants
530
64
406
37
Grants receivables related to fixed and intangible assets (note 19)
64
42
Grants receivables related to income (note 19)
489
364
Grants, deferred income (note 23)
(7)
(5)
CO
2
allowances
CO
2
emission allowances allocated from the government
are classified as grants, measured at nominal value (zero). If
actual emissions exceed the number of allocated allowances,
additional allowances must be purchased. The allocation of
free allowances for the period 2021-2025 has been decided by
the Norwegian government.
CO
2
compensation
The Norwegian government has since 2013 had a CO
2
compensation scheme to partially compensate for CO
2
costs included in the power price for certain industries. The
compensation scheme is based on a corresponding scheme
for EU and are approved by the EFTA surveillance authority
ESA. The previous CO
2
compensation scheme ended 31
December 2020 and a new scheme for 2021-2025 has been
approved by ESA and implemented into Norwegian regulation.
The CO
2
compensation scheme applies for Elkem's Silicon and
Ferrosilicon plants. The compensation is based on the market
price of CO
2
allowances and will as such vary with the price
development. As the grant compensates power costs, which are
costs recognised as part of the cost price of inventory during
the production process, the compensation is recognised in the
statement of profit or loss when the produced goods are sold.
Other
The remaining grants are mainly related to R&D and energy
recovery projects.
6. Employee benefit expenses
Amounts in NOK million
2022
2021
Salaries, holiday pay and variable compensation
(1 090)
(1 024)
Employer's national insurance contributions / social security tax
(141)
(126)
Pension expenses (note 7)
(78)
(74)
Share-based payments
(24)
(18)
Other payments / benefits
(15)
(15)
Total employee benefit expenses
(1 348)
(1 257)
Average number of full time equivalents
1 308
1 295
For information concerning remuneration to management
and share-based payments, see "Report on salary and other
remuneration to leading personnel in Elkem ASA for the
financial year 2022", note 9 Employee benefits and note 10
Share-based payment in the consolidated financial statement.
7. Employee retirement benefits
Defined contribution plans
Pension for employees in Elkem ASA are mainly covered by
pension plans that are classified as contribution plans.
Elkem ASA' contributions to the employees individual pension
plan assets constitutes 5% of base salary up to 7.1G and
15% between 7.1 and 12G. G refers to the national insurance
scheme's basic amount in Norway, amounting to NOK 111,477
as at 1 May 2022. Pension on salary above 12G is not supported
by external service providers and is therefore handled as a
separate plan and included under defined benefit plans.
Elkem ASA participates in the early retirement scheme AFP.
This is as a multi-employer plan accounted for as a defined
contribution plan, in accordance with the
Ministry of Finance's conclusion. The participants in the
pension plan are jointly responsible for 2/3 of the plan's
pension obligation, the government is responsible for the
remaining part. The yearly pension premium in 2022 is 2.6%
of the employee’s salary between 1 and 7.1G, covering this
year’s pension payments and contribution to a security fund
for future pension obligations. The premium in per cent of
salary for 2023 will be 2.6%. At 31 December there is 1,544
participants below the age of 61 years in the scheme.
Defined benefit plans
The defined benefit pension plans are unfunded and
comprise pension on salaries above 12G, where the expense
is 15% of annual base salary that exceeds 12G plus interest
on the individual calculated pension obligation, and some
individual retirement schemes. The individual retirement
schemes are closed.
Net interest is calculated based on pension liability at the start
of the period multiplied by the discount rate and is presented
as a part of finance expenses. Remeasurements of the defined
benefit plans are recognised directly in equity.
The company's retirement schemes meet the minimum
requirement of the Norwegian Act of Mandatory
Occupational Pension.
Breakdown of pension expenses
Amounts in NOK million
2022
2021
Defined benefit plans
(4)
(4)
Defined contribution plans
(57)
(55)
Early retirement scheme (AFP)
(18)
(16)
Total pension expenses
(78)
(74)
Amounts in NOK million
31.12.2022
31.12.2021
Present value of pension obligations
(80)
(85)
Net value pension liabilities
(80)
(85)
Active participants in pension scheme for salary above 12G
49
49
Retired participants
45
50
Changes in actuarial gains / (losses) recognised in equity / deferred tax
6
3
Principal assumptions used for the actuarial valuation
Amounts in NOK million
2022
2021
Discount rate
1)
4.2 %
2.0 %
Annual regulation of pensions paid
1.9 %
1.5 %
1)
The discount rate is based on high quality corporate bonds reflecting the timing of the benefit payments.
8. Other operating expenses
Amounts in NOK million
2022
2021
External distribution expenses
Commission expenses sales
Machinery, tools, fixtures and fittings
Repair, maintenance and other operating expenses
Other external expenses (fees, transport, IT services, etc.)
Energy and fuel expenses
Leasing expenses (note 9)
Travel expenses
Loss on trade receivables
Miscellaneous manufacturing, administration and selling expenses
Total other operating expenses
(707)
(138)
(381)
(246)
(600)
(70)
(51)
(26)
(1)
(463)
(2 684)
(531)
(91)
(432)
(159)
(404)
(103)
(58)
(9)
4
(389)
(2 172)
Miscellaneous manufacturing, administration and selling expenses include:
Capitalisation of salary on fixed assets (employee benefit expenses are presented gross in note 6)
Changes in inventories of finished and semi-finished goods
10
74
10
(4)
During 2022, Elkem ASA expensed NOK 193 million
(NOK 82 million) as research and development related to
process, product and business development, including
technical customer support and improvement projects.
Grants received related to research and development
amount to NOK 28 million (NOK 39 million) and are
included in other operating income.
Audit and other services
Amounts in NOK million
2022
2021
Audit fee
(6)
(5)
Other assurance services
(1)
(1)
Tax services
-
-
Other services
-
-
Total fees to auditor
(7)
(6)
9. Operating lease
Amounts in NOK million
2022
2021
Leasing expenses, current year (note 8)
(51)
(58)
Minimum future lease payments due in accordance with
non-cancellable operating lease contracts:
Within one year
(27)
(26)
Within two years
(25)
(25)
Within three years
(25)
(22)
Over three years
(227)
(196)
Future leasing obligations are mainly related to rental of office
buildings. The rental agreement contains an extension option
for 5+5 years for one of the leases. The future obligation for the
extension option is approximately NOK 125 million.
10. Other gains (losses) related to operating activites
Amounts in NOK million
2022
2021
Realised currency gains (losses) from forward currency contracts
(17)
158
Unrealised currency gains (losses) from forward currency contracts
(86)
(38)
Other currency gains (losses) operational
134
8
Realised effects other financial instruments
1)
640
65
Unrealised and reversal of unrealised effects other financial instruments
2)
1 041
60
Total other gains (losses) related to operating activities
1 712
253
1)
Of the realised effects other financial instruments, a gain of NOK 597 million (gain NOK 124 million) relates to realised ineffectivenes on power
derivatives designated as hedging instruments. Se note 24 financial instruments.
2)
Of the amount NOK 817 million (NOK 0 million) relates to unrealised ineffectivenes on power derivatives designated as hedging instruments.
The remainng part relates mainly to movements in the value of the part of embedded currency derivatives that are not designated as hedging
instrument. Se note 24 financial instruments.
11. Finance income and expenses
Amounts in NOK million
2022
2021
Interest income
29
3
Interest income from related parties (note 26)
130
129
Other financial income
7
2
Total finance income
166
134
Net foreign exchange gains (losses)
(62)
377
Interest expenses
(215)
(179)
Interest expenses to related parties (note 26)
(48)
(11)
Interest on net pension liabilities
(3)
(3)
Other financial expenses
(2)
(5)
Total finance expenses
(267)
(198)
Net finance income (expenses)
(163)
313
Foreign exchange gains (losses) in 2022 and 2021 are
mainly related to the bank loans in EUR and group loans
in EUR and CNY.
12. Taxes
Income tax recognised in income statement
Amounts in NOK million
2022
2021
Current tax expenses
(1 330)
(458)
Deferred tax
(270)
(22)
Other taxes
(3)
(21)
Total income tax (expense) benefit
(1 603)
(501)
Reconciliation of income tax (expense) benefit
Amounts in NOK million
2022
2021
Profit before tax
7 593
2 274
Applicable tax rate Norway
22 %
22 %
Tax expense at applicable tax rate
(1 670)
(500)
Permanent differences
Tax effects of income from Norwegian controlled foreign companies (NOKUS)
(16)
(8)
Tax effects share of profit (loss) from joint ventures
(4)
9
Dividend within the Tax exemption method
31
27
Gain on realised shares
20
-
Tax effects other permanent differences
19
(2)
Other effects
Previous year tax adjustment
20
(6)
Other current tax paid
(3)
(22)
Total income tax (expenses) benefit
(1 603)
(501)
Effective tax rate
21 %
22 %
Pending tax issues with tax authorities
Elkem ASA has four debt waiver agreements with Elkem
Silicones France SAS. The gross taxable value of these
agreements as of 31 December 2022 is NOK 595 million
(NOK 595 million), book value NOK 0. Elkem Silicones France
SAS has not repaid anything under this agreement in 2022
or 2021. Elkem has previously assessed that the effect of
repayment is tax exempted.
The Norwegian Tax Office (NTO) decided in February 2021
to increase Elkem ASA's taxable income for the fiscal years
2016-2019 by NOK 781 million, which increased the income
tax expenses by NOK 181 million in 2020. The amount was
paid in the first quarter of 2021. The reassessments relate to
the debt waiver agreements acquired by Elkem ASA in 2016
through the cross-border parent-subsidiary merger with
Bluestar Silicones International Sarl. Elkem is of the opinion
that the reassessment is unfounded and will appeal. Based
on legal advice, Elkem’s assessment is that the defence
against the action will be successful. According to a decision
by the Supreme Court in Norway related to interpretation of
Norwegian Accounting Standards, Elkem needs to be virtually
certain that the decision by the NTO will be overruled by the
Tax Appeal Board, in order for the decision not to be reflected
in the financial statements. Due to the complexity of the case,
Elkem is not currently able to reach a conclusion with that high
level of certainty and the paid amount concerning this case is
not reflected in the balance sheet.
Deferred tax assets and deferred tax liabilities
Amounts in NOK million
31.12.2022
31.12.2021
Derivatives
(475)
(120)
Property, plant, equipment and intangible assets
(244)
(184)
Pension liabilities
17
18
Trade receivable
2
2
Inventory
(42)
(26)
Provisions
(0)
3
Other differences
1
1
Net deferred tax assets (liabilities)
(741)
(306)
Movement in net deferred tax assets (liabilities)
Amounts in NOK million
2022
2021
Opening balance
(306)
(128)
Charged to profit (loss)
(270)
(21)
Changes in deferred tax hedges charged to equity
(146)
(156)
Change in actuarial gains (losses) charged to equity
(1)
(1)
Effect of merger
(19)
-
Currency translation differences
-
0
Closing balance
(741)
(306)
13. Property, plant, and equipment
2022
Amounts in NOK million
Land
Buildings and
other property
Plant, machinery,
equipment and
motor vehicles
Office and other
equipment
Construction
in progress
Total
Opening balance
Additions
Disposals
Transferred from CiP
Reclassifications
Merger
Impairment losses
Depreciation
Closing balance
9
1
-
0
-
-
-
-
10
599
8
(0)
79
-
183
-
(64)
805
1 840
4
(0)
401
1
748
(2)
(309)
2 683
27
0
-
6
-
-
-
(8)
25
528
539
(5)
(486)
(7)
7
(1)
-
575
3 003
552
(5)
-
(6)
938
(3)
(381)
4 098
Historical cost
Accumulated depreciation
Accumulated impairment losses
Closing balance
10
-
(0)
10
1 894
(1 084)
(5)
805
6 136
(3 385)
(68)
2 683
101
(75)
(0)
25
575
-
-
575
8 716
(4 544)
(73)
4 098
Estimated useful life
Depreciation plan
Indefinite
5-40 years
Straight-line
3-30 years
Straight-line
3-20 years
Straight-line
2021
Amounts in NOK million
Land
Buildings and
other property
Plant, machinery,
equipment and
motor vehicles
Office and other
equipment
Construction
in progress
Total
Opening balance
Additions
Disposals
Transferred from CiP
Reclassifications
Impairment losses
Depreciation
Closing balance
7
-
-
2
-
-
-
9
629
0
-
28
(1)
-
(57)
599
1 771
-
-
346
(2)
(8)
(267)
1 840
30
0
-
3
3
-
(8)
27
504
405
-
(379)
-
(2)
-
528
2 941
406
-
-
(0)
(10)
(333)
3 003
Historical cost
Accumulated depreciation
Accumulated impairment losses
Closing balance
9
-
(0)
9
1 629
(1 025)
(5)
599
5 099
(3 191)
(69)
1 840
97
(70)
(0)
27
528
-
-
528
7 363
(4 286)
(74)
3 003
Estimated useful life
Depreciation plan
Indefinite
5-40 years
Straight-line
3-30 years
Straight-line
3-20 years
Straight-line
14. Intangable assets
2022
Amounts in NOK million
Goodwill
Software
Other
intangible
assets
Intangible
assets under
construction
Total
intangible
assets
Opening balance
Additions
Disposals
Transferred from CiP
Reclassifications
Impairment losses
Amortisation
Closing balance
20
-
-
-
-
-
(4)
16
50
0
-
3
6
-
(19)
40
13
-
-
-
0
-
(3)
11
48
0
(16)
(3)
-
-
-
30
111
1
(16)
-
6
-
(22)
81
Historical cost
Accumulated amortisation
Closing balance
40
(24)
16
216
(177)
40
28
(17)
11
30
-
30
274
(193)
81
Estimated useful life
Amortisation plan
10 years
Straight-line
3-10 years
Straight-line
3-10 years
Straight-line
2021
Amounts in NOK million
Goodwill
Software
Other
intangible
assets
Intangible
assets under
construction
Total
intangible
assets
Opening balance
Additions
24
-
59
8
16
-
40
14
115
22
Disposals
Transferred from CiP
Reclassifications
-
-
-
(0)
5
-
-
-
-
-
(5)
-
(0)
-
-
Impairment losses
Amortisation
Closing balance
-
(4)
20
(4)
(19)
50
-
(3)
13
-
-
48
(4)
(22)
111
Historical cost
40
206
29
48
283
Accumulated amortisation
Closing balance
(20)
20
(156)
50
(15)
13
-
48
(172)
111
Estimated useful life
Amortisation plan
10 years
Straight-line
3-10 years
Straight-line
3-10 years
Straight-line
15. Investments in subsidiaries
Carrying
Carrying
Owner share
amount
amount
Investment in subsidiaries of Elkem ASA
Vote rights (%)
Country
31.12.2022
31.12.2021
Elkem Carbon AS
100 %
Norway
125
122
Elkem Chartering Holding AS
80 %
Norway
1
1
Elkem Digital Office AS
100 %
Norway
8
8
Elkem Distribution Center B.V.
100 %
Netherlands
0
0
Elkem Foundry (China) Co., Ltd.
100 %
China
66
66
Elkem GmbH
100 %
Germany
1
1
Elkem Iberia S.L.U
100 %
Spain
0
0
Elkem International AS
100 %
Norway
5
5
Elkem International Trade (Shanghai) Co. Ltd.
1)
11 %
China
1
1
Elkem Ísland ehf.
100 %
Iceland
785
784
Elkem Japan K.K
100 %
Japan
0
0
Elkem Korea Co. Ltd.
100 %
Republic of Korea
19
1
Elkem Madencilik Metalurji Sanayi Ve Ticaret Ltd. STI
1)
1 %
Turkey
0
0
Elkem Materials Processing (Tianjin) Co., Ltd.
100 %
China
1
1
Elkem Materials Processing Services BV
100 %
Netherlands
1
1
Elkem Metal Canada Inc.
100 %
Canada
7
7
Elkem Milling Services GmbH
100 %
Germany
12
12
Elkem Nordic A.S.
100 %
Denmark
5
5
Elkem Oilfield Chemicals FZCO Ltd.
51 %
UAE
13
13
Elkem Paraguay S.A.
1)
79 %
Paraguay
498
498
Elkem Processing Services S.A.
2)
100 %
Belgium
34
-
Elkem S.a.r.l.
100 %
France
-
-
Elkem S.r.l.
100 %
Italy
6
6
Elkem Silicon Materials (Lanzhou) Co., Ltd.
100 %
China
1 033
1 033
Elkem Silicon Product Development AS
100 %
Norway
8
8
Elkem Siliconas España S.A.U
100 %
Spain
125
125
Elkem Silicones Brasil Ltda.
100 %
Brazil
214
214
Elkem Silicones Canada Corp.
100 %
Canada
6
6
Elkem Silicones Czech Republic, s.r.o.
100 %
Czech Republic
2
2
Elkem Silicones Finland OY
100 %
Finland
5
5
Elkem Silicones France SAS
100 %
France
2 163
2 160
Elkem Silicones Germany GmbH
100 %
Germany
130
130
Elkem Silicones Guangdong Co., Ltd.
100 %
China
1 543
1 543
Elkem Silicones Hong Kong Co., Ltd.
100 %
Hong Kong
102
102
Elkem Silicones Korea Co., Ltd.
100 %
Republic of Korea
219
219
Elkem Silicones México S. De R.L. De C.V.
100 %
Mexico
5
5
Elkem Silicones Poland sp. z o.o.
100 %
Poland
4
4
Elkem Silicones Scandinavia AS
100 %
Norway
15
15
Elkem Silicones Services S.à.r.l
100 %
France
5
4
Elkem Silicones Shanghai Co., Ltd.
100 %
China
109
109
Investment in subsidiaries of Elkem ASA
Carrying
Carrying
Owner share
amount
amount
Vote rights (%)
Country
31.12.2022
31.12.2021
Elkem Silicones USA Corp.
USA
100 %
261
261
Elkem Siliconi Italia S.r.l.
Italy
100 %
24
24
Elkem Singapore Materials Pte. Ltd.
Singapore
100 %
0
0
Elkem South Asia Private Limited
India
100 %
34
34
Elkem (Thailand) Co., Ltd.
Thailand
100 %
3
3
Elkem UK Holdings Ltd.
United Kingdom
100 %
78
78
Elkem Uruguay S.A.
Uruguay
100 %
33
33
Explotación de Rocas Industriales y Minerales S.A. (ERIMSA)
Spain
100 %
80
80
Jiangxi Bluestar Xinghuo Silicones Co., Ltd.
China
100 %
4 716
4 153
NEH LLC
USA
100 %
98
98
Vianode AS
3)
Norway
-
-
1
Total
12 604
11 982
1)
Elkem ASA and a subsidiary own 100% of Elkem International Trade (Shanghai) Co. Ltd., Elkem Madencilik Metalurji Sanayi Ve Ticaret Ltd
and Elkem Paraguay S.A.
2)
Elkem ASA acquired Elkem Processing Services S.A. (then KeyVest Belgium S.A.) in June 2022
3)
Elkem ASA sold 60% of the shares in Vianode AS in September 2022, reducing its ownership from 100% to 40%
Impairment
For more details see note 19 Impairment assessment in the
consolidated financial statement.
Income from investments in subsidiaries
Amounts in NOK million
2022
2021
Dividends and group contributions from subsidiaries
138
126
Net income on disposal of subsidiary
92
-
Total income from subsidiaries
229
126
16. Investments in joint ventures
Owner share
Owner share
Company
Voting rights
Voting rights
Accounting
address
Country
2022
2021
method
Elkania DA
Hauge i Dalane
Norway
50 %
50 %
Gross method
Vianode AS
1)
Oslo
Norway
40 %
-
Equity
Salten Energigjenvinning AS
2)
Oslo
Norway
-
50 %
Equity
1)
The share of ownership are equal to Elkem's voting rights, with the exception of Elkem's investments in Vianode AS where the parties have
33,33% ownership influence. Elkem ASA sold 60% of the shares in Vianode AS in September 2022, reducing its ownership from 100% to 40%
2)
The remaining shares was purchased on 31 January 2022 and the company was followingly merged with Elkem ASA.
Main figures for the investments accounted for by equity
method. The figures show Elkem ASA's portion.
Total interests in joint ventures
Amounts in NOK million
2022
2021
Opening balance
46
(3)
Acquisition of shares and capital contributions
267
-
Change in equity interest, to subsidiary
(47)
-
Change in equity interest
383
-
Share of profit / (loss)
(17)
37
Share of other comprehensive income
7
12
Closing balance
639
46
Main figures for investments accounted for using the gross
method, showing Elkem ASA's portion.
Amounts in NOK million
Elkania DA
Total 2022
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
47
24
18
8
45
47
24
18
8
45
Total revenue
Total expenses
Financial items
Tax
Total profit / (loss) for the year
53
(29)
(0)
-
24
53
(29)
(0)
-
24
Amounts in NOK million
Elkania DA
Total 2021
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
26
18
14
8
21
26
18
14
8
21
Total revenue
Total expenses
Financial items
Tax
Total profit / (loss) for the year
44
(26)
(0)
-
18
44
(26)
(0)
-
18
17. Inventories
Amounts in NOK million
31.12.2022
31.12.2021
Finished goods
1 206
684
Semi-finished goods
228
185
Raw materials
1 012
547
Operating materials and spare parts
307
261
Total inventories
2 753
1 677
Provisions for write down of inventories
2
2
18. Trade receivables
Amounts in NOK million
31.12.2022
31.12.2021
Trade receivables
518
1 008
Trade receivables, related parties
1 075
740
Provision for doubtful accounts
(11)
(10)
Total trade receivables
1 582
1 739
Elkem ASA and its subsidiary Elkem Carbon AS has entered
into a factoring agreement with a credit limit of EUR 100 million,
NOK 1,051 million, to sell on continuing basis trade receivables
that meet specific conditions. The agreement includes a
recourse clause for maximum 5 %, of the face value of the
individual receivables sold. The non-recourse amount of the
receivables sold is derecognised and the recourse amount is
recognised as a current liability when the title to the receivables
is transferred. As of 31 December 2022, NOK 50 million (NOK
33 million) is recognised as current liability (see note 23
Provisions and other liabilities). In addition, Elkem has entered
into factoring agreements without recourse for some specific
customers. Receivables that are sold without recourse are
derecognised in its entirety when the title is transferred, as there
is no remaining credit risk after transfer. As at 31 December
2022 NOK 1,235 million (NOK 1,053 million) of Elkem ASA’s
trade receivables are derecognised under these agreements.
Analysis of gross trade receivables by age, presented
based on the due date
Amounts in NOK million
31.12.2022
31.12.2021
Not due
269
850
1 - 30 days
204
141
31 - 60 days
6
9
61 - 90 days
23
2
More than 90 days
16
6
Total trade receivables
518
1 008
Elkem applies for credit insurance for all customers when this
can be obtained. In cases where credit insurance coverage is
refused, other methods of securing the sales income are used.
Other methods used for securing the sales are, among others,
prepayment, letter of credit, documentary credit, guarantee etc.
Movements in provisions for doubtful accounts
Amounts in NOK million
31.12.2022
31.12.2021
Opening balance
Losses during the year
New provisions
Reversed provisions
Closing balance
(10)
0
(3)
1
(11)
(16)
2
(3)
7
(10)
Analysis of ageing of trade receivables where allowance
for expected credit losses are made
Amounts in NOK million
31.12.2022
31.12.2021
Not due
Overdue by:
1 - 30 days
31 - 60 days
61 - 90 days
More than 90 days
Total provisions for doubtful accounts
(2)
(1)
(0)
(0)
(8)
(11)
(2)
(0)
(0)
(0)
(7)
(10)
19. Other assets
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Shares in associated companies
9
9
-
-
Other shares
8
7
-
-
Restricted deposits
31
27
-
-
Other deposits
1
1
-
-
Pension assets, defined benefits and contribution plans (note 7)
-
0
1
1
Prepayments
1
0
30
43
Loans and deposits to related parties, interest-bearing (note 26)
4 221
3 269
1 074
447
Receivables from related parties, interest free (note 26)
-
-
-
10
Grants receivable (note 5)
-
-
553
406
Value added tax
-
-
75
88
Corporate income tax
-
-
-
-
Interest receivables
-
-
-
-
Interest receivables from related parties (note 26)
-
-
26
17
Other receivables
8
8
19
120
Other assets
0
0
6
5
Total other assets
4 278
3 322
1 786
1 136
20. Equity
2022
Share
Other paid
Total paid
Retained
Total
Amounts in NOK million
capital
in capital
in capital
earnings
equity
Opening balance
3 197
2 981
6 178
5 104
11 283
Cash flow hedge
-
-
-
516
516
Share of items booked against equity from joint ventures
-
-
-
20
20
Remeasurement pension obligations gains (losses)
-
-
-
5
5
Currency translation differences
-
-
-
0
0
Share-based payments
-
24
24
-
24
Net movement treasury shares
-
7
7
(46)
(38)
Merger (note 28)
-
-
-
4
4
Dividends
-
(2 716)
(2 716)
(1 079)
(3 795)
Profit for the year
-
-
-
5 990
5 990
Closing balance
3 197
296
3 493
10 515
14 009
The share capital of Elkem ASA is NOK 3,197,206,890 divided
on 639,441,378 shares of NOK 5 par value. Of this amount
Elkem ASA held 4,964,393 treasury shares.
For the year 2022 NOK 6.0 per share corresponding to
NOK 3,813 million has been allocated for the distribution
of dividends to the shareholders. In addition an decreased
amount of NOK 18 million was allocated for distribution of
dividends for 2021, in 2022.
2021
Share
Other paid
Total paid
Retained
Total
Amounts in NOK million
capital
in capital
in capital
earnings
equity
Opening balance
2 907
3 302
6 208
3 012
9 220
Cash flow hedge reserve
-
-
-
552
552
Share of items booked against equity from joint ventures
-
-
-
12
12
Remeasurement pension obligations gains (losses)
-
-
-
3
3
Currency translation differences
-
-
-
(0)
(0)
Share-based payments
-
28
28
-
28
Net movement treasury shares
-
(32)
(32)
(246)
(278)
Capital increase
291
1 610
1 900
-
1 900
Dividends
-
(1 927)
(1 927)
-
(1 927)
Profit for the year
-
-
-
1 773
1 773
Closing balance
3 197
2 981
6 178
5 104
11 283
21. Shareholders
The table shows shareholders holding 1% or more of the total
639,441,378 shares outstanding as of 31 December 2022,
according to information in the Norwegian 'securities' registry
system (Verdipapirsentralen).
Number of Shares
Ownership
Bluestar Elkem International Co., Ltd. S.A.
338 338 536
52.9 %
Folketrygdfondet
26 475 551
4.1 %
Must Invest AS
14 000 000
2.2 %
Verdipapirfondet Alfred Berg Gambak
11 946 530
1.9 %
Pareto Aksje Norge Verdipapirfond
9 761 626
1.5 %
State Street Bank and Trust Comp
1)
8 989 837
1.4 %
Verdipapirfondet Storebrand Norge
8 173 294
1.3 %
1)
The Bank of New York Mellon SA/NV
7 400 041
1.2 %
1)
Euroclear Bank S.A./N.V.
6 419 487
1.0 %
Total shareholders with ownership greater than 1%
431 504 902
67.5 %
1)
Nominee accounts
Information on shares held by
key management personnel is
included in "Report on salary and other remuneration to leading
personnel in Elkem ASA for the financial year 2022" and note 9
Employee benefits in the consolidated financial statement.
22. Interest-bearing assets and liabilities
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Interest-bearing liabilities
Deposits from related parties (note 26)
Loans from external parties, other than bank
Bank financing
Accrued interest
Total interest-bearing liabilities
171
3 688
5 214
-
9 074
145
3 110
4 037
-
7 292
3 831
1
56
16
3 903
2 618
1 256
53
19
3 945
Interest-bearing assets
Cash and cash equivalents
Restricted deposits
Loans to related parties (note 26)
Deposits to related parties (note 26)
Loans to external parties
Interest receivables from related parties (note 26)
Interest receivables from external parties
Total interest-bearing assets
-
31
4 221
-
8
-
-
4 260
-
27
3 269
-
8
-
-
3 304
5 316
-
801
272
-
26
-
6 416
4 256
3
24
422
-
17
-
4 723
Net interest-bearing assets / (liabilities)
(4 814)
(3 988)
2 512
778
Interest-bearing liabilities by currency
31.12.2022
31.12.2021
Currency
Currency
Amounts in NOK million
amount
NOK
amount
NOK
EUR
710
7 469
674
6 740
USD
106
1 045
46
408
NOK
4 137
4 137
3 622
3 622
Other currencies
-
326
-
467
Total interest-bearing liabilities
12 977
11 237
The table below analyses the financial liabilities into relevant
maturity groupings based on the remaining period at the date of
the statement of financial position to the contractual maturity
date. The amounts disclosed in the table are discounted.
Maturity of interest-bearing liabilities
31 December 2022
Amounts in NOK million
2023
2024
2025
2026
2027
2028 and later
Total
Deposits from related parties
Loans from external parties, other
Bank financing
Accrued interest
than bank
3 831
1
56
16
171
908
-
-
-
1 234
-
-
-
942
-
-
-
500
5 257
-
-
105
-
-
4 002
3 689
5 313
16
Total
3 903
1 079
1 234
942
5 757
105
13 019
Prepaid loan fees
Total interest-bearing liabilities
(42)
12 977
Maturity of interest-bearing liabilities
31 December 2021
Amounts in NOK million
2022
2023
2024
2025
2026
2027 and later
Total
Deposits from related parties
Loans from external parties, other
Bank financing
Accrued interest
than bank
2 618
1 256
53
19
145
-
4 053
-
-
1 110
-
-
-
1 000
-
-
-
500
-
-
-
500
-
-
2 763
4 366
4 106
19
Total
3 945
4 198
1 110
1 000
500
500
11 253
Prepaid loan fees
Total interest-bearing liabilities
(16)
11 237
Loan agreements
The main non-current loan agreements as of 31 December
2022 are a term loan of EUR 500 million (EUR 400 million), a
term loan of EUR 0 million (EUR 5 million), issued bond loans
of a total of NOK 2,500 million (NOK 2,500 million) and a series
of loans issued in the Schuldschein market of EUR 113 million
(EUR 61 million). The interest rates for the non-current loan
agreements are in the range of 4.38% to 4.78% for the bond
loans and 1.82% to 4.5% for the loans in the Schuldschein
market. For the term loan the interest rate is 3.44%.
Elkem placed EUR 200 million in the Schuldschein market
on 4 and 6-year tenors in December 2022, where of EUR
52 million was disbursed in December 2022, while EUR 148
million was disbursed in January 2023. In June Elkem signed
new bank facilities with a term loan of EUR 500 million and a
credit facility of EUR 500 million, refiniancing the term loan
of EUR 400 million from prior year. Later in 2022 the facilities
was linked to two sustainability KPIs, KPI 1 Lost Time Injury
Rate and KPI 2 – Product Group Carbon Footprint. The margin
of the RCF and term loan shall be reduced by 0.025% if both
KPIs are met, and increased by 0.025% if none of the KPIs are
met. If one KPI is met there shall be no change to the margin.
The sustainability KPIS will first be tested for 2023 with effect
from 2024.
One of the loans issued in the Schuldschein market (EUR 15
million) is a fixed rate loan with a fixed rate of 1.8160%. Given
the market conditions as at 31 December 2022 the loan would
have been approximately EUR 0.7 million lower, due to the
difference between fixed and market rate.
The bond loans are listed on Oslo Børs. There are no material
differences between fair value of the bond loan and book values.
The loan facilities are unsecured, but part of the loans have
financial covenants related to them, see below.
Credit facilities
Elkem ASA is granted credit facilities of EUR 500 million (NOK
5,257 million) and NOK 250 million, a total of NOK 5,507
million in granted credit facilities. Both facilities remained
undrawn at 31 December 2022 and 31 December 2021.
Covenants
The credit facilities and the bank financing in Elkem ASA
contain financial covenants based on the consolidated
financial statements of Elkem group. In addition parts of the
loans from external part, other than bank, contain financial
covenants. The financial covenants are identical towards the
different parties and remain equal to previous year's covenants.
In total drawn loans of NOK 6,501 million (NOK 5,971 million)
have covenants as described below. Elkem ASA is compliant
with its covenants at the end of 2022 and 2021.
Covenants Elkem group
Amounts in NOK million
31.12.2022
31.12.2021
Loan covenant
Equity ratio
55 %
47 %
> 30%
Interest cover ratio
58.38
37.33
> 4.00
23. Provisions and other liabilities
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Employee withholding taxes, soc. sec.tax and other public taxes
-
-
103
85
Value added tax
-
-
29
81
Prepayments from customers
-
-
24
51
Prepayments from related parties (note 26)
-
-
-
6
Payables to related parties (note 26)
-
-
60
43
Provisions
45
33
3
7
Obligation to finance subsidiary
37
37
-
-
Contingent consideration related to purchase of subsidiary
-
40
42
163
Accrued expenses
-
-
358
194
Employee benefits
-
-
248
232
Deferred income, government grants
-
-
7
5
Recourse liability factoring agreement (note 18)
-
-
50
33
Other liabilities
-
-
5
2
Total provisions and other liabilities
82
109
927
902
The contingent consideration related to purchase of
subsidiaries relates to the acquisition of Polysil on 1 April 2020.
Movements in provision
2022
Amounts in NOK million
Restructuring
Site restoration
Environmental
measures
Total provisions
Opening balance
Additional provisions recognised
Used during the year
Reversal of provisions recognised
Closing balance
3
-
(3)
-
-
31
1
-
-
32
6
11
(1)
(0)
16
40
13
(4)
(0)
48
Hereof non-current
Hereof current
Closing balance
-
32
-
-
-
32
13
3
16
45
3
48
Site restoration
The site restoration provisions are related to the necessary site
remediation work that Elkem ASA will have to undertake in
respect of its quartz mines.
Environmental measures
Elkem ASA has nationwide operations representing potential
exposure towards environmental consequences. Elkem ASA
has established clear procedures to minimise environmental
emissions, well within public emission limits. The estimated
provisions relate to estimated clean-up costs in connection with
closed landfills.
24. Financial instruments
Currency exchange contracts
Elkem ASA enters into forward currency contracts to mitigate
Elkem group's foreign currency exposure. Hedge accounting
is not applied, the contracts are classified as held for trading
and booked at fair value in the income statement. Elkem
ASA's Treasury department also offers internal currency
hedging for major purchase / sale-contracts entered into by
the subsidiaries. Such contracts cannot be designated in
a hedging relationship, hence the changes in fair value are
recognised in the income statement. There are no currency
contracts against subsidiaries as at 31 December 2022.
Embedded EUR derivatives in power contracts where the spot
element is designated as hedging instruments in a cash flow
hedge to hedge currency fluctuations in highly probable future
sales, from 1 January 2016. Unrealised effects are from that
date booked against equity and later reclassified to revenue
when realised. Realised hedging effects from such derivatives
in 2022 are a loss of NOK 29 million (loss of NOK 31 million).
See note 10 Other gains (losses) related to operating activities
for information on contracts classified as held for trading.
Details of currency exchange contracts
31 December 2022
Purchase
Purchase
Sale
Sale
Type of
Currency
Fair
Notional
currency
ccy million
currency
ccy million
instrument
rate
Due
value
1)
value
2)
CAD
40
USD
31
Fwd
1,310
2023
(9)
301
NOK
1 750
EUR
170
Fwd
10,279
2023
(44)
1 790
NOK
189
JPY
2 014
Fwd
0,094
2023
36
151
NOK
426
JPY
4 242
Fwd
0,101
2024-2026
88
317
NOK
764
USD
79
Fwd
9,677
2023
(10)
780
NOK
719
EUR
69
Embedded
2)
10,452
2023
(22)
723
NOK
3 688
EUR
335
Embedded
2)
11,017
2024-2034
42
3 520
Total fair value
80
Details of currency exchange contracts
31 December 2021
Purchase
Purchase
Sale
Sale
Type of
Currency
Fair
Notional
currency
ccy million
currency
ccy million
instrument
rate
Due
value
1)
value
2)
CAD
40
USD
32
Fwd
1,255
2022
(4)
284
NOK
1 231
EUR
120
Fwd
10,230
2022
20
1 203
NOK
2
GBP
0
Fwd
11,655
2022
(0)
2
NOK
169
JPY
1 844
Fwd
0,092
2022
27
141
NOK
615
JPY
6 256
Fwd
0,098
2023-2026
112
479
NOK
392
USD
45
Fwd
8,656
2022
(9)
399
NOK
709
EUR
69
Embedded
2)
10,336
2022
1
686
NOK
4 039
EUR
371
Embedded
2)
10,888
2023-2034
(18)
3 709
Total fair value
129
1)
The currency exchange contracts are measured at fair value based on the observed forward exchange rate for contracts with a
corresponding maturity term, on the balance sheet date.
2)
Notional value of underlying asset, based on currency rates at 31 December.
3)
Embedded EUR derivatives in own use power contracts.
Power contracts recognised at fair value
Elkem ASA enters into power derivative contracts to meet its
need for power at the plants. These contracts are designated
as hedging instruments in a cash flow hedge to mitigate price
fluctuations in highly probable future need for power. The fair
value of these contracts is based on observable nominal values
for similar contracts, adjusted for interest effects.
The effective part of change in fair value of contracts
designated in hedging relationships is booked temporarily
in equity, and recycled to the income statement when the
hedged items are realised. Realised effects from the hedging
of future need for power are a gain of NOK 377 million (gain of
NOK 190 million) which is included in raw materials and energy
for production. The ineffective part of change in fair value of
contracts designated in hedging relationships is recognised as
a part of other gains (losses) related to operating activities, see
note 10 Other gains (losses).
In addition, Elkem ASA holds power contracts which are
entered into and continue to be held for the purpose of the
receipt of power. These contracts are booked at the lower of
cost and fair value. As at 31 December 2022 the fair value of
these contracts is higher than cost (zero).
Details of fair value of power derivative contracts
31 December 2022
Amounts in NOK million
Volume GWh
Due
Fair value
Notional amount
1)
Forward contracts financial institutions
44
2023
43
15
Commodity contract "30-øringen"
1)
501
2023
608
158
Commodity contract "30-øringen"
1)
3 510
2024-2030
1 430
1 199
Total fair value
2 080
Details of fair value of power derivative contracts
31 December 2021
Amounts in NOK million
Volume GWh
Due
Fair value
Notional amount
1)
Forward contracts financial institutions
98
2022
23
52
Forward contracts financial institutions
44
2023
4
15
Commodity contract "30-øringen"
1)
501
2022
167
157
Commodity contract "30-øringen"
1)
4 011
2023-2030
163
1 378
Power contract with Salten Energigjenvinning AS (note 26)"
2)
124
2022
35
32
Power contract with Salten Energigjenvinning AS (note 26)"
2)
1 733
2023-2036
22
555
Total fair value
414
1)
Notional amount based on currency rates at 31 December.
2)
Elkem ASA merged with its subsidiary Salten Energigjenvinning AS in 2022.
25. Financial risk
Financial risk management in Elkem ASA is described in
note 27 Financial risk and capital management policies are
described in note 28 Capital management in the consolidated
financial statement. Elkem ASA's use of derivative instruments
are described in note 24 Financial instruments. See note
22 Interest-bearing assets and liabilities for details of credit
facilities and maturity profile of interest-bearing liabilities. The
exposure to credit risk is represented by the carrying amount
of each class of financial assets, including derivative financial
instruments, recorded in the balance sheet.
26. Related parties
Elkem ASA is owned 52.9% by Bluestar Elkem International
Co. Ltd S.A., Luxembourg, which is under control of Sinochem
Holdings Co., Ltd (Sinochem), a company registered and
domiciled in China. The structure of the Elkem group is
disclosed in notes to the consolidated financial statement;
note 4 Composition of the group and in note 5 Equity
accounted investments and joint operation. Details of
transactions between Elkem ASA and the parent company,
subsidiaries, joint ventures and associates and related parties
within Sinochem are disclosed below.
2022
Sale of
Purchase
Sale of
Purchase
Interest
Interest
Amounts in NOK million
good
of goods
services
of services
income
expenses
Bluestar Elkem International Co., Ltd. S.A.
-
-
-
-
-
-
Related parties within Sinochem
-
-
-
-
-
-
Subsidiaries
2 985
(1 148)
554
(540)
130
(48)
Joint ventures and associates
-
-
12
(145)
-
-
Total
2 985
(1 148)
565
(685)
130
(48)
2021
Sale of
Purchase
Sale of
Purchase
Interest
Interest
Amounts in NOK million
goods
of goods
services
of services
income
expenses
Bluestar Elkem International Co., Ltd. S.A.
-
-
-
-
-
-
Related parties within Sinochem
5
(154)
20
(0)
-
-
Subsidiaries
1 461
(664)
424
(498)
129
(11)
Joint ventures and associates
-
-
13
(124)
-
-
Total
1 465
(818)
457
(623)
129
(11)
Balances with related parties
Non-current
Current
Amounts in NOK million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Trade receivables, subsidiaries
-
-
1 068
734
Trade receivables, joint ventures and associates
-
-
6
6
Loans to subsidiaries, interest-bearing
4 221
3 269
801
24
Deposits from subsidiaries, interest-bearing
-
-
272
422
Interest receivable from subsidiaries
-
-
26
17
Receivables from subsidiaries, interest-free
-
-
-
10
Deposits from subsidiaries, interest-bearing
(171)
(145)
(3 831)
(2 618)
Other payables to subsidiaries, interest free
-
-
(60)
(43)
Trade payables, Bluestar Elkem Investment Co. Ltd. S.A
-
-
(5)
(5)
Trade payables, subsidiaries
-
-
(412)
(534)
Trade payables, joint ventures and associates
-
-
30
12
Prepayments from subsidiaries
-
-
-
(0)
Prepayments from joint ventures and associates
-
-
-
(6)
Financial power contract with joint ventures and associates
-
22
-
35
Transactions with key management personnel
Information on transactions with key management personnel
is included in "Report on salary and other remuneration to
leading personnel in Elkem ASA for the financial year 2022"
and note 9 Employee benefits in the consolidated financial
statement.
Commitment with related parties
Elkem has entered into a investment agreement and
committed to cover its proportion of total estimated capital
injections in Vianode AS. Elkem's proportion is NOK 534.5
million, whereof NOK 267 million is paid as of 31 December
2022.
Information about transactions between
related parties
Elkem follows internationally accepted principles for
transactions between related parties. In general, Elkem seeks
to use transaction based methods (comparable uncontrolled
price, cost plus and resale price method) in order to set the
price for the transaction.
The majority of the transactions between related parties relate
to products involving:
→
Raw materials (quartz) from quarries to plants
→
Metallurgical silicon to Silicones
→
Electrode paste from Carbon plants to FeSi
and Silicon plants
→
Surplus raw materials between plants
→
Ad-hoc supplies of finished goods to Elkem’s
internal distributors
→
Purchase of short and deep-sea transport
→
Sale of management and technology services
→
Rent of plant facilities and related services
→
Purchase of management services for the
Silicones segment
Elkem’s set-up for sales is based on an agent structure, rather
than a distribution network. Elkem also owns companies
sourcing key raw materials and other supplies from selected
suppliers world-wide. In both activities above, the transaction
between the related parties is a delivered service, either sales-
service or sourcing-service. Additionally, Elkem has internal
help chains that are established to serve several operating
units more efficiently.
Elkem ASA has both non-current receivables and non-current
payables to related parties. The group loans are normally
interest-bearing and interest is calculated based on interbank
rates (for example NIBOR) and a margin.
27. Pledge of assets and guarantees
Guarantee commitments
Amounts in NOK million
31.12.2022
31.12.2021
Guarantees given on behalf of the operating plants regarding environmental obligations
40
40
Guarantees given on behalf of subsidiaries regarding financing
681
576
As part of the factoring agreement parts of Elkem's trade
receivables are pledged (see note 18 Trade receivables). The
book value of the pledged assets and liability is NOK 50 million
(NOK 33 million).
28. Merger
Elkem ASA merged with its subsidiary Salten Energigjenvinning
AS in 2022. Salten Energigjenvinning AS operates a energy
recovery plant in connection to the Salten plant in Norway.
Following the purchase of the remaining 50% of the
shares giving Elkem ASA a 100% ownership in Salten
Energigjenvinning AS, the merger was effective from 21
November 2022 with Elkem ASA as transferee entity.
The merged entity`s total carrying amounts is based on group
book value and the continuity accounting method is applied.
For accounting purposes the merger was effective from 1
February 2022.
Net assets
Amounts in NOK million
Note
Total
Property, plant and equipment
Investments in subsidiaries
Total non-current assets
13
938
(182)
756
Inventories
Trade receivables
Other current assets
Cash and cash equivalents
Total currents assets
1
2
2
38
44
Non-current interest-bearing liabilities
Deferred tax liabilities
Derivatives
Total non-current liabilities
(650)
(19)
(87)
(756)
Trade payables
Other current liabilities
Total current liabilities
5
(45)
(40)
Net assets / equity contributed in the merger
20
4
29. Changes in presentation
Presentation of realised hedge ineffectiveness is changed from
raw materials and energy for production to other gains (losses)
related to operating activities in the inomce statement. The
impact on comparable figures in the inomce statement are
shown in the tables below.
Income statement
2022
2022
Amounts in NOK million
before change
Impact
After change
Raw materials and energy for production
Other gains (losses) related to operating activities
(5 585)
1 115
(597)
597
(6 183)
1 712
Operating profit (loss)
7 543
-
7 543
Income statement
2021
Impact
2021
Amounts in NOK million
Financial statement
of change
Restated
Raw materials and energy for production
Other gains (losses) related to operating activities
(4 268)
129
(124)
124
(4 392)
253
Operating profit (loss)
1 799
-
1 799
Elkem has changed from net to gross presentation of cash
flows from loans and deposits against subsidiaries. Cash flows
from repayment and new cash deposits are presented as
financing activities. Comparable figures are restated.
Cash flow statement
2022
Impact
2022
Amounts in NOK million
Before change
of change
After change
Increase in loans to subsidiaries
-
(1 848)
(1 848)
Re-payment on loans to subsidiaries
-
334
334
Increase /decrease in loans to subsidiaries
(316)
316
-
Cash flow from investing activities
(1 891)
(1 198)
(3 089)
New cash deposits to / from subsidiaries
-
1 578
1 578
Repayment of cash deposits to / from subsidiaries
-
(380)
(380)
Cash flow from financing activities
(2 367)
1 198
(1 169)
Change in cash and cash equivalents
1 056
-
1 056
Cash flow statement
2021 Financial
Impact
2021
Amounts in NOK million
statement
of change
Restated
Increase in loans to subsidiaries
-
(291)
(291)
Re-payment on loans to subsidiaries
-
201
201
Increase /decrease in loans to subsidiaries
(451)
451
-
Cash flow from investing activities
(1 075)
361
(714)
Repayment of interest-bearing loans and borrowings
(1 870)
(555)
(2 426)
New cash deposits to / from subsidiaries
-
910
910
Repayment of cash deposits to / from subsidiaries
-
(715)
(715)
Cash flow from financing activities
2 156
(361)
1 795
Change in cash and cash equivalents
2 461
-
2 461
Declaration by the Board of Directors
We confirm that, to the best of our knowledge, the financial
statements for the period from 1 January to 31 December 2022
have been prepared in accordance with applicable standards
and give a true and fair view of the group and the company’s
assets, liabilities, financial position and results of operations.
We confirm that the Board of Directors' report provides a
true and fair view of the development and performance of
the business and the position of the group and the company,
together with a description of the key risks and uncertainty
factors that they are facing.
The board of directors of Elkem ASA
Oslo, 8 March 2023
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Jingwan Wu
Board member
Grace Tang
Board member
Nathalie Brunelle
Board member
Marianne Elisabeth Johnsen
Board member
Terje Andre Hanssen
Board member
Marianne Færøyvik
Board member
Thomas Eggan
Board member
Helge Aasen,
CEO, Elkem ASA
KPMG AS
Sørkedalsveien 6
P.O. Box 7000 Majorstuen
N-0306 Oslo
Telephone +47 45 40 40 63
Internet www.kpmg.no
Enterprise 935 174 627 MVA
To the General Meeting of Elkem ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Elkem ASA, which comprise:
•
the financial statements of the parent company Elkem ASA (the Company), which comprise
the balance sheet as at 31 December 2022, the income statement and cash flow statement for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and
•
the consolidated financial statements of Elkem ASA and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at 31 December 2022, the
consolidated statement of profit or loss, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies.
In our opinion
•
the financial statements comply with applicable statutory requirements,
•
the financial statements give a true and fair view of the financial position of the Company as at
31 December 2022, and its financial performance and its cash flows for the year then ended in
accordance with Norwegian Accounting Act and accounting standards and practices generally
accepted in Norway, and
•
the consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2022, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the
EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the
Auditor’s Responsibilities for the
Audit of the Financial Statements
section of our report. We are independent of the Company and the
Group as required by relevant laws and regulations in Norway and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 7 years from the election by the general meeting of the
shareholders on 20 April 2016 for the accounting year 2016.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Assessment of impairment indicators of the carrying value of property plant and equipment
Refer to Note 3 Accounting estimates and Note 19 Impairment assessments
The key audit matter
As at 31 December 2022 the Group has
reported Property, plant and equipment of NOK
19,520 million across several cash-generating
units (CGUs).
For Property, plant and equipment management
assess, at each reporting date, whether there is
a trigger indicating that the carrying amount of
an asset may not be recoverable.
Due to the potential impact on the Group's
consolidated financial statements given the size
of the balance and uncertainty related to the
future economic environment, and the auditor
judgment required when evaluating whether
management's assumptions are reasonable and
supportable, the assessment of impairment
indicators of the carrying value of Property, plant
and equipment was considered to be a key audit
matter.
One CGU within the Silicones segment, Elkem
Silicones Guangdong with total carrying value of
NOK 187 million was identified to have
impairment triggers mainly due to significant
increase in raw material prices and limited pass-
through opportunities for the specialty part of
their sales portfolio.
As the recoverable amount exceeded the
carrying value, the CGU was assessed not to be
impaired.
How the matter was addressed in our audit
Our audit procedures performed to assess
impairment indicators included:
•
Assessing management's process and results
for identification and classification of CGUs to
ensure they were appropriate and in
accordance with relevant accounting
standards;
•
Obtaining an understanding of management’s
process and testing design and
implementation of management’s control
around the impairment trigger assessment;
•
Evaluating management’s impairment trigger
assessment and assessing any additional
potential indicators of impairment through
external and internal trigger indicators;
When impairment triggers were identified, our
procedures for the relevant CGUs included:
•
Evaluating and challenging the forecasted
cash flows including timing of future cash
flows applied in the models with reference to
historical accuracy and approved business
plans;
•
Evaluating key assumptions such as
forecasted sales prices, discount rates, growth
rates and EBITDA margin;
•
Assessing, with the assistance of KPMG
valuation specialists, the mathematical and
methodological integrity of management's
impairment models and the reasonableness of
discount rates applied with reference to
market data; and
•
Evaluating the adequacy and appropriateness
of the disclosures in the financial statements
related to the carrying value of Property, plant
and equipment.
2
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appear to be materially misstated. We are required
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
•
is consistent with the financial statements and
•
contains the information required by applicable statutory requirements.
Our opinion on the Board of Director’s report applies correspondingly to the board of director’s report
on Corporate Governance and the ESG report.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with the Norwegian Accounting Act and accounting standards and practices generally
accepted in Norway, and for the preparation and true and fair view of the consolidated financial
statements of the Group in accordance with International Financial Reporting Standards as adopted
by the EU, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern. The financial statements of the Company use the going concern basis of accounting insofar
as it is not likely that the enterprise will cease operations. The consolidated financial statements of the
Group use the going concern basis of accounting unless management either intends to liquidate the
Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
•
identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
3
•
obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's and the Group's internal control.
•
evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
•
conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company's and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
•
evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
•
obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Elkem ASA we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the
annual report, with the file name 549300CVBE06T0SH6T76-2022-12-31-en, have been prepared, in
all material respects, in compliance with the requirements of the Commission Delegated Regulation
(EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant
to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all
material respects, in compliance with the ESEF regulation.
4
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
regulation. This responsibility comprises an adequate process and such internal control as
management determines is necessary.
Auditor’s Responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all
material respects, the financial statements included in the annual report have been prepared in
compliance with ESEF. We conduct our work in compliance with the International Standard for
Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of
historical financial information”. The standard requires us to plan and perform procedures to obtain
reasonable assurance about whether the financial statements included in the annual report have been
prepared in compliance with the ESEF Regulation.
As part of our work, we have performed procedures to obtain an understanding of the Company’s
processes for preparing the financial statements in compliance with the ESEF Regulation. We
examine whether the financial statements are presented in XHTML-format. We evaluate the
completeness and accuracy of the iXBRL tagging of the consolidated financial statements and assess
management’s use of judgement. Our procedures include reconciliation of the iXBRL tagged data with
the audited financial statements in human-readable format. We believe that the evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Oslo, 17 March 2023
KPMG AS
Øyvind Skorgevik
State Authorised Public Accountant
5
Appendix - Alternative Performance Measures (APMs)
An APM is defined as a financial measure of historical or
future financial performance, financial position, or cash
flows, other than a financial measure defined or specified
in the applicable financial reporting framework (IFRS).
Elkem uses EBITDA and EBITDA margin to measure
operating performance at the group and segment level. In
particular, Management regards EBIT and EBITDA as useful
performance measures at segment level because income tax,
finance expenses, foreign exchange gains (losses), finance
income and other items are managed on a group basis and
are not allocated to each segment. Elkem uses cash flow from
operations to measure the segments cash flow performance,
this measure is excluding items that are managed on a group
level. Elkem uses ROCE, or return on capital employed as
measures of the development of the group’s return on capital.
Elkem relies on these measures as part of its capital allocation
strategy. Elkem uses net interest-bearing debt less non-
current interest-bearing assets / EBITDA as leverage ratio for
measuring the group's financial flexibility and ability for step-
change growth and acquisitions.
The APMs presented herein are not measurements of
performance under IFRS or other generally accepted accounting
principles and should not be considered as a substitute for
measures of performance in accordance with IFRS. Because
companies calculate the APMs presented herein differently,
Elkem’s presentation of these APMs may not be comparable to
similarly titled measures used by other companies.
Elkem’s financial APMs, EBITDA and EBIT
→
EBITDA is defined as Elkem’s profit (loss) for the period,
less income tax (expense) benefit, finance expenses,
foreign exchange gains (losses), finance income, share
of profit from equity accounted financial investments,
other items (except realised gains and losses from
hedge ineffectiveness and discontinuation of hedging),
impairment losses and amortisation and depreciation.
→
EBITDA margin is defined as EBITDA divided by total
operating income.
→
EBIT is defined as Elkem’s profit (loss) for the period,
less income tax (expense) benefit, finance expenses,
foreign exchange gains (losses), finance income, share of
profit from equity accounted financial investments and
other items (except realised gains and losses from hedge
ineffectiveness and discontinuation of hedging).
Below is a reconciliation of EBIT and EBITDA.
2022
Amounts in NOK million
Silicones
Silicon
Products
Carbon
Solutions
Other
Eliminations
Elkem
Profit (loss) for the year
Income tax (expense) benefit
Finance expenses
Foreign exchange gains (losses)
Finance income
Share of profit from equity accounted financial investments
Other items
Realised effects from hedge ineffectiveness and
discontinuation of hedging
EBIT
743
9 630
1 063
(281)
(257)
9 642
2 594
313
(85)
(67)
17
(2 151)
635
10 898
Impairment losses
Amortisation and depreciation
EBITDA
2 022
10 224
1 166
(231)
(257)
28
1 999
12 925
2021
Amounts in NOK million
Silicones
Silicon
Products
Carbon
Solutions
Other
Eliminations
Total
Profit (loss) for the year
Income tax (expense) benefit
Finance expenses
Foreign exchange gains (losses)
Finance income
Share of profit from equity accounted financial investments
Other items
Realised effects from hedge ineffectiveness and
discontinuation of hedging
EBIT
2 528
3 154
360
(97)
(46)
4 664
1 163
276
(241)
(40)
(37)
(10)
124
5 899
Impairment losses
Amortisation and depreciation
EBITDA
3 672
3 702
508
(44)
(46)
76
1 816
7 791
Elkem’s financial APMs, Cash flow from operations
→
Cash flow from operations is defined as cash flow from
operating activities, less income taxes paid, interest
payments made, interest payments received, changes
in provision, (gains) losses on disposal of subsidiaries,
changes in provisions, bills receivable and other,
changes in fair value of derivatives, other items (from the
statement of profit or loss), realised effects from hedge
ineffectiveness and discontinuation of hedging and
including reinvestments.
→
Reinvestments generally consist of maintenance capital
expenditure to maintain existing activities or that involve
investments designed to improve health, safety or the
environment.
→
Strategic investments generally consist of investments
which result in capacity increases at Elkem’s existing
plants or that involve an investment made to meet
demand in a new geographic or product area.
Below is a split of the items included in investment in
property, plant and equipment and intangible assets.
Amounts in NOK million
2022
2021
Reinvestments
(1 682)
(1 657)
Strategic investments
(2 797)
(1 717)
Periodisations
1)
421
245
Investments in property, plant and equipment and intangible assets
(4 058)
(3 128)
1)
Periodisations reflects the difference between payment date and accounting date of the investment.
Amounts in NOK million
2022
2021
Cash flow from operating activities
9 314
4 913
Income taxes paid
1 345
423
Interest payments made
319
242
Interest payments received
(66)
(34)
(Gains) losses on disposal of subsidiaries
159
-
Changes in provisions, bills receivables and other
539
88
Changes fair value of derivatives
1 139
9
Other items
(2 151)
(10)
Realised effects from hedge ineffectiveness and discontinuation of hedging
635
124
Reinvestments
(1 682)
(1 657)
Cash flow from operations
9 551
4 100
Elkem’s financial APMs, ROCE
→
ROCE, Return on capital employed, is defined as EBIT
divided by the average capital employed.
→
Working capital is defined as accounts receivable,
inventory, other current assets, accounts payable, current
employee benefit obligations and other current liabilities.
Accounts receivable are defined as trade receivables less
bills receivable. Other current assets are defined as other
current assets less current receivables to related parties,
current interest-bearing receivables, tax receivables,
grants receivable, assets at fair value through profit or
loss and accrued interest income. Accounts payable are
defined as trade payables less trade payables related to
purchase of non-current assets. Other current liabilities
are defined as provisions and other current liabilities less
current provisions, contingent considerations, contract
obligations and liabilities to related parties.
→
Capital employed consists of working capital as
defined above, property, plant and equipment, right-
of-use assets, other intangible assets, goodwill, equity
accounted investments, grants payable, trade payables
and prepayments related to purchase of non-current
assets. The definition was changed in 2022 to include
right-of-use assets, goodwill and other intangible assets.
Comparable figures are restated.
→
Average capital employed is defined as the average of the
opening and ending balance of capital employed for the
relevant reporting period.
Below is a reconciliation of working capital and capital
employed, which are used to calculate ROCE:
Capital employed and working capital
Amounts in NOK million
31.12.2022
31.12.2021
Inventories
10 325
7 716
Trade receivables
Bills receivable
Accounts receivable
4 248
(1 086)
3 162
4 297
(990)
3 307
Other assets, current
Other receivables to related parties interest free
Grants receivables
Tax receivable
Assets at fair value through profit or loss
Accrued interest
Other current assets included in working capital
1 698
(7)
(620)
(338)
-
(0)
733
1 551
(1)
(493)
(237)
(14)
(1)
806
Trade payables
Trade payables related to purchase of non-current assets
Accounts payables included in working capital
5 335
(1 117)
4 219
4 614
(605)
4 008
Employee benefit obligations
994
976
Provisions and other liabilities, current
Provisions, contingent considerations and contract obligations
Liabilities to related parties
Other current liabilities included in working capital
1 545
(144)
(30)
1 371
1 657
(454)
(32)
1 172
Working capital
Property, plant and equipment
Right-of-use assets
Other intangible assets
Goodwill
Equity accounted investments
Grants payable
Trade payables- and prepayments related to purchase of non-current assets
Capital employed
7 637
19 520
779
1 385
984
1 039
(16)
(1 018)
30 310
5 673
15 722
1 017
1 602
941
241
(15)
(581)
24 599
Elkem’s financial APMs, Leverage ratio
→
Net interest-bearing debt that is used to measure
leverage ratio is excluding non-current other restricted
deposits, receivables from related parties, loans to
external parties and accrued interest income. These
assets are not easily available to be used to finance
the group's operations. Below a calculation of Elkem's
leverage ratio.
Leverage ratio
Amounts in NOK million
31.12.2022
31.12.2021
Net interest-bearing assets / (liabilities)
(2 559)
(4 776)
Other restricted deposits, non-current
(46)
(41)
Receivables from related parties
(1)
(1)
Loans to external parties
(8)
(8)
Accrued interest income
(0)
(1)
Net interest-bearing assets / (liabilities) less non-current interest-bearing assets
(2 615)
(4 827)
EBITDA
12 925
7 791
Leverage ratio
0,2
0,6
