Annual report 2023
Navigating
challenges and
positioning for
sustainable growth
Delivering your potential
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We are Elkem
Advanced silicon-based
materials shaping a better
and more sustainable future
The Elkem Share
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Board of directors report
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Corporate governance
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Financial statements
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Table
of contents
Annual report
Elkem's history
12
2023 in a brief
16
Elkem’s value chain
20
Letter from the CEO
22
The Elkem way
26
Silicones
28
Silicon Products
30
Carbon Solutions
32
The Elkem share
36
Board of directors’ report
42
Board and management
58
Corporate governance
60
Overview of main risk areas
76
Risk descriptions
78
ESG report
82
Introduction
86
The Elkem climate roadmap
90
ESG management
92
Environmental
104
Social
142
Governance
162
Third party verification
178
Financial statements
180
Consolidated financial statements
184
Notes to the consolidated financial statements
190
Financial statements – Elkem ASA
278
Notes to the financial statements – Elkem ASA
283
Declaration by the board of directors
313
Independent auditor’s report
314
Alternative Performance Measures (APMs)
320
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 resourcefulness. 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 around 7,400 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
companies demonstrating best Environmental, Social
and Governance (ESG) practices.
Who we are
and what
we do
35.5
NOK billion total
operating income
11%
EBITDA margin
>80%
renewable
electricity
0
net zero
emissions
by 2050
One company,
three divisions
Elkem is organised in three divisions, providing silicones,
silicon products and carbon solutions. These products
are essential to making a large number of innovative
products that people use in their daily life and which are
necessary components for sustainable solutions for the
future, from digital communication, health and personal
care to green mobility and transportation, as well as
energy and power.
Elkem aims to grow profitably, through a focus on
building strong cost and market positions, with
integrated value chains, both in the East and the West.
Elkem also has a strong emphasis on innovation and
R&D to enable a higher degree of product specialisation,
creating added value for customers.
Silicones
A fully integrated producer
from silicon metal to upstream
siloxanes and downstream
silicone specialities.
Silicon
Products
A leading producer of silicon-
based materials, including silicon,
ferrosilicon, specialty alloys based
on ferrosilicon and Microsilica.
Carbon
Solutions
A leading producer of speciality
carbon products for various
metallurgical smelting processes
and primary aluminium industries.
A collection
of milestones
1918
Patenting of the Søderberg
electrode technology
1904
Elkem was founded
1913
Elkem listed on the Oslo
Stock Exchange
1944
First trial batch of
silicones in Lyon, France
1951
World’s largest ferrosilicon
smelter put into operation
at Fiskaa
1964
Silgrain© first
production (Bremanger)
A collection
of milestones
2011
Orkla aquired Elkem in 2005,
and de-listed the company.
Ownership changed to China
National Bluestar in 2011
1978
Beginning of
silicones production
in China (Xinghuo)
1981
Acquisition of
Union Carbide
Ferroalloys Division
2018
Re-listing on Oslo
Stock Exchange
2021
Silicones from Elkem
in more than 1 million
electric vehicles globally
2023
Elkem is a top 5 global silicones
producer, a top producer of silicon
and foundry alloys in Western
markets, and the only global
producer of carbon products
2005 -
2023
in brief
1Q-2023
→
The world’s first carbon capture pilot for smelters was
inaugurated at the Rana plant in Norway
→
Elkem decided to invest around NOK 200 million to
increase its production capacity in Brazil for pitch, a
raw material for electrode paste to industrial smelters
→
Elkem signed new long-term power agreements in
Norway for the Salten, Rana and Bremanger plants at
competitive terms
2Q-2023
→
Elkem acquired VUM, a Slovak producer of carbon
materials to further increase production capacity in
attractive markets
→
Elkem successfully completed accelerated
maintenance and improvement projects at the
Thamshavn and Rana plants and an extensive
maintenance stop in China
3Q-2023
→
Elkem ASA successfully issued NOK 1,000 million
of new senior unsecured green bonds with a tenor
of 5 years
→
Elkem’s ESG report rated A+ (top 5%) by Position
Green’s assessment of the 100 largest companies on
Oslo Stock Exchange and S&P Global ranked Elkem’s
ESG performance in the top 6% for 2023
4Q-2023
→
The European Chemical Industry Council (Cefic)
selected Elkem as one of 26 companies and
national associations to feature in its 2023 European
Responsible Care® Awards Gallery, with the only
initiative in the category of circularity
→
Elkem successfully completed an accelerated
maintenance and improvement project at the
ferrosilicon plant in Iceland
→
Elkem reached an agreement with reindeer grazing
district 7 (Rákkonjárga) which enables the expansion
of Elkem’s mining operations in Tana, Norway, one of
the world’s largest quartzite mines and a key source
of raw materials for the green transition
→
Fire at the Salten plant in Norway. No one was injured
in the fire. The fire started in a building housing raw
materials, including carbon materials
2023 has been a challenging year characterised by
weak macro-economic conditions, impacting demand
and sales prices for Elkem’s products. Elkem has
benefitted from its robust business model with strong
cost positions and balanced geographical positions.
High scores
from CDP
Elkem awarded A and double
A- from CDP for efforts on
forests, climate and water
Plants
Offices
HQ
Total operating income
Operating income growth
EBITDA
EBIT
Profit (loss) for the period
Cash flow from operations
Reinvestments in % of D&A
Total assets
Net interest-bearing debt
Debt leverage
Equity
Equity share
Return on capital employed (ROCE)
Earnings per share (EPS)
Number of employees
Total recordable injury rate H1+H2
NO
x
emissions
Total CO
2
emissions (Scope 1, 2 and 3)*
Energy consumption
2022
45 898
36%
12 925
10 898
9 642
9 551
84%
52 781
2 615
0.2
28 773
55%
39%
15.09
7 372
3.2
6 519
10.74
6.54
2023
35 545
-23%
3 771
1 365
170
3 027
102%
50 500
9 450
2.5
24 458
48%
4%
0.11
7 436
3.0
5 830
9.84
7.27
2020
24 691
9%
2 675
948
278
1 513
81%
30 888
8 058
3.0
12 635
41%
5%
0.41
6 856
2.3
6 610
10.27
6.40
2018
25 230
20%
5 793
4 522
3 367
4 031
84%
31 129
3 264
0.6
13 722
44%
26%
5.74
6 280
2.2
7 068
6.23
2017
20 985
26%
3 188
1 927
1 249
2 336
72%
25 507
8 111
2.5
8 565
34%
12%
2.08
6 113
3.1
7 109
5.28
2019
22 668
-10%
2 656
1 189
897
2 133
80%
29 004
5 722
2.2
12 952
45%
7%
1.47
6 370
2.2
6 718
6.01
2021
33 717
37%
7 791
5 899
4 664
4 100
91%
41 850
4 827
0.6
19 874
47%
26%
7.49
7 074
3.7
8 932
11.60
6.54
Unit
NOK million
Ratio
NOK million
NOK million
NOK million
NOK million
Ratio
NOK million
NOK million
Ratio
NOK million
Ratio
Ratio
NOK
Number
Ratio
Tonnes
Mill tonnes
TWh
Key figures
2016
16 594
1 559
264
-268
627
57%
23 092
9 502
6.1
5 830
25%
2%
(0.52)
6 022
5.3
7 309
4.40
* Total scope not reported before 2020.
Elkem's value
chain
Navigating challenges
and positioning for
green growth
Dear Elkem shareholder,
I wrote in my letter to you in last year’s report that
I expected a slowdown in global economic activity
and that market prices would come down to more
normal levels. Unfortunately, I was proven right,
and the downturn has been even more severe
than anticipated.
The macro-economic sentiment in 2023 has been
characterised by high inflation and interest rate
hikes, significant slowdown in European GDP
growth, combined with a weaker than eexpected
economic recovery in China after the pandemic.
The world also experiences continued geopolitical
uncertainty, exemplified by the wars in Ukraine
and the Middle East.
These factors, among others, have contributed to
weak demand and destocking across key markets
for Elkem. Silicones prices in China reached a
ten-year low in August 2023, while silicon and
ferrosilicon prices in EU were more than halved
since the beginning of 2022.
In 2023, Elkem was also negatively affected by
changes in the Norwegian CO
2
compensation
scheme. Despite some potential improvements
in the final agreement on the state budget, these
changes will continue to have a negative impact on
Norwegian industry in the years to come.
Comprehensive programme for cost
and capex reductions
To counteract the challenging market dynamics
and lower profitability, we have introduced a
comprehensive programme including initiatives
across several dimensions, such as freezing new
hires, working capital improvements, focus on
operational efficiencies and capacity optimisation,
as well as review of investment plans.
By the end of 2024, we expect to improve our cost
position by more than NOK 1.5 billion and reduce
investments by more than NOK 2 billion.
Long-term global megatrends
remain strong
In the near term, we continue to see significant
uncertainty regarding the macroeconomic
development and inflationary pressure, leading
to continued market volatility.
Looking beyond the current downturn we expect
growth in Asia to pick up significantly, and
combined with reindustrialisation in the Western
part of the world this will create attractive
opportunities for Elkem.
We are convinced that the long-term global
megatrends remain strong, and that Elkem’s
advanced materials are increasingly important in
transformation to a more sustainable future.
Following two years of record results for Elkem, supported
by unprecedented market momentum, 2023 presented
a more challenging macro-economic environment. This
has affected demand and resulted in lower profitability.
Elkem is taking action to address the challenging market
conditions and to position for a demand recovery.
Helge Aasen
CEO, Elkem ASA
This year, silicon has gained recognition by being
included in the European Union’s Critical Raw
Materials Act, as well as the list of critical materials
for energy by the United States’ Department of
Energy. The latter also includes electrical steel, an
iron alloy with silicon as the main additive element.
Positioning for a recovery and
sustainable growth
We are using this period to position Elkem for a
demand recovery. Throughout 2023, we have taken
steps such as accelerating maintenance at selected
plants, growing organically by expanding capacity
in Brazil, France (Roussillon) and China (Xinghuo)
as well as growing inorganically by acquiring the
carbon materials producer VUM in Slovakia.
The expansion at the Xinghuo plant in China
remains on track, both with regards to cost and
time. This will increase the plant’s production
capacity by 50 per cent, deliver significant cost
improvements and improve the environmental
footprint through lower energy and raw material
consumption. It is expected to be commissioned
during the first half of 2024.
These investments, both in the East and the West,
further reinforce Elkem’s corporate strategy of
dual-play growth and green leadership.
Securing green leadership
We have taken additional steps this year to
deliver on our ambition to be part of the solution
to combat climate change, and to be one of the
leading companies in our industry.
In the beginning of 2023, Elkem launched the
world’s first carbon capture pilot for smelters. A
mobile test unit was installed at Elkem’s plant in
Rana in order to demonstrate the technology on
site. Carbon capture can potentially contribute
significantly towards our global climate roadmap of
reducing emissions towards net zero while growing
supplies to the green transition.
During the year, Elkem also issued its first green
bonds, at a value of NOK 1 billion, in accordance
with the newly established green bond framework.
Finally, we achieved strong scores on climate,
forest, and water metrics from CDP, along with
an "A+" score in Position Green's analysis of
ESG (Environmental, Social and Governance)
reporting for the 100 largest companies on the
Oslo Stock Exchange.
We firmly believe 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.
Focus on safety improvement
Following a setback in our safety performance
during the pandemic, with a relatively high number
of incidents both in 2021 and 2022, we rolled out a
new and reinforced system for Health, Safety and
the Environment (HSE) improvement in Elkem to
reverse this trend.
I am pleased to share with you that we have reduced
the total injury rate per million working hours in
2023. However, two tragic accidents resulted in
four fatalities this year, among contractors working
for Elkem. Given the serious consequence of
these incidents we have taken significant steps to
reinforce management focus in the affected areas.
Our first priority ambition is the health and safety
of our employees. We believe that all injuries are
preventable and have therefore adopted a zero-
harm philosophy in our operations.
120 years young
In 2024, Elkem turns 120 years old, but we prefer
to see our company as 120 years young. Since the
establishment in 1904, we have been committed to
developing new products, exploring new markets,
and innovating new production technology.
An ambitious innovation strategy, combined
with continuous improvement, has been the
cornerstone of Elkem’s development and growth.
Today, Elkem is one of the world's leading providers
of advanced silicon-based materials, shaping a
better and more sustainable future. We have an
excellent team of more than 7,400 people all over
the world, working according to strong values –
respect, involvement, precision, and continuous
improvement – with the Elkem Business System
(EBS) as the foundation of our company culture.
This gives me confidence that we will be able to
continue to deliver value for you, our shareholders,
and all our stakeholders – in line with our purpose:
Delivering your potential.
Helge Aasen,
CEO, Elkem ASA
The Elkem way
We are Elkem
Our purpose
Delivering your potential
Our values
Involvement
Respect
Precision
Continuous improvement
→
A leading global provider of silicon-based advanced materials
→
Top 3 in silicones worldwide
→
Number 1 in silicon products and carbon solutions in the West
→
Elkem’s products are critical input factors to a vast number of applications
that are necessary in sustainable solutions enabling renewable energy,
energy storage, mobility solutions, infrastructure improvements and
digital communications
→
Elkem develops its business in accordance with the UN Sustainable
Development Goals and the Paris agreement
→
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
→
Elkem’s purpose is in our commitment to stakeholders:
Delivering 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
→
Involvement
commits people. We know that only people can identify
problems and opportunities and find solutions. By involving colleagues,
customers and other stakeholders, and by being transparent and committed
to teamwork, we increase our ability to learn and develop new solutions
→
We
respect
the law, the environment, our employees, colleagues,
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 mission
Advanced silicon-based
materials shaping a better
and more sustainable
future, adding value to
stakeholders globally
Our growth ambitions
Our corporate strategy
Dual-play growth
→
Balanced between
geographic regions
(East & West)
→
Balanced across the
value chain (Upstream &
Downstream)
Green leadership
→
Strengthening position
as best in the industry
on low
CO
2
→
Growing supplies to
green transition and
creating green ventures
>5%
Growth per year
-28%
Reduce CO
2
(2020-2031)
Dual-play growth and
green leadership
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
>15%
EBITDA margin
per year
0
net zero emissions
by 2050
Who we are, how we work and why we are here
End markets
→ Construction
→ Automotive
→
Chemical formulators
→
Personal care
→ Healthcare
→
Paper and film release
→
Silicone rubber
→ Textile
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
Elkem is a global leader in fully integrated silicone
manufacturing, 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 several areas,
including in personal care products, in cars, in the gel on
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
geographical growth across the main markets in the
East and the West, improve the cost position through
new investments in France and China, and to focus
on R&D and further specialisation of the products
portfolio. In 2024, the Silicones division will complete
several expansion and specialisation projects, including
expansions of the upstream siloxane capacity in China and
France. These projects will improve Elkem’s environmental
footprint, upstream product quality, and the plants’ cost
positions and underlying profitability.
14.4
NOK billion in total
operating income
40%
of group sales*
2023
14 364
-605
-4%
4 525
332
2021
17 429
3 672
21%
4 395
409
2022
19 288
2 022
10%
4 637
394
2020
12 800
1 326
10%
4 224
372
Key figures
Total operating income (in NOK million)
EBITDA (in NOK million)
EBITDA margin (in %)
Number of employees
Sales volume (thousands metric tonnes)
2019
11 319
1 486
13%
3 718
336
*Share of group sales from external customers ex. Other
Well positioned for further
growth and specialisation
End markets
→ Automotive
→
Construction/industrial equipment
→ Electronics
→
Specialty steel
→
Solar and wind turbines
→ Refractories
→
Oil and gas
10 main plants
Norway
Salten, Thamshavn,
Rana, Bremanger,
Bjølvefossen,
Iceland
Grundartangi
China
Shizuishan
India
Nagpur
Paraguay
Limpio
Canada
Chicoutimi
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 used in steel industry, with
Elkem’s specialty grades primarily employed in the
production of electrical steel for motors and power
network components, supporting the electrification.
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.
Drivers for the division’s growth are key mega trends,
such as the green transition, digital communications,
and smarter and more sustainable cities. Its main markets
are automotive, construction, electronics, and renewable
energy sectors.
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 carbon emissions through its value chain.
In 2023, silicon was included in the European Union’s
Critical Raw Materials Act, and on the list of critical
materials for energy by the United States’ Department
of Energy. In addition, Elkem has performed several
accelerated maintenance projects in 2023, and secured
new long-term power contracts in Norway. These
initiatives are supportive to securing the division’s leading
cost and market positions.
*Share of group sales from external customers ex. Other
Industry leader with strong
cost and market positions
18.4
NOK billion in total
operating income
49%
of group sales*
Key figures
Total operating income (in NOK million)
EBITDA (in NOK million)
EBITDA margin (in %)
Number of employees
Sales volume (thousands metric tonnes)
2023
18 403
3 304
18%
2 070
462
2021
14 789
3 704
25%
1 904
566
2022
24 489
10 226
42%
1 958
522
2020
10 807
1 214
11%
1 890
488
2019
10 159
998
10%
1 889
460
End markets
→
Ferroalloys
→
Silicon
→
Aluminium
→
Iron foundries
7 main plants
Norway
Kristiansand
Slovakia
Žiar nad Hronom
Brazil
Serra (Carboindustrial
and Carboderivados)
South Africa
Emalahleni
China
Shizuishan
Malaysia
Bintulu
Elkem is a leading producer of specialty carbon products
for various metallurgical smelting processes and primary
aluminium industries, uniquely positioned as the only
producer with a global reach.
Carbon products are used in electric arc furnaces and
by the aluminium and iron foundries industries. Elkem’s
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 critical for the green transition, and for
transportation and construction. High-quality electrodes
are critical for the customers to ensure stable and reliable
production processes.
The division's strategy is based on selective growth
opportunities, sustainable low-cost positions and high-
quality products giving status as preferred supplier.
In 2023, the Carbon Solutions division acquired VUM,
a Slovak producer of carbon materials. The transaction
will further increase Elkem’s capacity and competence
in attractive specialty markets. In addition, the division
decided to increase the production capacity of high-quality
products in Brazil. The new production will start in 2025.
Through these initiatives the division is delivering on its
strategy of selective growth within high-quality products.
Expanding in attractive
markets for specialty products
to metallurgical industries
4.2
NOK billion in total
operating income
11%
of group sales*
Key figures
Total operating income (in NOK million)
EBITDA (in NOK million)
EBITDA margin (in %)
Number of employees
Sales volume (thousands metric tonnes)
*Share of group sales from external customers ex. Other
2023
4 217
1 286
30%
454
279
2021
2 176
508
23%
395
294
2022
3 752
1 166
31%
401
302
2020
10 804
1 212
11%
1 890
479
2019
1 870
437
23%
394
256
The Elkem share
Elkem aims to be an attractive investment for
shareholders, delivering sustained growth and
competitive profitability through the cycle.
→
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, part of Sinochem Holdings
Co., Ltd., is the majority shareholder with 52.9%
→
Nine analysts are covering Elkem, providing
market updates and estimates for Elkem’s
financial development
NOK 13.5 bn
Elkem’s market cap as at
31 December 2023
19,544
shareholders
639.4
million shares
Elkem’s financial targets
Target metric
Revenue growth (%)
EBITDA margin (%)
Reinvestments % of D&A
Debt leverage ratio
Dividend target
Targets
5 - 10%
15 - 20%
80 - 90%
1.0x - 2.0x
30 - 50%
of group profit
Comments
Grow faster than market through specialisation,
organic growth and acquisitions
Target average margin through
the economic cycle
Ensure appropriate and disciplined capital
allocation following long-term plans
Ensure efficient and robust capital structure
Stable and predictable over time
Elkem intends to pay dividends reflecting the underlying
earnings and cash flow and will target a dividend pay-out
ratio of 30-50% of the group’s profit for the year
Due to the low earnings per share, the board of directors
has proposed to the annual general meeting not to pay
dividends for 2023.
Year
2023
2022
2021
2020
2019
2018
Earnings
per share
0.11
15.09
7.49
0.41
1.47
5.74
Dividend
per share
0.00
6.00
3.00
0.15
0.60
2.60
Date
proposed
08.02.2024
08.02.2023
09.02.2022
09.02.2021
12.02.2020
11.02.2019
Date
approved
18.04.2024
28.04.2023
27.04.2022
27.04.2021
08.05.2020
30.04.2019
Ex date
-
02.05.2023
28.04.2022
28.04.2021
11.02.2020
02.05.2019
Pay-out ratio
0%
40%
40%
37%
41%
45%
Dividend
yield (%)
0%
17%
9%
1%
2%
8%
Share price development since listing
2018
2019
2020
2021
2022
2023
Share price high (NOK)
Share price low (NOK)
Share price avg (NOK)
Share price year-end (NOK)
Volume
Turnover
EPS (NOK)
Market cap. year-end (NOK billion)
Shares outstanding as of 31.12
Shares issued
2018
45.00
21.00
34.00
22.20
342 107 122
10 506 950 753
5.74
12.90
581 310 344
581 310 344
2019
36.10
20.20
25.10
24.80
369 570 346
9 438 910 774
1.47
14.39
581 310 344
581 310 344
2020
29.60
11.20
20.40
28.40
303 729 619
6 114 487 641
0.41
16.50
581 310 344
581 310 344
2021
38.50
25.70
32.20
29.80
438 749 361
14 103 001 272
7.49
19.07
633 037 606
639 441 378
2023
39.90
16.50
26.90
21.20
267 010 261
6 779 641 881
0.11
13.53
633 890 288
639 441 378
2022
43.70
27.30
35.60
35.20
290 206 422
10 324 893 777
15.09
22.51
634 476 985
639 441 378
Common share data
50
45
40
35
30
25
20
15
10
5
0
Cash flow from operations
Operating income
EBITDA
FY 2020
FY 2021
FY 2022
FY 2023
Avg: 4.5
CAGR 13%
Avg: 6.8
Avg: 18%
1.5
4.1
9.6
3.0
FY 2020
FY 2021
FY 2022
FY 2023
24.7
33.7
45.9
35.5
FY 2020
FY 2021
FY 2022
FY 2023
2.7
7.8
12.9
3.8
NIBD
Leverage ratio
FY 2020
FY 2020
FY 2021
FY 2021
FY 2022
FY 2022
FY 2023
FY 2023
8.1
3.0
4.8
0.6
2.6
0.2
9.5
2.5
Avg: 6.2
Avg: 1.6
EBITDA margin
FY 2020
FY 2021
FY 2022
FY 2023
11%
23%
28%
11%
The 20 largest shareholders as of 31 December 2023
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
China National Bluestar
Folketrygdfondet
Must Invest
Pareto Asset Management
Storebrand Asset Management
Vanguard
First Fondene
Alfred Berg Kapitalforvaltning
Arctic Fund Management
DNB Asset Management AS
Nordea Funds
Elkem ASA
BlackRock
Cape Invest AS
KLP Kapitalforvaltning AS
Forsvarets Personellservice
Fidelity International (FIL)
Dimensional Fund Advisors
Handelsbanken Fonder
Fondsfinans Kapitalforvaltning
Total 20 largest shareholders
Holding
338 338 536
25 691 092
17 689 827
15 315 726
14 682 342
10 014 830
8 520 874
8 410 257
7 393 161
7 064 932
6 101 592
5 551 090
5 519 263
4 495 096
3 724 872
3 635 000
2 623 806
2 374 553
2 085 406
2 000 000
491 232 255
Stake
52.9%
4.0%
2.8%
2.4%
2.3%
1.6%
1.3%
1.3%
1.2%
1.1%
1.0%
0.9%
0.9%
0.7%
0.6%
0.6%
0.4%
0.4%
0.3%
0.3%
76.9%
Change from
2022 %
∙
-
↓
-7%
↑
26%
↑
56%
↑
8%
↑
5%
↑
139%
↓
-64%
↓
-5%
↑
68%
↓
-17%
↑
12%
↑
2%
∙
New
↑
15%
↑
14%
∙
New
↓
-15%
↓
-49%
∙
New
Citizenship
China
Norway
Norway
Norway
Norway
United States
Norway
Norway
Norway
Norway
Finland
Norway
United States
Norway
Norway
Norway
United Kingdom
United States
Sweden
Norway
Geographical distribution of shareholders
As of 31 Decmber 2023 Elkem had 19,544 shareholders
Geographical distribution of shareholders
As of 31 December 2022 Elkem had 12,874 shareholders
36.1%
52.9%
4.6%
4.1%
1.2%
1.1%
China
Norway
United States
Sweden
Finland
Other
28.3%
52.9%
10.7%
5.3%
1.6%
1.2%
China
Norway
United States
Sweden
Finland
Other
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 believes that a safe and environmentally
responsible business model 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.
Towards the end of 2022, the global economy was
characterised by rapid inflation, increasing interest
rates and a slowdown in economic activity. Challenging
economic conditions continued throughout 2023,
combined with a weaker than expected recovery in
China after the pandemic and geopolitical uncertainty.
These factors have contributed to weak demand in key
markets, leading to a ten-year low of Silicones prices
in China in August 2023 and more than a halving of
silicon and ferrosilicon prices in the EU compared to the
beginning of 2022. During challenging market conditions
and macro headwinds in 2023, Elkem has adjusted
capacity utilisation, accelerated maintenance programs,
implemented group wide EBITDA
1
margin improvement
initiatives, while focusing on finalising high impact
investment projects targeted to ramp-up in 2024. The
board of directors believes that the long-term underlying
growth and development 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 decreased by 23%
Year-over-Year (YoY) to NOK 35,545 million in 2023. The
EBITDA margin was 11% compared to 28% in 2022. The
leverage
2
ratio was 2.5x as at 31 December 2023. This is
above the leverage target of 1.0x to 2.0x over the cycle
and is a consequence of the weaker results and higher
debt levels. Despite the weaker results in 2023, Elkem is
delivering on its financial targets over the business cycle,
based on strong top line growth, good profitability, and a
sound financial position.
Elkem’s policy is to pay a dividend of 30-50% of the owners
of the parent's share of profit for the year. Considering
the low earnings per share in 2023, the board of directors
has proposed to the annual general meeting not to pay
dividends for 2023. The board of directors emphasises the
ambition to uphold the dividend policy of 30-50%.
Elkem’s first priority is a safe workplace. Following a
setback in our safety performance during the pandemic
with a relatively high number of incidents in 2021 and
2022, a reinforced Health, Safety and Environment (HSE)
Following two years of record results for Elkem, supported
by unprecedented market momentum, 2023 presented
a more challenging macro-economic environment. This
has affected Elkem’s markets and resulted in lower
profitability. Elkem is executing extensive improvement
initiatives in order to improve profitability as a basis for
future growth and development.
Total Operating income
NOK million
EBITDA
1
NOK million
Leverage
2
ratio
1
EBITDA commented under APM section
2
Leverage ratio commented under APM section
Positioning Elkem for
profitability improvement
and growth through a
challenging year
system was rolled out globally during 2023. The total
injury rate per million working hours has been reduced
in 2023 compared to 2022. Despite considerable focus
and improvement efforts, two tragic accidents resulted
in 4 fatalities this year, among contractors working
for Elkem. Given the serious consequence of these
incidents, significant steps have been taken to reinforce
management focus in the affected areas. 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) continues
to be an important priority for Elkem by enabling
environmentally friendly and socially responsible
production of advanced silicon-based materials. The
ambition is to remain at the forefront of 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. 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 2023
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. The compound annual growth has been
13% since 2020. Key investment projects in 2023 include:
→
Silicones expansion projects in France and China
have progressed according to plan. The projects
are targeting upstream capacity increase of 25% /
20 ktpa in France and 50% / 120 ktpa in China and
are expected to ramp up production in 2024. These
projects will improve the plants’ cost positions, mainly
through lower energy and raw material consumption.
The new production line in China is expected to be
on level with the current lowest cost producers. The
new capacity will enable Elkem to benefit from lower
cost levels while providing feedstock to production of
higher margin products downstream.
→
In January 2023, Elkem decided to invest around
NOK 200 million to increase its production capacity
in Brazil for pitch, a raw material for electrode
paste to industrial smelters. The investment is an
expansion of an existing facility based on known
technology, thereby further improving productivity
and profitability. The investment will increase the
production capacity by up to 40 per cent when
started up in early 2025.
→
During the year, Elkem carried out accelerated
maintenance programmes at selected strategic
locations. Silicones completed planned maintenance
at its upstream production unit in China during first
half of 2023. Silicon Products executed maintenance
at Thamshavn, Rana, Bremanger and Iceland during
the year. The maintenance and improvement projects
position the company with higher efficiency and
improved production.
→
In September 2023, a comprehensive programme
for EBITDA improvements was initiated across all of
Elkem’s divisions. In addition, full focus has been set
at finalising ongoing step change investment projects
while carefully reduce investment levels to reflect the
weaker market conditions. The target is to improve
EBITDA by NOK 1.5 billion and reduce investments by
NOK 2.0 billion in 2024.
Strategic initiatives for renewed value creation
Key initiatives to ensure growth and create shareholder
value have been implemented during the year, providing a
continuous basis for long term value creation and secure
strategic positions.
→
In February 2023, Elkem and Statkraft signed a new
long-term power agreement which secures additional
competitive access to power for the Salten, Rana
and Bremanger plants in Norway. The new contract
covers a capacity of 20-40 MW for a duration of
ten years and secures additional predictability for a
total of 3 TWh in the period 2024-2033, supporting
continued long-term operations and enabling new
investments at the plants.
→
In June 2023, Elkem acquired VUM, a Slovak producer
of carbon materials. The transaction will further
increase capacity and competence in attractive
specialty markets. The acquisition is in line with our
growth and specialisation strategy, and will improve
the flexibility to handle different raw materials and
provide synergies to Elkem’s existing operations.
→
In December 2023, Elkem reached an agreement
with reindeer district 7 (Rákkonjárga) which enables
the expansion of Elkem’s mineable reserves with
15 years at Tana, Norway, one of the world’s largest
quartzite mines and a key source of raw materials for
the green transition.
ESG and climate roadmap remains a high
priority 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 continue to be at the forefront
in the green transition, taking a leading part to combat
climate change.
In January 2023, the world’s first carbon capture pilot
for smelters was inaugurated at Elkem in Rana, Norway.
The goal of the project is to verify the technology on
real industrial gases from smelters and other process
industries, in order to prepare a full-scale plant for
industrial carbon capture. Industrialization of such
technology is considered as an important contributor
to reducing CO
2
emissions and delivering on the global
sustainability goals. In January 2024, the pilot recorded
high capture rates of CO
2
, up to 95%, indicating technical
viability of carbon capture and storage in smelters.
In August 2023, Elkem ASA successfully issued NOK
1,000 million of new senior unsecured green bonds with a
tenor of 5 years.
In September 2023, Elkem’s ESG report was rated A+ (top
5%) by Position Green’s assessment of the 100 largest
companies on OSE and S&P Global ranked Elkem’s ESG
performance in the top 6% for 2023.
In November 2023, The European Chemical Industry
Council (Cefic) selected Elkem as one of 26 companies
and national associations to feature in its 2023 European
Responsible Care® Awards Gallery, with the only initiative
in the category of circularity.
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 7,400 full time equivalents
(FTE), 31 main production sites and an extensive network
of sales offices worldwide. In 2023 Elkem had a total
operating income of NOK 35,545 million. 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 4,500
FTEs 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 40% of
the group total operating income.
The markets for the Silicone 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 49% of the group total operating income.
Silicon Products has about 2,000 FTEs 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, however the material is also highlighted
as an important material for the green transition in Europe
and the United States.
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 FTEs, with plants in Norway, South Africa, Brazil,
Malaysia, Slovakia and China. The Carbon Solutions
division represents 11% 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 2023.
Consolidated profit and loss statement
Consolidated operating income for the Elkem group
amounted to NOK 35,545 million compared to NOK
45,898 million in 2022. The 23% decrease was driven by
lower sales prices and volumes. The Silicones division saw
a 26% decrease in operating income driven by weaker
prices and lower sales volumes in all markets and regions.
Sales volumes decreased compared to 2022 mainly due
to lower demand, an oversupply situation in China and
destocking in EMEA and Americas regions. Operating
income for the Silicon Products division decreased by
25% due to negative price development for silicon and
ferrosilicon driven by weaker demand, in addition to
lower sales volume. Carbon Solutions’ operating income
increased by 12%, driven by higher prices and favourable
currency effects countering higher raw material cost.
Sales volume was lower driven by lower demand.
Consolidated EBITDA ended at NOK 3,771 million compared
to NOK 12,925 million in 2022. The corresponding margin
decreased from 28% in 2022 to 11% in 2023. EBITDA fell
YoY driven by lower EBITDA from Silicones and Silicon
Products primarily driven by lower prices and lower sales
volumes. Carbon Solutions delivered the best EBITDA result
ever driven by improved prices and strong operational
performance. We refer to “Divisions business performance”
for further descriptions.
Consolidated operating profit was NOK 1,682 million in
2023 compared to NOK 12,414 million in 2022, a decrease
of NOK 10,732 million explained mainly by decreased
consolidated EBITDA, increased amortisation, depreciation
and impairment losses and lower contributions from other
items. Amortisation and depreciation were NOK 2,312
million in 2023 compared to NOK 1,999million in 2022. The
increase in amortisation and depreciation is attributed to
higher investment levels from 2021 to 2023. Impairment
losses were NOK 94 million in 2023 compared to NOK
28 million in 2022. Other items were positive NOK 516
million in 2023 compared to positive NOK 2,151 million in
2022. Other items effect in 2023 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 and foreign exchange gains.
This was partially countered by restructuring expenses
related to Silicones’ EBITDA improvement programs.
Consolidated profit before income tax ended at NOK
951 million for the year, compared to NOK 12,236 million
in 2022.
Net financial items were negative NOK 731 million in
2023 compared to negative NOK 178 million in 2022
mainly driven by higher finance expenses. The share of
profit from equity-accounted financial investments was
negative NOK 63 million in 2023 compared to negative
NOK 17 million in 2022. Finance income was NOK 182
million and foreign exchange losses were NOK 106 million
in 2023 compared to NOK 67 million and positive NOK
85 million in 2022 respectively. Finance expenses were
NOK 743 million compared to NOK 313 million in 2022
driven by higher interest rate charges and higher interest
bearing debt level.
The consolidated profit for the year was NOK 170 million,
after NOK 781 million in tax expenses. The tax expenses
are driven by positive results in most countries whereas
negative results in France and China are not capitalised as
deferred tax assets. The tax expenses mainly consisted of
taxes on the current year’s result.
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 expense of NOK 566 million for 2023, compared to a
net income of NOK 1,234 million in 2022.
The share of consolidated profit attributable to
shareholders of Elkem ASA was NOK 72 million, resulting
in basic earnings per share NOK 0.11 per share in 2023
compared to NOK 15.09 per share in 2022.
The total comprehensive income for the year was
negative NOK 396 million in 2023 compared to NOK
10,876 million in 2022.
Divisions business performance
The Silicones division had an operating income in
2023 of NOK 14,364 million (NOK 19,288 million in
2022). EBITDA was negative NOK 605 million in 2023
compared to positive NOK 2,022 million in 2022. The
EBITDA decrease was caused by lower commodity
sales prices and lower sales volumes in all regions. DMC
market index prices in China fell to a 10 year low level in
August 2023 and averaged 37% lower in 2023 compared
with 2022 level. Prices overall fell as a result of weaker
demand in all regions and segments of Elkem. Sales
volumes decreased by 16% YoY from 394 thousand
metric tons (mt) in 2022 to 332 thousand mt in 2023
driven by lower demand in all regions, an oversupply
situation in China and maintenance stop in China.
Maintenance stop and inventory write down contributed
additionally to the negative EBITDA in 2023.
The Silicon Products division had an operating income in
2023 of NOK 18,403 million (NOK 24,489 million in 2022).
EBITDA was NOK 3,304 million in 2023 compared to NOK
10,226 million in 2022. The record high EBITDA in 2022
was mainly attributable to good operations and record
high sales prices driven by the energy crisis in Europe.
During 2023 prices developed negatively on weaker
demand compared to 2022. Silicon and ferrosilicon sales
2022
12 925
Silicones
-2 627
Silicon
Products
-6 922
Carbon
Solutions
120
Other /Elim
276
2023
3 771
EBITDA
NOK million
Operating income
NOK million
2022
45 898
Silicones
-4 924
Silicon
Products
-6 086
Carbon
Solutions
465
Other /Elim
192
2023
35 545
prices were on average 36% lower in 2023 compared to
2022. Sales volumes decreased from 522 thousand mt
in 2022 to 462 thousand mt in 2023 driven by weaker
demand and accelerated maintenance stops.
The Carbon Solutions’ division had an operating income
in 2023 of NOK 4,217 million (NOK 3,752 million in 2022).
EBITDA was all time high at NOK 1,286 million in 2023
compared to NOK 1,166 million in 2022. The improved
EBITDA was mainly due to higher prices partially
countered by increased raw material cost. Sales volumes
decreased by 8% from 302 thousand mt in 2022 to
279 thousand mt in 2023.
Cash flow and statement of financial position
Cash flow from operating activities (IFRS) was NOK 3,006
million for the year, compared to NOK 9,314 million in 2022.
Positive cash flow contribution from EBITDA (NOK 3,771
million) was further strengthened by reduced working
capital (NOK 1,584 million), positive effects from gains from
equity accounted companies (NOK 22 million), changes
in provisions, bills receivable and other (NOK 190 million)
and interest payments received (NOK 179 million). This
was countered partially by interest payments made (NOK
716 million), changes in fair value of derivatives (NOK 59
million) and income taxes paid (NOK 2,281 million).
Amortisation, depreciation and impairment increased
in 2023. The increase is attributed to higher investment
levels during the past few years with a substantial portion
going towards a step increase production capacity for
Silicones in China. Sizable growth investments in Europe
and the Americas and accelerated maintenance programs
underlines the dual-play growth strategy and green
leadership ambition.
Changes in working capital were positive YoY mainly
due to a decrease in inventories. Lower inventories
were explained by production volumes and lower raw
material prices, impacting the value of raw materials and
finished goods. 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 5,299 million negative for the year, compared to
NOK 4,404 million negative in 2022. Elkem invested NOK
2,351 million in maintenance, environment, health and
safety, and productivity improvement initiatives during
the year. In addition, Elkem had NOK 2,866 million in
strategic investments. The cash flow from investing
activities in 2023 is mainly explained by investments in
the Silicones division particularly related to expansion of
production capacity in China, accelerated maintenance
and improvement investments at selected plants in
Silicon Products.
Cash flow from financing activities was negative NOK
724 million, compared to negative NOK 2,899 million in
2022. The negative cash flow from financing activities in
2023 was mainly related to dividends paid to the owners
(NOK 3,815 million). In addition, other items in cash flow
from financing activities in 2023 that were net negative
include changes in bills payables and restricted deposits
(NOK 237 million), payment of lease liabilities (NOK
209 million) and payment of interest-bearing loans and
borrowings (NOK 262 million) countered by new interest-
bearing loans and borrowings (NOK 3,911 million).
Change in cash and cash equivalents was negative
NOK 3,017 million for the year.
Elkem’s financial position was impacted by the weaker
financial results in 2023. The group’s equity ratio ended
at 48% at the end of the year compared to 55% in 2022.
The lower equity ratio was mainly impacted by a record
high dividend distribution for 2022. The leverage ratio for
the group increased from 0.2x in 2022 to 2.5x at the end
of 2023 due to lower EBITDA and higher Net interest-
bearing debt
3
(NIBD).
Elkem has two financial covenants in its loan agreements.
These are Equity Ratio
4
> 30%, and Interest Cover Ratio
5
must equal or exceed 4.0x. The interest rate hikes in 2023,
combined with the market downturn and reduced EBITDA,
gives a risk that the Interest Cover Ratio could drop below
threshold included in the covenants. Elkem initiated a
waiver process during first quarter of 2024, and requested
the lenders’ consent for a temporary waiver of the current
Interest Cover Ratio to ensure that Elkem has sufficient
headroom to operate through these uncertain times.
The board of directors views the group’s underlying
competitive positions and strong equity ratio as a good
basis to support further profitable growth of the group.
Total interest-bearing liabilities was NOK 16,206 million
as of 31 December 2023, of which NOK 2,697 million
matures in 2024. Debt maturities in 2024 mainly consist
of short-term loans in China for local working capital
financing. Cash and cash equivalents amounted to NOK
6,367 million in addition to NOK 6,293 million in undrawn
credit facilities. NIBD amounted to NOK 9,450 million as
of 31 December 2023. The board views the group’s cash
and financial position to be strong.
Going concern
The board of directors is of the opinion that Elkem has the
ability to continue its business in the foreseeable future
and hence confirms that the financial statements have
been prepared on a going concern basis and that this
assumption is appropriate at the date for the accounts,
and that the group has sufficient equity and liquidity to
fulfil its obligations.
Strategic priorities
The board of directors conducts an annual review of
Elkem’s strategy, which includes an assessment of strategic
priorities, and financial scenarios based on industry trends,
market development and other framework conditions.
The macro-economic sentiment has been challenging in
2023, characterised by high inflation, interest rate hikes, a
slower than expected recovery in China, and geopolitical
uncertainties. This has resulted in weak demand and
lower sales prices in Elkem’s main markets and impacted
the results negatively. In response to challenging market
conditions Elkem has implemented a comprehensive
programme to improve EBITDA and cash flow generation,
and to reduce investments to preserve cash and reduce
debt leverage.
Elkem is one of very few companies with complete and
integrated value chains covering Eastern and Western
markets respectively. In addition, the company has good
cost and market positions. The board considers Elkem
to be well positioned to benefit from a macroeconomic
recovery, when markets improve.
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 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%. Since 2020, Elkem has delivered a
compound annual growth of 13% with an average EBITDA
margin of 18%.
The main strategic priorities are dual-play growth and
green leadership. 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 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-design of
innovative products.
3
See APM section
4
See Note 23 Interest-bearing assets and liabilities
5
See Note 23 Interest-bearing assets and liabilities
The focus on a higher degree of product specialisation
through Research and Innovation (R&I) and selected
acquisitions remain a key strategic measure to improve
and stabilise the group’s profitability through the business
cycle. The expansion of the silicones plant in China is
expected to provide additional high-quality siloxane for
further downstream specialisation. Elkem also expects to
complete several downstream specialisation projects in
2024, within the overall strategic investment frame.
To support its strategic goals, Elkem will focus on
operational excellence, digitalisation, people development
and ESG. Elkem’s divisions will focus on developing
and maintaining sustainable low-cost positions within
respective markets. 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.
Research and Innovation is vital to support and
realise Elkem’s strategy on sustainable growth
and specialisation
Elkem devotes considerable effort and resources to
R&I activities with more than 3.5% of 2023 revenues
dedicated to new products and new processes, including
technical support to customers. With this investment,
carried out 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 15% of Elkem’s revenue.
R&I efforts are key to create and develop innovative
products for new market needs 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 2023, 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 aims to be at the forefront
of new technologies in five prioritised areas, 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
→
Through an EU-funded project together with
research- and customer partners, Elkem has
developed a new specialised iron silicon powder,
which may allow 3D-printing of components for
electrical motors.
→
Focus on new materials
→
In 2023 Elkem submitted two entries to the
prestigious R&D100 Awards by R&D World
magazine and was recognised as one of the 156
finalists with PURESIL ORG 03: An advanced
silicone elastomer technology with a bio-based
raw material derived from sugar cane for
Personal Care applications and with Silicone
Elastomers as Modifiable Excipient for Drug
Delivery Devices.
→
Focus on climate strategy and circular economy
→
A global roadmap for carbon management
including CO
2
modelling, methodology for
climate reporting, carbon capture initiatives
and the development in the future of new
silicon processes. Elkem has successfully
completed the world’s first pilot for carbon
capture and storage in a smelter at Rana
plant in Norway. The project received financial
support from Gassnova CLIMIT, and was
a collaboration between Elkem and Mo
Industripark, SINTEF, Alcoa, Celsa, Ferroglobe,
SMA Mineral, Norcem, Norfrakalk, Arctic
Cluster Team and Aker Carbon Capture.
→
A biocarbon initiative with four objectives: to
support Elkem's climate strategy by increasing
the use of biocarbon in Elkem smelters; to
secure the quality of end-products, including
Silicon (Si), Ferrosilicon (FeSi) and Microsilica
(MS); to ensure safe and efficient operation
on Si/FeSi furnace while shifting to biogenic
raw materials; and to ensure an efficient
biocarbon production process. This initiative is
supported by a pilot plant in Canada and several
collaborative research projects.
→
Project on chemical and mechanical recycling
of silicone waste, potentially reducing CO
2
emissions by around 65% and waste by around
75% (project in collaboration with University
of Lyon and start-ups). Elkem's Collaborative
Research Project REPOS on Chemical
recycling was recognised by the European
Chemical Industry Council (CEFIC) and
received commendation in the category
of Circularity.
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.
→
At the 6th CIIE (China International Import Expo)
held on November 5-10th, 2023 in Shanghai, China,
Elkem hosted ten new product launches, including
technological innovations and sustainable solutions
across various high-end application markets, such as
new energy, healthcare, construction, personal care
and consumer electronics.
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 center 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, and is now expected to be
inaugurated in 2024.
Sustainability: Environmental, social and
governance (ESG)
Elkem, as a signatory to the UN Global Compact, is
dedicated to developing its business in alignment with
the UN Sustainable Development Goals and the Paris
Agreement. The company emphasises the increasing
importance of safe and environmentally friendly
production. Elkem collaborates with customers and
partners to create both current and future solutions,
recognising the vital role of responsible practices.
Within the realm of ESG, Elkem ensures best practices for
socially responsible and sustainable business, evaluating
sustainability materiality annually using the widely accepted
reporting framework, Global Reporting Initiative (GRI).
Prioritised targets and actions are implemented to effect
improvements. Key material topics for Elkem in 2023,
identified through the GRI 2021 materiality assessment,
include CO
2
and other greenhouse gas emission reductions,
energy management, local emissions, biodiversity, water
management, waste management, circularity, health and
safety on site, environmental and social due diligence in
the supply chain, responsible economic practices, product
governance, and supporting the green transition. In 2024
Elkem will report according to the Corporate Sustainability
Reporting Directive (CSRD), and a double materiality
assessment has been conducted in Q4 2023.
For detailed information on Elkem's response to material
topics, refer to the ESG report detailing commitments and
activities within environmental, social, and governance.
The chapter on Human and labour rights are compliant
with the requirements stated in the Norwegian
Transparency Act (2021), the UK Modern Slavery Act
(2015) and the Forced Labour in Canadian Supply Chains
Act (2023). This report, an integral part of the annual
report, has undergone independent verification by a third
party, and it can be reviewed on page 178-179.
Health, Safety and Environment
HSE forms the foundation of Elkem's business, consistently
holding the top priority. Guided by a zero-harm philosophy,
our HSE management system is methodically implemented
to progress toward this paramount goal.
The safety of our employees stands as the cornerstone
of our philosophy. The group firmly believes, and has
demonstrated, that Elkem's operations can be conducted
without harm to employees and individuals. Elkem
allocates significant resources to hazard identification
and the implementation of suitable measures, aiming
to reduce risks to an acceptable level. This ensures that
all employees and contractors working at Elkem can
conclude their tasks as healthy as when they commenced.
In 2023, we have introduced a new safety management
system, FORUS, aligned with global best practices in HSE
(Health, Safety, and Environment).
Elkem enforces a rigorous reporting regimen for injuries,
necessitating reporting, investigation, and mitigation
regardless of severity. Sadly, two tragic accidents resulted
in 4 fatalities this year, among contractors working for
Elkem, and this underscores the continued focus on
HSE. The total recordable injury rate decreased from 3.2
in 2022 to 3.0 in 2023, and the lost workday rate (LWR)
declined from 0.9 in 2022 to 0.8 in 2023.
For detailed insights into Elkem's management system,
reporting, safety metrics, and organizational and value
chain follow-up, consult the Social chapter in the ESG
report on page 144-161.
Elkem’s scope 1 and scope 2 emissions have been reduced
by 9.5% compared to 2022, primarily due to lower
production. Increased use of biocarbon as a reduction
agent in the production of silicon and ferrosilicon is a key
element in Elkem’s climate roadmap to reduce fossil GHG
emissions. In 2023, the biocarbon share has increased
in line with the strategy, but due to lower production, the
biocarbon share of total emissions was stable at 20%. The
access to sufficient amounts of biocarbon is expected
to be challenging in the coming years, hence continued
research on carbon capture and storage (CCS) and
usage (CCU) are expected to be key to reduce Elkem’s
absolute emissions in the long term. For more on Green
House Gas (GHG) emission reduction, water and waste
management, biodiversity and local emissions to air
review the Environmental chapter in the ESG report on
pages 106-141.
Diversity, inclusion, and equality
Elkem is dedicated to fostering equal opportunities within
a diverse and inclusive work environment. The company
recognises and values the uniqueness of each individual,
emphasising respect for their distinct abilities. Elkem
expects all colleagues to adhere to these principles and
champion the four Elkem values.
The company views its human capital as its most valuable
asset. The collective wealth of individual differences, life
experiences, knowledge, creativity, self-expression, unique
capabilities, and talent that employees bring to their
work not only shapes Elkem's culture but significantly
influences its reputation and business outcomes.
Elkem maintains a zero-tolerance policy for any form of
harassment or discrimination.
Well-established policies and practices in place
encompass diversity, equality, and inclusion (DEI).
These include the code of conduct, human rights
policy, people policy, and global standard procedures
covering recruitment, working conditions, promotions,
development, on- and off-boarding, and protection
against harassment.
Elkem's DEI vision is to cultivate a workplace that is
diverse, equitable, and inclusive, where all employees feel
engaged, valued, and a sense of belonging. The promotion
of diversity, inclusion, and equality is crucial in attracting
and retaining talent, establishing and maintaining
profitability, competitive advantage, and sustained
success at Elkem. The group aims to create an inclusive
culture where all voices are heard, encouraging individuals
to ask questions, embrace new approaches, and bring
diverse perspectives to the table. Through maintaining a
diverse, equal, and inclusive working culture, Elkem seeks
to enhance its ability to deliver market-leading products
and services profitably.
In 2023, Elkem continued its improvement efforts based
on the global employee engagement survey conducted in
2022, where Elkem scored 84% of employees responded
positively on the DEI dimensions matching the industry
benchmark. DEI workshops have been organised at
corporate and division management levels. For updated
information on Elkem's activities and reporting duties in
2023, please refer to the Activity
and Reporting Duty Report.
mapping process. In addition, Elkem has made a thorough
mapping of the biodiversity exposure in 2023, which will
be further analysed in 2024. Elkem seeks to ensure a
sustainable business model by reducing emissions and
ensuring compliance with regulations. Elkem's production
facilities are generally close to sea or river, or in close
proximity to cities or local communities. Elkem works
proactively to mitigate negative impact on climate and
environment and works consistently to limit emissions
by focusing on sustainable sourcing of raw materials,
production based on renewable energy, extensive energy
recovery projects, investments to reduce dust and NO
X
emissions and use of biogenic reduction materials in the
smelting processes. Recycling and reduction of waste are
also key focus areas and an integrated part of EBS.
Over the past years we have seen that large crises
can 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 resilience
during previous crisis.
Exposure to sanctions and regulatory framework
conditions have 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. Elkem maintains
tight monitoring of the prevailing sanction lists and trade
related restrictions to ensure compliance. The business
model is based on having two independent value chains;
one serving Eastern markets, and one serving Western
markets. This means that Elkem is not dependent on
shipping intermediate products or finished goods between
these regions to meet customer requirements. The
purpose of the dual business model is to make Elkem’s
operations less exposed to trade restrictions, sanctions and
disruptions to global logistics and transportation chains.
Elkem is exposed to macroeconomic conditions and
the current weak market sentiment has negatively
impacted the group's financial performance. Weak growth,
combined with high inflation and rising interest rates,
have resulted in reduced demand, particularly from key
industrial sectors such as construction and automotive.
Market conditions are closely monitored to ensure
adequate and timely response to changes in market
conditions. Macro-economic conditions could have
significant impact on Elkem’s sales prices particularly
in commodity markets. It is therefore a key priority for
Elkem to maintain its strong cost positions. In addition,
Elkem’s integrated value chain provides flexibility to
change production between product groups and between
commodities and specialties, which is an advantage when
managing an economic downturn.
Elkem's working environment includes a significant
inherent risk of injuries and there are risks of fires and
explosions in connection with high temperature and
chemical production processes. In December 2023, a fire
broke out at the Salten plant in Norway. The fire started
in a building housing raw materials and was under control
and mostly extinguished within 24 hours. No people were
seriously injured, but the fire led to a production stop on
the plant’s three furnaces. The safety of our employees and
contractors is a main priority, and Elkem uses considerable
resources to prevent hazards and reduce risk to an
acceptable level. This includes safety instructions, training,
physical protection, and adherence to EBS principles.
Other key risks for Elkem include changes in regulatory
framework conditions, return on investment projects,
cyber and IT risk, and compliance and legal risks.
Elkem has operations in many countries and could be
exposed to changes in regulatory framework conditions,
such as the reduction in the CO
2
compensation scheme
in Norway in 2022 and 2023. Elkem seeks to take a
proactive approach to manage these risks. The growth
strategy is based on organic growth projects and potential
M&As. Such projects carry a risk of delays, cost overruns,
and under-performance. Elkem seeks to mitigate project
related risks by diligent project management and thorough
due diligence processes, comprising professional support
from legal, financial, audit and industry expertise. Cyber
and IT incidents pose a risk as IT systems are used for
virtually all business-related activities. The financial
impact of an incident could be significant. Compliance
risks are also important. Elkem has operations in many
countries, including countries with high risk related to
corruption and human rights violations. Elkem seeks to
mitigate this risk by training of our employees and good
internal control systems.
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 result, 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
Governance
The board of directors recognises the importance of
good corporate governance. The goal is to ensure equal
treatment and 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 persons as of 31 December
2023, 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 nine board meetings in 2023. 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 61 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, and
to ensure 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 76 in this annual report.
Assessment of climate-related risks and opportunities has
become an increasingly important part of Elkem’s overall
risk management processes. Elkem has implemented
reporting on climate risks and opportunities according
to Task Force on Climate-Related Financial Disclosures
(TCFD) and assessment of transitional and physical
climate risks have become an integrated part of the risk
interest rate fluctuations on its net interest-bearing debt.
Elkem has a floating interest rate policy, as interest rate
changes is expected to correspond well with economic
up- and downturns.
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 2023, Elkem raised
new green bond loans of NOK 1,000 million. In addition,
Elkem has raised local long-term loans in China for
financing of the silicones expansion project. Elkem has
a credit rating from Scope. The BBB rating was affirmed
in 2023, and the outlook was changed from stable to
negative. The affirmed investment grade rating reflects
Elkem’s sound financial policy, strong cost position,
good global footprint, and integrated position in the
silicone industry. The change in outlook reflects the
deterioration in revenue and profitability in 2023 and
the prospects of a prolonged economic slowdown in the
company’s main markets.
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 macro-economic sentiment has been challenging in
2023, characterised by high inflation, interest rate hikes,
slower than expected recovery in China, and geopolitical
uncertainties. This has resulted in weak demand and lower
sales prices in Elkem’s main markets and impacted the
results negatively. Markets are still challenging going into
the first quarter of 2024. In the near term, we continue to
see significant uncertainty regarding the macroeconomic
development and inflationary pressure, fostering
continued market volatility. 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 2023.
Elkem aims to grow both in the Eastern and Western
world while focusing on sustainability and support the
green transition. The geopolitical situation combined with
sanction risk is also being monitored closely by Elkem.
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 good at the
end of the year with a robust equity ratio and healthy cash
flow generation and strong 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
11,628 million in 2023 compared to NOK 16,455 million in
2022. The operating profit ended at NOK 1,065 million in
2023, compared to NOK 7,543 million in 2022.
The net change in cash and cash equivalents amounted
to NOK 1,985 million negative. Cash flow from operating
activities amounted to negative NOK 198 million, investing
activities of NOK 2,100 million negative and positive cash
flow from financing activities of NOK 312 million.
Elkem ASA’s equity was NOK 13,410 million at the end of
2023. The equity ratio
6
ended at 39%. Profit for the year
was NOK 365 million. The net interest-bearing liabilities
amounted to NOK 7,770 million per 31 December 2023.
Cash and cash equivalents amounted to NOK 3,331
million. The board of directors’ view is that the dividend
proposal of zero for the year is appropriate based on the
low earnings per share.
Allocation of 2023 net profit: The Board of Directors
proposes the profit for the year of NOK 365 million to be
allocated to retained earnings.
6
See Note 23 Interest-bearing assets and liabilities
The board of directors of Elkem ASA
Oslo, 12 March 2024
Helge Aasen,
CEO, Elkem ASA
Zhigang Hao
Chair of the Board
Dag Jakob Opedal
Vice chair
Marianne Færøyvik
Board member
Thomas Eggan
Board member
Yougen Ge
Board member
Marianne Elisabeth Johnsen
Board member
Terje Andre Hanssen
Board member
Nathalie Brunelle
Board member
Bo Li
Board member
Olivier Tillette de
Clermont-Tonnerre
Board member
Grace Tang
Board member
Corporate management
2023
Marianne Færøyvik
Board member
Thomas Eggan
Board member
Board of directors
2023
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Bo Li
Board member
Nathalie Brunelle
Board member
Grace Tang
Board member
Marianne Elisabeth
Johnsen
Board member
Terje Andre Hanssen
Board member
Katja Lehland
SVP Human Resources
Morten Viga
CFO
Asbjørn Søvik
SVP Green Ventures & Digital
Håvard Moe
SVP Technology
Louis Vovelle
SVP Innovation and R&D
Larry Zhang
SVP Silicones
Morten Magnus Voll
SVP Strategy & Business
Development
Inge Grubben-Strømnes
SVP Silicon Products
Luiz Simao
SVP Carbon Solutions
Helge Aasen
CEO
For more information, please see Elkem.com
↗
For more information, please see Elkem.com
↗
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. Elkem emphasises the importance of good
relationships with society and stakeholder groups that
are affected by the company’s activities. Elkem strives to
meet high standards in the areas of corporate governance,
and environmental and social criteria (ESG). 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:
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.
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.
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.
Section 3
Section 6
Section 7
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 2023.
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 2023, the group’s equity was NOK
24,458 million, which is equivalent to 48% 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.
Elkem aims to maintain an investment grade profile and
targets a leverage ratio, defined as net interest bearing
debt to EBITDA, in the level of 1.0 - 2.0x, based on earnings
over the business cycle. As at 31 December 2023, the
leverage ratio was 2.5x. The leverage ratio has weakened
compared to 31. December 2022 as a result of lower
EBITDA and higher net interest-bearing debt. The increase
in net interest-bearing debt was mainly related to the
dividend payment of NOK 3,815 million for 2022, while the
reduction in EBITDA was a result of significantly weaker
market conditions. The board of director’s target is to
ensure a leverage ratio in line with policy over the business
cycle. In addition, Elkem aims to keep a robust liquidity
reserve and a smooth maturity profile on its loan portfolio
to mitigate financing and liquidity risk. As at 31 December
2023, available cash and cash equivalents amounted to
NOK 6,367 million providing a strong liquidity position. In
addition, Elkem has undrawn credit facilities amounting to
NOK 6,293 million.
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
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 strategy, focusing on low CO
2
emissions,
and supplying the green transition. 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 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.
Elkem is operating in capital intensive and cyclical
industries and has 31 main 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 management to create value for the
company’s shareholders. The past year has been marked
by significant macro-economic downturn in most markets
and the board of directors has focused on actions to
mitigate negative impact on Elkem by reducing costs and
investments. More details on risk management principles
and an overview of Elkem’s main risks are presented in the
annual report. See also section 10 below.
Elkem’s main strategic goals are dual play growth and
green leadership. 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 sound 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.
not cover share capital increases against contribution
in kind and share capital increase in connections with
mergers. The authorisation is valid until the annual
general meeting in 2024, but no longer than to and
including 30 June 2024. This authorisation was not
utilised in the financial year ended 31 December 2023.
→
In order to allow the board of directors to utilise the
mechanisms permitted by the Norwegian Public
Limited Liability Companies Act to acquire treasury
shares, the board of directors was granted an
authorisation to acquire shares in the company, with
a nominal value of up to NOK 319,720,689, equal to
10% of the current share capital. The authorisation
can be used to fulfil the company's obligations in
connection with acquisitions, incentive arrangements
for employees, fulfilment of earn-out arrangements,
sale of shares to strengthen the company's equity or
deletion of shares. 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 2024, but no longer than to and
including 30 June 2024. Under this authorisation
the board of directors announced the acquisition
of 2,000,000 own shares on 14 August 2023. The
average purchase price per share was NOK 22.35.
Parts of the own shares acquired have been sold
under the share incentive programme and as at 31
December 2023 Elkem holds 5,551,090 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 2023. These transactions were carried out through
the stock exchange and ensured equal treatment of
all shareholders. Elkem announced the acquisition of
2,000,000 own shares on 14 August 2023. The average
purchase price per share was NOK 22.35. 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 2023 was held as a hybrid
meeting where the shareholders had the option to either
attend the general meeting physically or digitally through a
live webcast and submit questions relating to the items on
the agenda and cast their votes in real time. The webcast
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. A shareholder holding shares
through a nominee account must, however, notify Elkem
two days prior to the date of the general meeting (unless
the board of directors has included a shorter notification
deadline in the notice for the general meeting).
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
In 2023, Elkem signed new green bond loans of NOK
1,000 million with tenors of 5 years. The main purpose of
the bond loans was to refinance loans maturing in 2024.
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.
Due to the low earnings per share the board of directors
has proposed to the annual general meeting not to pay
dividends for 2023. The board of directors has not
been granted any authorisation to approve distribution
of dividends.
At the annual general meeting on 28 April 2023, the board
of directors was granted the following authorisations:
→
To ensure that the board of directors has financial
flexibility and to enable quick access to the market in
the event of an acquisition with shares as settlement
or for general corporate purposes, the board of
directors was granted an authorisation to increase the
company's share capital by up to NOK 319,720,689
corresponding to 10% of the company’s current
share capital. To exercise the authorisation in the
best possible commercial manner, it may be relevant
in certain situations to make a private placement
of shares directed at certain named persons and/
or enterprises. It may also be appropriate to use the
authorisation in the event of acquisition of business/
assets with shares as settlement. It was therefore
approved that the board of directors was authorised to
deviate from the shareholders’ preferential rights when
using the authorisation. The authorisation covers share
capital increases against contribution in kind and
share capital increase in connections with mergers.
The authorisation is valid until the annual general
meeting in 2024, but no longer than to and including
30 June 2024. This authorisation was not utilised in
the financial year ended 31 December 2023.
→
In order to honour the options granted under the share
incentive programme for the corporate management,
the board of directors was granted an authorisation
to increase the share capital of the company by up to
NOK 40,000,000. As the authorisation shall be used in
connection with issuance of shares to option holders,
the board of directors was authorised to deviate from
the shareholders' preferential rights to subscribe for
and be allotted new shares. The authorisation does
→
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 the company’s annual general meeting in 2024;
→
Nathalie Brunelle
/ Board member / Independent /
Elected in 2022 as for a term of two (2) years until the
company’s annual general meeting in 2024;
→
Yougen Ge
/ Board member / Representing the
majority shareholder / Re-elected in 2023 for a term
of office of two (2) years until the company’s annual
general meeting in 2025;
→
Grace Tang
/ Board member / Independent / Re-
elected in 2023 for a term of two (2) years until the
company’s annual general meeting in 2025;
→
Marianne Elisabeth Johnsen
/ Board member /
Independent / Re-elected in 2023 for a term of office
of two (2) years until the company’s annual general
meeting in 2025;
→
Bo Li
/ Board member / Representing the majority
shareholder / Elected in 2023 as new board member
until the company’s annual general meeting in 2025;
→
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.
Bo Li was elected as new board member at an
extraordinary general meeting on 20 November 2023
representing the majority shareholder. Bo Li replaced
Jingwan Wu after Jingwan Wu resigned as CFO of China
National Bluestar (Group) Co.
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.
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.
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 2023 the nomination
committee comprises the following members:
→
Sverre S. Tysland
/ Chair / Practicing lawyer /
Independent / Re-elected in 2023 for a term of office
of one (1) year until the annual general meeting in 2024:
→
Dong Dachuan
/ Committee member / Vice president
of China National Bluestar (Group) Co, representing
the majority shareholder / Elected in 2023 for a term
of office of two (2) years until the annual general
meeting in 2025; and
→
Anne Grete Dalane
/ Committee member / Vice
President Improvement Project Finance in Yara
International ASA / Independent / Elected in 2023
for a term of office of two (2) years until the annual
general meeting in 2025.
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 2023 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 2023, the board of directors of Elkem
comprise of the following persons:
→
Zhigang Hao
/ Chair / Representing the majority
shareholder / Re-elected in 2023 for a term of office
of two (2) years until the company’s annual general
meeting in 2025;
→
Dag Jakob Opeda
l / Vice chair / Independent / Re-
elected in 2022 for a term of office of two (2) years
until the company’s annual general meeting in 2024;
The remuneration committee
The board of directors has appointed a remuneration
committee which comprised the following persons as of
31 December 2023:
→
Bo Li
/ Chairperson / Representing the
majority shareholder
→
Olivier Tillette de Clermont-Tonnerre
/ Member /
Representing the majority shareholder
→
Marianne Elisabeth Johnsen
/ Member / Independent
Bo Li replaced Zhigang Hao as chair of the remuneration
committee with effect from 13 December 2023. 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
reparation 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 has become
an increasingly important part of Elkem’s overall risk
management processes. As part of this work Elkem has
prepared a global climate roadmap targeting reductions of
absolute CO
2
emissions and of the group’s relative product
carbon footprint. Elkem is reporting 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.
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 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. This work has had a particular
focus in 2023 due to the weak market conditions. 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 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 2023.
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 2023, the following
board members owned shares in the company: Olivier
Tillette de Clermont-Tonnerre (15,517 shares), Dag Jakob
Opedal (40,000 shares through Alcaran AS), 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 has 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 nine board meetings in 2023.
All board members have attended all board meetings,
during their respective terms of office.
The instructions for the board of directors state 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. The audit committee is also responsible
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 2023:
→
Dag Jakob Opedal
/ Chair/ Independent
→
Grace Tang
/ Member / Independent
→
Zhigang Hao
/ Member / Representing the
majority shareholder
Zhigang Hao replaced Jingwan Wu as member of the
audit committee with effect from 13 December 2023,
following Jingwan Wu’s resignation from the board of
directors. 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.
No deviations from the Code.
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 2023 until
the annual general meeting in 2024 are as follows:
Board of directors:
→
Chair: NOK 851,760
→
Vice chair: NOK 638,820
→
Board members: NOK 425,880
→
Observers: NOK 212,940
Audit committee:
→
Leader: NOK 153,317
→
Member: NOK 102,213
Remuneration committee:
→
Leader: NOK 153,317
→
Members: NOK 102,211
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 2023.
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 were
communicated to the annual general meeting in 2023
and will be presented to the annual general meeting
every four years, or if there should be substantial
changes. 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, 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 has delegated this task to
the IR team. Elkem has held regular investor meetings in
connection with each of the quarterly presentations in
2023 and attended several investor conferences. The IR
team has conducted physical and electronic meetings
with both domestic and international investors from
for example United Kingdom, United States, Germany,
France, Switzerland, and Benelux. 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 2023. Elkem has not been
subject to any takeover bids in 2023.
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 2023. 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 2023.
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, 12 March 2024
Helge Aasen,
CEO, Elkem ASA
Zhigang Hao
Chair of the Board
Dag Jakob Opedal
Vice chair
Marianne Færøyvik
Board member
Thomas Eggan
Board member
Yougen Ge
Board member
Marianne Elisabeth Johnsen
Board member
Terje Andre Hanssen
Board member
Nathalie Brunelle
Board member
Bo Li
Board member
Olivier Tillette de
Clermont-Tonnerre
Board member
Grace Tang
Board member
Overview of main
risk areas
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 risks for each division
and corporate functions. Each risk factor is evaluated based
on internal and external conditions and takes deemed
likelihood, estimated financial impact, time horizon and
mitigating activities into consideration. The individual risks
are aggregated into group risks. The main purpose is to
gain a thorough understanding of the group’s risk profile
and financial risk tolerance.
Elkem splits the risks 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.
Assessment of Environmental, Social and Governance
(ESG) risks and climate related risks are integral parts
of the five main risk categories. Elkem considers that
these risks could impact strategic positioning, raw
material supply, end-markets, and financial performance.
Elkem has implemented reporting on climate risks and
opportunities according to Task Force on Climate-related
Financial Disclosures’ recommendations (TCFD). In
addition, Elkem has made a thorough assessment of bio-
diversity risk in 2023. Please refer to the ESG report for
more information.
>7,400
employees
31
main
plants
worldwide
presence
Strategic risks
Financial risks
Production and
process risks
Market and
product risks
Raw material risk
ESG and
climate
4.
Health and safety
Elkem's working environment includes a significant inherent risk of injuries or
even fatalities. There are risks of large fires and explosions in connection with
high temperature smelting processes, advanced chemical processes, leakages of
hazardous substances, and other potential hazards. The safety of our employees and
contractors is the main priority, and Elkem uses considerable resources to identify
hazards and implement appropriate measures to avoid incidents and to reduce risk
to an acceptable level. This includes 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.
5. Regulatory frame-
work conditions
6.
Sales prices and
volumes
Elkem has operations in many countries and could be exposed to changes in
regulatory framework conditions, such as the reduction in the CO
2
compensation
scheme in Norway in 2022 and 2023. Such changes could negatively affect the
group’s competitive position and market access. Other examples of regulatory and
political framework conditions are environmental and product related regulations,
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 manage these risks. In addition, the group’s diverse geographical
presence and integrated value chains in the East and the West could reduce the
negative impact from various trade tensions and restrictions.
Elkem's sales prices and sales volumes may vary depending on the economic
conditions and the competitive environment. This constitutes one of the main risks
affecting the group’s financial performance. Commodity prices have traditionally
been volatile, impacted by the supply and demand development, while specialties
tend to have more stable pricing over the business cycle. Elkem seeks to mitigate
price and volume risks by developing a diversified and specialised product portfolio
based on good cost positions. In addition, Elkem has a diverse customer base with
a global presence. Elkem's integrated value chain offers flexibility to extract value
through the value chain.
Risk descriptions
1.
Black Swan
2.
Sanctions and trade
related restrictions
3. Macro economic
development
“Black swan” describes an unpredicted event that can cause dramatic changes
to economies and societies. Such unforeseen and unexpected events could pose
significant risks. Examples are the financial crisis in 2009, the Covid pandemic,
the war in Ukraine, and the energy crisis in Europe. “Black swans” demonstrate
the need for general risk preparedness, strong supply chains, and the importance
of a generally robust financial position. Elkem's key mitigating actions include
developing a competent organisation to pro-actively manage changing conditions,
having robust and regionally independent value chains, and keeping a sound
financial position to limit risk of financial distress.
Sanctions and trade restrictions have increased over the past years due to
war and political tensions. This could negatively impact Elkem's access to raw
materials and/or attractive end markets. It could also increase the risk that Elkem
or other third parties will get involved in business activities with sanctioned
entities or individuals, which could lead to business disruptions, breach of
contract and other legal proceedings. Elkem has independent value chains in the
East and the West to reduce the exposure to trade restrictions and duties. Elkem
keeps close monitoring of prevailing sanction lists and trade related restrictions
to ensure compliance and to avoid that the company or third parties engage in
business activities with sanctioned entities or individuals.
Elkem is exposed to macroeconomic conditions. The current weak market
sentiment has negatively affected the group's financial performance. Weak
growth, combined with high inflation and rising interest rates, have resulted in
reduced demand, particularly from key industrial sectors such as construction
and automotive. Reduced demand has negatively impacted sales volumes and
sales prices for Elkem's products, particularly in the silicones markets in APAC and
EMEA, as well as in commodity markets. High inflation has resulted in generally
higher cost levels. Elkem aims to maintain its attractive cost positions through a
lean manufacturing model, supported by ongoing cost- and margin improvement
programmes. Elkem is actively working to ensure adequate financing and liquidity
reserves. Market conditions are closely monitored to ensure adequate and timely
response to changes in market conditions.
8.
Cyber and IT risk
9. Environment and
climate
IT is used for virtually all business-related activities, including sales, production
planning, procurement, maintenance, finance and accounting. The financial
impact of an IT or cyber incident could be significant as production and operations
could be severely halted. Several other companies have experienced significant
losses from cyber-attacks.
Good IT procedures with a 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. In addition, Elkem has cyber
insurance in place to mitigate the financial impact in case of an incident.
Elkem’s global operations are exposed to environmental regulations, and potential
impact of climate risks. Climate risks comprise both regulatory, transitional and
physical risks. Ocean rise, temperature increases, and extreme weather events are
monitored to secure assets and avoid business interruptions. In addition, Elkem
seeks to ensure a sustainable business model by reducing emissions and ensuring
compliance with regulations. Elkem's production facilities are generally close
to sea or river, or in close proximity to cities or local communities. Exposure to
climate change has been assessed for each business unit according to the TCFD
framework. In addition, Elkem works proactively to mitigate negative impact on
climate and environment and works consistently to limit emissions by focusing
on sustainable sourcing of raw materials, production based on renewable energy,
extensive energy recovery projects, investments to reduce dust and NO
X
emissions
and use of biogenic reduction materials in the smelting processes. Recycling
and reduction of waste are also key focus areas and an integrated part of Elkem
Business System (EBS).
10. Compliance and
legal risks
Elkem has operations in many countries, including countries with high risk
related to corruption and human rights violations. This gives an inherent risk
of unacceptable business behaviours either through corruption, breach of
competition law, breach of sanctions, breach of human rights, or other unethical
activities, either by employees or business partners. There are also legal and
litigation risks in connection with contracts and/or intellectual property. The
negative financial impact could be significant, particularly related to corruption,
breach of competition law or breach of sanctions. There is also a significant
reputational risk. Elkem has a high focus on compliance and internal control,
and has strengthened these functions over the past years. Guidelines for ethical
conduct, training of all employees, and a 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.
7.
Return on
investment
projects
Elkem has a growth strategy based on organic growth projects and potential
M&As. Large investment projects carry an inherent risk of delays, cost overruns,
and underperformance. Elkem has made significant reinvestments and strategic
investments over the past years. Major strategic investments include the Silicones
division's expansions in China and France. In addition, Elkem has several other
specialisation and expansion projects. In relation to M&A, there is a 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 project related risks by diligent project management
and thorough due diligence processes, comprising professional support from
legal, financial, audit and industry expertise. Elkem carries out post evaluation
of projects to identify improvement potentials and risk mitigation actions that
can be utilised in future projects.
ESG report 2023
Reducing emissions
towards net zero while
growing supplies to
the green transition
Delivering your potential
The ESG report presents Elkem's management of 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.
Table of
Contents
Total scope 1+2+3
emissions 2023:
9.85 million tonnes
>80% of production based
on renewable electricity
Operating income 2023:
NOK 35.5 billion
Operations:
31 main plants world-
wide and more than
7,400 employees
Elkem highlights 2023
86
Elkem’s ESG agenda
88
The Elkem climate roadmap
90
Supplying the green transition
92
Sustainability and ESG governance
94
Environmental
104
Introduction
106
CO
2
and other GHG emissions
108
Energy management
112
Biodiversity
116
Water management
120
Waste management and circularity
124
Local emissions to air
130
EU Taxonomy
132
Social
142
Introduction
144
Health and safety on site
146
People and organisation
150
Human and labour rights
154
Diversity, equality and inclusion
158
Governance
162
Introduction
164
Responsible economic practices
166
Responsible value chain management
170
Product governance, incl. chemical safety
174
Limited assurance report
178
Elkem
highlights
2023
→
Elkem reduced its total GHG emissions by 8.3% from
2022 to 2023, with a reduction in all three scopes
→
Elkem was awarded A- on climate change, A- on
water security, and the top score of A for forests, on
2023 CDP disclosure
→
Elkem finished the worlds first CCS-pilot (carbon
capture and storage) on a smelter with good results
and capture rates. Further studies will follow
→
Elkem conducted a comprehensive biodiversity risk
assessment of all production sites using IBAT, AI and
local knowledge
→
Elkem successfully issued NOK 1,000 million of new
senior unsecured green bonds with a tenor of 5 years
→
Elkem received an A+ from Position Green for its
ESG reporting for 2022
→
Elkem reached reached an agreement with reindeer
grazing district 7 (Rákkonjárga) which enables the
expansion of Elkem’s mining operations in Tana,
Norway, one of the world’s largest quartzite
mines and a key source of raw materials for the
green transition
→
Elkem has carried our a double materiality
assessment and is positioning itself for CSRD
Elkem's products serve as fundamental components for
a low-carbon society and play a crucial role in facilitating
the green transition. The products are produced using a
high degree of renewable energy and efficient production
methods. Examples encompass renewable energy, energy
storage, mobility solutions, infrastructure enhancements,
digitalisation, and healthcare. The core of Elkem lies in its
people and their commitment to safe, sustainable operations
executed responsibly and with excellence.
Environmental
Governance
Social
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.
Elkem's ESG agenda
Climate action
Safety first
Responsible
business partner
→
CO
2
and other GHG emission
reductions, including energy
management
→
Biodiversity
→
Local emissions to air
→
Waste management
and circularity
→
Water management
→
Health and safety on site
→
Human rights, including
labour rights
→
Environmental and
social due diligence
in the supply chain
→
Supplying the
green transition
→
Product governance,
including chemical safety
→
Responsible economic
practices
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 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 26 and onwards in the annual report.
Reporting framework
Elkem adheres to the Global Reporting Initiative
(GRI) Standards 2021 and regards this report as our
Communication of Progress (COP) to the United Nations
Global Compact (UNGC). We employ various
reporting systems to enhance transparency and achieve
standardised reporting. The GRI index is accessible online
and incorporates links to the World Economic Forum's
stakeholder capitalism initiative, aimed at standardising
sustainability metrics. The section on Human and labour
rights adheres to the requirements of the Norwegian
Transparency act, the UK Modern Slavery Act, and
Canada’s Modern Slavery Act.
Assurance
PwC has undertaken a limited assurance engagement 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 2023
CDP: Improved scores
Elkem responds to the three CDP (Carbon Disclosure
Project) scopes, and achieved the highest score for forests,
improved the score on water security and maintained a
strong score on climate change. The scores for 2023 are:
Climate change A-, forests A, and water security A-.
ESG 100: A+
Elkem received the highest possible score, A+, for the ESG
reporting from Position Green in their assessment of the
top 100 listed companies in Scandinavia. The score reflects
a best-in-class reporting on sustainable practice, strategy,
quantifiable targets.
S&P Global Corporate Sustainability Assessment:
Top 94th percentile
Elkem increased its score from 53 to 61 on S&P’s CSA
2023, and is ranked in the top 94th percentile. The S&P
Global Corporate Sustainability Assessment (CSA) is an
annual evaluation of companies’ sustainability practices.
It covers over 10,000 companies from around the world.
The CSA focuses on sustainability criteria that are both
industry-specific and financially material and has been
doing so since 1999.
EcoVadis: Gold
Top 5% of more than 100.000 companies, on sustainability
transparency and action.
Reducing
our emissions
Supplying to
the transition
Enabling circular
economies
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
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 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
The Elkem
climate roadmap
Elkem presented its global climate roadmap, and
our transition plan in 2021, closely aligned with the
corporate strategy of green leadership. In 2023
Elkem has continued the work to reduce GHG-
emissions. The roadmap outlines how Elkem aims
to mitigate global warming resulting from climate
change, focusing on three key pillars:
Our roadmap to climate neutral products
Status – delivering on the roadmap
Total GHG emissions (CO
2
e)
Scope 1
Scope 2
Scope 3
Product group carbon footprint*
Metric
Mill tonnes
Mill tonnes
Mill tonnes
Mill tonnes
CO
2
e/kg
2021
11.60
2.34
0.90
8.35
7.4
Development
2022 to 2023
-8.4%
-8.7%
-11.7%
-7.8%
16.0%
2022
10.74
2.42
0.94
7.38
6.9
2023
9.84
2.21
0.83
6.81
8.0
* CO
2
equivalents per kg of produced material
Net
zero
1)
2020
baseline
Biomass
in smelters
More China
renewables
Low-carbon
supply chain
2031
target
CCS at
smelters
CCU,
recycling,
and other
2050
target
-39%
1)
The goal is to achieve carbon neutral production by 2050, meaning that GHG emissions from
production (scope 1 and 2) and upstream scope 3 shall be reduced and captured to reach net zero.
Supplying the
green transition
Elkem is one of the world's leading providers of advanced
silicon-based materials shaping a better and more sustainable
future. As part of Elkem’s climate roadmap, the company aims
to develop specialised products and services that can be key
enablers in the green transition.
There is a growing awareness and interest among both
commercial and political stakeholders for the need to
secure key materials to supply the green transition. In
Elkem, we see this as a great opportunity for growth,
at the same time as we engage actively to reduce the
environmental impact from our own production processes
through reducing our GHG emissions, local emissions to air,
and improvements in our water and waste management.
Silicon metal has been included on the European
Commission’s list of critical raw materials, and the US
Department of Energy has listed silicon and electrical steel
(specialty steel with silicon as the main additive element) as
critical materials for energy.
This illustrates that Elkem’s products are critical input
factors to a vast number of applications that are necessary
in sustainable solutions such as renewable energy, energy
storage, mobility solutions, infrastructure improvements,
digitalisation and health care. The increasing demand for
low-carbon technologies and products such as solar panels,
batteries and electrical vehicles will therefore increase
demand for several of Elkem’s product segment within
silicones, silicon and ferro-alloys.
Elkem is supplying these and other materials to a
large number of different green applications. Specific
examples include:
As a leader in silicone solutions for electric vehicle (EV)
battery protection, Elkem understands that safety and
reliability are critical parameters when designing an
EV battery pack. To protect the battery pack in an EV,
design engineers must consider thermal insulation to
manage heating of the cells and thermal conductance
to dissipate heat. Elkem offers robust and lightweight
silicone solutions, flexible in cure chemistry for optimised
processing, and mechanical integrity for safety and
reliability. We are proud to offer proven battery thermal
management solutions in more than 2 million EVs on
the road today.
Silicon from Elkem plays a pivotal role in aluminum for
vehicle electrification and on-board electronics. Silicon
alloys reinforce aluminum, ensuring structural integrity in
lightweight vehicle designs. This synergy between silicon
and aluminum is driving the transition towards more
efficient, eco-friendly, and high-performance vehicles in the
era of electrification.
Elkem has since the early 1990s supplied several
major manufacturers of electrical steel with high-purity
ferrosilicon. Today, electrical steel is seeing an additional
surge in use, thanks to the rapid growth in production of
both electrical vehicles and wind turbines, as well as high
voltage power line infrastructures. These new applications
have driven much innovation in the sector, as customers
demand ever greater performance from their electrical
devices as well as reduced weight.
Photovoltaic panels must be efficient and long lasting,
with lifespans of 20 years or more and with the ability to
resist extreme weather conditions. To meet these market
requirements, solar modules must be assembled with
high quality components to ensure proper functioning
and protection of vital components. Elkem provides cost-
effective products that ensure electrical integrity (adhesives,
electrical insulation, fire resistance) as well as electronic
performance (sealing, bonding, and potting of parts).
The construction industry is constantly seeking ways
to improve the durability and sustainability of concrete
structures, including those used in windmill foundations.
Since the early 1980s under the MICROSILICA® brand,
Elkem has developed a unique range of silica fume products
to improve the performance and durability of concrete.
Sustainability and
ESG governance
Elkem adeptly manages a multifaceted value chain
where every facet, from sourcing raw materials to securing
skilled personnel and ensuring timely product delivery,
significantly influences the company's ability to achieve its
strategic objectives. The company's overarching strategy,
characterised by dual-play growth and green leadership,
hinges on robust management of Environmental, Social,
and Governance (ESG) topics.
In today's landscape, there's a growing expectation for
companies to conscientiously oversee their value chains,
addressing environmental, social, and governance
considerations. The global community increasingly looks
to businesses to handle their operations responsibly,
mitigating sustainability-related impacts across the
entire value chain. This involves a comprehensive focus
on environmental conservation, social responsibility, and
ethical governance.
Specifically, there is a pressing global need for businesses
to actively reduce their carbon footprints to promote
the transition toward a greener and more just society,
governed by ethical principles. Elkem recognises this
imperative and aligns its approach with the production of
recyclable, durable materials that are manufactured with
minimal greenhouse gas (GHG) emissions.
Elkem insists on a responsible and ethical production of
materials, using precautionary approaches to safeguard
both people and the environment. The realisation of these
objectives requires the development and adoption of
innovative and efficient solutions. As society continues
to advocate for low-carbon technologies and products,
including solar panels, batteries, and electric vehicles,
Elkem finds itself at the forefront, experiencing an uptick
in demand for various product segments within silicones,
silicon, and ferroalloys. This surge in demand not only
underscores Elkem's strategic positioning but also
emphasises its role in contributing to a sustainable
and environmentally conscious future.
The Board's commitment to
ESG and sustainability
ESG and sustainability are integral components of Elkem’s
overarching business strategy, overseen collectively by the
board. ESG-related risks and opportunities are regularly
featured on board meeting agendas, reflecting our
commitment to responsible corporate practices. Annually,
the board evaluates the group's ESG strategy as part of
the strategic review process. Comprehensive information
on the company's ESG performance and projects are
consistently presented to the board during regular
reporting sessions and meetings.
The audit committee handles preparatory work for
sustainability and non-financial reporting. The audit
committee plays a crucial role in preparing the board for
subsequent follow-up, review, and the internal control of
Elkem’s sustainability and other non-financial reporting. It
actively oversees sustainability-related risk management
and monitors the company's performance in sustainability
ratings. The committee’s efforts ensure the board
maintains effective procedures and internal controls over
sustainability and non-financial reporting, reinforcing
Elkem's commitment to transparency and accountability.
The board is required to conduct an annual assessment
of its performance, competence, and expertise. This
assessment encompasses a thorough evaluation of the
composition of the board and the effectiveness of its
individual members and group dynamics. Additionally,
the board evaluates its overall performance, evaluating
aspects such as agenda management, meeting topics,
and preparation processes. The assessment extends to
appraising the board's competence in alignment with both
existing and newly established objectives and requirements
for its operations.
Management and operational oversight
The CEO has the operational responsibility for ESG and
sustainability in Elkem, and acts according to the board's
direction and oversight. The CFO is in charge of the daily
operations related to ESG and sustainability. The CFO
leads the ESG steering committee, a management body
comprised of members from corporate management, with
a specific focus on ESG responsibilities. The ESG steering
committee operates on behalf of the Chief Executive
Officer (CEO). Elkem's board of directors approves the
business strategy and corporate governance policy,
establishing the overarching framework for the group's
strategic direction and governance.
The ESG steering committee meets monthly to review,
discuss and propose actions according to the strategy.
The committee will assess and propose changes to the
strategy to the board, and monitor development of key
indicators. The implementation of the strategy is the
responsibility of the business units and divisions.The ESG
steering committee consists of key members of Elkem’s
top management, and topical experts are invited to discuss
and decide on key ESG topics.
The main coordinator of ESG in the organisation is the
ESG office. The ESG office reports to the ESG steering
committee and collaborates closely with business units and
divisions, to review and advise on relevant sustainability and
ESG issues – to set targets and improve systematically.
As part of the Elkem Business System (EBS), it is our belief
that what gets measured gets managed. An essential part
of this work is to advise and improve key performance
indicators that are monitored by corporate management.
Governing documents
Elkem's governing documents establish the guiding
principles for the group's business conduct. Central
to these documents are the Code of Conduct and the
Governance Policy. The Code of Conduct describes
Elkem's expectations for responsible behaviour, setting
ethical standards in crucial areas and guiding how Elkem
representatives should act on behalf of the company. This
Code is reinforced by various group policies, procedures,
and supporting documents, all approved by the
Compliance Committee.
Group policies provide direction for common objectives,
commitments, and behaviours, defining principles and
commitments for Elkem's governing processes while
allocating roles and responsibilities within the group's
functions. These governing documents impose mandatory
requirements on all Elkem group companies and
operational units, irrespective of division and geography.
To ensure consistency in responsible business conduct
across all activities and relationships, company governing
documents must align with the Code of Conduct.
ESG and sustainability governance structure
VP HSE
Climate
director
ESG office
SVP
Technology
Chief Financial
Officer
SVP
Silicones
SVP
Carbon
Solutions
SVP Green
Ventures &
Digital
SVP Human
Resources
SVP
Innovation
and R&D
SVP Strategy
& Business
Development
SVP Silicon
Products
Board of directors
Audit committe
General meeting
Chief Executive
Officer
* Functions marked in green are members of the ESG steering committee
Elkem has reviewed and updated its governing documents
over the last years, and the documents are available on the
Elkem website. In 2023, a Sustainability and ESG policy
was developed to further underpin Elkem’s commitment
to material sustainability topics. All governing documents
are available to employees on the intranet, and each policy
owner formulates an implementation plan tailored to
specific target groups based on roles and responsibilities.
The company adheres to the principles outlined in "The
Norwegian Code of Practice for Corporate Governance"
issued by the Norwegian Corporate Governance Board
("NUES" or the "Code"). This Code aims to ensure that
companies listed on regulated markets in Norway adhere
to comprehensive corporate governance practices that go
beyond legal requirements. For further details on Elkem's
corporate governance, refer to the board of directors'
report on corporate governance in the annual report.
Remuneration framework
The CEO and corporate management receives
performance-based compensation tied to predefined
metrics aligned with their respective areas of responsibility.
The performance-related short-term incentives (STI) are
capped at 100% of the CEO's base salary and 50% for
corporate management.
Elkem has a "clawback" provision, allowing for a fully or
partially reclaim of awarded short-term incentive (STI)
remuneration under specific circumstances, such as
instances where incentive remuneration was based on
subsequently proven incorrect information.
For the CEO in 2023, key metrics include:
→
Health, safety, and environmental performance,
aiming for zero major incidents with high severity
consequences.
→
Prevention of substantiated misconduct cases with
the potential for financial or reputational harm to
the company.
→
Global implementation of a new HSE system to
ensure achievement of HSE and sustainability targets.
Corporate management's bonus for 2023 aligns with
CEO metrics, emphasising compliance and sustainability.
Additional criteria involve employees completing
compliance training to foster a robust compliance culture,
mitigating the risk of substantiated misconduct cases.
For a detailed overview of remuneration management,
refer to the board of directors' report on salary and other
remuneration for leading personnel in 2023.
Corporate strategy
Working practices:
Values:
Mission:
Our mission is to provide advanced silicon-based materials shaping a better and
more sustainable future, adding value to stakeholders globally
EBS:
HSE:
ESG:
Elkem
Business
System
Respect
Involvement
Precision
Continuous
improvement
Health
Safety
Environment
Environmental
Social
Governance
Culture
Foundation
Figure: The Elkem house
The Elkem House
The Elkem House serves as a visual representation of the
fundamental components of Elkem's business model. At
its core, our mission and values form the foundation for our
working practices and defines our organisational culture.
These elements - mission, values, and working practices -
strengthen our corporate strategy.
Risk management and materiality assessment
Risk management process
The board of directors holds the ultimate responsibility
to ensure Elkem's risk management systems fits with the
scale and nature of the group's activities, encompassing the
entire value chain impact. Recognising risk management
as integral to Elkem's corporate governance structure, both
the board and management consider it crucial for
fostering trust,value creation, and addressing ESG and
climate-related concerns.
Assessing ESG and climate-related risks and opportunities
is a central part of Elkem's risk management processes.
These factors significantly influence the company's
strategy, financial conditions, and every facet of its value
chain, from raw materials to finished products.
Elkem conducts annual risk mapping through interviews
with divisions and corporate staff to thoroughly
comprehend the group's risk profile. Each risk undergoes
a detailed evaluation based on internal and external
conditions, considering likelihood, estimated financial
impact, time horizon, and potential mitigating activities.
Financial impact assessments are rooted in understanding
how a risk factor may affect Elkem's EBIT, cash flow, and
equity position. Furthermore, the frequency or likelihood of
each risk is assessed, categorising risks as low (frequency
over 5 years or probability below 20%), medium (between
1-5 years or a probability of 20-60%), or high (more
than 1 per year or a probability exceeding 60%). This
meticulous approach ensures a nuanced and effective risk
management strategy.
Climate risk
Elkem's approach to climate-related risks is centrally
governed by the board, with integration into the overall
business strategy. The board annually reviews the climate
strategy, and climate related risks and opportunities,
as part of the regular strategy process. The audit
committee is responsible for preparatory work and
supervision. The audit committee oversees sustainability
reporting, internal control, and sustainability-related risk
Risk type
Regulatory
Technological
Probability
High
Medium
Potential
financial
impact
Medium
High
Time
horizon
Short
Medium
Description
Elkem produces silicon and ferrosilicon in
Norway and Iceland, and silicones in France,
all under the EU's emission trading system
(ETS). Changes in free allowances or higher
prices may raise Elkem's direct costs. In
China, Elkem has silicon and silicones
production, and the evolving quota system
could potentially increase operational costs.
The introduction of CBAM will also pose
challenges to Elkem as we compete in a
global market.
Elkem faces potential impacts from the
EU Taxonomy, requiring technological
upgrades for sustainability. Global efforts to
reduce fossil GHG emissions could diminish
Elkem's product attractiveness, leading to
substitutes. Additionally, reliance on coal and
char as reduction agents poses a risk due to
potential scarcity, affecting access to critical
raw materials.
Mitigation
Increase share of biocarbon
as reduction agent in silicon
production.
Reinforce efforts to reduce
energy consumption, reduce
GHG emissions, and continue
to develop products that enable
GHG emission reductions
Increase share of biocarbon as a
reduction agent
Continue research and
development of CCS and CCU
Transitional risks
management, ensuring compliance with regulations and
achieving emission reduction targets. Within corporate
management, the CEO owns the Environmental, Social,
and Governance (ESG) policy, the CFO sets the financial
framework, and SVP Technology manages the different
climate-related support functions. The SVP Technology
oversees technology solutions for lower GHG emissions,
while the VP HSE monitors GHG emissions, and the
Climate Director coordinates Elkem's climate strategy.
Elkem assesses climate risks and opportunities across
short, medium, and long-term horizons, categorising
transition risks and opportunities. The company
acknowledges carbon emissions as an inevitable
byproduct of silicon production, with carbon pricing
mechanisms posing a key transitional risk. Physical
climate risks, such as extreme weather and drought,
are considered but have limited impact due to location
and infrastructure. Although short-term climate risks
are currently perceived as having limited financial
impact or frequency, Elkem remains vigilant, recognising
the potential changes brought about by climate
change. The leadership regularly reviews the strategy,
integrating climate-risk assessments into companywide
risk management processes. The CFO presents
comprehensive risk assessments, including climate
factors, at board meetings. Elkem annually assesses risks
through interviews with divisions and corporate staff
to grasp the group's risk profile. Each risk undergoes
a thorough evaluation based on internal and external
factors, including likelihood, financial impact, time
horizon, and potential mitigating activities. Financial
impact assessments focus on how a risk may affect
Elkem's EBIT, cash flow, and equity position. Risks are
categorised as low, medium, or high based on frequency
or likelihood (frequency over 5 years or probability below
20%), medium (between 1-5 years or a probability of
20-60%), or high (more than 1 per year or a probability
exceeding 60%). This meticulous approach ensures a
nuanced and effective risk management strategy.
Elkem's climate roadmap, and transition plan, aligns
with the Paris Agreement. The company actively works
toward reducing fossil CO
2
emissions, contributing to
the green transition, and promoting circular economies.
Elkem employs an internal carbon price for assessing
emission abatement project profitability, aligning with the
prevailing market price of carbon. This comprehensive
and integrated approach reflects Elkem's commitment to
addressing climate-related challenges and opportunities in
its business strategy.
Transitional climate risk
Elkem specialises in manufacturing of advanced silicon-
based materials. The energy-intensive production process,
utilising carbon materials as reduction agents, releases
CO
2
as a byproduct, presenting transitional climate
risks. However, given that silicon and silicone are crucial
components in the green transition, Elkem also possesses
various transitional opportunities to contribute positively
to sustainable initiatives.
Opportunity
type
Products
and services
Products
and services
Products
and services
Probability
High
High
High
Potential
financial
impact
High
High
Medium
Time
horizon
Short
Medium
Short
Description
The increasing demand for electric vehicles
(EVs) and battery cells. These require
products that Elkem delivers. Silicones
are used as a non-flammable insulation
for wiring and batteries, and EV require 4
times more silicone compared to internal
combustion vehicles. Li-ion batteries have a
key component that is the anode that usually
consists of graphite.
Circular economy and increased recycling
and reuse. In silicones production there are
opportunities to recycle silicones in order to
reduce emissions, up to as much as 65%.
Byproducts from silicon production also
represents an opportunity for Elkem.
Increased demand for renewable power,
power storage, electrification and
improvement of electrical infrastructure
Mitigation
Elkem is already capitalising
on these opportunities as the
company is already a qualified
supplier of wire and battery
insulation and speciality silicones
to the EV industry.
Elkem has developed technology
to produce graphite, main
component in anodes, with
90% lower GHG emissions than
today's standard graphite. This
has led to the establishment of
Vianode, a company that Elkem
owns 40%.
Elkem are exploring the
possibilities to recycle silicones
through projects such as REPOS
and RENOV
Elkem are looking into
opportunities to increase the use
of recycled packaging materials
and the reuse of wooden pallets
used in transport
Elkem has developed products
such as Microsilica, a by-product
from silicon production, that
makes concrete less brittle and
increase the lifespan of concrete
construction
Elkem has increased its use of
biocarbon as a reduction agent
in the silicon production to 24%
Elkem supplies products that
enable these developments to
aid in the transition to a more
sustainable society, and one of
Elkem's goals is green leadership
that entails growing our
deliveries to these sectors.
Transitional opportunity
Physical climate risk
Since the inaugural TCFD report in 2021, Elkem has
focused on enhancing its understanding of physical
climate-related risks. Initially a mapping was conducted to
identify the main climatic changes in the areas where our
sites are located. The assessment was based on available
research, map services (e.g. Kartverket) and specifically
World Bank Group’s Climate Change Knowledge Portal,
and the scenarios where a high (RCP 8.5) and a low
emission (RCP 4.5) scenario, and in a long- and short-term
perspective. Standard data metrics were identified based
on availability and quality, priorotising acute risks such as
storm surge, heatwaves, extreme weather, and floods, as
well as chronic risks such as rising sea levels and drought.
In 2023, Elkem conducted an in-depth analysis of the
different sites and the surrounding infrastructure to map
the risk exposure for the various sites. This resulted in a
more nuanced picture of our physical climate risk, and a
downgrading of the risk in Canada, and an increase of the
risk for France. The down grading in Canada is due to the
location of the site, and the increase in France is related to
drought and heatwaves.
The accompanying risk maps illustrate findings for a
2-degree global warming scenario (low) and a 4-degree
global warming scenario (high). These scenarios are
hypothetical, plausible futures and not Elkem's own
forecasts, but they are adjusted according to the
assessment of the sites.
Climate-related metrics and targets
Elkem’s ambition is to reduce the company’s fossil CO
2
footprint, by increasing the use of renewable carbon
sources and developing innovative production processes.
Our targets and metrics are an integrated part in the
annual ESG report that allows our stakeholders to follow
our progression. For climate related metrics, review the
section on GHG emissions and the scope 3 report.
Global overview of risks analysed: low emission scenario
Low
Iceland
Low-medium
Norway
(country average)
Low
France
(Saint Fons & Roussillon Plant)
Low-medium
USA
(Elkem Silicones NA Plant)
Low-medium
Brazil
(Elkem Carbon Brazil)
Medium
Canada
(Elkem Chicoutimi)
Low
The Netherlands
(Elkem Distribution Center)
Low-medium
China
(country average)
Low risk
Medium risk
High risk
Global overview of risks analysed: high emission scenario
Low
Iceland
Medium
Norway
(country average)
Medium
France
(Saint Fons & Roussillon Plant)
Medium
USA
(Elkem Silicones NA Plant)
Medium-high
Brazil
(Elkem Carbon Brazil)
Medium-high
Canada
(Elkem Chicoutimi)
Low-medium
The Netherlands
(Elkem Distribution
Center)
Medium-high
China
(country average)
Low risk
Medium risk
High risk
Materiality assessment changes
Elkem adheres to the principles, requirements, and
guidelines outlined in the GRI 2021 Standards to identify
material topics for Elkem's ESG report in 2023. Embracing
best practices, Elkem conducted a new impact-based
materiality assessment within the framework of the GRI
Standards, where impacts serve as the sole parameter
for assessing materiality. This approach aims to foster
objective and balanced reporting.
The identification of Elkem's most significant impacts
commenced with mapping all production locations across
the three business divisions: Silicones, Silicon Products,
and Carbon Solutions. Recognising that the value chains
of the divisions entail distinct potential impacts, Elkem
mapped out activities and business relationships for each
business area. Stakeholder input, expert guidance, and
independent research on sectors and locations further
informed this process.
Elkem acknowledges inherent risks associated with its
operational activities, given the sector and geographical
locations in which it operates. The identification and
assessment of potential impacts are based on general
risks relevant to Elkem's operations, without factoring in
the company's specific approach and actions to mitigate
these risks.
The impact assessment identified 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
These material topics encompass both positive and
negative impacts deemed most significant for Elkem's
global operations and value chains. The primary focus
is on impacts directly connected to Elkem's activities,
allowing for direct management. Elkem is currently
conducting a double materiality assessment to prepare for
the requirements of the Corporate Sustainability Reporting
Directive (CSRD), and to get a deeper understanding of
the impact of our material topics.
Civil society
Customers
and suppliers
Political
authorities
Investors and
shareholders
Regulatory
authorities
Employees
and unions
Figure: Key stakeholders
More information on
stakeholder issues and
ways of dialogue, see this
article on our website
104
Environmental
Social
Governance
E
Elkem maintains a fully integrated value chain, spanning
from the sourcing of raw materials and the upstream silicon
production to the downstream production of silicones. In
this comprehensive process, it is vital to effectively manage
the environmental footprint. Elkem's overarching objective is
to minimise any adverse environmental impacts across the
entire value chain.
Converting quartz into silicon involves a high-temperature
smelting process that consumes substantial energy
resources. While Elkem production is primarily powered
by renewable energy, the production process relies on
carbon sources such as fossil coal, charcoal, and wood
chips as reductants in the chemical conversion, resulting
in emissions of CO
2
, NO
x
(Nitrogen Oxides), SO
2
(Sulphur
Oxides), and airborne particulates.
Environmental impact and the preservation of biodiversity
are critical concerns for the process industry. Elkem has a
long history of addressing impacts on both land and water
ecosystems, and are now more engaged in a concerted
effort to understand its influence on biodiversity threats.
The transformation of silicon into silicones generates
significant volumes of wastewater that necessitate
treatment to eliminate residues, including substances
contributing to chemical oxygen depletion (COD). The
importance of effective water management is growing
in significance, with challenges varying considerably
throughout Elkem's value chain.
Environmental matters are systematically monitored
and reported to corporate management on a monthly
basis. These matters are overseen through Elkem’s
comprehensive HSE (Health, Safety, and Environment)
management system. All Elkem units must develop
and administer HSE management systems following
corporate standards.
Elkem identify and document all environmental impacts,
substantiated by precise measurements or calculations
comparing our performance against governmental
permits and internal improvement objectives. Elkem’s
approach emphasises the inherent value of waste streams,
whether through reduction, recycling, or reuse, and we
remain steadfast in our commitment to waste reduction
across our operations.
At present, Elkem stands as a frontrunner in
understanding the intricacies of producing carbon
products, silicon, and silicones. This has enabled us to
maintain a high yield, develop new revenue streams
from waste and by-products, and our commitment to
research and development will hopefully improve our
circular opportunities further. Our continuous dedication
to research and innovation improves the safety and
efficiency of our production processes, reinforcing our
position as a leader in the industry.
The environmental topics material to Elkem are:
→
CO2 and other GHG emission reductions, incl.
energy management
→
Local emissions to air
→
Biodiversity
→
Water management
→
Waste management and circularity
Introduction
Total CO
2
emissions:
Scope 1 + scope 2 + scope 3
Biocarbon share
Product group
carbon footprint
Energy consumption
from renewables
Waste re-used, recycled,
or diverted from landfill
Water consumption
2022
10.74
20%
6.9
81%
70%
27 439
2021
11.60
22%
7.4
84%
70%
25 709
Development 2022 to 2023
-8.3%
No change
16.0%
1.2%
-6.9%
Not
comparable
Improved measurement has
increased the precision and
the consumption is lower than
previously calculated.
Metric
Mill tonnes
%
CO
2
e/kg
product
%
%
Megaliters
2023
9.85
20%
8.0
82%
65%
9 713
Key KPI
Key takeaways
→
Elkem reduced its total GHG emissions by
8.3% in 2023
→
Elkem employs 25% biocarbon in production to
reduce fossil CO2 emissions, and this represents
20% of total scope 1 emissions
→
Elkem's main strategy involves replacing fossil
coal with biocarbon in smelting operations, with
a target to reach a 50% biocarbon share at the
smelters by 2031
Targets
→
Reduce absolute emissions in scope 1+2 by
(baseline year 2021)
→
Reduce the product group carbon footprint
by 39% by 2031 (baseline year 2021)
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
drought and heatwaves, as well as risks related
to extreme weather variability in the form of
acute precipitation increases
Elkem is committed to taking a leading industry position in
reducing fossil CO2 emissions by increasing renewable carbon
sources and developing innovative production processes.
Key opportunities
→
Elkem offers silicon with a significantly lower
CO2-footprint than the industry average
→
Resource efficiency
→
New market access and growing demand
for more sustainable products
CO
2
and other GHG
emission reductions
Key KPIs
Scope 1
2.21 mill tonnes
Scope 2
0.83 mill tonnes
Scope 3
6.81 mill tonnes
Development
of emissions
-8.3%
→
The climate change commitment has
its foundation in the climate roadmap
and the HSE policy.
Elkem’s corporate policies ↗
Policies
Product group
Avg. silicones PGCF
Avg, silicon alloys PGCF
Elkem average PGCF
Weight
50%
50%
100%
Metric
CO
2
e/kg
CO
2
e/kg
CO
2
e/kg
2023
10.9
5.0
8.0
2022
8.8
5.0
6.9
2021
10.0
4.9
7.4
Development
2022 to 2023
24.9%
0.2%
16.0%
Scope 1 – direct emissions
Scope 2 – Indirect emissions, electricity use, location based
Scope 2 – Indirect emissions, electricity use, market based
Scope 3 – indirect emissions, total
Upstream
Downstream
Biocarbon share
Metric
Mill tonnes
Mill tonnes
Mill tonnes
Mill tonnes
Mill tonnes
Mill tonnes
%
2021
2.34
0.90
2.77
8.35
4.92
3.43
22%
2022
2.42
0.94
2.64
7.38
4.06
3.33
20%
2023
2.21
0.83
2.89
6.81
4.00
2.81
20%
Development
2022 to 2023
-8.7%
-11.7%
9.5%
-7.8%
-1.3%
-15.7%
No change
KPIs
All numbers in the above table are CO
2
equivalents.
The colour indicates a positive or negative development year on year.
Elkem incorporates carbon sources like coal, coke, and
biocarbon as reduction materials in silicon and ferrosilicon
production, resulting in CO2 emissions. Smelters contribute
to approximately 70% of Elkem's total scope 1 emissions.
In 2023, Elkem employed 25% biocarbon in production to
reduce fossil CO
2
emissions, but these biogenic emissions
make up only 20% of total scope 1. As part of the climate
roadmap, the company aims to reduce emission further
by increasing biocarbon use, sourcing materials with lower
carbon footprints, and transitioning to a more renewable
power mix. Elkem is formulating a comprehensive plan
that encompasses plant upgrades, biocarbon substitution,
carbon capture and storage, and strategic sourcing to
realise these objectives.
Elkem reports scope 1, 2, and 3 emissions in accordance
with the GHG Protocol guidelines. Our reporting follows
operational control boundaries, where emissions from
any asset Elkem controls are included in our direct
emissions, while emissions from assets that we do not
control are accounted as indirect emissions. All CO2
emission figures are expressed as CO2 equivalents unless
specified otherwise.
Scope 1
Approximately 95% of Elkem's scope 1 emissions stems
from production processes, and 5% from fuel and
methane. Primary CO2 emissions arise from smelting
processes, where carbon reacts with oxygen in quartz
to produce silicon/ferrosilicon. Emissions are calculated
based on third-party certificates of carbon content in
raw materials, with CO2 emissions from other sources
determined using standard conversion factors aligned
with EU Emissions Trading Systems (EU ETS) Guidelines.
In 2023, total scope 1 emissions reached 2,21 million
tonnes, representing a reduction of 8.7% from 2022.
The reduction in Elkem’s GHG emissions is mainly due
to a decrease in production, but also due to an increased
biocarbon share in key production locations. Minor
changes in scope 1 are likely to occur during alignment
with EU ETS audit.
Scope 2
Elkem's power-intensive industrial processes rely heavily on
electricity. Scope 2 emissions are defined as indirect GHG
emissions linked to the consumption of electricity, steam,
heat, and cooling. Elkem utilises electricity emission factors
from the International Energy Agency for 2020, adapting
to regional differences in China's power system. In 2023,
Elkem's scope 2 In 2023, Elkem's scope 2 emissions was
reduced to 832,654 tonnes. This represents a reduction of
11,7% compared to 2022 (941,656 tonnes), primarily due
to reduced production in China. In China, Elkem has 90%
of its scope 2 emissions due to more CO
2 emissions in the
Chinese power mix.
Scope 3
Scope 3 refers to the indirect GHG emissions originating in
value chain activities beyond our operational control. Elkem
has disclosed its scope 3 emissions since 2021. In 2023,
scope 3 emissions totalled 6.81 million tonnes, reflecting a
7.8% reduction from 2022.
Elkem’s scope 3 reporting covers all relevant categories
to ensure that we capture the largest and most material
sources of indirect GHG emissions in our value chain. The
two largest categories are “category 1 – purchased goods
and services” and “category 12 – end of life treatment of
sold products”. Elkem’s scope 3 calculations are detailed in
our scope 3 emissions methodology report.
↗
The breakdown across scope 3 categories:
Biocarbon
Carbon sources plays a crucial role in silicon and ferrosilicon
production. To cut CO2 emissions, Elkem prioritises
replacing fossil carbon sources with biocarbon in its
smelting operations. The strategy aims to reach a 50%
biocarbon share at the smelters by 2031.
In 2023, the biocarbon share of Elkem's CO
2
emissions
reached 20%, and thus it remains at the same level as
in 2022. In production the biocarbon share of reduction
agents was 25%, with Elkem Bremanger and Elkem Iceland
achieving 31%. Elkem Paraguay consistently operates at
over 95% biocarbon share.
Biocarbon undersupply poses a significant challenge,
prompting Elkem to actively seek sustainable and
financially viable sources. Each plant has devised a
roadmap to attain the 2031 goal and will report progress
accordingly. To secure an ample supply, Elkem is
pioneering new biocarbon production technologies in
Canada, leveraging residues from sawmills rather than
virgin timber.
Elkem sources biocarbon from sustainable sources and
from by-products from the lumber industry. We only
source deforestation- and conversion free biocarbon
(DCF). Elkem relies on certification schemes, such
as FSC
1
, SFI
2
, SVLK
3
and PEFC
4
, to ensure that the
biocarbon is sustainably manufactured and sourced.
Elkem reports to the Carbon Disclosure Projects's
(CDP) questionnaire on forests, and in 2023 Elkem
was awarded the highest rating: A.
Life Cycle Assessments (LCAs) and Product
Carbon Footprints (PCFs)
Conducting Life Cycle Assessments (LCAs) is crucial for
Elkem. These assessments quantifies the environmental
impact of our products, and play a pivotal role in our
commitment to reduce our environmental footprint. LCA’s
also offer product transparency and valuable insights to
empower our customers in their transition toward a more
sustainable future.
In 2023, Elkem Silicon Products conducted LCAs for three
silicon/ferrosilicon plants with third-party support. Elkem
Silicones conducted Product Carbon Footprints (PCFs) of
siloxanes/ PDMS for our two upstream plants (France and
China) with the support of a third party. The product carbon
footprint measures the total greenhouse gas emissions
generated by a product and is reported in CO2e per kg.
CO
2
and other GHG emission reductions
Purchased goods and services
Capital goods
Transport
Other
End of life treatment
Use of products
1
Forest Stewardship Council
2
Sustainable Forestry Initiative
3
Sistem Verifikasi Legalitas Kayu (The Indonesian Timber Legality Assurance System)
4
Programme for the Endorsement of Forest Certification
The assessments of carbon footprints and environmental
impacts of our products have been conducted with
boundaries from the manufacturing process of raw
materials to when our products are ready to leave our
plants’ gates (cradle-to-gate basis).
The Silicones division has successfully developed and
employed a model to automatically calculate the carbon
footprint of its products. The model has been assessed
by a third party and complies with the GHG protocol and
Together for Sustainability (TfS) Product Carbon Footprint
for the Chemical Industry guidelines. Elkem will continue
to develop our work on the carbon footprints and LCAs of
our products in 2024.
Product Group Carbon Footprint (PGCF)
Elkem aims to cut absolute CO2 emissions by
28% by
2031 (scope 1+2), despite projections of increased growth
in volumes owing to its strong product alignment with
the green transition. Subsequently, the company has
established a goal to reduce its Product Group Carbon
Footprint (PGCF) by 39%. This refers to the carbon
intensity of its main products. While absolute CO2
reduction is crucial, the relative decrease in PGCF is vital
to evaluate the group's overall performance. The PGCF
distinguishes itself from PCF as it encompasses several
similar products as explained below.
Elkem has identified two product categories within the
PGCF reduction target. These main product categories are
characteristic of Elkem’s primary product segments, which
contributed to 93% of the total operating income in 2021
(the baseline year). The average PGCF scope therefore
covers i) upstream production of silicones (silox), and, ii)
tapped silicon and ferrosilicon metal, measured in CO2e
(scope 1+2+3 to gate) per kilogram of product produced.
The increase in Elkem's average PGCF in 2023 is
explained by a change of raw material sourcing in China
due to challenging market conditions.
Considering the relatively similar volumes and operating
incomes of the Silicones and Silicon Products divisions,
the average PGCF is computed as the arithmetic mean
of the two product categories. This strategic focus
underscores Elkem's dedication to sustainable practices
and aligns with our broader environmental objectives
throughout the value chain.
For example, Elkem's silicon production in Europe stands
out for its low CO2 footprint compared to silicon from
other producers, due to: Utilisation of hydro-power,
incorporation of biocarbon reductants, and strong
operational performance, characterised by high yields,
and minimal waste.
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
Purchased electricity,
steam, heating &
cooling for own use
Scope 2
Indirect
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
Key takeaways
→
Elkem annually consumes approximately
6.5 TWh of electricity, in 2023 82% was
from renewable sources
→
Energy recovery 1 TWh which represents
14% of total consumption
Targets
→
Energy recovery increase year on year
→
Energy intensity improvements on
main products
→
Improved energy efficiency in facilities
and equipment
Key risks
×
Changing regulatory framework, permits
and requirements
×
Volatility of energy prices
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
Elkem is committed to ensure energy efficiency and
sustainable energy sourcing to secure a reliable supply,
while simultaneously diminishing Elkem's global
greenhouse gas footprint.
Energy management
Key KPIs
Total consumption
7 272 GWH
Total share renewable
82%
Energy recovered
14%
Energy consumption – electricity
Consumption of purchased or
acquired electricity, renewable
Consumption of purchased
or acquired electricity, non-
renewable
Renewable share of electricity
consumption
Energy recovery
Energy recovery of total
consumption
Consumption of fuel (excluding
feedstock) non-renewable
Consumption of fuel (excluding
feedstock) renewable
Consumption of purchased or
acquired heat
Consumption of purchased or
required steam, renewable
Consumption of purchased or
required steam, non-renewable
Total energy consumption
Metric
GWh
GWh
GWh
%
GWh
%
GWh
MWh
MWh
MWh
MWh
GWh
2023
5 873
4 807
1 066
82%
995
14%
1 211
0.2
0
0
187
7 272
2022
6 542
5 397
1 144
81%
892
11%
1 438
0
0
0
53
8 033
2021
6 536
5 488
1 047
84%
909
13%
44
0
0
0
59
7 023
Development 2022 to 2023
-10.2%
-10.9%
-6.8%
1.2%
11.5%
27.3%
-15.8%
252.8%
-9.5%
KPIs
The colour indicates a positive or negative development year on year.
→
Elkem uses an Energy management
system at all energy intensive sites.
→
HSE policy
Elkem’s corporate policies
↗
Policies
In 2023, the energy market in Europe saw a relative
stabilisation after the shock effects from the Russian
invasion of Ukraine the year prior. Europe succeeded in re-
stocking its gas storage facilities, which helped calm both
the gas- but also the power markets across Europe. The
continent also experienced an unusually mild winter, which
reduced gas and power demand. Power prices declined
throughout the year, with spot prices hitting exceptionally
low or even negative values at times during summer. This
is expected to be a more frequent occurrence in the future
due to increasing amounts of solar and wind power and
less dispatchable coal generation.
Parts of Elkem’s value chain involve high-energy
processes, particularly in the production of silicon,
ferrosilicon, and foundry alloys using high-temperature
electric arc furnaces. Elkem annually consumes 6.5
TWh (5.9 TWh in 2023), and in 2023, about 82% of
this electricity was sourced from renewables. Given
this already substantial percentage, Elkem has not
set specific quantitative targets for further increasing
renewable energy usage. However, the company
anticipates a significant rise in the availability of
renewable energy in China in the coming years, enabling
a shift toward more renewable solutions in Elkem's
Chinese power base.
Elkem focuses on three main energy targets:
a.
Improving the energy efficiency of existing facilities
and equipment
b.
Reducing the energy intensity of main products
c.
Increasing energy recovery from processes that
generate surplus heat
Elkem, a forerunner in waste heat utilisation, installed
its first energy recovery system on a silicon smelting
furnace in the 1970s. Recovered heat finds versatile
applications, serving as hot water for district heating,
steam for various production processes, and new
electricity generation.
Elkem's dedication to improving its energy footprint
aligns with the broader commitment to minimising the
environmental impact outlined in the Elkem General
Policy. The Health, Safety, and Environment (HSE)
management system mandates energy management,
reporting on consumption, recycling, and deviations.
At the corporate level, an environmental manager
and a senior corporate energy specialist coordinate
improvement efforts. Elkem's energy management
initiatives, includes ISO14001 and ISO 50001 certification
China
Regional factors from CRU
Regional factors from CRU
Local factors given by the plants, where available. Otherwise DEFRA factor.
at applicable sites. In 2023, Elkem continued our efforts
to certify our energy management systems, and currently
the Elkem sites at Salten (NO), Bjølvefossen (NO),
Rana (NO), Thamshavn (NO), Iceland, Límpio (PA), and
Chicoutimi (CA) are in progress to become ISO50001
certified. Elkem Xinghuo, Yongdeng, Shanghai, Ningxia,
Bremanger, and Roussillon are certified according to
ISO50001. All environmental deviations and indicators,
including those related to energy, are systematically
registered and monitored through the company’s
reporting and deviation management system, Synergi.
Energy consumption
In 2023, Elkem's gross electricity consumption was
5 873 GWh, representing a reduction of 9,5% from 2022
levels. The reduction was in line with the target for year
on year energy consumption reduction . The reduction
is primarily due to reductions in production, but also
a result of increased energy efficiency in the smelting
process and improved production yield.
In 2023 Elkem consumed around 5.9 TWh of electricity,
and 82% of this came from renewable power sources.
All Elkem smelting furnaces, except one in China,
operating in countries with a fully renewable electrical
energy mix. In addition to electrical energy, Elkem utilises
approximately 1.4 TWh of other energy types, mainly for
internal vehicle operations and facility/process heating
and cooling. These energy types are predominantly
fossil-based.
Elkem’s targets concentrate on maximising energy
efficiency, thereby reducing the energy intensity
of products.
Energy recovery
As part of Elkem’s climate programme, Elkem pursues
an annual increase in energy recovery. Major production
sites generate surplus heat with temperatures suitable for
recovery. This recovered heat is harnessed to produce new
electricity for the grid, as well as steam or hot water for
internal or external use, including district heating.
Globally, Elkem recovered 995 GWh GWh of heat and
electricity in 2023, equivalent to the annual consumption of
about 66,000 Norwegian households. This represents 14%
of total energy consumption, an increase from 11% in 2022,
due to lower production at sites without energy recovery.
Energy efficiency
Elkem mandates updated energy inventories at its sites
as part of energy management efforts. These inventories
outline specific consumption and potential efficiency
improvements to reduce consumption and costs.
One notable example involves replacing old, inefficient
electrical motors with new, efficient ones featuring
variable frequency drives. Other significant projects
include transitioning from inefficient coal boilers to
cogeneration technology at Elkem Xinghuo, reducing
coal consumption, and expanding siloxane capacity
at lower energy intensity. We have carried out four
energy audits at four of our Norwegian sites, Salten,
Bjølvefossen, Rana and Thamshavn. The audits are
done to map possible energy savings by assessing
core processes ( such as smelter furnaces, distillation
columns and calciners) and possible auxillary energy
savings (such as lighting, compressed air, etc.). These
audits are key for continous improvement and increased
energy efficiency.
Conversion factors
Electricity – market based
Electricity – location based
Purchased steam
EU – ETS countries incl.
Norway and Iceland
Residual mixes from
Association of Issuing
Bodies (AIB)
IEA
Country factors
Rest of the World
IEA
Country factors
Energy management
Key takeaways
→
Biodiversity risk assessment completed for
all Elkem sites, and the results have been
communicated to the organisation
→
Competence building on biodiversity is ongoing
→
Elkem deposits to a restoration fund annually,
and the funds are used for restoration of nature
when we close down mining operations
→
Elkem has worked to reduce local emissions
to air and water for years, and have succeeded
with significant reductions over the years.
→
Dust emissions have been reduced by 48,6%
from 2015 when a target was set to reduce
dust emissions by 30% by 2025. SO
2
and NO
X
emissions are also down.
Elkem has an integrated value chain which is composed of
several processes that can have an impact on biodiversity.
In 2023, Elkem conducted a biodiversity risk assessment to
estimate the risk for all our sites. Mining, high-temperature
calcining, high temperature smelting processes, and
chemical production have been identified to have potential
impact on flora and fauna.
Biodiversity
Targets
→
No net loss of biodiversity in new projects
→
Elkem has set targets for reduction of dust, SO
2
and NO
X
emissions, but are working to raise the
ambition level further. More on this in the chapter
on local emissions to air
→
Rehabilitation of mined areas. Elkem deposits
money each year to a fund, and these are used to
restore the mined areas after the operations have
shut down.
Key risks
×
Fire and incident risks
×
Local emissions of SO2, NO
X
, and dust
to surrounding areas
×
Hazardous substances used in
production processes
Key opportunities
→
Improved planning of new sites and projects
resulting in reduced ecological impact
→
Optimising the use of raw materials and improved
efficiency can reduce waste and demand on
natural resources
→
New technology can reduce local emissions to
surrounding areas
→
Engaging with local communities, authorities, NGOs
and other stakeholders to address biodiversity
concerns and develop joint conservation strategies
→
More sustainable sourcing of raw materials
Elkem defines biodiversity as the variation among
living organisms across terrestrial, marine, and aquatic
ecosystems, as well as the intricate ecological networks
they constitute. This encompasses diversity within
species, between species, and across ecosystems, aligning
with the guidelines set forth by the newly established
Taskforce on Nature-related Financial Disclosures (TNFD)
and the upcoming Corporate Sustainability Reporting
Directive (CSRD). Biodiversity is integrated into Elkem's
environmental management system and is closely
interwoven with other sustainability metrics overseen by
the Vice President of Health, Safety, and Environment
(VP HSE). For more on governance review chapter on
ESG governance.
↗
Maintaining a conscientious stance toward environmental
stewardship, Elkem recognises the imperative of curbing
its operational impact, emphasising a commitment to
biodiversity conservation and the promotion of sustainable
management practices.
Elkem acknowledges the significance environmental
considerations, with a focus on elements such as
water quality, water usage, soil conditions, habitats,
vegetation, and the structural integrity of landscapes
and decommissioned structures. This holistic approach
underscores Elkem's proactive stance in addressing
environmental impacts across various facets of its
operations.
Biodiversity risk assessment
In 2023 Elkem conducted a biodiversity risk assessment
where we assessed the risk of all our production sites.
We used the Integrated Biodiversity Risk Assessment
Tool (IBAT) to identify risks related to threatened species,
protected areas and key biodiversity areas up to 50 km
from our facilities, with a granularity of 1 km. Enabling
us to get a detailed and science-based understanding
of what nature values we are exposed to. To identify our
priority sites, we conducted interviews with topical experts
and site managers to determine the risk factors specific
for each site to account for differences in operations,
infrastructure, location, topographical attributes, and
weather patterns.
By combining these two assessments, Elkem arrived at a
holistic understanding of the biodiversity risks inherent to
each production site. This approach not only considered
the broader ecological context but also factored in on-the-
ground, real-world risks specific to each facility, enabling
us the better plan our mitigation efforts.
In 2023, we expanded the scope of reporting in relation
to where we have operations in protected areas and key
biodiversity areas. Summary of our presence in relation to
this is presented below.
Figure 1: If several protected areas (PA) or Key Biodiversity Areas
(KBA) are present within a proximity category around a given asset
or operation, they are counted as one. If a given PA or KBA are within
proximity categories for several assets or operations, it is counted in for
each of these assets or operations.
In the vicinity (5-15 km)
→
Of Protected Areas
→
Of Key Biodiversity Areas
Close (1-5 km)
→
Of Protected Areas
→
Of Key Biodiversity Areas
Adjacent (<1 km)
→
Of Protected Areas
→
Of Key Biodiversity Areas
Inside
→
Of Protected Areas
→
Of Key Biodiversity Areas
Assets
6
5
14
7
4
2
3
0
→
HSE policy
Elkem's corporate policies ↗
Policies
Biodiversity
Mining
Mining, with its inherent biodiversity risks tied to water
and terrestrial ecosystem use, also poses threats
related to GHG emissions, air and water pollutants,
soil contaminants, and solid waste. Elkem, however,
exclusively mines quartz, which exerts less stress on
ecosystems compared to other mining practices. Given
the abundance of quartz, Elkem sources raw materials
from non-protected areas, aligning its activities closely
with national mining authorities. Environmental risk
and impact assessments, involving consultations with
biodiversity experts and local stakeholders, are integral
steps in Elkem's mining permit applications.
Throughout mining projects, Elkem actively monitors
emissions to water and air, as well as their impact on soil,
vegetation, and the landscape. National mining authorities
audit all activities, and Elkem prioritises the utilisation of
mineral side streams to minimise the mining process's
impact. As a proactive measure, Elkem allocates annual
provisions for mine restoration post-activity, demonstrating
a commitment to responsible environmental practices. As
a member of IMA-Europe (Industrial Minerals Association)
and the Towards Sustainable Mining Initiative, Elkem
collaborates with other mining companies to foster more
sustainable mining practices.
We prioritize sustainable mining with a strong focus on
habitat restoration. In Spain, we lease land for quartz
mining, then restore it meticulously, achieving a 93%
restoration rate at our Frades, Salamanca, and Castillo
sites in 2023. Similarly, in Norway, we ensure our
operations leave the land in better condition, reflecting
our dedication to environmental responsibility and
positive community impact.
Smelting and Calcinating
Through smelting and calcination processes Elkem has
an impact on biodiversity through its emission of SO2,
NO
x
and dust, but also noise and heat pollution from our
smelting plants. The negative impact has a limited radius,
and mitigating measures has been implemented.
Chemicals
Elkem produces silicones and this entails biodiversity risks
such as water usage, process water discharge, incidents
that can cause release of hazardous air pollutants (HAPs)
and persistent organic pollutants (POPs). Elkem vigilantly
monitors its water management and chemical safety at its
silicone production sites.
Elkem's chemical processing aligns rigorously with
national and local authorities, incorporating biodiversity
risk assessments for new processing plants. Collaborating
with local governments and experts, Elkem strives to
mitigate biodiversity impacts. Its Silicones division, as a
member of the Responsible Care Global Charter, commits
to the safe management of chemicals, contributing to
sustainable development.
Water, a critical input in Elkem's main production
processes, is extensively addressed in the Water
Management chapter on page 120.
↗
Key takeaways
→
Most Elkem sites are situated in areas with
ample access to water. Still it is key to manage
the water sustainably and minimise the negative
impact. For sites in areas where water is scarce
water targets are in place, and closed loops to
avoid any waste of water
→
Safe production processes and minimising the
risk of emissions of dangerous substances to
water recipients is key to Elkem. An example
of this is Elkem Rousillon that has reduced its
copper emissions by 97%
Targets
→
20% reduction of water withdrawals in areas with
occasional water scarcity 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 risks
×
Water availability, directly as process water and
indirectly as power source
×
Water quality (contamination and discharge)
×
Water-related regulatory framework and permits
×
Biodiversity and ecosystems
×
Stakeholder conflict
Water is a crucial input in numerous Elkem production
processes, and its indirect dependence on water is
significant, with over 80% of its electricity sourced from
hydropower. Ensuring a sustainable water footprint is vital.
Challenges related to water vary considerably throughout
Elkem's value chain, primarily focused on preventing
hazardous discharge. Elkem is committed to sustainable
water management.
Key opportunities
→
Improvements of water handling, particularly
the production expansion project at the
Xinghuo plant in China
→
Improved water efficiency and management
reduces the physical climate risk and
biodiversity risk for production sites
Water management
Key KPIs
Total water withdrawal
80,636 Megalitres
(-10.0%)
Total water discharge
70,923 Megalitres
(14.1%)
Total water consumption
9,713 Megalitres
Withdrawal
Total freshwater withdrawal
Withdrawal of fresh surface water,
including rainwater, water from wetlands,
rivers, and lakes
Withdrawal of groundwater – renewable
Withdrawal from third party sources
Discharge
Discharge of cooling water
Discharge of process water
Discharge to fresh surface water
Discharge to brackish water or seawater
Discharge to third-party destinations
COD flow
Total water discharge
Total water consumption (fresh water)
Metric
Megaliters
Megaliters
Megaliters
Megaliters
Megaliters
Megaliters
Megaliters
Megaliters
Megaliters
Thousand kg
Megaliters
Megaliters
2023
80 636
39 385
2 321
38 931
60 423
7 766
4 621
36 961
13 416
237
70 923
9 713
2021
85 654
46 698
581
38 391
52 925
7 020
4 936
54 883
1 260
202
59 945
25 709
2022
89 587
46 509
452
42 716
54 542
7 605
4 489
56 437
1 210
183
62 145
27 439
Development 2022 to 2023
-10.0%
-15.3%
Not
comparable
-8.9%
10.8%
2.1%
2.9%
-34.5%
Not
comparable
29.5%
14.1%
Not
comparable
Development mainly
due to improved data
quality and tracking
Development mainly
due to improved data
quality and tracking
Development mainly
due to improved data
quality and tracking
Development mainly
due to improved data
quality and tracking
KPIs
→
HSE policy
Elkem's corporate policies ↗
Policies
Water management
Elkem is dependent on water for various parts of its
production. This implies that Elkem has to have a solid
water management, both in terms of treating discharge
water to avoid emissions or spills of hazardous substances
or making sure that cooling water is discharged in a manner
that minimises the impact on marine biotopes. Elkem also
has operations in areas where water is scarce, but not
classified as water stressed, and we work to minimise the
water consumption in these areas. Fortunately these are
small operations that require limited amounts of water.
The primary water consumption in Elkem is related to
silicone production and it accounts for 90% of Elkem’s
water consumption.
→
Water withdrawals in areas with occasional scarcity
were 17% lower (120 megalitres) than baseyear of
2020, but increased by 8% compared to 2022.
→
Water intensity (fresh fresh water withdrawals)
related to silicone production have increased by 8%
in 2023 compared to 20220 (base year), driven by
reduced production.
→
CDP water security: A- (up from B in 2023)
Water consumption and scarcity
Recognising water as a vital shared resource, Elkem has
initiated programs to enhance corporate water stewardship.
We monitor water withdrawal, consumption, and discharge
to uphold responsible water management. Elkem’s use of
freshwater is typically related to water as a raw material
for production (silicones), water for cooling of production
equipment and products, water for cleaning purposes and
for emergency preparedness.
The majority of water usage falls into the first two
categories, demanding high-quality water to prevent
product contamination, equipment corrosion, and
clogging, as well as safeguarding water infrastructure.
Water consumption, including discharge and withdrawals,
is regularly monitored and reported quarterly to corporate.
Measurement methods vary based on availability and
source, utilising in-line water meters for direct measurement
or capacity calculations reflecting operational time.
In regions with water scarcity, third parties control water
withdrawals, typically via external suppliers. Process
water discharge volumes are reported quarterly to
corporate, excluding cooling water, which is returned to
the source at similar quality.
Elkem's production sites adhere to discharge regulations,
reporting annual parameters specified in permits.
Seventeen water discharge parameters are reported
quarterly to corporate from applicable plants.
Most production units benefit from abundant water
access, crucial for both production and hydropower-
based electricity. A few sites in regions like north-east
China, South Africa, and India, face occasional water
scarcity, though not water stress. Elkem implements
water management measures, conducts systematic risk
assessments (including those related to TCFD), and limits
withdrawals in these areas.
All Elkem sites provide free potable water for employees
and contractors, along with sanitary facilities. Showers and
changing rooms are available where needed, and working
uniforms are provided and cleaned by the company.
Indirect water use in the value chain beyond Elkem is yet
to be fully evaluated, with ongoing discussions centring
on the critical role of hydroelectric power as an energy
source for Elkem's smelters. This is identified as a possible
risk in Elkem mapping of physical climate risk, and the
developments in water reservoirs that Elkem depends on
are monitored, but it is not considered a significant risk.
Water Management:
While Elkem's production sites in water-abundant areas
pose low water consumption risks, the focus sharpens on
environmental repercussions linked to water discharge.
The majority of our major production sites neighbor
substantial bodies of water, warranting stringent water
management to avert enduring negative environmental
impacts. This involves comprehensive understanding
of the environmental effects of all water discharges
connected to production, ensuring effective water
monitoring, and treatment systems to comply with
discharge permits and meet targets for reducing
harmful substance discharges.
Key enablers to attain strategic water-related goals include:
→
Substitution of raw materials.
→
Implementation of good housekeeping practices.
→
Continuous development of new processes and
production technology.
→
An advanced control program incorporating
environmental monitoring.
→
Wastewater treatment and reduction through
recycling or reuse.
→
Transparency, including participation in CDP Water.
Discharge Oversight and Treatment
Elkem's production sites adhere to water discharge
permits, reporting specific parameters annually.
Seventeen water discharge parameters are measured or
calculated and reported quarterly to corporate HSE from
relevant plants.
The top three critical discharges include organic
substances affecting oxygen concentration (COD),
Silicone Cyclics (D4, D5, and D6), and Polycyclic aromatic
hydrocarbon (PAH). Elkem employs extensive monitoring
and maintenance measures to ensure compliance:
→
COD: Monitoring and minimising organic waste
generation, infrastructure maintenance, and optimal
on-site water treatment to purify before discharge.
→
Silicone Cyclics (D4, D5, D6): A focus on process
control, avoidance of spills and leakages, R&D
collaboration with customers to reduce residues,
and substantial investments in China to replace
cyclic materials.
→
PAH Discharges: Originating from coal-tar pitch
in carbon product production, Elkem ensures
compliance through process control, on-site water
treatment, and substantial R&D investments in
alternative binders without PAH.
In 2023, Elkem's Santa Perpetua plant unfortunately
experienced a leakage from a defect sewage set up,
and this resulted in 6 m3 of cyclics, mainly D4, leaking
in to the public sewer. A crisis management team was
mobilised and authorities where alerted immediately.
Fortunately no deviations were registered in the waste
water system. Elkem will do a full review of this incident
and local authorities will ensure that proper remediation
is in place. This underlines the importance of sound
water management.
Key takeaways
→
Multiple projects across the value chain that
address waste management and circularity,
including: remelting of slags, recycling of fines
and filter dust, reuse of pallets, recycling and
deploymerization of silicones waste and other
key projects
→
Microsilica, an important process product
finds use in construction, refractory, energy
and polymer industries
→
Updates to (internal) waste data reporting
and associated KPIs
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
Elkem’s business system (EBS) adheres to a zero-waste
philosophy, emphasising the reduction of waste across the
value chain. The primary focus lies on efficiently utilising
resources, minimising waste generation, and promoting
the reuse, recycling, or sale of residual waste. This aligns
seamlessly with circularity principles, and Elkem remains
dedicated to exploring fresh opportunities for the recycling
and reuse of waste and products.
Waste management
and circularity
Key KPIs
Waste recycling index
65.2%
Total waste generated
353 992 tonnes
Total waste reused or recycled
230 655 tonnes
Total waste generated
Non-hazardous waste to landfill
Hazardous waste to landfill
Non-hazardous waste to
destruction
Hazardous waste to destruction
Total waste directed to disposal
Byproducts to recycling/sale ex.
microsilica
Oils and chemicals to recycling
Scrap, packaging, etc. to
recycling
Microsilica
Other waste diverted from
disposal
Total waste diverted from
disposal (reused or recycled)
Mining activities*
Metric
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
2022
462 745
45 273
6 301
2 485
67 166
121 225
129 318
9 398
65 386
137 418
341 520
354 456
2021
397 247
58 465
5 200
15 660
38 791
118 116
137 998
69
4 491
136 573
279 131
320 687
KPIs
2023
353 992
55 163
7 781
1 718
58 674
123 337
53 503
5 754
11 243
106 327
53 828
230 655
332 717
*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.
→
HSE policy
Elkem’s corporate policies
↗
Policies
Development
2022 to 2023
-23.5%
21.8%
23.5%
-30.9%
-12.6%
1.7%
-58.6%
-38.8%
-82.8%
-22.6%
New category
-32.5%
-6.1%
Elkem’s value chain includes numerous process
flows, including mining, high-temperature calcining,
high temperature smelting, and chemical processing.
This results in a variety of waste, and poses different
challenges in terms of recycling and reuse. 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
Efforts have been implemented to minimise waste,
primarily through process improvements focusing on:
→
Reducing waste generation.
→
Reusing and recycling (spent mass neutralization
and packaging).
→
Incineration with and without energy recovery.
In 2023 65% of Elkem's waste was reused or recycled.
This is down from 70% in 2022. The main reason for
this is better data quality and tracking of waste streams,
and lower production and sale of by-products such as
Microsilica. We saw a significant decrease in the total
waste generated in 2023. Elkem's product value chain
comprises four main production types, each with specific
potential waste streams:
Quartz
Quartz is extracted from mountain seams using explosives
or riverbeds with diggers. The process involves washing,
crushing, and sizing without the use of hazardous
chemicals. Waste streams include tailings, off-spec
qualities, or sizes, most of which are repurposed for mine
restoration or sold as by-products (construction sands
and gravels). Some waste is landfilled during mining site
restoration. Elkem explores alternative uses for sands in
agriculture and sports.
Waste in connection with shipment
: Bulk shipping with
no specific packaging.
Hazard classification:
No hazardous wastes as quartz is
a naturally occurring mineral.
Carbon production
Carbon production involves high-temperature treatment
of anthracite and petroleum coke, creating various pastes
for metallurgical smelting. Most of the off-spec production
and degraded raw materials can safely be reprocessed
into new batches. Remaining waste is sent to approved
suppliers for hazardous waste treatment. Non-hazardous
(green) binders are in development to reduce reliance on
high-temperature coal tar pitch (CTPht).
Waste in connection with shipment:
Primary raw materials
are bulk-shipped, eliminating packaging. Finished
products are delivered in big bags or on pallets, potentially
generating customer waste. Packaging materials are of
sufficient quality for multiple reuses.
Hazard classification:
Degraded raw materials and off-
spec production may contain CTPHT binders, listed as a
substance of very high concern.
Silicon smelting
Silicon smelting involves a high-temperature chemical
reaction, transforming quartz and carbon into silicon, with
additional operations for alloying, crushing, and sizing to
meet customer specifications in electronics, foundry, and
chemical industries.
Key waste streams include degraded raw materials,
smelting slag, off-gas emissions particles, and fines from
crushing and sizing. Since the 1970s, Elkem pioneered
off-gas capture, converting waste into valuable products,
totaling 150,000 tonnes annually.
Historically, other waste streams were sold as low-value
products or landfilled. Dedicated teams have increased
utilisation, treating them as valuable raw materials for
reintroduction into Elkem's processes or as value-added
products, harvesting over 100,000 tonnes annually,
reducing costs and offering new solutions.
Waste in connection with shipment:
Except for charcoal
and alloying materials (often shipped in smaller
containers), most raw materials are bulk-supplied,
minimising packaging. Finished products are shipped in
bulk or big bags on reusable pallets.
Hazard classification:
Major waste streams are non-
hazardous, while some hazardous materials used in
post-smelting processing are sent to certified third-party
suppliers for disposal.
Silicone formulation
Silicone formulation involves various chemical processes
producing specialised products tailored to customer
needs. It generates diverse waste streams, both
hazardous and non-hazardous, including acid water,
used solvents, hydrolysis by-products, sludge, and
waste masses. Waste reduction is integrated into annual
objectives and improvement plans by production teams
and research departments.
Waste in connection with shipment:
Significant packaging
is required for raw materials, intermediates, and finished
products. Waste reduction focuses on reuse (IBCs, pallets,
drums) and recycling.
Hazard classification:
A substantial portion of generated
waste during production is hazardous. Hazardous waste is
either treated on-site (incineration, neutralization, reuse)
or sent to certified providers for destruction.
Generic waste streams
Elkem manages generic waste streams, including used
oil from vehicles and equipment, and packaging materials
from sourced goods. Each site implements dedicated
waste sorting systems, delivering waste to approved
service providers for recycling or re-use whenever possible.
Circularity
In alignment with our commitment to sustainable
business practices, we actively contribute to our climate
strategy through various circular economy initiatives.
Sustainability is not merely a consideration but a
fundamental precondition in all our projects, guiding our
actions across the entire value chain. We are dedicated to
exploring the integration of biobased materials into our
production processes, promoting the use of renewable
resources and reducing dependence on finite raw
materials. Furthermore, we emphasise the importance of
eco-design principles in both our products and processes,
ensuring that environmental considerations are integral
from the initial concept through the entire lifecycle.
Waste management and circularity
Project
Biocarbon as a reductant
BRIQSIL™
Sicalo - Carbon capture and usage
(CCU) in silicon production
Recycling of wooden pallets
SiTHERMO - Eco-design of thermally
conductive silicones
Description
Elkem's strategic initiative focuses on securing long-term access to affordable,
high-quality renewable biocarbon as a reductant in its smelting process.
This is done to replace fossil-based reductants, enhancing competitiveness
in sustainable silicon production. Currently using 24.4% biocarbon, Elkem
aims for 50% by 2031, supported by a pilot biocarbon plant in Canada. The
Paraguay plant achieved 100% biocarbon, making Elkem a pioneer in the
industry. In collaboration with Vow ASA's subsidiary, Vow Industries, Elkem
aims to reduce fossil CO
2
emissions by developing and manufacturing
biocarbon and other sustainable products using wood feedstock.
Elkem's briquetting initiative demonstrates an innovative approach to reusing
materials. BRIQSIL™, a ferrosilicon substitute, is created from fine materials
generated during quartz and coal processing. These solid briquettes, resilient
during handling and transportation, reintegrate into furnaces, increasing
production while reducing associated waste.
Elkem is engaged in a crucial project on the development of a new silicon
production process with lower carbon emissions through carbon looping. The
primary goal is to significantly decrease the use of fossil reduction materials
and cut all direct CO
2
emissions, showcasing our commitment to sustainable
practices and innovation for a greener future.
Elkem Nagpur in India adopts a circular economy approach in pallet
management by reusing and repairing inbound wooden pallets to minimise
new purchases. The initiative, stemming from the DISHA program, has
been expanded to all warehouses, resulting in significant waste reduction.
Elkem India successfully repurposes approximately 6,000 pallets annually,
showcasing a strong commitment to sustainability and resource efficiency.
Elkem Silicones is working on innovating thermal management materials,
focusing on optimising the balance between thermal conductivity and
environmental impact throughout the life cycle. Fillers represent key
component (70-95% by mass) in the production of thermal management
silicone materials. Elkem is addressing key challenges such as lightening
materials with isoperformance and enhancing recyclability. In an eco-
design approach, Elkem assesses benefits across different life cycle stages,
including the extraction of raw materials, production processes, material use
efficiency, and end-of-life recyclability. As part of the SiTHERMO project,
Elkem integrates life cycle assessment (LCA) and environmental data into
formulation design for the first time, fostering cross-team workshops on
eco-design. This project is supported by ADEME, The French Agency for
Ecological Transition, with LCA work conducted by EVEA.
Project
REPOS - REssourcement
POlymères Silicones
RENOV - Recycling and reincorporation
of elastomer materials
Description
The REPOS project will develop intensified depolymerization processes
of Silicones waste to return to monomer or oligomer units reused in
polymerization and functionalization in an economically and industrially
viable way. The objectives of the project are the development of competitive,
selective and clean processes of silicone polymers depolymerization at low
temperature. First trials demonstrate the validity of this collaborative project
and a reduction of more than 65% of waste and carbon footprint is estimated
on preliminary studied perimeter.
The RENOV project aims to develop technologies for mechanically recycling
cured and cross-linked elastomeric material waste, with a focus on recycling
processes and material analysis. The goal is to achieve optimal reincorporation
into formulations containing virgin elastomers for applications with upgraded
properties. The project addresses waste recovery mechanisms, methods
for analyzing chemical composition and developing recycling routes,
and evaluates economic and environmental aspects through Life Cycle
Assessments (LCA) and cost studies for the entire solution from waste
recovery to final product manufacturing with recycled materials.
Waste management and circularity
Key takeaways
→
Elkem has focused on reducing local emissions
to air for years. This is a material topic that can
negatively affects health and safety on site,
biodiversity and local communities.
→
In 2015 Elkem set a target to reduce dust
emissions by 30% by 2025. By 2023 Elkem has
reduced its dust emissions by 48,6%.
→
In 2023 Elkem saw reductions in SO
2
and NO
X
emissions due to increased use of biocarbon
reductants and lower production.
Targets
→
Dust: 30% reduction by 2025 baseline year 2015
(1,970 tonnes). By 2023 Elkem has reduced the
dust emissions by 48,6%, and we will set new
targets going forward.
→
SO
2
: Elkem has a target to reduce SO
2
-emissions
by 3000 tonnes. This target will be further
developed in 2024, and is closely connected to
our biocarbon target.
→
NO
X
: Elkem has reduced its NO
X
-emissions
significantly over the years, with a 34,7%
reduction from 2021. Targets will be developed
in 2024.
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 Xinghuo 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
Local emissions to air are inherent to many of Elkem's main
production processes and are therefore deemed 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. These
local emissions can impact our employees and local biotopes,
and Elkem is committed to reduce these emissions and limit
the impact.
Local emissions to air
The colour indicates a positive or negative development year on year.
Dust
SO
2
NO
x
Metric
Thousand tonnes
Thousand tonnes
Thousand tonnes
2021
1 379
7 280
8 932
2022
1 204
7 229
6 519
2023
1 012
6 700
5 830
KPIs
Development
2022 to 2023
-15.9%
-7.3%
-10.6%
Local air emissions are closely monitored for compliance
with public permits, and applicable sites report 17
parameters related to air emissions quarterly to corporate
HSE. Variations in emissions are primarily tied to
production volume changes inherent to the process,
influenced by raw material quality, process control, and
investments in filtration or scrubber systems, all regulated
by public permits.
NO
X
Nitrogen oxides (NO
X
) result from Elkem's high-
temperature smelting and calcining processes,
potentially harming ecosystems, vegetation, and human
health. Elkem has invested in furnace upgrades and
R&D, and this has significantly reduced NO
X
-emissions
over the years, and we have seen a 10,6% decrease from
2022 to 2023 (34,7% from 2021 to 2023). Over 80% of
reported NO
X
-emissions rely on online monitoring, with
the remaining 20% based on industrial emission factors.
SO
2
Sulphur dioxide (SO
2
) is generated during the smelting
process using carbon materials and calcining coal
and coke in carbon products, with potential negative
effects on plant and animal life and human health. In
2023 Elkem managed to reduce SO
2
-emissions by 7,3%
compared to 2022. This is mainly due to an increased
use of biocarbon reductants and lower production. Most
reported SO
2
emissions are based on mass balance, and
a few plants use digital monitoring. The increased use of
biocarbon as a reductant in the silicon smelting process
reduces the SO
2
-emissions.
Dust
Dust poses a significant challenge in silicon and carbon
product production, impacting both the environment and
worker health. The focus is on reducing dust generation
and enhancing collection and filtration to prevent escape
into the working environment. Despite challenges posed by
high temperatures and ultra-fine particles, Elkem allocates
substantial resources to combat dust. The long-term
ambition is to achieve acceptable exposure levels without
respiratory protection. Elkem has succeeded in reducing
its dust emissions by 48,6% from 2015 to 2023, and
thus the target of reducing dust by 30% by 2025 will be
revised in 2024. Dust emission calculations employ various
quantification strategies, including continuous monitoring,
fugitive emissions estimates, and third-party control.
→
HSE policy
Elkem’s corporate policies
↗
Policies
Statement on the EU
Taxonomy for sustainable
economic activities
The EU Taxonomy
1
is a classification system that establishes
a list of environmentally sustainable economic activities.
The purpose of the EU Taxonomy is to scale up sustainable
investments to these environmentally sustainable
activities and further, help in reaching the EU’s climate and
environmental targets for 2050 and the objectives of the
European Green Deal
2
.
1 Regulation (EU) 2020/852 of the European Parliament and of the
Council of 18 June 2020 on the establishment of a framework to facilitate
sustainable investment.
2 Communication from the European Commission to the European
parliament, the European council, the Council, the European economic and
social committee and the committee of the regions the European Green
Deal of 11 December 2019.
3 Commission Delegated Regulation (EU) 2021/21
39 of 4 June 2021,
Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022
and Commission Delegated Regulation of 27 June 2023 with regards to
amendments of Regulation (EU) 2021/2139 and environmental objectives 3-6.
4 Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021
supplementing Regulation (EU) 2020/852 by specifying the content and
presentation of information to be disclosed.
About the EU Taxonomy
The Taxonomy Regulation is a key component of the
European Commission's action plan to redirect capital
flows towards a more sustainable economy. It represents
an important step towards achieving EU’s 2050 carbon
neutrality goal, as the Taxonomy is a classification system
establishing detailed criteria for determining whether an
economic activity qualifies as environmentally sustainable.
The EU Taxonomy Regulation outlines six environmental
objectives to which a set of predefined economic activities
may have a substantial positive contribution, as defined by
the EU Commission. These are:
1.
Climate Change Mitigation (CCM)
2.
Climate Change Adaptation (CCA)
3.
Sustainable use and protection of water and
marine resources (WTR)
4.
Transition to a circular economy (CE)
5.
Pollution prevention and control (PPC)
6.
Protection and restoration of biodiversity and
ecosystems (BIO)
An activity is Taxonomy-eligible if it’s described in the EU
Commission’s Delegated Acts
3
, regardless of whether it
meets the technical criteria. Non-eligible activities are
those not yet described in these Acts.
A Taxonomy-aligned activity meets the technical criteria
in the Delegated Acts, including contributing substantially
to an environmental objective, not significantly harming
other objectives, and complying with minimum safeguards
(e.g., human rights, labour rights, consumer interests, anti-
corruption, taxation, fair competition).
Scope
Elkem falls within scope of the EU Taxonomy Regulation,
as the regulation applies to large public interest entities
with more than 500 employees.
The EU Taxonomy Disclosures Delegated Act
4
was
published in July 2021, with first mandatory reporting
requirements for Norwegian non-financial companies
having a closing financial balance date at 31.12.2023 or later.
Elkem ASA, with a financial year running from January 1 to
December 31, provides Taxonomy disclosures in this report
for the period spanning January,1, 2023, to December 31,
2023, which is the financial period under scope.
This report includes disclosures for all the six
environmental objectives of the EU Taxonomy. However,
for the financial year 2023, companies are only required to
report on eligibility against environmental objectives 3-6.
Hence, Elkem presents figures on Taxonomy-alignment
soley for the first two environmental objectives, CCM and
CCA, in this report.
Disclosure requirements
Companies within the scope of the regulation are required
to report performance indicators on net turnover, capital
expenditure (CapEx) and operational expenditure (OpEx)
associated with both Taxonomy-eligible and aligned
economic activities across the various environmental
objectives set out in the regulation.
Elkem Taxonomy-eligible and aligned activities
The subsequent section details the percentage of Elkem
ASA’s net turnover, capital expenditure (CapEx), and
operating expenditure (OpEx) attributed to economic
activities eligible for the EU Taxonomy and aligned with
the two environmental goals of the EU Taxonomy. This
data pertains to the financial reporting period of 2023.
Taxonomy-eligible activities
Elkem has identified the following economic activities as
Taxonomy-eligible across the six environmental objectives
in the Taxonomy Regulation:
Economic Taxonomy activity
3.17 Manufacture of plastics in
primary form
3.1 Manufacture of renewable
energy technologies
3.6 Manufacture of other low
carbon technologies
Description
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. As of the reporting date Elkem consider
silicones as an eligible activity.
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.
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.
Relevant environmental
objective in Taxonomy
Climate Change Mitigation
Climate Change Adaptation
Climate Change Mitigation
Climate Change Adaptation
Climate Change Mitigation
Clmate Change Adaptation
FY 2023
Turnover
Capital expenditure (CapEx)
Operating expenditure (OpEx)
Overview
Total (MNOK)
35 545
5 442
1 852
Proportion of
Taxonomy-eligble
economic activities
42%
68%
42%
Proportion of
Taxonomy-aligned
economic activities
0%
0%
0%
Proportion of
non-eligble
economic activities
58%
32%
58%
Assessment of Taxonomy-alignment
Many of Elkem`s upstream products are defined
as taxonomy – non – eligible economic activities,
meaning that these activities are not described in the
supplementing delegated acts. Silicon-based advanced
materials are essential to the green transition, with silicon
metal on the EU`s 2023 list of critical raw materials.
As long as the EU Taxonomy regulation does not cover
silicon-based materials the company`s assessment of the
taxonomy-aligned activities will be limited.
Elkem performed an initial assessment of the EU
Taxonomy in 2022, which provided an indication of the
eligibility of the portfolio. In 2023, Elkem continued
to look for other eligible activities and expanded the
assessment to cover alignment. Activities not assessed
as core and material to Elkem, have been scoped out
from reporting for 2023. Furthermore, there has been
some additional changes compared to last year reporting.
The company`s silicone activities have been merged into
activity 3.17 to ease the reporting. The EU Taxonomy
is constantly evolving and applying to the taxonomy is
therefor a continuous learning process. The screening
criteria are comprehensive, and changes may occur.
Elkem will continue to interpret the description of eligible
activities and conduct assessments of the technical
screening criteria in accordance with the taxonomy
alignment in 2024.
3.17 Manufacture of plastics in primary form
Substantial contribution to Climate Change Mitigation:
The manufacturing of plastics in primary form has been
included in the technical screening criteria from the
delegated acts. However, the EU has set strict requirements
for when this activity can be seen as sustainable. According
to the Taxonomy, activity 3.17 consist of NACE C.20.16,
where silicones are covered. For silicones to meet the
sustainable contribution criteria the production must
be derived wholly or partially from renewable feedstock.
Silicon-metal is essential to production of silicones. Elkem
Silicones sources Si-metal from e.g. norwegian plants that
use a biocarbon as an reduction material in the production
process. This criterion is also in line with one of Elkem’s
primary CO
2
strategies, which aims to replace fossil carbon
with biocarbon in our smelting operations. Silicones derived
partly from Si-metal with a share of biocarbon will qualify as
alignment will therefore meet the first “alignment-test” as
substantial contribution to Climate Change Mitigation.
Do no significant harm (DNSH):
Elkem has reviewed the activity against the DNSH criteria,
and identified areas where alignment is strong and others
where further evaluation is necessary.
As of the reporting date, Elkem will transparently report
zero alignment with DNSH. This reflects the company`s
commitment to integrity and our acknowledgment that
the assessment process is ongoing. During 2024 Elkem
will continue to refine the approach, collaborate with
relevant stakeholders, and strive for meaningful alignment
with the EU Taxonomy.
3.1 Manufacture of renewable energy technologies
Substantial contribution to Climate Change Mitigation:
This activity is automatically complying with the criteria.
Do no significant harm (DNSH):
As of the reporting date Elkem has not yet assessed
the DNSH criteria for this activity, and as a result, the
company will transparently report zero alignment.
3.6 Manufacture of other low carbon technologies
Substantial contribution to Climate Change Mitigation:
Elkem Microsilica improve concrete performance, making
it more durable, increasing the service life and reducing
maintenance costs, it will also contribute to reduce the
carbon footprint for a concrete mix. Elkem has performed
a LCA of microsilica. As of the reporting date, the LCA has
not yet been verified by a third party, hence this eligible
activity does not meet the substantial contribution criteria
against climate change mitigation.
Do no significant harm (DNSH):
As of the reporting date Elkem has not yet assessed
the DNSH criteria for this activity, and as a result, the
company will transparently report zero alignment.
Minimum safeguards
The next section outlines Elkem’s compliance with the
Minimum Safeguards criteria across four areas: human
rights, anti-corruption, taxation, and fair competition,
demonstrating Elkem’s commitment to maintaining high
standards in its operations.
Human rights (including labor rights and consumer
interests, as well as issues related to science, technology
and innovation)
Based on the UNGPs and the OECD MNE Guidelines,
including the OECD Due Diligence Guidance for
Responsible Business Conduct, we have implemented
a six-step approach in order to identify, prevent and,
if necessary, mitigate and remediate any actual and
potential negative impacts on human rights. Our human
rights program, describing our strategy, the high-impact
areas and our processes and measures to prevent
negative human rights impacts, is publicly available on
our website and described in our annual ESG report which
covers our reporting responsibilities under the Norwegian
Transparency Act. Our strategy for combating human
rights violations is based on a third party impact analysis
that takes particular account of geographical and sectoral
risks. The impact analysis includes our own business units,
subsidiaries and business partners, and our value chain.
Measures to prevent and mitigate actual and potential
adverse human rights impacts were identified and
implemented. Our processes ensure that remedial action
is taken promptly in the event of an acute human rights
violation and, if necessary, compensation is provided to
affected individuals. The effectiveness of our processes is
monitored by internal reviews on a regular basis.
Corruption and bribery
To prevent and fight against corrupt practices, Elkem has
implemented an ant-corruption program. The company`s
control mechanisms to prevent corruption and bribery in
our business units and value chains are based on a risk
assessment, including geographical and sectoral criteria.
Anti-corruption is an integral part of our Code of Conduct
and elaborated on in a dedicated anti-corruption program
description. Our zero tolerance for corruption and bribery
is also communicated to our business partners through
our Code of conduct for business partners. Regular
training of employees on the anti-corruption rules and on
the application of those rules, as well as specific training
of employees and other actors identified as specifically
exposed to corruption risks, is mandatory.
Taxation
In line with the company`s ethical business values, tax
governance and tax compliance are important elements of
our oversight, and we are committed to complying with all
relevant tax laws and regulations. Therefore, in line with the
Group’s strategy, the company`s tax strategy is transparent,
sustainable in the long term and complies with the Code of
Conduct. Tax risk management is an essential component
of our Corporate Management System and is embedded in
our overall company risk management system. Elkem`s risk-
based tax governance framework is managed by a team of
dedicated, qualified tax experts, who work closely with our
group management.
Fair competition
Elkem carry out activities in a manner consistent with all
applicable competition laws and regulations, taking into
account the competition laws of all jurisdictions in which
the company`s activities might have anticompetitive
effects. With the company`s guideline for fair competition
and ethical business conduct, Elkem pursue the goal of
achieving and maintaining lively competition in a free
market environment for the entire group by establishing a
corresponding corporate culture. The company`s guideline
provides the employees with assistance in preventing,
detecting and remedying any competition violations.
Raising awareness and conducting training that addresses
competition law risks of our business activities are of
particular importance to ensure fair competition.
3. KPIs and accounting policy
Turnover KPI
The denominator of the turnover KPI is based on our
consolidated net turnover in accordance with paragraph
82(a) of IAS 1. For further details on our accounting
policies regarding our consolidated net turnover, see page
209 of our Annual Report 2023. Our consolidated net
turnover can be reconciled to our consolidated financial
statements, see the income statement on page 280 of our
Annual Report 2023.
For activity 3.17 Manufacture of plastic in primary forms
the total turnover of this activity has been applied. To
calculate the turnover from activity 3.1 Manufacture
of renewable energy technologies we have used the
customer information as basis. Since all of our foundry
customers operate in more than one market segment
we categorized them by revenue. If a foundry customer
generates over half of their revenue from the ‘wind energy
turbines’ sub-segment, we count that revenue towards
this activity. For the activity 3.6 Manufacture of other
low carbon technologies we have used the volume of
microsilica sold to construction to calculate the revenue
in this segment.
CapEx KPI
The CapEx KPI is defined as Taxonomy-eligible and
aligned CapEx (numerator) divided by our total
CapEx (denominator).
Total CapEx consists of additions to tangible and
intangible fixed assets during the financial year, before
depreciation, amortisation, and any remeasurements,
including those resulting from revaluations and
impairments, as well as excluding changes in fair value.
It includes acquisitions of tangible fixed assets (IAS
16), intangible fixed assets (IAS 38), right-of-use assets
(IFRS 16) and investment properties (IAS 40). Additions
resulting from business combinations are also included.
Goodwill is not included in CapEx, because it is not
defined as an intangible asset in accordance with IAS 38.
For further details on our accounting policies regarding
our CapEx, see page 239 of our Annual Report 2023
(the CapEx definition needs to be adapted to the actual
CapEx of Elkem). Our total CapEx can be reconciled to
our consolidated financial statements, see page 187 of our
Annual Report 2023.
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 silicone’s activities. For
other eligible activities we have used the total revenue
split as proxy.
OpEx KPI
The OpEx KPI is defined as Taxonomy-eligible and aligned
OpEx (numerator) divided by total OpEx as defined in the
Taxonomy (denominator).
Total OpEx as defined in the Taxonomy (restrictive
scope) consists of direct non-capitalised costs related
to research and development, building renovation
measures, short-term leases, maintenance and repair
and any other direct expenses relating to the day-to-day
maintenance of fixed assets.
→
Research and development expenditure is recognised
as an expense during the reporting period in our
income statement (see page 220 of our Annual
Report 2023). In line with our consolidated financial
statements (paragraph 126 of IAS 38), this includes
all non-capitalised expenditure that is directly
attributable to research or development activities.
→
The volume of non-capitalised leases was determined
in accordance with IFRS 16 and includes expenses for
short-term leases and low-value leases (see page 231
of our Annual Report 2023).
→
Maintenance and repair expenditures were
determined based on the maintenance and repair
costs allocated to our internal cost centers. The
related cost items can be found in various lines items
in our income statement, including production costs
(maintenance in operations), sales and distribution
costs (maintenance logistics) and administration
costs (such as maintenance of IT systems). This also
includes building renovation measures.
In general, this includes staff costs, costs for services and
material costs for daily servicing, as well as for regular and
unplanned maintenance and repair measures. These costs
are directly allocated to our PP&E. This does not include
expenditures relating to the day-to-day operation of
PP&E, such as raw materials, cost of employees operating
the machinery, electricity or fluids that are necessary to
operate PP&E. Amortisation and depreciation are also not
included in the OpEx KPI.
The total operating expenditures included in the OpEx
KPI are:
→
Research and development costs cover MNOK 641,
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 66, described in
note 16.
→
Maintenance and repair expenses include Elkem`s
maintenance and repair cost not qualifying for
capitalisation as part of the relevant asset. Repair and
maintenance activities consist of MNOK 1 145.
Turnover KPI
Substantial Contribution Criteria
DNSH criteria
('Does Not Significantly Harm') (h)
2023
Code (2)(a)
Climate Change Mitigation (11)
Turnover (3)
Climate Change Adaptation (12)
Proportion of Turnover, year N (4)
Water (13)
Climate Change Mitigation (5)
Pollution (14)
Climate Change Adaptation (6)
Circular Economy (15)
Water (7)
Biodiversity (16)
Pollution (8)
Minimum Safeguards (17)
Circular Economy (9)
Biodiversity (10)
Category enabling activity (19)
Category transitional activity (20)
Economic
Activities (1)
A. Taxonomy-eligible activites
A.1. Environmentally sustainable
activities (Taxonomy-aligned)
Turnover of environmentally sustainable
activities (Taxonomy-aligned) (A.1)
Of which Enabling
Of which Transitional
A.2 Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (g)
3.17 Manufacture of plastics in
primary form
3.1 Manufacture of renewable
energy technologies
3.6 Manufacture of other low
carbon technologies
Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
A. Turnover of Taxonomy eligible activities
(A.1+A.2)
B. Taxonomy-non-eligible activities
Turnover of Taxonomynon-eligible activities
Total
Proportion of Taxonomy
aligned (A.1.) or eligible
(A.2.) turnover, year N-1 (18)
0
0
0
14 079
230
618
14 926
14 926
20 619
35 545
0%
0%
0%
(f)
EL
EL
EL
42%
42%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
0%
39.6%
0.6%
1.7%
42%
42%
58%
100%
CCM
CCM
CCM
0%
0%
0%
0%
0%
0%
0%
0%
CapEx KPI
Substantial Contribution Criteria
DNSH criteria
('Does Not Significantly Harm') (h)
2023
Code (2)(a)
Climate Change Mitigation (11)
Turnover (3)
Climate Change Adaptation (12)
Proportion of Turnover, year N (4)
Water (13)
Climate Change Mitigation (5)
Pollution (14)
Climate Change Adaptation (6)
Circular Economy (15)
Water (7)
Biodiversity (16)
Pollution (8)
Minimum Safeguards (17)
Circular Economy (9)
Biodiversity (10)
Category enabling activity (19)
Category transitional activity (20)
Economic
Activities (1)
A. Taxonomy-eligible activites
A.1. Environmentally sustainable
activities (Taxonomy-aligned)
OpEx of environmentally sustainable
activities (Taxonomy-aligned) (A.1)
Of which Enabling
Of which Transitional
A.2 Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (g)
3.17 Manufacture of plastics in
primary form
3.1 Manufacture of renewable
energy technologies
3.6 Manufacture of other low
carbon technologies
OpEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
A. OpEx of Taxonomy eligible activities
(A.1+A.2)
B. Taxonomy-non-eligible activities
OpEx of Taxonomynon-eligible activities
Total
Proportion of Taxonomy
aligned (A.1.) or eligible
(A.2.) OpEx, year N-1 (18)
0
0
0
734
12
32
778
778
1 074
1 852
0%
0%
0%
(f)
EL
EL
EL
42%
42%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
0%
39.6%
0.6%
1.7%
42%
42%
58%
100%
CCM
CCM
CCM
0%
0%
0%
0%
0%
0%
0%
0%
OpEx KPI
Substantial Contribution Criteria
DNSH criteria
('Does Not Significantly Harm') (h)
2023
Code (2)(a)
Climate Change Mitigation (11)
Turnover (3)
Climate Change Adaptation (12)
Proportion of Turnover, year N (4)
Water (13)
Climate Change Mitigation (5)
Pollution (14)
Climate Change Adaptation (6)
Circular Economy (15)
Water (7)
Biodiversity (16)
Pollution (8)
Minimum Safeguards (17)
Circular Economy (9)
Biodiversity (10)
Category enabling activity (19)
Category transitional activity (20)
Economic
Activities (1)
A. Taxonomy-eligible activites
A.1. Environmentally sustainable
activities (Taxonomy-aligned)
CapEx of environmentally sustainable
activities (Taxonomy-aligned) (A.1)
Of which Enabling
Of which Transitional
A.2 Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (g)
3.17 Manufacture of plastics in
primary form
3.1 Manufacture of renewable
energy technologies
3.6 Manufacture of other low
carbon technologies
CapEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
A. CapEx of Taxonomy eligible activities
(A.1+A.2)
B. Taxonomy-non-eligible activities
CapEx of Taxonomynon-eligible activities
Total
Proportion of Taxonomy
aligned (A.1.) or eligible
(A.2.) turnover, year N-1 (18)
0
0
0
3 675
10
26
3 711
3 711
1 731
5 442
0%
0%
0%
(f)
EL
EL
EL
68%
68%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
%
(f)
N/EL
N/EL
N/EL
0%
0%
0%
0%
0%
67.5%
0.2%
0.5%
68%
68%
32%
100%
CCM
CCM
CCM
0%
0%
0%
0%
0%
0%
0%
0%
Template 1: Nuclear and fossil gas related activities
Nuclear energy related activities
The undertaking carries out, funds or has exposures to research,
development, demonstration and deployment of innovative electricity
generation facilities that produce energy from nuclear processes with
minimal waste from the fuel cycle.
The undertaking carries out, funds or has exposures to construction
and safe operation of new nuclear installations to produce electricity or
process heat, including for the purposes of district heating or industrial
processes such as hydrogen production, as well as their safety upgrades,
using best available technologies
The undertaking carries out, funds or has exposures to safe operation
of existing nuclear installations that produce electricity or process heat,
including for the purposes of district heating or industrial processes
such as hydrogen production from nuclear energy, as well as their safety
upgrades.
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or
operation of electricity generation facilities that produce electricity using
fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction,
refurbishment, and operation of combined heat/cool and power
generation facilities using fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction,
refurbishment and operation of heat generation facilities that produce
heat/cool using fossil gaseous fuels.
NO
NO
NO
NO
NO
NO
Row
1.
2.
3.
4.
5.
6.
Environmental
Social
Governance
S
Safety is our top priority in Elkem. Elkem firmly believes that
all incidents are preventable, and we steadfastly adhere to
a zero-harm philosophy in all our divisions. To realise this, a
skilled, engaged, and diverse workforce is key.
Elkem's growth and green leadership strategy pivot on
operational excellence and a continuous improvement.
Our global team, comprising more than 7,400 dedicated
employees are central to our success. Our employees
shares a deep commitment to our stakeholders, working
collectively to realise our full potential.
Our employees are our most invaluable resource, and as
such, Elkem takes responsibility for safety for all on-site
activities. Elkem actively seek to influence our suppliers
and partners to align with our consistent focus on health
and safety.
Regrettably, Elkem experienced four fatalities among its
contractors in 2023. Investigations revealed lapses in
following essential safety measures, underscoring the
imperative nature of unwavering focus on health and
safety. For further details, please refer to the HSE chapter.
Elkem emphasises individual involvement in creating a
secure work environment. We place significant emphasis
on human rights, fair wages, and equal opportunities.
These elements are seen as vital to Elkem's operations and
a sustainable future. Our dedication remains consistent
to establish a culture founded on equality and respect for
cultural differences.
To bolster our commitment to human rights, Elkem is
implementing its action plan based on the human rights
risk assessment done in 2022. Labour right, working
conditions, anti-discrimination, diversity, equality, and
inclusion have been included in the internal HR audits,
and a new supplier management system (SRM) will be
implemented.
The social topics material to Elkem are:
→
Health and safety on site
→
Human rights, including labour rights
Introduction
Total recordable injury rate
Reported confirmed cases of child or forced labour
Employees covered by collective bargaining agreements
Female share
Key KPI
2022
3.2
0
40%
25%
2021
3.7
0
39%
25%
2023
3.0
0
35%
25%
A strong health and safety culture is fundamental to Elkem’s
license to operate. Elkem's Health, Safety, and Environment
(HSE) initiatives follows a zero-harm philosophy, with a
systematically implemented management system working
to achieve this objective. In 2023, the total recordable
injury rate for our employees continued to decrease, but we
unfortunately experienced some high-consequence incidents
and an increased total injury rate for our contractors.
Health and safety on site
Key takeaways
→
In 2023, Elkem implemented FORUS, a HSE
Management System to systematically increase
focus on HSE.
→
The TRIR (total recordable injury rate) for own
employees continued to decline, but it has
proven difficult to convey our HSE-culture to
our contractors which have shown a
deterioration in performance.
→
An increased focus on reporting of incidents,
investigating these incidents and the sharing
of these learnings has been a focus of the
improvement work.
Targets
→
Elkem follows a zero-harm philosophy
→
Reduction in Frequency rates by 10% from
base of 2022
→
Increased training of all people on our sites
meeting required planned training hours per
job level
Key risks
×
Exposure to hazardous substances
×
Hazardous operations
×
Working at height
×
Moving equipment and safeguarding
×
Legislative changes and requirements
Key opportunities
→
Improved training has resulted in a decrease
in injuries among own employees, and we
work to see the same development among
our contractors.
→
Sharing of learnings from Injuries and High
Risk Incidents will enable Elkem to learn
across the organisation and work to prevent
reoccurrence of incidents.
→
Continued implementation of FORUS will
establish good systems to enable the continued
HSE improvement work.
Key KPIs
TRIR
3.0
TRIR contractor
3.4
Lost workday rate
0.7
Lost workday rate
contractor
2.1
Work-related injuries
Fatalities
High-consequence work-related injuries
Lost workday injuries
Other recordable injuries
Total recordable injuries
Hours worked
Work-related injuries
Fatalities
High-consequence work-related injuries
Lost workday injuries
Other recordable injuries
Total recordable injuries
Hours worked
Metric
Absolute numbers
Rate
Absolute no.
Rate
Absolute no.
Rate
Absolute no.
Rate
Absolute no.
Rate
Number
Metric
Absolute numbers
Rate
Absolute no.
Rate
Absolute no.
Rate
Absolute no.
Rate
Absolute no.
Rate
Number
2022
0
0
1
0.1
13
0.9
31
2.2
44
3.2
13 936 109
2021
0
0
0
0
21
1.5
30
2.2
51
3.7
13 706 429
2022
2
0.3
2
0.3
14
2.4
8
1.4
22
3.8
5 722 932
2021
0
0
0
0
7
1.5
10
2.1
17
3.5
4 797 159
2023
0
0.0
0
0.0
11
0.7
31
2.2
42
3.0
14 216 585
2023
4
0.4
4
0.4
24
2.1
14
1.3
38
3.4
11 176 605
Development 2022 to 2023
No change
-100.0%
-15.4%
No change
-4.5%
2.0%
Development 2022 to 2023
100.0%
100.0%
71.4%
55.6%
72.7%
95.3%
Hours worked by
contractors have
increased significantly
due to expansion and
maintenance at plant
in Xinghuo.
KPIs
Employees
Contractors
The colour indicates a positive or negative development year on year.
→
Code of conduct
→
HSE policy
→
Code of conduct for Elkem's
business partners
Elkem’s corporate policies
↗
Policies
Health and safety management
Elkem's production activities entail inherent risks,
exposures, and emissions, given operations involving
high-temperature smelting (>2,000°C) and advanced
processing of hazardous chemicals. A paramount aspect
of our success and operational license is the commitment
to a zero-harm philosophy, emphasising the health and
safety of employees and contractors on-site. While
Elkem bears full responsibility for maintaining a safe and
healthy workplace, it expects equal commitment from its
workforce to actively contribute to this goal.
To reinforce line management's ability to fulfil this
responsibility, each site has an HSE organisation
tailored to its size and risk level. Oversight of Elkem's
HSE management system lies with the corporate Vice
President for HSE. Routine internal audits, conducted
by corporate and divisional resources, ensure system
compliance at each site.
Elkem aims to audit all production sites a minimum of
every other year, conducting 22 audits in 2022 and 20 in
2023. The safety management system FORUS further
enhances the focus on safety through internal self-
assessments, divisional, and corporate audits. In 2024
the plan is to conduct 25 audits.
Continuous efforts are invested in equipping employees
and contractors with the necessary skills and tools to
identify and manage workplace risks. Comprehensive
risk management systems, applicable globally, underline
Elkem's commitment to health and safety. This
commitment is demonstrated by clear responsibilities,
accountability at all levels, prioritisation of individual
health and safety in decision-making, ambitious goals
for continuous improvement, and uniform HSE systems
across all Elkem operations worldwide.
In 2023, Elkem reported a decrease in the overall
number of injuries in 2023, with the majority being low-
consequence injuries. The total recordable injury rate
decreased from 3.2 to 3.0, and the lost workday rate
reduced from 0.9 to 0.7 in 2023.
Unfortunately, Elkem experienced a significant challenge
with four contractor fatalities in 2023. This underscores
the crucial importance of maintaining an unwavering
focus on health and safety.
Elkem follows a stringent reporting regime for injuries,
requiring comprehensive reporting, investigation,
and mitigation measures, irrespective of severity. All
injuries and high-potential incidents undergo thorough
investigation, with implemented measures to prevent
recurrence. Detailed insights are shared across Elkem
sites to ensure lessons learned from incidents.
HSE management system and auditing
To enhance safety management, Elkem decided to
introduce a new system in 2022, FORUS, modelled after
the ISRS safety management system. The name FORUS
signifies the aim to be a leader (Forerunner System) in
safety. This risk-based system comprises a manual, safety
procedures, protocols, and a comprehensive auditing
system. All Elkem employees and contractors working on
Elkem property are subject to the system’s requirements,
and suppliers are expected to adhere to basic HSE rules
within contractual purchasing agreements.
Elkem’s HSE management system establishes HSE
as a line management responsibility, emphasising
accountability for HSE performance at all levels of the
organisation across different locations.
In 2023, the rollout of the system continued with the
development of communication and visualisation tools,
the development of training modules related to the
introduction of Basic HSE and FORUS system and the
Life Saving rules. The plants completed self-assessments
of the current state versus the new standards for FORUS,
and action plans have been developed to close the gaps.
In 2024, the goal is to focus on process safety while
closing the gaps related to these elements in FORUS.
Incident management
Elkem adheres to general requirements for recording,
notification, and classification of injuries and incidents
based on criteria from the US Occupational Safety and
Health Administration (OSHA), aligning with the nature of
Elkem’s industry. The company employs a comprehensive
digital incident management system, urging all employees
to promptly report injuries, incidents, unsafe conditions,
deviations, and non-compliances. Each report undergoes
investigation, mitigation sharing, and, when appropriate,
contributes to organisational learning and improvement.
Serious incidents undergo thorough root cause analysis.
Recordable injuries and high-risk incidents are regularly
presented to corporate management for weekly
discussion. In addition to reporting, incident management
encompasses emergency preparedness. Each Elkem
site possesses tailored emergency plans and resources
commensurate with their risk levels. These resources
range from basic first aid and fire extinguishing equipment
to fully equipped in-house emergency response teams.
Health and safety on site
Health and safety training
Elkem prioritises the safety of its employees through
thorough and documented HSE training. This training
equips employees with a comprehensive understanding of
workplace hazards and empowers them to mitigate risks
during their 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 healthy 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.
→
The Basic HSE and Introduction to FORUS training
has been updated and rolled out into the organisation.
This started by training trainers to present the training
with the latest methods of retention of knowledge
so that employees and contractors retain and apply
knowledge and concepts learnt.
→
Modules for Life Saving Rules are in development and
are being rolled out into the organisation.
Contractor health and safety on site
Elkem extends its zero-harm philosophy to all contractors
working on-site, ensuring they adhere to the same health
and safety standards as Elkem employees. Contractor
companies undergo screening before being contracted,
and their employees receive dedicated HSE training from
Elkem before commencing work at Elkem plants. The
four fatalities among Elkem’s contractors underscores
the importance of continually training both Elkem's own
employees and contracted personnel.
Many of the total contractor hours worked within Elkem
in 2023 were related to the upgrade projects within
the Silicones Division. Even though there were many
training hours concluded and much on site follow up,
the performance was still not as required. The Division
implemented a review of the work and improvements
were implemented which assisted with the improvement
in contractor performance in the second half of 2023. This
work will be continued in 2024, while we bring these large
projects to the startup phase.
Elkem's appeal as an employer is built on a robust and
empowering company culture, equitable treatment of all
employees, and a secure, inclusive, and motivating workplace.
Ongoing organisational development supporting the strategy
implementation, systematic competency development
and performance management are vital for the company's
sustained growth. Elkem is dedicated to empowering
individuals in their respective roles through involvement,
respect, continuous improvement, and precision.
People and organisation
Key takeaways
→
Elkem introduced a new global Learning
Management System in 2023, and this will
improve the training of all employees.
→
Elkem saw the turnover rate reduce from
6% to 4,5% in 2023.
→
Elkem offers leadership development for first-
level, mid-level, and senior-level leaders. The
development programmes are adapted to the
different managerial levels.
Targets
→
100% of employees have an annual
development discussion
→
100% of the mandatory training is completed
by the assigned target group
Key risks
×
Ability to attract necessary resources – both the
necessary competencies and capacity – in the
remote locations of the Elkem plants, often far
away from education institutes etc.
×
Ability to retain a diverse workforce by offering
continuous competency- and career development
×
Lack of development opportunities and follow-
up may result in demotivated employees and a
high turnover rate
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, who are willing
to relocate on short or long term assignments
→
Systematic investment in development of
leaders at all levels in the organisation offer
an opportunity to further enhance employee
performance and motivation globally
→
Focus on increasing diversity and retaining
diverse workforce contributes to improved
performance and well-being of the employees
and teams.
Total employees*
Europe
Asia
America
Africa
Turnover rate
Female share of new hires
Female share of leavers
Blue collar / operators
White collar / staff
Total contractors**
Europe
Asia
America
Africa
Temporary hire rate (%) to permanent employment
Part time workers rate (%) to permanent employment
Development discussions
Metric
Number
Number
Number
Number
Number
%
%
%
%
%
FTE
Number
Number
Number
Number
%
%
%
2021
7 074
2 898
3 433
716
27
8%
27%
23%
55%
45%
433
159
238
36
0
7%
6%
78%
2022
7 372
2 953
3 632
758
28
6%
26%
27%
59%
41%
331
125
171
35
0
5%
1%
89%
2023
7 534
2 925
3 643
957
9
4.5%
30%
29%
55%
45%
283
96
160
27
0
5.5%
3.9%
78%
Development
2022 to 2023
2.2%
-0.9%
0.3%
26.3%
-67.9%
-25.0%
15.4%
7.4%
-6.8%
9.8%
-14.5%
-23.2%
-6.4%
-22.9%
No change
10.0%
290.0%
-12.4%
KPIs
*Total employees are calculated using total headcount
**Total contractors are calculated using FTEs
The colour indicates a positive or negative development year on year.
→
People policy
→
HSE policy
→
Elkem Business System (EBS)
Elkem’s corporate policies
↗
Policies
Key KPIs
Total employees
7 534
Temporary hire rate/part time workers rate
5.5%
Female share
25%
Elkem values its people as the most critical and
appreciating asset. The human resource strategy,
optimisation of the organisational structure, and ongoing
investment in employee development drive and enable
business strategy implementation. Key elements include
leadership development, reinforcing culture fundamentals
and the Elkem Way, ensuring critical competencies, and
investing in individual employee growth and well-being,
thus ensuring continuous high engagement levels. Elkem
provides a diverse internal training program, continuously
refining and evaluating it. The adoption of digital channels
facilitates swift and widespread competency development.
Leadership development
Elkem offers three standardised global leadership
development programs for first-level, mid-level, and
senior-level leaders. The first-level program, Leadership
Essentials, targets middle management, team leaders,
shift leaders, and those with personnel responsibility,
aiming to foster a unified Elkem culture aligned with the
company's purpose, values, and mission.
The mid-level program, Elkem Leadership, is a one-year
extensive program for high potentials and senior leaders,
featuring five modules, interdisciplinary team projects,
individual coaching, and evaluations. Participants are
selected globally by Elkem's corporate management.
For the most senior leaders who have completed
the Elkem Leadership program, as well as division
management and leaders of other leaders, Elkem offers
the Elkem Excellence Program at the third leadership level.
Competency development
Competency Development at Elkem is offered locally at
plants and units, as well as at the division level and the
corporate global level. The offering is facilitated through the
company intranet's Learn-pages, where both mandatory
and all other internal training courses are accessible. The
mandatory training includes HSE, Compliance, IT Security,
and other elements reviewed and prioritised annually to
equip the organisation with necessary competencies in the
current business environment.
Additionally, Elkem provides a range of optional training
categories such as Elkem Business system, Digitalisation,
Innovation, IP, Legal and leadership development as well
as interpersonal and communication skills. The global
on-boarding program for all employees is standardised.
Elkem encourages employees to take ownership of
their learning by ensuring easy access and widespread
availability of courses, fostering continuous growth and
development. A global Learning Management System was
implemented in 2023 to facilitate this.
Development discussion (DD)
At Elkem, the Development Discussion (DD) is a key
process where employees discuss and agree on their
annual targets with their leaders, identifying the necessary
development initiatives, support and resources needed
for successful and high performance. The discussion also
includes a mutual feedback discussion, also with the aim
to support the development of both the employee and the
leader. All employees are expected to contribute to a culture
of continuous improvement and innovation, facilitated
by regular constructive feedback on performance and
contributions to the working environment.
Formal and informal channels, including the DD, are used
for this purpose. Elkem fosters an environment where
employees are encouraged to take on new challenges and
responsibilities, work in cross-functional improvement
teams and be willing to re-locate and be mobile.
Elkem aims for 100% of employees worldwide to engage
in an annual development discussion with their leaders. In
2023, 78% of Elkem employees had their DD.
People policy and survey
Elkem’s global People Policy establish the principles related
to the management of people in Elkem, and define the roles
and responsibilities across the organisation.
The purpose is to ensure that business units within
Elkem adhere to standardised group HR procedures. HR
representatives have an obligation to handle employment
matters consistently supporting the employees throughout
their employment lifecycle with Elkem. The policy outlines
the high-level principles and commitments required to
achieve that consistency and it is supported by detailed
global or local procedures and guidelines.
In 2024 , Elkem will conduct its second global employee
engagement survey.
Elkem Business System (EBS) –
our common culture
EBS, Elkem's business system and leadership
philosophy, unifies our culture, language, and continuous
improvement methods. Rooted in our values—respect,
involvement, precision, and continuous improvement—
EBS fosters operational excellence in all parts of the
value chain. Central to EBS is the commitment to involve
all employees in improvement work, empowering them
as experts in their areas of responsibility. Elkem values
delegated decision-making, considering it a strength and
integral to our business culture.
People and organisation (Own workforce)
The EBS principle of empowering people underpins
Elkem's stance on labor rights and employee involvement.
Efficiency in the product value chain is sought through
the people value chain. Elkem employs a team-based
structure with orderly working conditions, offering diverse
opportunities for personal development.
Establishing a shared language and culture is a gradual
process. When Elkem expands or acquires new entities,
priority is given to implementing HSE and EBS standards
and systems. Some sites are in the early stages, while
others have made significant progress.
EBS assessments, conducted biannually by a
corporate team, evaluate site progression, involvement,
and improvements. Topics cover daily operations,
systematic improvements, and leadership commitment
to continuous improvement. Elkem's global expansion,
demonstrates successful EBS implementation
despite cultural differences. Critical position planning,
competency development of employees, and
assessments identify gaps and improvement areas
for ongoing organisational development.
Flexibility and work-life balance
To achieve Elkem's overarching goals, fostering an
organizational culture of participation, physical meetings
and teamwork, and empowerment is crucial. Elkem is
committed to offering flexibility in working hours and
location in line with local laws, accommodating employee
requests while contributing to increased efficiency
and without hindering the performance of job tasks.
The working terms shall enable employees to balance
work and family life. Recognising the positive impact
on motivation, performance, and productivity, Elkem
supports employees in achieving a better work-life
balance and managing their priorities effectively.
Turnover
Elkem aims to retain and attract employees, gauging its
attractiveness through turnover rates. In 2023, the group's
total turnover decreased to 4.5% from 6% in 2022.
Contractors and temporary hires
All Elkem employees, including contractors and temporary
hires, must have written employment documentation
complying with local laws. While Elkem primarily offers
permanent employment, during peak times, contracted
or temporary work may be considered for specific
projects. Fair compensation and priority rights to potential
permanent roles are ensured for temporary workers.
Contractors adhere to the same HSE requirements as
Elkem employees, receiving full training for a safe and
healthy work environment. In 2023, Elkem had contracted
employees equal to 283 FTEs. These contractors work
with core activities (e.g. production processes). Elkem saw
a decrease of 14.5% in use of contractors, while the hours
worked increased significantly. This is because contracted
hours include maintenance and construction related to a
large expansion of the operations at Xinghuo.
Changes to the organisation
Elkem's workforce needs can fluctuate for various reasons,
leading to potential increases or decreases. In the event
of downsizing the organisation, the process adheres to
relevant local laws and agreements. The management
engages employees and their representatives early in a
transparent and constructive manner, and leaders in Elkem
are equipped with competency and understanding of the
importance of change management as a vital component
of organisational change processes. In connection with
expansion, M&As etc. Elkem set up integration project
teams to ensure a professional, compliant and smooth
integration of new entities to Elkem.
World class
quality products
require world
class performers
Products
People
Figure: The double value chain
Key takeaways
→
Decision to implement new supplier
management (SRM) system will address
main weakness in managing supply chain
human rights risks
→
Integrated labour rights, working conditions,
anti-discrimination, diversity, equality, and
inclusion as topics in internal HR audit template
→
Reached agreement with local stakeholders
on mitigating measures to ensure sustainable
coexistence with expanded mining operations
in Tana, Norway
Targets
→
Make human rights eLearning mandatory
for key employee target groups
→
Further strengthen framework for human
rights due diligence in the supply chain
through new supplier management platform
Key opportunities
→
New SRM will enable risk-based targeting
of suppliers for enhanced qualification
and follow-up
→
Solid human rights program builds
stakeholder trust and secures Elkem’s
position as a preferred supplier to
strategic customers
Key risks
×
Risk of unsafe, hazardous work environment
and safety concerns related to Elkem’s own
production and processes or our supply chain
×
Risk of unfavourable 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
Elkem advocates for fair working conditions and upholds
human rights throughout our operations and value chains.
We recognise the responsibility of businesses to respect
human rights and remain dedicated 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 applicable local legislations in the countries
where we operate. Our commitment aligns with the United
Nations Guiding Principles on Business and Human Rights.
Human and labour rights
→
Code of conduct
→
Code of conduct for business partners
→
Human rights program
→
People policy
Elkem’s corporate policies
↗
Policies
Framework for managing human rights risks
Elkem’s operations, business activities, organisation
structure and supply chain are described in more detail
in the Our business chapter. As an international company
operating globally, as both a producer and buyer, Elkem
acknowledges the risk of potential involvement in human
rights violations due to our expansive footprint. We are
committed to prevent adverse human rights impacts across
our operations. This commitment is outlined in our board-
approved code of conduct, further detailed in our Human
Rights program, and operationalised in function-specific
policies and procedures. Our expectations for partners are
defined in our business partner code of conduct.
Respecting human rights requires understanding what
human rights are and how our business activities may impact
them. In 2023, our training efforts were relatively narrowly
targeted towards our raw materials sourcing teams. To
further raise awareness in the wider organisation, we have
developed an eLearning course. Due to changes in our global
learning management platform the roll-out of this training to
broader target groups was postponed from 2023 to 2024.
Despite our focus on employee representation and
strong HSE practices, challenges arise in ensuring full
transparency within our complex supply chain, especially in
regions with human rights concerns. We recognise the need
to address and mitigate human rights risks within our value
chains. While we cannot solve all every issue independently,
our commitment involves continuous efforts to strengthen
our human rights framework.
Human rights risk assessment
In 2022, Elkem engaged independent third-party advisors
to conduct a human rights risk assessment. The final report
was issued in January 2023. It concluded that Elkem has
high inherent risk of adversely affecting human rights due to
the company’s nature of operations, geographic presence,
and size / complexity of supply chain. It was noted that
Elkem has good systems and processes in place to manage
risk of adverse impacts of our own operations. The main
observed gap was the lack of a global supplier management
system, which reduces our ability to work risk based and
systematically address human rights risks in our supply
chain. The advisors also noted that Elkem could benefit from
more systematic training and awareness efforts.
Key KPIs
Employees covered by collective
bargaining agreements, %
35%
Reported confirmed cases of
child or forced labour, number
0
Number of cases reported through
grievance mechanism, number
1
Human and labour rights
This third-party risk assessment is considered a starting
point for improved human rights management in Elkem. An
action plan was developed by the Human rights working
group and approved by the ESG Steering Committee to
address the findings. Implementation will require efforts by
the line organisation as well as several supporting functions
including Compliance, HR, HSE, and Supply chain. Progress
on the action plan is reported to the ESG steering committee.
Safeguarding human and labour rights in our
own operations
Elkem’s most salient human rights risks are the impacts
of our own operations have on employees and other
personnel working on our sites. In 2023, Elkem did not
record any confirmed incidents where the company
caused or contributed to adverse human rights impacts
from our own operations.
Forced labour and child labour
There were no incidents of forced labour or child labour
reported in Elkem in 2023. Our people policy and
business partner code of conduct safeguard vulnerable
stakeholders, setting a minimum working age of 18 with
limited exceptions for specific circumstances. Elkem strictly
adheres to local law, ensuring all employees have proper
documentation, insurance, and correct tax payments.
Health and safety on Elkem’s sites
HSE rules and training apply universally to Elkem employees
and contractors, with all incidents and follow-ups inclusive
of contractors. High-risk work areas undergo rigorous
compliance measures, including routine HSE audits. Despite
these efforts, there were four fatalities among contractors
working on Elkem sites in 2023. These tragic incidents
underscore the importance of HSE always being our top
priority, including our responsibility for disseminating good
HSE practices in our supply chain. The accidents have been
investigated and initiatives have been launched to address
the root causes and prevent future accidents. More details
are provided in the section on HSE on site.
Freedom of association and collective bargaining
Elkem upholds the right of all employees to form and
join trade unions of their choice. We foster a tradition of
inclusion and collaboration, and believe that a robust,
ongoing, and positive dialogue between employees and
management enhances our decision-making. As per the
Norwegian Companies Act, Elkem includes three employee
representatives on its board. Additionally, Elkem has a
European Works Council (EWC) that aligns with the EU
Directive 2009/38/EC.
We explicitly acknowledge and respect the freedom
of association and the right to collective bargaining in
alignment with local and national legislation and practices.
In regions where local laws, practices, or traditions may
not fully support these rights, Elkem actively promotes
alternative channels and forums. These avenues empower
employees to stay informed about the company, voice
concerns, and exert influence on decisions affecting them.
In 2023, 35% of Elkem's global workforce benefited from
collective bargaining agreements, primarily in Norway and
other countries. The generalisation of these agreements
ensures that all eligible employees receive equitable
pay and fair working conditions. This approach protects
against disparities and promotes fairness, especially for
foreign workers.
Trade union coverage varies worldwide, with some
countries operating under a single collective bargaining
agreement. In locations without formal unions, Elkem
encourages local management to establish collaboration
channels, leveraging the EBS tools and culture to involve
employees in decisions. For non-union members and
groups not covered by agreements, Elkem determines
conditions based on existing agreements to ensure equality.
Labour rights and decent working conditions
The HR function collaborates with local management
to comply with local laws and safeguard labour rights.
The chapters Human rights Responsible value
chain management, and Responsible economic
practices have been developed to comply with
the legal requirements to report / produce and
annual statement as stated in the Forced Labour in
Canadian Supply Chains Act (2023), the Norwegian
Transparency Act (2021), and the UK Modern
Slavery Act (2015).
The reporting requirements apply to Elkem as an
enterprise resident in Norway with total assets
of more than NOK 35 million combined with, on
average, more than 50 full time employees, a
supplier of goods with a total turnover of GBP 36
million or more in the UK, and as an entity engaged
in producing, selling or distributing goods in
Canada having with $20 million or more in assets,
$40 million or more in revenue, and / or an average
of 250 or more employees.
The information is valid for Elkem ASA and its
consolidated subsidiaries.
The statement is approved and signed by the Board
of Directors of the parent company Elkem ASA as
part of their approval of the annual ESG report.
Working hours conform to local laws or agreements, with
adjustments made, when necessary, to prioritise rest
intervals and align with our guiding principles.
Elkem ensures comprehensive support for employees'
well-being, covering medical treatment for work-related
sickness or injury. In cases of work-related disablement or
death, insurance payments and pensions are provided to
employees or their immediate surviving family members.
Furthermore, Elkem safeguards employees from dismissal
due to pregnancy or new-born child responsibilities in
accordance with local customs and laws.
In 2023, the template for internal HR audits was updated
to include additional questions on labour rights, working
conditions, anti-discrimination, diversity, equality, and
inclusion. Countries with inherent high risk as identified
in the human rights risk assessment were prioritised
for internal HR audits. No major con-conformities were
discovered, but improvement areas are addressed by local
management with support from the global HR organisation.
Minimising adverse impacts on
external stakeholders
Elkem’s operations directly affect people and the
environment around our plants. In 2023, we codified
our ambitions within energy management, biodiversity
stewardship, water-, resource- and waste management in a
new Sustainability policy. Our efforts to safeguard the local
environment is further described in the HSE chapter.
Elkem source materials, goods, and services from
thousands of suppliers and service providers globally and is
therefore at risk of being directly linked to adverse human
rights impacts on workers in our supply chain.
Responsible supply chain management
The risk of forced labour and unsatisfactory working
conditions for workers in Elkem’s supply chain is considered
high, especially for certain raw materials. Mitigating
measures such as integrity due diligence of intermediaries
and producers, audits, and on-site visits for critical raw
material suppliers are already in place. However, the human
rights risk assessment identified variable practices in our
supply chain management processes. The introduction of
a new supplier relationship management (SRM) system
is planned for 2024. This global platform will improve our
ability to identify human rights risk, prioritise areas of
high impact, and conduct systematic risk-based supplier
qualification and follow-up. More information is provided in
the chapter Responsible sourcing practices.
Stakeholder dialogue
Elkem aims to provide safe and stable job opportunities as
well as contribute to the economic and human development
of our employees and the communities in which we operate.
Local stakeholder dialogue and the nature of community
involvement differ from site to site to cater for historical
and local needs and differences. Several Elkem plants have
implemented local initiatives and support programmes,
including initiatives for better education and local
infrastructure, sports activities, local community poverty
reduction and food support, healthcare, and other social
impact initiatives.
Bigger changes to Elkem operations require more extensive
stakeholder dialogue. The most recent example is the long
and demanding negotiations with reindeer grazing district
7 (Rákkonjárga) in Tana, Norway. The expansion of one of
the world’s largest quartzite mines will secure access to
a key source of raw materials for the green transition. But
the expansion will impact local reindeer herding activities,
and the parties have come to an agreement on mitigating
measures to ensure sustainable coexistence.
Grievance mechanisms
Elkem's grievance mechanism, accessible on the company’s
website, is designed for stakeholders providing feedback
or expressing concerns about our global operations. The
ESG Office manages confidentially received concerns,
engaging relevant parts of the organisation for resolution.
Elkem also has a secure speak-up channel for both internal
and external parties, detailed in the chapter on responsible
business practices.
Employees covered by collective bargaining agreements
Reported confirmed cases of child or forced labour
Number of cases reported through the grievance
mechanism
Metric
%
Number
2022
40%
0
6
2021
39%
0
2
2023
35%
0
1
Comment
All cases reported
were resolved
KPIs
Key takeaways
→
Elkem has conducted its first global employee
engagement survey, resulting in high
engagement score, 5% point higher than global
industry benchmark. On the DEI dimension
84% of employees responded positively,
matching the manufacturing benchmark.
→
DEI has been included in all leadership training
offering in Elkem, both first line-, middle- and
senior management levels.
→
DEI Awareness workshops have been
organised at the corporate and the division
management levels
→
Elkem Iceland received in 2023 a Gender
Equality Initiative award for its outstanding
contribution towards gender parity in
leadership positions.
Targets
→
Expand the DEI awareness training for both
leaders and employees globally
→
Develop & implement DEI training
for recruitment, promotion and talent
management purposes
→
Continue to focus on diversity in connection
with hiring and internal promotions
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
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,
motivation and engagement
At Elkem, we consider our people our greatest and
appreciating asset. The amalgamation of individual
differences is not only integral to our culture but
also defines our reputation and achievements. Our
commitment to equal opportunities, diversity, and an
inclusive company culture reflects our goal to enhance
customer centricity, cultural awareness, compliance,
and innovation.
Diversity, equality and
inclusion (DEI)
Key KPIs
Female share in company
25%
Female share in management
24%
Female share in trainee program
31%
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)
Age distribution, employees
< 30 years
30-50 years
>50 years
Age distribution, management teams
< 30 years
30-50 years
>50 years
Salary: CEO to median employee (NOR) wage
Metric
%
%
%
%
%
%
%
%
%
Weeks
Weeks
%
%
%
%
%
%
Ratio
2021
25%
30%
N/A
24%
43%
45%
29%
36%
17%
38
16
16%
56%
28%
6%
60%
34%
7:1
2022
25%
30%
36%
22%
38%
31%
25%
35%
17%
38.3
17.5
16%
56%
28%
3%
59%
38%
10:1
2023
25%
24%
32%
25%
31%
42%
27%
32%
14%
37
21
17%
53%
30%
2%
56%
42%
11:1
Development
2022 to 2023
No change
-20.0%
-11.1%
13.6%
-18.4%
35.5%
8.0%
-8.6%
-17.6%
-3.4%
20.0%
6.3%
-5.4%
7.1%
-33.3%
-5.1%
10.5%
10.0%
KPIs
The colour indicates a positive or negative development year on year.
→
Code of conduct
→
Speak up policy
→
People policy
Elkem’s corporate policies
↗
Policies
Cultural diversity
Elkem boasts a strong multicultural workforce, measured
by the distribution of employees belonging to nationalities
outside the country in which they work. In Norway, we have
38 nationalities represented at our locations. Going forward,
Elkem remains committed to evaluating diversity needs
and attracting cultural diversity. Our workforce comprises
individuals from 65 different nationalities, with Chinese,
Norwegian, French, American, Icelandic, and Spanish being
the largest groups.
Age diversity
Within our workforce, 17% are under 30 years old (16%
in 2022), 53% fall between 30 and 50 (2022: 56%), and
30% are above 50 (2022: 28%). In management, 56% of
leaders (2022: 59%) belong to the 30-50 age category.
Elkem actively monitors our age structure, undertaking
systematic efforts to foster knowledge transfer and skill
development from senior to less experienced employees.
In many Elkem plants and units the company actively
engages in supporting the education of young people by
offering apprentice-placements, trainee-programs and
special programs for young people to support inclusion.
Gender diversity
Elkem maintains a stable gender diversity ratio, with
female employees constituting 25% (2022: 25%) and
males 75% (2022: 75%) of the workforce. Globally, female
representation in management teams stands at 24% (2022:
30%), and among leaders with personnel responsibility, it
is 25% (2022: 23%). There are fluctuations in the different
categories of female share in Elkem, and this is to be
expected given our total share of 25% women. Our ongoing
initiatives aim to enhance female representation through
recruitment, retention, and promotion processes.
We recognise that a diverse, equitable, and inclusive
workplace is vital for business success, fostering varied
perspectives essential for excellence in research,
innovation, and continuous learning. Elkem is committed
to long-term Diversity, Equity, and Inclusion (DEI) efforts,
aiming to strengthen awareness and reinforce core
behaviours aligned with our values.
Leadership
Our firm conviction lies in the paramount importance
of leadership commitment and accountability. How our
leaders communicate, interact, and shape the workplace
culture significantly influences diversity and inclusivity.
Leaders' vision, communication, decision-making,
and the trust they build are pivotal. Elkem's leadership
development programs prioritise equipping leaders with
essential people skills to engage and empower their teams.
Deliberately intertwined with the thread of Diversity, Equity,
and Inclusion (DEI), these programs cover modules such
as Inclusive Leadership, Unconscious Bias, Psychological
Safety, Managing Self, and Managing Teams.
Board and management
Elkem's board comprises 11 members from China,
France, and Norway, with a 36% (2022: 36%) female
representation. Among the ten-member corporate
management team, 10% (2022: 10%) are female. The age
distribution shows one member in the 30-50 age group,
while the majority is 51 or older.
The road ahead
Diversity, Equality and Inclusion (DEI) are key pillars in
our Corporate Human Resources Strategy, People Policy,
underlying HR procedures and the Code of Conduct.
The fundament of the way we work and interact in
Elkem is the Elkem Business System (EBS). Our values
and leadership principles are founded in EBS and our
commitment to continuous improvement is dependent on
empowered and motivated people. Employees use their
skills and competency in improvement teams to measure
gaps and follow up on risks.
We have implemented a global Learning Management
System (LMS) in order to ensure equality by increasing
accessibility of learning and development opportunities
for all employees, regardless of their geographical work
location or their position level.
To work more strategically with DEI, we have taken a
holistic approach, by first analysing and amending all
the processes and procedures we currently have in
place through a DEI lens. We reviewed and re-designed
our HR People policy, procedures and supplementary
material, ensuring equal opportunities for all as well as
committing to equity as an organisation. Our focus has
been on wellbeing, flexibility and fairness in the workplace.
Dedicated DEI workshops have increased awareness and
competency on DEI, both at the corporate and the division
management levels.
All of our HR related policies and procedures are regularly
reviewed and, where relevant, discussed with the local
employee representatives, who engage in continuously
improving the working conditions, evaluating any
inequalities and identifying any health and safety risk and/
or improvement areas.
We also have a Speak up channel, where employees can
raise any concerns.
Diversity, equality and inclusion (DEI)
162
Environmental
Social
Governance
G
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 company
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.
In this chapter we will introduce the following governance
topics defined as material to Elkem
→
Responsible economic practices
→
Responsible value chain management
→
Product governance, including chemical safety
Introduction
New raw material suppliers subjected to
assessment and pre-qualification
Compliance training
Employees with signed code of conduct
Number of significant fines due to non-compliance
with law or environmental deviations
Key KPIs
2022
100%
31
94%
0
2021
92%
28
96%
0
2023
80%
21
Incomplete data
0
Metric
%
Minutes / employee
%
Number
Key takeaways
→
Elkem assesses risks by identifying high-
risk jurisdictions and vulnerable employee
groups to anti-competitive practices.
They provide updated eLearning based
on their competition law procedure and
offer targeted training for compliance,
conducting ad hoc assessments to
address any identified red flags or gaps.
→
In 2023, Elkem’s new online training
program received positive feedback.
Upgraded in 2022, it now includes
modules on ethics, anti-bribery, corruption,
and antitrust topics. Mandatory for
designated employees, the program is
accessible in multiple languages.
→
All employees and external stakeholders
have access to a secure speak-up channel.
Key risks
×
High risk markets
×
High value investments
×
Government interactions
×
Licenses and permits
×
Business partners
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
Elkem prioritises robust corporate governance for value
creation and trustworthiness, emphasising effective
compliance programs amid increasing regulatory demands.
The company advocates for responsible economic practices,
zero tolerance for corruption, and compliance with anti-
money laundering and antitrust laws, conducting its activities
based on honesty, respect, and ethical standards globally.
Responsible
economic practices
Key KPIs
Compliance training
21 minutes per employee
Total number of misconducts
15 reported cases
Confirmed cases of corruption and fraud
1 case
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 dedicated to delivering relevant and engaging
compliance training. The training program was upgraded
in 2022, introducing new modules covering ethics, anti-
bribery and corruption, and antitrust topics. In 2023 these
modules have been targeted towards new employees to
set clear expectations of ethical employee conduct.
In 2023, Elkem has invested significant resources in
developing a new Code of conduct eLearning course,
accessible in multiple languages. Completion will be
mandatory for office-based employees in 2024, and for
new employees joining the company going forward. This
commitment underscores Elkem's proactive approach
to fostering a culture of compliance and ethical conduct
among its workforce. In the last year, Elkem has both
implemented a new global learning platform and adopted
new software to support in-house development of
compliance training modules for our employees. Use of
these new technologies will enable us to deliver on our
ambition to deliver risk-based and role-specific training to
different groups of employees.
Anti-competitive practices
Elkem is committed to preventing anti-competitive
practices in all operations. Elkem conducts risk
assessments to identify high-risk jurisdictions and
employee groups vulnerable to anti-competitive
practices. Additionally, Elkem offers both recently
updated eLearning based on Elkem’s own competition
law procedure as well as targeted training for competition
law compliance, performing ad hoc assessments to
identify red flags and address any gaps. This proactive
approach underscores Elkem's commitment to upholding
competition law standards throughout its operations.
Elkem has further implemented its dawn raid guidelines
at all major locations globally and conducted specific
training for employees and management.
Anti-Bribery and anti-corruption measures
Elkem maintains a zero-tolerance policy against
corruption. Operating in various jurisdictions, including
high-risk countries, Elkem engages with government
officials for permits and administrative matters. The
company adopts a risk-based approach to compliance,
utilising risk assessments to inform and enhance its
anti-bribery and corruption program. This approach is
consistently applied to all aspects of Elkem's operations,
including market entries and product introductions.
Working with business partners
Elkem recognises that cases involving bribery, human
rights breaches, environmental disasters, and scandals
often implicate business partners, including agents,
consultants, suppliers, joint venture partners, and
distributors. Ensuring high ethical standards in these
partnerships is crucial. Elkem’s screening tools against
sanction lists and our Code of conduct for business
partners have been significantly improved in previous
years, and all stakeholders have access to our speak-up
channel. This year we have started the development of a
new supplier relationship management system that will
develop our risk management and control further.
Responsible economic practices
Speak-up/whistleblowing
Elkem promotes a culture of reporting possible dishonest
or illegal conduct without fear of repercussions. A secure
speak-up channel is in place for employees and external
parties to report misconduct and non-compliance with
Elkem's code of conduct. Available in all Elkem languages,
the channel allows for anonymous reporting via web or
telephone, with clear guidance. Severe matters can be
escalated to management, the audit committee, and the
external auditor. The speak-up channel and policy are
accessible on Elkem's intranet and corporate website,
promoted during employee training, and featured on
posters and handouts at plants and offices. Misconduct
reports are handled by Corporate Compliance in
accordance with relevant legislation, and Elkem has a
zero-tolerance policy against retaliation, with sanctions for
those who engage in it.
Tax strategy
Elkem is dedicated to full compliance with tax laws across
all operating jurisdictions, emphasising transparency and
cooperation with tax authorities. We prioritise adherence
to relevant laws and regulations, maintaining a low-risk
tolerance in tax matters and avoiding aggressive planning.
Our tax approach undergoes annual reviews and is aligned
with the overall risk strategy.
The group tax function, reporting to the CFO, ensures
effective tax governance, collaborating with other functions
to identify and mitigate risks. Elkem manages the primary
tax risk of non-compliance through experienced decision-
making and, when necessary, third-party advisors. 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.
We pursue an open and transparent relationship with
tax authorities, committing to consistent, timely, and
professional dealings. In line with Elkem's transparency
goals, we report country-by-country information for the
entire group, including subsidiaries and joint ventures
where Elkem holds 50% ownership.
Non-compliance
There were no significant instances of non-compliance
with laws and regulations during 2023 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.
Average minutes of compliance training
per employee*
Total number and nature of misconduct
reports
Number of confirmed cases of
corruption** and fraud
Number of confirmed incidents in which
employees were dismissed or disciplined
for corruption**
Public legal cases regarding corruption**
brought against the organisation or
its employees
Confirmed incidents when contracts
with business partners were terminated
or not renewed due to violations related
to corruption**
Employees with confirmed commitment
to the code of conduct
Metric
Minutes /
employee
Number
Number
Number
Number
Number
%
2021
28
13
0
0
0
0
96%
2022
31
14
6
2
0
5
94%
2023
21
15
Company/
professional code
violation: 2
Conflict of interest:
3
Corruption and
fraud: 4
HSE violation: 1
Inappropriate
workplace
behaviour and
harassment: 2
Rights and
protection of
individuals: 1
HR case: 2
1
0
0
0
Incomplete data
KPIs
*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.
Development 2022 to 2023
-32.3%
7.1%
-83.3%
-100.0%
No change
-100.0%
NA
A change in e-training
suppliers, and the move to a
newly developed e-course on
the Code of conduct caused
several delays. This hampered
the compliance training
programme in 2023. This will
be remediated in 2024.
A change in e-training
suppliers, and the move to a
newly developed e-course on
the Code of conduct caused
several delays. This will be
remediated in 2024.
Responsible sourcing is a strategic imperative for Elkem.
With an annual global procurement spend of approximately
NOK 25 billion, encompassing raw materials, energy, goods,
services, and logistics, Elkem actively engages with a diverse
supply base of around 18,000 global suppliers. While the
count of raw material suppliers is relatively low, the spend is
significant and this is an area of sourcing that is connected to
higher risk levels.
Responsible value
chain management
Key takeaways
→
Started implementation of new supplier
management scheme, and new supplier
relationship management system is being
introduced. The new SRM is expected to be
implemented fully by the end of 2024.
→
CDP: Elkem recieved the highest score with
an A on CDP forest
→
Signed new contract with NCL for
environmentally-friendly container vessels
→
Increased biocarbon share to 24%
→
Started production at Elkem’s biocarbon pilot
plant in Canada
→
New water treatment plant in Tana where
water is purified and reused resulting in less
water consumption and no discharge of
contaminated water
→
Contract signed with indigenous peoples to
secure an expanded operating area in Tana
→
Contract signed with Wilson Shipping to build
2-4 environmentally-friendly bulk vessels for
Elkem’s use (contract approval expected early
January. Ellen is checking with Wilson if OK to
include their name)
Targets
→
All new raw material suppliers subject to
assessment and pre-qualification screening
→
All critical suppliers of raw materials subject
to supplier audit
→
All new suppliers to sign Elkem’s code of
conduct for business partners
Key risks
×
ESG-related risk in supply chain
×
Incidents or accidents in Elkem’s supply chain
×
Breach of sanctions in Elkem’s supply chain
Key opportunities
→
Develop new biocarbon products to reduce CO2
fossil emissions
→
New container vessels in operation in 2024 to
reduce CO2 emissions
→
Implementation of Supplier Relationship
Management system “Ivalua”
Share of new raw materials suppliers subjected
to assessment and pre-qualification screening
Share of new raw material suppliers subjected
to supplier audit
Adverse human rights concerns in supply
chain reported
Metric
%
%
Number
2021
92%
19%
1
2022
100%
0
2023
80%
50%
0
Comment
-20%
No change
KPIs
The colour indicates a positive or negative development year on year.
Key KPIs
Share of new raw materials suppliers
subjected to assessment and pre-
qualification screening
80%
Share of critical raw material suppliers
subjected to supplier audit
50%
Adverse human rights concerns
in supply chain reported
0
Policies
Policies
→
Code of conduct for Elkem's
business partners
→
Human rights program
→
HSE policy
Elkem’s corporate policies
↗
Responsible value chain management
Responsible sourcing and the supply chain
Elkem focuses on enhancing supply chain practices.
The decentralised procurement organisation manages
raw materials, logistics, and services across corporate,
divisional, and plant levels. Distinctions are made
between raw materials and indirect material procurement,
considering both as potentially critical. The corporate
procurement council oversees Elkem's global procurement
and logistics strategy, policies, and procedures.
Elkem ensures responsible sourcing through its
procurement policy and associated procedures for supplier
prequalification and management. The biocarbon sourcing
policy underscores Elkem's commitment to sustainable
forest management and the requirements for procuring
bio-based reductants. Supplier contracts enable risk
assessments and audits, aligning with Elkem's code of
conduct for business partners, emphasising ethics, labour
rights, and social and environmental considerations.
Supplier due diligence and screening
The procurement function conducts pre-qualification and
risk assessments based on corporate criteria, including
environment, health and safety, social responsibility,
anti-corruption, and legal compliance. New raw material
suppliers undergo screening against environmental
and social standards, with high-risk suppliers subject to
additional due diligence like integrity assessments.
Elkem is reshaping its responsible sourcing approach
and introducing a new supplier relationship management
(SRM) system. This will develop Elkem’s supply chain risk
management further. This system will streamline screening
processes, unify vetting across divisions and jurisdictions,
monitor compliance throughout the contract lifecycle, and
manage supplier risk. The SRM platform is planned to go
live in the first half of 2024.
Responsible supply chain management
Elkem sets rigorous requirements for high-risk suppliers
and contractors in areas such as health, safety, and
environmental standards. Actively involved in ensuring
safe working conditions, Elkem provides health and
safety training, supplies appropriate personal protective
equipment, and enforces age controls to prevent child
labour. Suppliers and contractors are mandated to offer
fair contracts, inform employees about their rights, and
allow them to organise and bargain collectively where
legally possible. In spite of these requirements and efforts
we unfortunately saw four fatalities among contractors
working on Elkem sites in 2023. This underlines the
importance of Elkem’s focus on HSE in the supply chain,
and Elkem has investigated the accidents and launched
initiatives to prevent such tragedies in the future. For more
on this review the section on HSE on site.
Regular discussions with suppliers reinforce Elkem's
expectations. High-risk suppliers must showcase their
comprehension of legal requirements and operational
hazards, presenting plans to eliminate or control risks while
working for Elkem. Elkem conducts audits during routine
visits and unannounced site inspections, with external
auditors engaged on its behalf. Violations prompt warnings
and requests for improvements, with repeated offenses
leading to swift implementation of improvement plans,
financial penalties, or contract termination.
Elkem spans the entire value chain, starting from quartz
as a raw material and progressing through metallurgical
silicon to specialty silicones. Consequently,
comprehensive product stewardship principles apply
across all production steps. Proactively managing
chemical usage and prioritising environmental and
human health protection are fundamental prerequisites
for Elkem's business operations.
Product governance
including chemical safety
Key takeaways
→
Product governance hierarchy in Elkem is
set up as follows:
→
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
Key risks
×
Accidents causing spills
×
Hazardous substances used in
production processes
×
Non-compliance to chemical regulations
resulting in lost market access
Key opportunities
→
Competitive advantage triggered by the
bio-carbon strategy and the use of
hydroelectric power: low Carbon footprint
and EPD of our products
Key KPIs
Number of spilles of hazardous substances
2022
0
2021
0
2023
1
Elkem adheres to various rules and regulations for
its products, including safety data sheets, transport
regulations, and REACH registrations. Product compliance
ensures fulfillment of legal requirements. Beyond this,
Elkem embraces product stewardship as an integrated
business process, managing health, safety, environmental,
and regulatory risks in the best interest of society. Above
product stewardship is product governance, establishing
policies for Elkem's products, covering ethical obligations,
animal testing, emerging technologies, raw material
sustainability, biodiversity, and CO2 emission reduction
targets. This chapter outlines key aspects of Elkem's
product governance.
Renewable raw materials and
biobased products
Biocarbon serves as a strategic raw material for
Elkem's sustainable silicon and ferrosilicon production,
encompassing wood chips, charcoal, and biocarbon
agglomerates. Elkem is dedicated to ethical and
sustainable raw material sourcing, adhering to
internationally recognised principles and standards
such as FSC (Forest Stewardship Council) and
PEFC (Programme for the Endorsement of Forest
Certification). Elkem's sourcing contracts and corporate
standards align with the highest levels of sustainability
and responsible sourcing for natural raw materials.
Mining activities and biodiversity
Elkem is committed to excluding protected areas from
its mining operations, closely coordinating with national
mining authorities. As quartz, the primary raw material, is
abundant, Elkem sources exclusively from non-protected
areas. Environmental risk assessments are integral to
mining permit applications, involving consultations with
biodiversity experts. Throughout mining operations,
emissions are monitored, and audits by national mining
authorities ensure compliance. Elkem allocates annual
provisions for mine restoration post-activity. Recognised
in Spain for sustainable practices, Elkem aligns with IMA-
Europe's sustainability charter for biodiversity and the
environment. Committed to responsible mineral sourcing,
Elkem actively avoids conflicts with human rights abuses
and environmental degradation. Elkem is a member of
the Towards Sustainable Mining Initiative through its
membership in Norsk Bergindustri.
Transport safety
International regulations, including UN Transport
Regulations and IMO standards, govern the transport
of hazardous goods, establishing standards for packed
material (IMDG), solid bulk cargoes (IMSBC), and bulk
liquids (IBC). Professional transport companies handle
all transportation, adhering to these regulations. At plant
sites, hazardous goods are transported by truck, with
rigorous procedures ensuring safe transport, including
loading, unloading, and handling. Standard routines
involve checklists for vehicle and equipment conditions,
speed, and alcohol control. Plant sites are ISPS ports
with restricted access, and all personnel undergo safety
training, while transport companies engage in safety drills
with the plant's fire brigade.
→
Product stewardship policy
→
HSE policy
Elkem’s corporate policies
↗
Policies
Product governance including chemical safety
Hazardous substances management
Elkem prioritises assessing safer alternatives for
hazardous substances, promoting their substitution and
reduction. The company systematically reviews options to
mitigate identified risks, including potential substitution,
phasing out substances posing unacceptable risks to
human health or the environment, and limiting exposure
to SVHC substances when substitution is not possible.
This assessment of alternative solutions for hazardous
chemicals is implemented consistently across all Elkem
laboratories and plants.
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 REACH legislation mandates suppliers to inform
European downstream users about SVHC substances
exceeding 0.1 % (w/w). Elkem consistently monitors
its product portfolio for SVHC substances, reviewing
management plans regularly to define specific risks.
The company explores various options to mitigate risks,
including substitution, phasing-out, or exposure limitation.
In addition to adhering to chemical production regulations,
the Silicones division is a signatory of the Responsible
Care Global Charter by ICCA. Through Responsible Care,
Elkem commits to improving performance, engaging
with stakeholders, and extending responsible practices
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.
In 2023, Elkem’s Santa Perpetua plant faced a sewage leak
from a defective setup, resulting in approximately 6 m³ of
cyclics, mainly D4, escaping into the public sewer. A crisis
management team acted swiftly, and authorities were
notified. Fortunately, no irregularities were detected in the
wastewater system. Elkem will conduct a thorough review,
and local authorities will oversee remediation efforts.
Product safety program:
Elkem ensures product safety through two key pillars:
1.
Chemical safety assessments align with operative
chemical legislation.
2.
Mandatory safety data sheets (SDS) serve as hazard
communication tools for safe product handling by
customers and employees.
The product stewardship team provides expertise for
key end-markets from the initial stages of product
development, ensuring compliance with the correct
regulatory context.
Elkem's management upholds a zero-harm policy,
enforcing detailed standard operating procedures (SOP),
mandatory familiarization with safety data sheets, and safe
job analyses. Formal requirements are stored in databases
like Inosa, ensuring traceability. Incident investigation
and corrective actions follow corporate HSE standards,
supported by the Synergi software tool. Auditing, a
crucial element of Elkem's safety program, encompasses
suppliers, contractors, and internal audits, aligning with
Elkem's ISO 9001 and ISO 14001 certifications.
There were no material incidents of non-compliance
concerning the health and safety impacts of products
and services, to Elkem's knowledge in 2023.
Chemical Safety
Elkem ensures compliance with various chemical product
regulations, covering registrations, autorisations, safety
data sheets, and labels. Specific industry regulations are
followed, especially for products in contact with food,
water, or healthcare applications.
With over 4,000 diverse products, regulatory and product
compliance is a priority. The Silicones division employs
a document management system for easy access to
compliance, certificates, and regulatory statements.
Elkem globally complies with regulatory requirements,
providing safety data sheets (SDS) following the UN
Globally Hamonised System. Products must meet specific
technical, regulatory, health, and environmental standards
in all markets.
Elkem engages in regional and international trade
associations to anticipate and understand emerging
regulations and standards impacting its industry. Key
events in chemical safety for 2022 include:
→
Elkem Silicones is actively working on its REACH
Turkey (KKDIK regulation) obligations to meet the
registration deadline (postponed to 2026-2028)
→
Elkem Silicones to finish its review of REACH dossier
→
Elkem Silicones is actively working to meet the EU
Poison Center Notifications (PCN) requirements for
industrial uses. 2024 is the transition period.
Animal testing policy
Elkem commits to avoiding animal testing, except when
legally mandated. Toxicology studies on vertebrate
animals conducted by Elkem Silicones are validated
and centrally coordinated by an Elkem toxicologist.
This central coordination ensures comprehensive
data awareness for the product stewardship team,
supporting product safety and meeting global regulatory
requirements. All studies strictly adhere to European
cosmetic regulations.
Policy on emerging technologies
Elkem acknowledges risks tied to emerging technologies
and abstains from using GMOs or engaging in stem
cell and genetic engineering research. While avoiding
these areas, Elkem employs nanoforms of existing
products, essential for sustainable constructions (Elkem
Microsilica®) and battery technology (silicon). The
company is dedicated to assessing and mitigating risks
associated with nanoparticles, adhering to national
occupational hygiene legislation. Nanoforms undergo
specific chemical safety assessments under European
REACH legislation to ensure safe use.
Elkem's evaluation of new products, including nanoforms,
follows internal procedures facilitated by the corporate
product stewardship team. As of Elkem's knowledge,
there have been no material incidents of non-compliance
concerning the health and safety impacts of its products
and services.
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, 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
To the Board of Directors of Elkem ASA
Independent statement regarding Elkem ASA’s sustainability reporting
We have undertaken a limited assurance engagement in respect of Elkem ASA’s GRI Index for 2023 and
defined key performance indicators for sustainability (sustainability reporting) for the year ending 31 December
2023.
●
Elkem's GRI Index for 2023 is an overview of which sustainability topics Elkem considers material to
its business, together with a reference to where material sustainability information is reported. Elkem’s
GRI Index for 2023 is available at https://www.elkem.com/sustainability/esg-reporting/. We have
examined whether Elkem has developed a GRI Index for 2023 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 2023. 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 (below the relevant KPI table)
(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 2023 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 109 and 113)
o
"Local emissions to air" (see KPIs presented on page 130)
o
“Biodiversity” (see KPIs presented on page 117)
o
“Water management" (
see KPIs presented on page 121)
o
"Waste management and circularity" (see KPIs presented on page 125)
o
“Health and safety on site” (see KPIs presented on page
147)
o
“Environmental due diligence in the supply chain” (see first KPI presented on page 1
71)
o
“Social
due diligence in the supply chain” (see first KPI presented on page 1
71)
o
“Responsible economic practices, including anti
-
corruption and tax strategy” (see first four
KPIs presented on page 169)
o
“Supplying the green transition” (see KPIs presented on page
134)
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. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation of a GRI Index and key performance indicators for
sustainability that are free from material misstatements, whether due to fraud or error.
GHG quantification is subject to inherent uncertainty because of incomplete scientific knowledge used to
determine emissions factors and the values needed to combine emissions to different gases.
Our Independence and Quality Management
We have complied with the independence and other ethical requirements as required by relevant laws and
regulations and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code),
which is founded on fundamental principles of integrity, objectivity, professional competence and due
care, confidentiality and professional behaviour
.
We apply the International Standard on Quality Management (ISQM) 1,
Quality Management for Firms that
Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements,
and accordingly, maintain a comprehensive system of quality control including documented policies and
2 / 2
procedures regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
Our 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 limited assurance
engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 revised
–
«Assurance Engagements other than Audits or Reviews of Historical Financial Information» and,in respect of
greenhouse gas emissions, ISAE 3410 -
“Assurance Engagements on Greenhouse Gas Statements”, issued
by the International Auditing and Assurance Standards Board. These standards require that we plan and
perform this engagement to obtain limited assurance about whether the sustainability reporting is free from
material misstatement. A limited assurance engagement in accordance with ISAE 3000 and ISAE 3410
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 judgment 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, based on an assessment of the risk of error,
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.
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 Subject Matter Information 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 2023 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,
calculated, estimated and
reported in accordance with the definitions and explanations provided in relation to the key
performance indicators.
Oslo, 12 March 2024
PricewaterhouseCoopers AS
Anders Ellefsen
State Authorised Public Accountant (Norway)
Financial
statements
Table
of contents
Financial statements
Consolidated statement of profit or loss
184
Consolidated statement of comprehensive income
185
Consolidated statement of financial position
186
Consolidated statement of cash flows
187
Consolidated statement of changes in equity
188
General information
Note 1
General information
190
Note 2
Basis for preparing the consolidated financial statements
190
Note 3
Accounting estimates
192
Group structure
Note 4
Composition of the group
192
Note 5
Equity accounted investments and joint operations
199
Information about statement of profit or loss
Note 6
Operating segments
203
Note 7
Revenue
209
Note 8
Other operating income
211
Note 9
Employee benefits
212
Note 10 Share-based payments
218
Note 11
Other operating expenses
220
Note 12 Other items
221
Note 13
Finance income and expenses
222
Note 14 Taxes
223
Information about statement of financial position
Note 15
Property, plant and equipment
228
Note 16 Leases
231
Note 17
Other intangible assets
233
Note 18 Goodwill
236
Note 19 Impairment assessments
237
Note 20 Inventories
242
Note 21 Trade receivables
243
Note 22 Other assets
245
Note 23 Interest-bearing assets and liabilities
246
Note 24 Provisions and other liabilities
251
Note 25 Financial assets and liabilities
253
Note 26 Hedging
260
Other information
Note 27 Financial risk
264
Note 28 Capital management
272
Note 29 Number of shares
273
Note 30 Earnings per share
274
Note 31
Supplemental information to the consolidated statement of cash flows
274
Note 32 Related parties
275
Note 33 Pledge of assets and guarantees
276
Note 34 Events after the reporting period
277
APM
Alternative Performance Measures
320
Consolidated statement of profit or loss
Amounts in NOK million
Note
2023
2022
1 January - 31 December
Revenue
Other operating income
Share of profit (loss) from equity accounted investments
Total operating income
7
8
5
6
Raw materials and energy for production
Employee benefit expenses
Other operating expenses
Amortisation and depreciation
Impairment losses
Other items
9
11
15, 16, 17
15, 16, 17
12
(20 401 )
(5 253 )
(6 319 )
(2 312 )
(94 )
(21 976 )
(4 918 )
(6 714 )
(1 999 )
(28 )
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
(63 )
(106 )
(743 )
(17 )
(313 )
Income tax (expense) benefit
Profit (loss) for the year
14
(781 )
(2 594 )
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
Consolidated statement of comprehensive income
Amounts in NOK million
Note
2023
2022
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
Share of other comprehensive income (loss) from equity accounted companies
Total items that will not be reclassified to profit or loss
9
14
5
(19 )
(0 )
(12 )
(33 )
(4 )
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
26
14
26
14
5
(199 )
(1 294 )
(686 )
(142 )
(218 )
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
4, 5
26
14
(37 )
(424 )
(317 )
Other comprehensive income (loss) for the year, net of tax
(566 )
Total comprehensive income for the year
(396 )
Attributable to:
Non-controlling interests' share of comprehensive income
Owners of the parent's share of comprehensive income
Total comprehensive income for the year
(498 )
(396 )
Consolidated statement of financial position
Amounts in NOK million
Note
31.12.2023
31.12.2022
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 payables
Employee benefit obligations
Derivatives
Provisions and other liabilities
Total current liabilities
16, 23
23
9
25, 26
24
Total equity and liabilities
Oslo, 12 March 2024
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Bo Li
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
2023
2022
1 January - 31 December
Operating profit (loss)
Amortisation, depreciation and impairment losses
Changes in working capital
Equity accounted investments
Changes in fair value of derivatives
Changes in provisions, bills receivable and other
Gains (losses) on acquisition and disposal of subsidiaries
Interest payments received
Interest payments made
Income taxes paid
Total cash flow from operating activities
15, 16, 17
31
5
4, 5
(59 )
(716 )
(2 281 )
(1 583 )
(108 )
(1 139 )
(539 )
(159 )
(319 )
(1 345 )
Investments in property, plant and equipment and intangible assets
Received investment grants
Proceeds from sale of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Disposal of subsidiaries, net of cash
Payment of contingent consideration related to acquisitions (IFRS 3)
Acquisition of and capital contribution to joint ventures
Other investments / sales
Total cash flow from investing activities
15, 17
8
15, 17
4
4
24, 31
5
(4 988 )
(152 )
(38 )
(329 )
(1 )
(5 299 )
(4 213 )
(108 )
(176 )
(292 )
(4 404 )
Dividends paid to non-controlling interests
Dividends paid to owners of the parent
Net sale (purchase) of treasury shares
Net changes in bills payable and restricted deposits
Payment of lease liabilities
New interest-bearing loans and borrowings
Payment of interest-bearing loans and borrowings
Total cash flow from financing activities
28
29
23
16, 23
23
23
(104 )
(3 815 )
(8 )
(237 )
(209 )
(262 )
(724 )
(38 )
(1 900 )
(38 )
(218 )
(116 )
(7 237 )
(2 899 )
Change in cash and cash equivalents
(3 017 )
Currency translation differences
Cash and cash equivalents opening balance
Cash and cash equivalents closing balance
23
Consolidated statement of changes in equity
2023
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
Profit (loss) for the year
Other comprehensive income for the year
Total comprehensive income for the year
(878 )
(878 )
(10 )
(570 )
(498 )
(570 )
(498 )
(566 )
(396 )
Share-based payments (note 10)
Net movement treasury shares (note 29)
Dividends to equity holders (note 28)
Closing balance
(3 )
(2 734 )
(3 )
(2 734 )
(79 )
(5 )
(1 081 )
(5 )
(1 081 )
(8 )
(3 815 )
(104 )
(8 )
(3 919 )
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
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)
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 )
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 7,400 people have a joint commitment to stakeholders:
Delivering your potential. In 2023, Elkem achieved an
operating income of NOK 35,545 million.
(hereafter Elkem/the group), including notes, for the year
2023 were authorised for issue by the Board of Directors of
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 2023 . 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.
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, cash
and cash equivalents 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
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,
The amendments to IAS 1 and IFRS Practice Statement 2
Making Materiality Judgements provide guidance and examples
to help entities apply materiality judgements to accounting
policy disclosures. The amendments aim to help entities
provide accounting policy disclosures that are more useful by
replacing the requirement for entities to disclose their significant
accounting policies with a requirement to disclose their material
accounting policies and adding guidance on how entities apply
the concept of materiality in making decisions about accounting
policy disclosures. The amendments have had an impact on
the group’s disclosures of accounting policies, but not on the
measurement, recognition or presentation of any items in the
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 expected
The preparation of the consolidated financial statements
according to IFRS requires management to make estimates
and assumptions that affect 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 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 following notes:
→
Note 14 Taxes
→
Note 19 Impairment assessments
→
Note 24 Provisions and other liabilities
→
The consolidated financial statements include the financial
statements of Elkem ASA and entities controlled directly or
The acquisition method of accounting is used to account for
operations make up the composition of the group and are
included in the consolidated financial statements
31.12.2023 31.12.2022 |
|||||
Functional |
Country of |
Equity |
Equity |
||
Company |
currency |
incorporation |
interests |
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 Carbon Slovakia, a.s. 2) |
EUR |
Slovakia |
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 |
EUR |
Turkey |
100% |
100% |
Elkem International AS |
Sanayi Ve Ticaret Ltd. STI |
|||||
Elkem Materials, Inc. |
USD |
USA |
100% |
100% |
NEH LLC |
Elkem Materials Delaware, Inc. 3) |
USD |
USA |
- |
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% |
Elkem ASA 1) |
Elkem Participaçòes Indústria e Comércio Limitada |
BRL |
Brazil |
100% |
100% |
Elkem Carbon AS |
Elkem Processing Services S.A. |
EUR |
Belgium |
100% |
100% |
Elkem ASA |
Elkem S.à r.l. |
EUR |
France |
100% |
100% |
Elkem ASA |
Elkem S.r.l. |
EUR |
Italy |
100% |
100% |
Elkem ASA |
31.12.2023 31.12.2022 | |||||
Functional | Country of | Equity | Equity | ||
Company | currency | incorporation | interest | 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 | 100% | 100% | Elkem ASA |
of Korea | |||||
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. |
.
1)
Elkem ASA owns 79% and Elkem Uruguay S.A owns 21%
2)
Formerly VUM a.s
3)
Dormant company that was liquidated during 2023
Changes in composition of the group in 2023,
business combination
31 May 2023 Elkem acquired Elkem Carbon Slovakia a.s
(formerly VUM a.s), a Slovak producer of carbon materials.
The transaction will further increase Elkem’s capacity and
competence in attractive specialty markets and increase its
flexibility in the supply chain. Revenues of NOK 97 million
and a loss after tax of NOK 6 million after the acquisition
date from the company have been included in consolidated
statement of profit or loss. If the company had been part
of the group from 1 January 2023 revenue and profit after
tax would have increased with NOK 101 million and NOK 10
million respectively. Elkem Carbon Slovakia a.s is presented
within the Carbon Solutions operating segment.
Net cash outflow |
2023 |
Cash transferred on acquisition |
(152) |
Cash and cash equivalents of the acquiree |
0 |
Acquisition of subsidiaries, net of cash acquired |
(152) |
The table below summarise the total consideration and the
provisional amounts recognised for assets acquired and
liabilities assumed in the business combination:
Consideration |
2023 |
Cash transferred on acquisition |
152 |
Total consideration |
152 |
Assets acquired and liabilities assumed
Amounts in NOK million |
Carrying amount |
Excess value |
Fair value |
Property, plant and equipment |
14 |
67 |
81 |
Other intangible assets |
0 |
29 |
29 |
Inventories |
71 |
(1) |
70 |
Trade receivables |
26 |
- |
26 |
Other assets, current |
10 |
- |
10 |
Cash and cash equivalents |
0 |
- |
0 |
Deferred tax liabilities |
(0) |
(20) |
(20) |
Employee benefit expenses |
(1) |
- |
(1) |
Trade payables |
(18) |
- |
(18) |
Income tax payables |
(11) |
- |
(11) |
Interest-bearing liabilities, current |
(31) |
- |
(31) |
Provisions and other liabilities, current |
(6) |
- |
(6) |
Total identifiable net assets |
54 |
75 |
129 |
Goodwill |
- |
23 |
23 |
Total recognised |
54 |
75 |
152 |
Acquisition-related costs of NOK 13 million (NOK 4 million in
2022) are recognised in other items in the statement of profit
or loss related to the acquisition of Elkem Carbon Slovakia a.s.
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 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 the consolidated statement of profit
and loss as a result of the transaction (see note 12 Other items).
If the company had been part of Elkem 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 profit or loss. If the company had been part of Elkem
from 1 January 2022 revenue and profit after tax would
have increased with NOK 59 million and NOK 10 million
respectively. 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
amounts recognised for assets acquired and liabilities
assumed in 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 | 823 | 119 | 942 |
Other intangible assets | 0 | 6 | 6 |
Deferred tax assets | 7 | - | 7 |
Inventories | 29 | - | 29 |
Trade receivables | 10 | - | 10 |
Other assets, current | 13 | - | 13 |
Cash and cash equivalents | 48 | - | 48 |
Deferred tax liabilities | - | (28) | (28) |
Interest-bearing liabilities, non-current | (650) | - | (650) |
Derivatives, non-current | (87) | - | (87) |
Trade payables | (7) | - | (7) |
Income tax payables | (3) | - | (3) |
Interest-bearing liabilities, current | (10) | - | (10) |
Provisions and other liabilities, current | (46) | - | (46) |
Total identifiable net assets | 128 | 97 | 225 |
Loss on pre-existing relationship | - | - | 58 |
Gain on bargain purchase 1) | - | - | (5) |
Total recognised | 128 | 97 | 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. See note 5 Equity accounted investments
and joint operations.
Net cash outflow | 2022 |
Cash transferred on acquisition | - |
Cash and cash equivalents of the acquiree | 151 |
Acquisition of subsidiaries, net of cash acquired | 151 |
and joint ventures
Share of profit (loss) from investments in associates and
joint ventures is presented 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
presented as share of profit from equity accounted companies,
included in total operating income. Investments in associates
and joint ventures that do not operate within Elkem's main
business areas are presented as share of profit from equity
accounted financial investments. Judgement is applied in
arrangements and associates
% equity | % equity | |||||
Principal | interests | interests | ||||
Name of entity | Business office | Country | actvities | Classification | 2023 | 2022 |
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 | - | - | - |
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% | 40% |
Jiangxi Guoxing Intelligence | Yangjialing | China | Energy production | Joint venture | 35% | 35% |
Energy Co. Ltd | ||||||
Euro Partnership BV | Moerdijk | Netherlands | Ship management | Associate | 50% | 50% |
services | ||||||
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% |
Osiris GIE | Roussillon | France | Business supplies | Associate | 25% | 25% |
and equipment | ||||||
3Deus Dynamics SAS | Lyon | France | 3D printing | Associate | 21% | - |
Future Materials AS | Grimstad | Norway | Marketing of | Associate | 20% | 20% |
research facilities |
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 33,3% 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, 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. For further information
see note 4 Composition of the group.
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 2022 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.
In 2023 Elkem has covered the remaining parts of its
commitment for capital injections, NOK 267 million of a total
of NOK 534.5 million. Vianode AS is set to start the production
at their pilot facility at Herøya, Norway at the beginning of
2024. Further Vianode AS is looking to expand with additional
full scale facilities and will seek additional financing from its
owners to progress.
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 41.0
million is paid as of 31 December 2023. In addition Elkem has
committed to sell the land, buildings and equipment needed
to establish the cogeneration facility and committed to supply
excess steam from production. The sale is partly effected in
2023 resulting in a gain of CNY 8.4 million (NOK 12.1 million)
whereof Elkem's share of the gain, CNY 3 million (NOK 4
million), is not recognised. The facility is up and running and
Elkem purchase power generated by the facility.
6 December 2023 Elkem increased its ownership and invested
EUR 2.2 million (NOK 26 million) in 3Deus Dynamics SAS, an
entity operating to develop a dynamic molding process for
3D printing with the help of Elkem's expertise with silicones.
Elkem held warrants and shares in the company prior to the
increase in ownership. With the transaction Elkem recognised
a fair value gain of EUR 1 million (NOK 11.6 million) of the
previously held interest in the company, resulting in a total fair
value of Elkem's share in 3Deus Dynamics SAS of EUR 3.2
million (NOK 37 million).
See note 32 Related parties for commitments and transactions
related to the joint ventures and associates.
Movements in equity accounted investments
| 2023 | 2022 | |||||
Joint | Joint | |||||
Amounts in NOK million | ventures | Associates | Total | ventures | Associates | Total |
Opening balance | 822 | 217 | 1 039 | 115 | 126 | 241 |
Acquisition of and capital contribution to joint ventures | 303 | 26 | 329 | 292 | - | 292 |
Change in equity interest, in relation to business combinations | - | - | - | (47) | - | (47) |
Change in equity interest, in relation to disposal of subsidiaries | - | - | - | 443 | - | 443 |
Change in equity interest, transfer from financial instruments (note 25) | - | 11 | 11 | - | - | - |
Dividends received | (18) | (50) | (68) | (13) | (14) | (26) |
Share of profit (loss) from equity accounted companies | 16 | 29 | 46 | 42 | 93 | 135 |
Share of profit (loss) from equity accounted financial investments | (63) | - | (63) | (17) | - | (17) |
Gain on sales of assets to equity accounted companies | (4) | - | (4) | - | - | - |
Part of other comprehensive income | (0) | 3 | 2 | 7 | 7 | 15 |
Currency translation differences | (2) | 6 | 4 | 0 | 5 | 5 |
Closing balance | 1 054 | 242 | 1 296 | 822 | 217 1 039 | |
Share of profit and loss and carrying amount for equity
accounted investments
2023 | 31.12.2023 | 2022 | 31.12.2022 | |
Amounts in NOK million | Share of profit | Carrying amount | Share of profit | Carrying amount |
North Sea Container Line AS | 13 | 90 | 42 | 95 |
North-Sea Management AS | 2 | 5 | (0) | 2 |
Salten Energigjenvinning AS | - | - | (6) | - |
Klafi EHF | 0 | 1 | (0) | 1 |
Weldermate AS | - | 0 | (0) | 0 |
Vianode AS | (63) | 903 | (11) | 699 |
Jiangxi Guoxing Intelligence Energy Co. Ltd | 1 | 56 | - | 25 |
Euro Partnership BV | 18 | 43 | 10 | 44 |
Combined Cargo Warehousing BV | 2 | 4 | 1 | 6 |
Euro Nordic Agencies Belgium NV | 1 | 5 | 1 | 4 |
EPB Chartering AS | 8 | 105 | 80 | 117 |
Osiris GIE | - | 49 | - | 46 |
3Deus Dynamics SAS | - | 36 | - | - |
Future Materials AS | - | 0 | - | 0 |
Total | (17) | 1 296 | 117 | 1 039 |
Cash-flow from operations, equity accounted investments
Amounts in NOK million | 2023 | 2022 |
Share of profit (loss) from equity accounted investments | (46) | (135) |
Dividend received | 68 | 26 |
Equity accounted investments | 22 | (108) |
Summary of unaudited financial information for
joint ventures on a 100% basis
Vianode | Total | Vianode | Total | |||
Amounts in NOK million | AS | Other | 2023 | AS | Other | 2022 |
Current assets, including cash and cash equivalents | 805 | 460 | 1 264 | 729 | 269 | 998 |
NOK 866 million (NOK 92 million) | ||||||
Non-current assets | 1 653 | 436 | 2 089 | 783 | 92 | 875 |
Current liabilities, including current financial liabilities | 203 | 124 | 328 | 120 | 94 | 214 |
NOK 28 million (NOK 0 million) | ||||||
Non-current liabilities, including non-current financial | 148 | 421 | 569 | 127 | - | 127 |
liabilities NOK 547 million (NOK 651 million) | ||||||
Net assets/equity | 2 107 | 350 | 2 457 | 1 265 | 268 | 1 533 |
Excess value | 60 | - | 60 | 193 | - | 193 |
Elkem's carrying amount | 903 | 151 | 1 054 | 699 | 123 | 822 |
Total revenue | 0 | 890 | 891 | 0 | 907 | 907 |
Total expenses, including depreciation and amortisation | (187) | (868) | (1 055) | (33) | (834) | (867) |
NOK 5 million (NOK 31 million) and other items | ||||||
Financial income, including interest income | 38 | 13 | 52 | 5 | 3 | 8 |
NOK 42 million (NOK 0 million) | ||||||
Financial expenses, including interest expenses | (10) | (1) | (11) | (0) | (4) | (4) |
NOK 9 million (NOK 11 million) | ||||||
Tax expense | - | (1) | (1) | 0 | (0) | (0) |
Total profit for the year | (158) | 34 | (125) | (28) | 71 | 43 |
Other comprehensive income | (0) | 0 | (0) | - | (14) | (14) |
Total comprehensive income | (159) | 34 | (125) | (28) | 57 | 29 |
Elkem's share of profit for the year | (63) | 16 | (47) | (11) | 36 | 24 |
Elkem's share of other comprehensive income | (0) | 0 | (0) | - | 7 | 7 |
Summary of unaudited financial information for
associates on a 100% basis
Amounts in NOK million | Total 2023 | Total 2022 |
Revenue | 2 458 | 1 770 |
Profit for the year | 70 | 347 |
Other comprehensive income | 10 | 29 |
Total comprehensive income | 80 | 377 |
Elkem's share of profit for the year | 29 | 93 |
Elkem's share of other comprehensive income | 3 | 7 |
Net assets/equity | 775 | 768 |
Excess value | 26 | - |
Elkem's carrying amount | 242 | 217 |
Operating segments are components of a business that
are followed up and 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. Elkem’s operating segments are aligned with the
three reporting segments.
Segment performance is evaluated based on EBITDA and
EBIT, see definitions below. Elkem's financing and income
tax are managed on group basis and are not allocated to
operating segments.
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 IFRS accounting
policies applied for the group except for: Realised effects
from hedge ineffectiveness and from the discontinuation
of hedging is included in other items in 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.
Lease payments under internal lease agreements are
recognised as operating expenses on a straight-line basis
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.
From the first quarter of 2023, Elkem changed its internal
reporting to management, impacting the composition of
Elkem's operating and reportable segments. Elkem Distribution
Center that handles parts of the logistics for Silicon Products
division was previously included in the segment Other. From
1 January 2023 the entity is included in the segment Silicon
Products. Comparable figures are restated.
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
2023
Silicon | Carbon | |||||
Amounts in NOK million | Silicones | Products | Solutions | Other | Eliminations | Total |
Revenue from sale of goods (note 7) | 14 055 | 16 535 | 3 742 | (401) | - | 33 931 |
Other revenue (note 7) | 23 | 113 | 17 | 280 | - | 434 |
Other operating income (note 8) | 220 | 890 | 9 | 16 | - | 1 135 |
Share of profit from equity accounted investments (note 5) | 1 | 0 | - | 44 | - | 46 |
Total operating income from external customers | 14 301 | 17 538 | 3 768 | (61) | - | 35 545 |
Operating income from other segments | 63 | 865 | 450 | 506 | (1 884) | - |
Total operating income | 14 364 | 18 403 | 4 217 | 445 | (1 884) | 35 545 |
Operating expenses | (14 969) | (15 099) | (2 931) | (977) | 2 203 | (31 774) |
EBITDA | (605) | 3 304 | 1 286 | (532) | 318 | 3 771 |
EBIT | (2 142) | 2 610 | 1 164 | (585) | 318 | 1 365 |
Cash flow from operations | (1 033) | 3 511 | 1 394 | (859) | 14 | 3 027 |
Working capital | 1 790 | 4 388 | 641 | (356) | (80) | 6 383 |
Capital employed | 18 183 | 11 068 | 1 724 | 1 553 | (80) | 32 449 |
Reinvestments | (2 351) | |||||
Strategic investments | (2 866) | |||||
Movement CAPEX payables | 361 | |||||
Cash flow from investments in property, plant and equipment | (4 856) | |||||
and intangible assets, including received investment grants |
Main items by operating segment
2022
Silicon | Carbon | |||||
Amounts in NOK million | Silicones | Products 1) | Solutions | Other 1) | 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 8) | 150 | 542 | 5 | 48 | - | 746 |
Share of profit from equity accounted investments (note 5) | 0 | (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 | 1 515 | 333 | 392 | (2 319) | - |
Total operating income | 19 288 | 24 489 | 3 752 | 688 | (2 319) | 45 898 |
Operating expenses | (17 266) | (14 263) | (2 586) | (920) | 2 062 | (32 973) |
EBITDA | 2 022 | 10 226 | 1 166 | (233) | (257) | 12 925 |
EBIT | 743 | 9 632 | 1 063 | (283) | (257) | 10 898 |
Cash flow from operations | 1 271 | 7 802 | 620 | (157) | 16 | 9 551 |
Working capital | 2 449 | 5 456 | 739 | (636) | (371) | 7 637 |
Capital employed | 16 762 | 11 293 | 1 597 | 1 030 | (371) | 30 310 |
Reinvestments | (1 682) | |||||
Strategic investments | (2 797) | |||||
Movement CAPEX payables | 421 | |||||
Cash flow from investments in property, plant and equipment | (4 058) | |||||
and intangible assets, including received investment grants |
1)
2022 figures have been restated, see text above
Definitions
The segments' performance are evaluated based on 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.
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, inventories,
other current assets, accounts payable, current employee
benefit obligations and other current liabilities. Accounts
receivables are defined as trade receivables less bills
receivables. 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 definitions are not specified by IFRS Accounting Standards
and therefore may not be comparable to apparently similar
definitions used by other companies.
Below is a reconciliation of profit (loss) for the year against EBIT and EBITDA:
2023
Silicon | Carbon | |||||
Amounts in NOK million | Silicones | Products | Solutions | Other | Eliminations | Elkem |
Profit (loss) for the year | 170 | |||||
Income tax (expense) benefit | 781 | |||||
Finance expenses | 743 | |||||
Foreign exchange gains (losses) | 106 | |||||
Finance income | (182) | |||||
Share of profit from equity accounted financial investments | 63 | |||||
Other items | (516) | |||||
Realised effects from hedge ineffectiveness and | 199 | |||||
discontinuation of hedging | ||||||
EBIT | (2 142) | 2 610 | 1 164 | (585) | 318 | 1 365 |
Impairment losses | 94 | |||||
Amortisation and depreciation | 2 312 | |||||
EBITDA | (605) | 3 304 | 1 286 | (532) | 318 | 3 771 |
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) | |||||
Realised effects from hedge ineffectiveness and | 635 | |||||
discontinuation of hedging | ||||||
EBIT | 743 | 9 632 | 1 063 | (283) | (257) | 10 898 |
Impairment losses | 28 | |||||
Amortisation and depreciation | 1 999 | |||||
EBITDA | 2 022 | 10 226 | 1 166 | (233) | (257) | 12 925 |
Below is a reconciliation of working capital and capital employed:
Capital employed and working capital
Amounts in NOK million | 31.12.2023 | 31.12.2022 |
Inventories | 9 018 | 10 325 |
Trade receivables | 3 209 | 4 248 |
Bills receivables | (823) | (1 086) |
Accounts receivable | 2 386 | 3 162 |
Other assets, current | 2 062 | 1 698 |
Other receivables to related parties, interest free | (8) | (7) |
Grants receivables | (671) | (620) |
Tax receivables | (261) | (338) |
Assets at fair value through profit or loss | - | - |
Accrued interest | (0) | (0) |
Other current assets included in working capital | 1 122 | 733 |
Trade payables | 5 281 | 5 335 |
Trade payables related to purchase of non-current assets | (1 313) | (1 117) |
Accounts payables included in working capital | 3 968 | 4 219 |
Employee benefit obligations | 912 | 994 |
Provisions and other liabilities, current | 1 381 | 1 545 |
Provisions, contingent considerations and contract obligations | (101) | (144) |
Liabilities to related parties | (17) | (30) |
Other current liabilities included in working capital | 1 263 | 1 371 |
Working capital | 6 383 | 7 637 |
Property, plant and equipment | 22 754 | 19 520 |
Right-of-use assets | 854 | 779 |
Other intangible assets | 1 458 | 1 385 |
Goodwill | 1 015 | 984 |
Equity accounted investments | 1 296 | 1 039 |
Grants payable | (17) | (16) |
Trade payables- and prepayments related to purchase of non-current assets | (1 295) | (1 018) |
Capital employed | 32 449 | 30 310 |
The table below show realised effects from Elkem's power
and foreign exchange hedging programmes, including realised
effects from hedge ineffectiveness and discontinuation of
hedging, on the different group segments.
2023
Silicon |
Carbon |
|||||
Amounts in NOK million |
Silicones |
Products |
Solutions |
Other |
Eliminations |
Total |
Revenue from sale of goods (note 26) |
1 |
34 |
- |
(400) |
(366) |
|
Operating expenses (note 26) |
- |
290 |
(2) |
23 |
311 |
|
Total realised effects from derivatives included in EBITDA |
1 |
323 |
(2) |
(377) |
(55) |
2022
Silicon |
Carbon |
|||||
Amounts in NOK million |
Silicones |
Products |
Solutions |
Other |
Eliminations |
Total |
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 |
Total revenue by geographic market
based on customer location
Amounts in NOK million |
2023 |
2022 |
Norway |
1 194 |
1 342 |
Other Nordic countries |
1 241 |
1 545 |
United Kingdom |
902 |
1 354 |
Germany |
3 846 |
5 394 |
France |
994 |
1 566 |
Italy |
1 400 |
1 719 |
Poland |
610 |
869 |
Spain |
965 |
1 066 |
Other European countries |
2 654 |
3 238 |
Europe |
13 806 |
18 093 |
Africa |
386 |
345 |
USA |
4 219 |
5 470 |
Canada |
473 |
770 |
Brazil |
1 978 |
1 854 |
Other American countries |
420 |
548 |
America |
7 090 |
8 643 |
China |
7 706 |
10 849 |
Japan |
1 349 |
2 153 |
South Korea |
537 |
501 |
India |
1 433 |
1 485 |
Other Asian countries |
2 285 |
2 792 |
Asia |
13 310 |
17 780 |
Rest of the world |
139 |
206 |
Total revenue before hedging effects |
34 730 |
45 067 |
Realised effects from hedging |
||
programmes (note 26) |
(366) |
(49) |
Total revenue |
34 364 |
45 018 |
Non-current assets by geographic
areas based on entity location
Amounts in NOK million |
2023 |
2022 |
Norway |
6 548 |
5 744 |
Other Nordic countries |
855 |
568 |
United Kingdom |
40 |
38 |
Germany |
102 |
97 |
France |
4 730 |
4 133 |
Italy |
147 |
134 |
Poland |
2 |
0 |
Spain |
380 |
324 |
Other European countries |
209 |
177 |
Europe |
13 013 |
11 214 |
Africa |
115 |
112 |
USA |
990 |
882 |
Canada |
686 |
643 |
Brazil |
448 |
357 |
Other American countries |
454 |
494 |
America |
2 578 |
2 376 |
China |
11 827 |
10 363 |
Japan |
9 |
2 |
South Korea |
226 |
230 |
India |
111 |
79 |
Other Asian countries |
54 |
48 |
Asia |
12 228 |
10 721 |
Total non-current assets |
27 934 |
24 423 |
Non-current assets are presented less derivatives and
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 and are presented as
other operating expense.
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
2023
Silicon | Carbon | ||||
Amounts in NOK million | Silicones | Products | Solutions | Other | Total |
Sale of goods, Silicones | 14 012 | - | - | - | 14 012 |
Sale of goods, Silicon Products | 43 | 16 501 | - | (1) | 16 543 |
Sale of goods, Carbon Solutions | - | - | 3 742 | - | 3 742 |
Revenue from energy recovery and other energy related income | 3 | 63 | - | 92 | 157 |
Service agreements with related parties (note 32) | 4 | 0 | 3 | 72 | 79 |
Other revenue from contracts with customers | 17 | 50 | 14 | 117 | 198 |
Total revenue from contracts with customers | 14 078 | 16 614 | 3 759 | 279 | 34 730 |
Realised effects from hedging programmes (note 26) | 1 | 34 | - | (400) | (366) |
Total revenue | 14 079 | 16 648 | 3 759 | (121) | 34 364 |
Details of revenue from contracts with customers
2022
Silicon | Carbon | ||||
Amounts in NOK million | Silicones | Products | Solutions | Other | Total |
Sale of goods, Silicones | 18 954 | - | - | - | 18 954 |
Sale of goods, Silicon Products | 39 | 22 324 | - | (1) | 22 362 |
Sale of goods, Carbon Solutions | - | - | 3 393 | - | 3 393 |
Revenue from energy recovery and other energy related income | 2 | 38 | 0 | 52 | 92 |
Service agreements with related parties (note 32) | 14 | 1 | - | 14 | 30 |
Other revenue from contracts with customers | 48 | 31 | 21 | 133 | 232 |
Total revenue from contracts with customers | 19 057 | 22 395 | 3 413 | 197 | 45 063 |
Rental income | 2 | 1 | 0 | 1 | 4 |
Realised effects from hedging programmes (note 26) | 0 | 37 | - | (86) | (49) |
Total revenue | 19 060 | 22 432 | 3 414 | 112 | 45 018 |
Insurance settlements
Income from insurance settlements is 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 related to income are presented 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.
Non-monetary grants are measured at nominal value.
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
Amounts in NOK million | 2023 | 2022 |
Grants | 785 | 717 |
Sale of CO 2 emission allowances | 288 | - |
Gain on disposal of fixed assets | 35 | 0 |
Insurance settlements | 8 | 19 |
Other | 19 | 10 |
Total other operating income | 1 135 | 746 |
2023 | 2022 | |||
Other | Deduction | Other | Deduction | |
operating | of carrying | operating | of carrying | |
Amounts in NOK million | income | amount FA/IA | income amount FA/IA | |
R&D grants from the Norwegian government | 24 | - | 59 | - |
R&D grants from the French government | 73 | - | 71 | - |
Other R&D grants | 58 | 38 | 13 | 91 |
CO 2 compensation from the Norwegian Environment Agency | 549 | - | 497 | - |
Other government grants | 81 | 1 | 72 | 1 |
Total government grants | 785 | 39 | 712 | 93 |
Norwegian NO X fund for reduced emission of NO X | - | 28 | 1 | 64 |
Other grants | - | - | 3 | - |
Total grants from other than governments | - | 28 | 5 | 64 |
Total grants | 785 | 67 | 717 | 157 |
Grants receivable related to fixed and intangible assets (note 22) | - | 64 | ||
Grants receivable related to income (note 22) | 891 | 862 | ||
Grants payable (note 24) | (17) | (16) | ||
Grants, deferred income (note 24) | (34) | (8) |
CO
2
emission 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 included 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. Gain on sale of CO
2
emission allowances are included in other operating income.
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 current scheme ends 31 December 2025. 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. For compensation granted for 2023, the
Norwegian government has introduced a deduction of 375
NOK/tonne CO
2
(up from deduction of 200 NOK/tonne for
2022). As the grant partially 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
Employee benefits
Employee benefits include both current and non-current
benefits, and are expensed as incurred, together with any social
security taxes applicable. Short-term 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. Long-term 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 twelve months.
Defined contribution plans
Defined contribution plans comprise of arrangements where
Elkem 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.
Multi-employer defined benefit plans where available
information is insufficient to be able to calculate
each participant's obligation, are accounted for as
Amounts in NOK million | 2023 | 2022 |
Salaries, holiday pay and variable compensation | (3 998) | (3 755) |
Employer's national insurance contributions / social security tax | (893) | (787) |
Pension expenses | (138) | (168) |
Share-based payments (note 10) | (8) | (24) |
Other payments / benefits | (217) | (185) |
Total employee benefit expenses | (5 253) | (4 918) |
Average number of full-time equivalents | 7 647 | 7 592 |
Amounts in NOK million | 2023 | 2022 |
Fixed compensation | (36) | (33) |
Variable compensation - STI | (9) | (20) |
Variable compensation - LTI | (3) | (31) |
Other benefits | (1) | (2) |
Pension benefits | (4) | (4) |
Total remuneration to corporate management | (54) | (90) |
Remuneration provided to the board of directors | (6) | (5) |
Remuneration provided to the committee remuneration | (1) | (1) |
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 2023".
The report is published on Elkem's website.
↗
Shares and options granted to corporate
management and board members
2023 | 2022 | ||||
Number | Number of | Number | Number of | ||
Name | Position | of shares | options | of shares | options |
Helge Aasen | CEO | 68 406 | 101 000 | 46 206 | 101 000 |
Morten Viga | CFO | 46 896 | 300 000 | 46 896 | 408 380 |
Katja Lehland | SVP Human Resources | - | 300 000 | - | 400 000 |
Asbjørn Søvik | SVP Green Ventures & Digital | 10 000 | 300 000 | 10 000 | 400 000 |
Håvard Moe | SVP Elkem Technology | 10 000 | 300 000 | 110 000 | 600 000 |
Louis Vovelle | SVP Innovation R&D | 6 896 | 308 380 | 6 896 | 425 140 |
Morten Magnus Voll | SVP Business development | 10 384 | 200 000 | - | - |
(from February) | |||||
Frédéric Jacquin | SVP Business development | - | - | 81 551 | 408 380 |
Inge Grubben-Strømnes | SVP Silicon Products | 35 189 | 300 000 | 35 189 | 676 526 |
Luiz Simao | SVP Carbon Solutions | 22 000 | 300 000 | 20 000 | 350 000 |
Larry Zhang | SVP Silicones | - | 150 000 | - | 250 000 |
Zhigang Hao 1) | Chair of the board | - | - | - | - |
Dag Jakob Opedal | Vice chair of the board | 40 000 | - | 40 000 | - |
Olivier Tillette de | Board member | 15 517 | - | 15 517 | - |
Clermont-Tonnerre 1) | |||||
Yougen Ge 1) | Board member | - | - | - | - |
Marianne Johnsen | Board member | - | - | - | - |
Grace Tang | Board member | - | - | - | - |
Nathalie Brunelle (from May) | Board member | - | - | - | - |
Jin Wang Johnny Wu | Board member | - | - | - | - |
(from May until November) 1) | |||||
Li Bo (from November) 1) | Board member | - | - | - | - |
Terje Andre Hanssen 2) | Board member | - | - | - | - |
Marianne Færøyvik 2) | Board member | 4 950 | - | 4 950 | - |
Thomas Eggan (from July) 2) | Board member | - | - | - | - |
Heidi Feldborg 2) | Observer | - | - | - | - |
Jan Harald Karlsen (from July) 2) | Observer | - | - | - | - |
Anja Isabel Dotzenrath (until April) | Board member | - | - | - | - |
Knut Sande (until June) 2) | Board member | - | - | - | - |
Per Roar Aas (until June) 2) | Observer | - | - | - | - |
1)
Representatives for the majority shareholder.
2)
Employee benefit assets and obligations
Non-current | Current | |||
Amounts in NOK million | 31.12.2023 | 31.12.2022 | 31.12.2023 | 31.12.2022 |
Pension plan assets, net (note 22) | 28 | 40 | - | - |
Pension contribution fund (note 22) | 1 | 1 | 3 | 2 |
Employee prepayments etc. | - | - | - | 5 |
Total employee benefit assets | 29 | 41 | 3 | 7 |
Salaries, holiday pay and variable compensation | - | - | 684 | 752 |
Employer's national insurance contributions / social security tax | - | - | 210 | 226 |
Pension plan obligations, net | 375 | 370 | - | - |
Other benefit plans | 132 | 119 | 18 | 16 |
Total employee benefit obligations | 507 | 489 | 912 | 994 |
(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 there is no accrual
(EUR 2 million) related to this agreement.
Elkem has both defined contribution and defined benefit
plans. For defined contribution plans the cost is equal to
Elkem'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 118,620 as at
1 May 2023. 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 2023 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 2024 is set to 2.7%.
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 2023 are distributed as
follows Norway 24%, France 48%, Canada 10%, other Europe
15%, other countries 4%. 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 | 2023 | 2022 |
Current service expenses | (25) | (43) |
Administration expenses | (1) | (1) |
Curtailments | 23 | - |
Net pension expenses, defined benefit plans | (3) | (45) |
Defined contribution plans | (113) | (102) |
Early retirement scheme AFP (Norway) | (22) | (21) |
Total pension expenses | (138) | (168) |
In addition, interest expenses on net | (11) | (9) |
pension liabilities are recognised as a part | ||
of finance expenses |
Net defined benefit obligations
Amounts in NOK million | 2023 | 2022 |
Present value of funded pension obligations | (438) | (384) |
Fair value of plan assets | 466 | 425 |
Net funded pension obligations | 28 | 40 |
Present value of unfunded pension obligations | (375) | (370) |
Net value of funded and unfunded obligations | (347) | (329) |
Movements in the defined benefit obligations and plan assets
2023 |
2022 |
|||||
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 |
(754) |
425 |
(329) |
(978) |
487 |
(492) |
Current service expenses incl. |
||||||
social security tax |
(25) |
- |
(25) |
(43) |
- |
(43) |
Interest (expenses) income |
(34) |
23 |
(11) |
(22) |
13 |
(9) |
Administration expenses |
- |
(1) |
(1) |
- |
(1) |
(1) |
Remeasurement gains (losses) |
(30) |
11 |
(19) |
237 |
(91) |
146 |
Contributions from employer |
- |
6 |
6 |
- |
32 |
32 |
Benefits paid |
44 |
(23) |
21 |
85 |
(33) |
52 |
Curtailments |
23 |
- |
23 |
- |
- |
- |
Other changes |
4 |
- |
4 |
3 |
- |
3 |
Currency translation differences |
(41) |
25 |
(16) |
(36) |
18 |
(19) |
Closing balance |
(813) |
466 |
(347) |
(754) |
425 |
(329) |
Breakdown of pension plan assets
31.12.2023 |
31.12.2022 |
|||
Fair value of |
Fair value of |
|||
Amounts in NOK million |
Distribution% |
plan assets |
Distribution% |
plan assets |
Cash, cash equivalents and money market investments |
12% |
54 |
12% |
52 |
Bonds |
14% |
67 |
15% |
62 |
Shares |
34% |
156 |
36% |
152 |
Property |
33% |
155 |
35% |
147 |
Other plan assets |
7% |
33 |
3% |
12 |
Total pension plan assets |
100% |
466 |
100% |
425 |
Actual return on plan assets |
8% |
34 |
-16% |
(78) |
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 2023 (2022)
Norway | France | Canada | Germany | UK | ||||||
Discount rate | 4.8% | 4.2%) | 3.0% | (3.0%) | 4.8% | (5.0%) | 3.7% | (3.9%) | 4.8% | (5.1%) |
Expected rate of salary increase | na | (na) | 3.0% | (3.0%) | 3.5% | (3.5%) | 3.0% | (3.0%) | na | (na) |
Annual regulation of pensions paid | 2.3% | (1.9%) | 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 Elkem 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 |
2023: Effect on the pension obligation | (43) | 48 | 17 | (17) | 19 | (17) |
2022: Effect on the pension obligation | (38) | 42 | 14 | (15) | 10 | (10) |
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.
Expected contribution for the pension plans next year and
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 | 8 | 18 | 19 | 4 | 6 |
Weighted average duration of the defined benefit obligations | 6 years | 15 years | 15 years | 11 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 76 million (NOK 64
million) relate to jubilee and long-service benefits in the
Silicones segment, mainly in France. Estimated duration
of the obligation is 12 years. Non-current provisions for
other employee benefits for Elkem’s Chinese entities, in the
Silicones segment, are NOK 31 million (NOK 35 million), mainly
consisting of post-employment benefits related to employees
laid off due to reorganisation. The estimated remaining duration
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 Long-term Bonus Scheme
(LTBS). See the "Report on salary and other remuneration to
leading personnel in Elkem ASA for the financial year 2023" for
description of the LTBS. 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
Components of share-based payments employee benefit expenses | ||
A mounts in NOK million | 2023 | 2022 |
S hare-based payment | (8) | (24) |
S ocial security contribution | 4 | (9) |
T otal expenses related to share-based payments | (4) | (33) |
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) | 31.20 | 19.10 | 23.53 |
Share price (NOK) | 32.90 | 17.19 | 24.66 |
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 2023 | 31 December 2022 | ||||
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 |
2019 programme | 23.53 | 259 190 | 0.58 | 612 688 | 1.57 |
2020 programme | 19.10 | 2 433 380 | 1.50 | 2 945 140 | 2.38 |
2021 programme | 31.20 | 4 921 950 | 2.01 | 5 778 375 | 2.85 |
Total outstanding | 7 614 520 | 1.80 | 11 636 203 | 2.24 | |
Quantity and weighted average prices
31 December 2023 | 31 December 2022 | |||
Overview of outstanding options | Number of | Weighted average | Number of | Weighted average |
Amounts in NOK million | instruments | exercise price | instruments | exercise price |
Outstanding options 1 January | 11 636 203 | 29.18 | 20 479 772 | 28.55 |
Granted during the year | - | - | - | - |
Exercised during the year | (1 413 303) | 25.76 | (6 443 569) | 23.97 |
Forfeited during the year | (408 380) | 30.03 | (200 000) | 30.01 |
Expired during the year | (2 200 000) | 38.52 | (2 200 000) | 38.52 |
Outstanding options 31 December | 7 614 520 | 27.07 | 11 636 203 | 29.18 |
Of which exercisable (vested) | 5 280 854 | 25.25 | 4 368 870 | 32.47 |
Average share price at exercise date (NOK per share) | 37.52 | 37.64 | ||
Details of operating expenses
Amounts in NOK million | 2023 | 2022 |
Loss on disposal of fixed assets | (3) | (2) |
Freight and commission expenses | (1 910) | (2 395) |
Leasing short-term and low value contracts (note 16) | (66) | (70) |
Machinery, equipment, spare parts and operating materials | (1 145) | (1 344) |
External services 1) | (2 593) | (2 441) |
Insurance expenses | (183) | (137) |
Impairment losses trade and other receivables | 8 | (2) |
Other operating expenses 2) 3) | (426) | (324) |
Total other operating expenses | (6 319) | (6 714) |
1)
Including services from auditor, see specification below
2)
Including changes in inventories of finished goods and work in progress of positive NOK 387 million (positive NOK 288 million)
3)
Including capitalised salary on fixed asset projects of positive NOK 96 million (positive NOK 125 million)
During 2023, Elkem expensed NOK 1,021 million (NOK 1,000
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 100 million
(NOK 312 million).
Grants relating to research and development amount to NOK
155 million (NOK 143 million) and are recognised in other
operating income. In addition NOK 38 million (NOK 91 million)
KPMG is the group auditor of Elkem.
Fees to KPMG and other audit firms
Amounts in NOK million | 2023 | 2022 |
KPMG | ||
Audit fee | (23) | (19) |
Other assurance services | (1) | (1) |
Tax services | (0) | - |
Other services | - | - |
Other audit firms | ||
Audit fee | (4) | (2) |
Other assurance services | (0) | (0) |
Tax services | (2) | (2) |
Other services | (1) | (0) |
Total fees to KPMG and other audit firms | (30) | (25) |
Other gains (losses) consist 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
Other income (expenses)
Other income (expenses) consist of transactions and events
that are related to acquisition of business, gains / (losses)
on disposal of businesses and restructuring programmes.
In addition, performance incentives for Elkem employees
related to such items. Cost related to liquidated / wound-up
businesses, or updated regulations with retroactive effect
related to events / periods before purchase of the business,
e.g., environmental measures, are also included in other
income and expenses.
Acquisition related costs may include both costs related
to completed acquisitions, acquisitions in progress 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 related to listed companies classified as other
Amounts in NOK million | 2023 | 2022 |
Changes in fair value commodity contracts (note 25) | (1) | (2) |
Net gains (losses) on embedded EUR derivatives power contracts (note 25) | (73) | 218 |
Ineffectiveness on cash flow hedges (note 26) | 357 | 1 471 |
Net foreign exchange gains (losses) - forward currency contracts | (26) | 9 |
Operating foreign exchange gains (losses) | 308 | 387 |
Total other gains (losses) | 566 | 2 084 |
Dividends from other shares | 3 | 4 |
Change in fair value from other shares measured at fair value through profit or loss | 6 | 1 |
Gains (losses) on acquisition and disposal of subsidiaries (note 4 and 5) | - | 159 |
Restructuring expenses (note 24) | (43) | 26 |
Dismantling and environmental expenses (note 24) 1) | (4) | (72) |
Other 2) | (13) | (50) |
Total other income (expenses) | (50) | 67 |
Total other items | 516 | 2 151 |
1)
2022 includes NOK 70 million in restoration expense related to decommissioned business in Canada.
2)
including group loans are classified as a part of financial
income and expenses, and foreign exchange gains (losses)
self-constructed item of property, plant and equipment when
the construction period takes a substantial period of time,
meaning more than 9-12 months. Judgement is applied in
determining if a project is expected to last for a substantial
period of time.
Financial expenses also include interest on net pension
liabilities, unwinding of the discount effect from provisions and
contingent consideration from acquisition of subsidiaries, and
interest on lease liabilities.
Interest expenses from factoring and supply finance
Amounts in NOK million |
2023 |
2022 |
Interest income on loans and receivables |
179 |
65 |
Other financial income |
3 |
1 |
Total finance income |
182 |
67 |
Net foreign exchange gains (losses) 1) |
(106) |
85 |
Interest expenses on interest-bearing liabilities measured at amortised cost |
(647) |
(229) |
Interest expenses from other items measured at amortised cost 2) |
(102) |
(50) |
Interest expenses on lease liabilities (note 16) |
(27) |
(30) |
Capitalised interest expenses |
51 |
20 |
Unwinding of discounted liabilities |
(5) |
(10) |
Interest expenses on net pension liabilities (note 9) |
(11) |
(9) |
Other financial expenses |
(2) |
(5) |
Total finance expenses |
(743) |
(313) |
Net finance income (expenses) |
(668) |
(161) |
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)
Penalties and interest related to income taxes are recognised as
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.
Judgement has been applied in the assessment of the
probability of being able to apply the group’s carry forward loss
against future taxable profit. Based on the current facts and
circumstances Elkem has concluded that it is not probable
that the carry forward loss will be applied against future profit
within a reasonable period and have therefore not recognised a
deferred tax asset. When assessing the recognition of deferred
tax assets, a five-year historic performance is applied in order
to determine if future profit is probable. All entities with carry
forward loss, except for Paraguay, have had negative taxable
result this year. To reconsider and recognise deferred tax assets,
an entity must experience stable taxable income for 3-5 years.
tax position related to a pending tax issues with the Norwegian
tax authorities (se details below). Based on Elkem’s own
assessment and the advice from third party expertise it has
been concluded that it is more likely than not that Elkem will be
Part of the basis for recognising deferred tax assets is based
on applying the loss carried forward against future taxable
income, which requires use of estimates for calculating future
taxable income.
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. See details
Income tax recognised in profit or loss
Amounts in NOK million | 2023 | 2022 |
Profit (loss) before income tax | 951 | 12 236 |
Current taxes | (683) | (2 234) |
Deferred taxes | (98) | (360) |
Total income tax (expense) benefit | (781) | (2 594) |
Income taxes recognised in other comprehensive income (OCI)
Amounts in NOK million | 2023 | 2022 |
Remeasurement of defined benefit pension plans | 4 | (33) |
Hedging of net investment in foreign operations | 44 | 31 |
Cash flow hedges | 247 | (125) |
Total tax charged to OCI | 295 | (127) |
Reconciliation of income tax (expense) benefit
Amounts in NOK million | 2023 | 2022 |
Profit (loss) before income tax | 951 | 12 236 |
Expected income taxes, 22% of profit before tax (22%) | (209) | (2 692) |
Tax effects of: | ||
Difference in tax rates for each individual jurisdiction | 61 | (99) |
Preferential tax rates | (136) | 61 |
Permanent differences | ||
Tax effects of income from Norwegian controlled foreign companies (NOKUS) | (22) | (16) |
Tax effects share of profit (loss) from equity accounted companies | (5) | 24 |
Tax effects non-deductible expenses | (48) | (12) |
Tax relief based on value of equity | 10 | 19 |
Tax effects gains (losses) on acquisition and disposal of subsidiaries | - | 34 |
Tax effects non-taxable income | 83 | 134 |
Other effects | ||
Tax effects of changes in unrecognised deferred tax assets | (476) | (32) |
Other current taxes | (20) | (10) |
Previous year tax adjustment | (19) | (5) |
Total income tax (expense) benefit | (781) | (2 594) |
Effective tax rate | 82% | 21% |
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 relates mainly to taxes that are indirectly
calculated based on profit (loss) before income tax and
withholding taxes.
31.12.2023 | 31.12.2022 | |||
Temporary | Temporary | |||
Amounts in NOK million | difference | Deferred tax | difference | Deferred tax |
Property, plant and equipment and intangible assets | 177 | 36 | 412 | 69 |
Pension liabilities | 339 | 86 | 325 | 79 |
Trade receivables | 879 | 5 | 92 | 7 |
Inventories | 755 | 158 | 998 | 222 |
Provisions | 661 | 146 | 364 | 72 |
Other differences | 294 | 55 | 458 | 93 |
Debt waiver | 595 | 153 | 595 | 161 |
Tax losses carried forward | 6 151 | 1 261 | 2 901 | 648 |
Gross deferred tax assets | 9 850 | 1 900 | 6 145 | 1 351 |
Unrecognised deferred tax assets for tax loss carried forward | (5 800) | (1 166) | (2 398) | (520) |
Unrecognised debt waiver | (595) | (153) | (595) | (161) |
Unrecognised deferred tax assets other items | (91) | (11) | (1 264) | (190) |
Recognised deferred tax assets | 3 366 | 570 | 1 888 | 480 |
Netting | (436) | (329) | ||
Net deferred tax assets | 134 | 151 | ||
Derivatives including cash flow hedges | 1 087 | 239 | 2 162 | 476 |
Property, plant and equipment and intangible assets | 4 437 | 972 | 3 451 | 775 |
Inventories | 96 | 20 | 284 | 62 |
Other differences | 651 | 139 | 683 | 139 |
Gross deferred tax liabilities | 6 271 | 1 370 | 6 580 | 1 452 |
Netting | (436) | (329) | ||
Net deferred tax liabilities | 935 | 1 123 | ||
Net deferred tax (liabilities) assets recognised | (801) | (972) | ||
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 | 2023 | 2022 |
Opening balance | (972) | (457) |
Recognised in profit or loss for the year | (98) | (360) |
Effect of business combination | (20) | (20) |
Disposal of subsidiaries | - | 2 |
Recognised in other comprehensive income | 295 | (127) |
Currency translation differences | (6) | (10) |
Closing balance | (801) | (972) |
Tax losses carried forward
31 December 2023
Gross tax losses | Net tax losses | Unrecognised tax | Recognised deferred tax | |
Amounts in NOK million | carried forward | carried forward | losses | losses carried forward |
France | 2 692 | 695 | (623) | 73 |
China | 2 774 | 416 | (416) | - |
Brazil | 206 | 70 | (70) | - |
Paraguay | 345 | 46 | (46) | - |
Malaysia | 29 | 7 | (7) | - |
US | 87 | 22 | - | 22 |
Canada | 11 | 3 | (3) | - |
Korea | 6 | 1 | (1) | - |
UK | 1 | 0 | (0) | - |
Total tax losses to carried forward | 6 151 | 1 261 | (1 166) | 95 |
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 | (74) | - |
Brazil | 175 | 59 | (59) | - |
Paraguay | 295 | 30 | (30) | - |
Malaysia | 61 | 15 | (15) | - |
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 by expiry date
31.12.2023 | 31.12.2022 | |||
Total | Total | Total | Total | |
unrecognised | recognised | unrecognised | recognised | |
Amounts in NOK million | losses | losses | losses | losses |
Loss car.forw.which exp. within 1 year | (5) | - | (3) | - |
Loss car.forw.which exp. within 2 years | (9) | - | (5) | - |
Loss car.forw.which exp. within 3 years | (10) | - | (9) | - |
Loss car.forw.which exp. within 4 years | (3) | - | (10) | - |
Loss car.forw.which exp. within 5 years | - | - | (70) | - |
Loss car.forw.which exp. within 5-10 years | (40) | - | (7) | - |
Without maturity | (1 100) | 95 | (416) | 128 |
Total tax losses carried forward | (1 166) | 95 | (520) | 128 |
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 has appealed. 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 was recognised in 2021.
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 2023
is NOK 595 million (NOK 595 million). Elkem Silicones France
SAS has not reinstated any loan amounts in 2023 or 2022 and
correspondingly no tax credit is recognised in 2023 or 2022.
Debt waiver 31 December 2023
Amounts in NOK million | 2010 | 2012 | 2013 | 2014 | Total |
Gross value of debt waiver | 54 | 186 | 149 | 207 | 595 |
Utilised 2023 | - | - | - | - | - |
Total debt that can be reversed | 54 | 186 | 149 | 207 | 595 |
Deferred tax asset unrecognised 1) | 14 | 48 | 38 | 53 | 153 |
The respective agreements expire in | 2 years | 4 years | 5 years | 6 years |
1)
Based on tax rate 25.8% (27.0), which is applicable in France.
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 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
3 years
5 years
6 years
7 years
1)
Property, plant and equipment (PPE) are stated in the statement
of financial position at cost less accumulated depreciation and
accumulated impairment losses.
Initial cost includes expenditures that are directly attributable
to the acquisition of the asset. In projects depending on new
technology all cost up to final investment decision is expensed
when incurred. In projects using known technology the cost
incurred in the preparation for the final investment decision is
capitalised due to the close integration with the investment.
This is for example relevant for relining of furnaces.
When substantial parts of an installation are replaced with a
new component, the cost is capitalised. The replacement is
substantial when the costs associated with the replacement
account for more than approximately 70% of the value of an
equivalent new installation. Upon capitalization, the carrying
amount of the replaced part is derecognised.
than every year is capitalised and depreciated over the
period until the next periodic maintenance. Major periodic
maintenance typically requires curtailment of production
during the maintenance period. Silicon products typically
perform relining of a furnace approximately every 10 to 15th
year, Silicones performs mainly biennial maintenance of
production equipment, while maintenance within Carbon
Solutions is mostly performed on a day-to-day basis. Costs
related to restarting the production after major maintenance
are expensed when incurred.
Costs that do not relate to replacement of substantial parts or
major periodic maintenance that is carried out less frequently
than every year, are classified as “day-to-day servicing” and
and expected residual value for each item of PPE and are
recognised in the statement of profit or loss using the straight-
line method. Elkem has certain leases with local governments.
Unless there are indications to the contrary it is assumed
that these leases are extended at expiry when determining
the useful life of the assets situated on the land. Depreciation
commences when the assets are ready for their intended use.
Judgement is applied to determine the time when the asset is
The main rule is to classify spare parts as inventory. However,
major spare parts and stand-by equipment qualify as property,
plant, and equipment when Elkem expects to use them during
more than one period. Depreciation for major spare parts starts
when the asset is recognised in the asset register.
Accounting principle application and judgements for
2023
Plant, | ||||||
machinery, | ||||||
Buildings | equipment | Office | ||||
and other | and motor | and other | Construction | |||
Amounts in NOK million | Land | property | vehicles | equipment | in progress | Total |
Cost | ||||||
Opening balance | 233 | 8 957 | 25 406 | 1 078 | 5 022 | 40 696 |
Additions | 0 | 14 | 97 | 22 | 4 883 | 5 016 |
Transferred from CiP | 12 | 532 | 1 534 | 976 | (3 053) | - |
Reclassification | (1) | 2 | (286) | 285 | - | - |
Business combinations (note 4) | 21 | 33 | 25 | - | 2 | 81 |
Disposals | - | (76) | (227) | (17) | (13) | (333) |
Currency translation differences | 10 | 113 | 417 | (15) | 2 | 526 |
Closing balance | 276 | 9 575 | 26 965 | 2 328 | 6 842 | 45 987 |
Accumulated depreciation | ||||||
Opening balance | (3 322) | (14 437) | (580) | (18 339) | ||
Additions | (319) | (1 440) | (208) | (1 967) | ||
Reclassification | 1 | 267 | (268) | - | ||
Disposals | 40 | 204 | 16 | 260 | ||
Currency translation differences | (39) | (245) | (2) | (287) | ||
Closing balance | (3 639) | (15 650) | (1 043) | (20 332) | ||
Impairment losses | ||||||
Opening balance | (11) | (435) | (2 358) | (1) | (30) | (2 836) |
Additions | - | (13) | (80) | - | (0) | (94) |
Reclassification | - | (9) | 22 | (14) | - | - |
Disposals | - | 10 | 18 | 0 | 1 | 29 |
Currency translation differences | (1) | 1 | 1 | 0 | 0 | 1 |
Closing balance | (12) | (446) | (2 398) | (15) | (30) | (2 900) |
Carrying amount | ||||||
Closing balance | 264 | 5 490 | 8 917 | 1 271 | 6 812 | 22 754 |
Original cost of assets fully depreciated | ||||||
but still in use | 0 | 2 214 | 7 979 | 240 | - | 10 433 |
Estimated useful life | Indefinite | 5–50 years | 3–50 years | 3–20 years | ||
Depreciation plan | Straight-line | Straight-line | Straight-line |
average cost of capital for capitalisation of loan interest in
Impairment losses in 2023 are primarily related to impairment
of production units at Xinghuo NOK 69 million and impairment
2022
Plant, | ||||||
machinery, | ||||||
Buildings | equipment | Office | ||||
and other | and motor | and other | Construction | |||
Amounts in NOK million | Land | property | vehicles | equipment | in progress | Total |
Cost | ||||||
Opening balance | 217 | 8 064 | 23 043 | 866 | 2 819 | 35 009 |
Additions | 1 | 13 | 34 | 5 | 4 091 | 4 143 |
Transferred from CiP | 2 | 475 | 1 271 | 181 | (1 929) | - |
Reclassification | - | 1 | 1 | (6) | (40) | (43) |
Business combinations (note 4) | 1 | 185 | 749 | 0 | 7 | 942 |
Disposal of subsidiaries (note 4) | - | - | - | - | (29) | (29) |
Disposals | (0) | (10) | (384) | (9) | (12) | (415) |
Currency translation differences | 13 | 229 | 691 | 40 | 116 | 1 088 |
Closing balance | 233 | 8 957 | 25 406 | 1 078 | 5 022 | 40 696 |
Accumulated depreciation | ||||||
Opening balance | (2 999) | (13 085) | (430) | (16 514) | ||
Additions | (263) | (1 293) | (137) | (1 693) | ||
Reclassification | 0 | (1) | 1 | 0 | ||
Disposals | 8 | 306 | 6 | 321 | ||
Currency translation differences | (68) | (365) | (20) | (453) | ||
Closing balance | (3 322) | (14 437) | (580) | (18 339) | ||
Impairment losses | ||||||
Opening balance | (11) | (419) | (2 315) | (1) | (28) | (2 774) |
Additions | - | (10) | (13) | (0) | (5) | (28) |
Reclassification | - | 6 | (6) | (0) | - | (0) |
Disposals | - | 0 | 44 | 0 | 4 | 48 |
Currency translation differences | (1) | (13) | (68) | (0) | (1) | (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 | 0 | 2 738 | 6 592 | 252 | - | 9 583 |
Estimated useful life | Indefinite | 5–50 years | 3–50 years | 3–20 years | ||
Depreciation plan | Straight-line | Straight-line | Straight-line |
average cost of capital for capitalisation of loan interest in 2022
Right-of-use assets are presented separately in the statement
of financial position, whereas lease liabilities are presented in
interest-bearing liabilities.
the production cycle, including production buildings and land
where this is not controlled by the local government. 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 applies a single recognition and measurement approach
for all leases, except for:
→
Lease contracts for which the lease term ends within 12
months as of the commencement date are not capitalised
(short-term leases). Elkem's short-term lease commitments
are 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.
2023
Buildings | Plant, machinery, | ||||
and other | equipment and | Office and other | |||
Amounts in NOK million | Land | property | motor vehicles | equipment | Total |
Cost | |||||
Opening balance | 326 | 659 | 150 | 2 | 1 138 |
Additions / lease modifications / remeasurements | 73 | 95 | 57 | - | 225 |
Partial or full termination of agreements | - | (30) | (63) | - | (93) |
Currency translation differences | (3) | 9 | 9 | 0 | 15 |
Closing balance | 397 | 733 | 153 | 2 | 1 285 |
Accumulated depreciation | |||||
Opening balance | (70) | (191) | (96) | (1) | (359) |
Additions | (10) | (93) | (38) | (0) | (141) |
Partial or full termination of agreements | - | 30 | 48 | - | 77 |
Currency translation differences | 0 | (3) | (6) | (0) | (9) |
Closing balance | (80) | (258) | (92) | (2) | (431) |
Impairment losses | |||||
Opening balance | - | - | - | - | - |
Closing balance | - | - | - | - | - |
Carrying amount | |||||
Closing balance | 317 | 476 | 61 | 0 | 854 |
Estimated useful life | 9–99 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
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) |
Partial or full termination of agreements | - | 1 | - | 4 | 5 |
Currency translation differences | - | (0) | - | (0) | (0) |
Closing balance | - | - | - | - | - |
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 |
Carrying amounts of lease liabilities and the movements during the period
Amounts in NOK million | 2023 | 2022 |
Opening balance | 578 | 801 |
Additions / lease modifications / remeasurements | 225 | 124 |
Partial or full termination of agreements | (16) | (6) |
Disposal of subsidiaries | - | (238) |
Payments | (236) | (146) |
Interest expenses on lease liabilities | 27 | 30 |
Currency translation differences | 10 | 13 |
Closing balance (note 23) | 589 | 578 |
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 | 2023 | 2022 |
Depreciation of right-of-use assets | (141) | (119) |
Interest expenses on lease liabilities (note 13) | (27) | (30) |
Leasing expenses, short-term leases (note 11) | (52) | (56) |
Leasing expenses, low value assets (note 11) | (14) | (13) |
Leasing expenses, variable lease payments (note 11) | (1) | (2) |
Total amount recognised in consolidated statement of profit or loss | (235) | (219) |
from the research phase to the development phase for
internally developed intangible assets. To ensure consistent
judgement, different activities are grouped in four different
phases. Expenses incurred in phase 1 are classified as
research and expensed directly to profit and loss. Expenses
incurred in phase 2-4 are normally capitalised as long as the
criteria for capitalisation are met. Phase 4 may also contain
commercialisation/industrialisation of technology developed in
phase 1-3 into full scale plants and judgement must be applied
both in terms of separation between fixed and intangible
assets as well as the correct starting point for depreciation. In
general depreciation of the intangible assets starts when the
Expenditures related to research and development activities,
Accounting principle application and judgements for
2023
Intangible | |||||||
Land use | Technology | Other assets under | |||||
Amounts in NOK million | rights | and licences | Software Development | intangible 1) | construction | Total | |
Cost | |||||||
Opening balance | 108 | 868 | 627 | 880 | 350 | 377 | 3 209 |
Additions 2) | - | - | 17 | - | - | 183 | 200 |
Transferred from CiP | - | 5 | 67 | 94 | 3 | (170) | - |
Business combinations (note 4) | - | - | 0 | - | 29 | - | 29 |
Disposals | - | - | (9) | - | - | - | (9) |
Currency translation differences | 7 | 38 | 13 | 56 | 2 | 17 | 133 |
Closing balance | 116 | 911 | 714 | 1 030 | 384 | 407 | 3 563 |
Accumulated amortisation | |||||||
Opening balance | (59) | (579) | (457) | (606) | (122) | (1 824) | |
Additions | (2) | (43) | (58) | (65) | (37) | (205) | |
Reclassification | - | - | - | - | - | - | |
Disposals | - | - | 9 | - | - | 9 | |
Currency translation differences | (4) | (32) | (8) | (40) | (0) | (84) | |
Closing balance | (65) | (654) | (514) | (711) | (159) | (2 103) | |
Impairment losses | |||||||
Opening balance | (1) | - | - | - | - | - | (1) |
Currency translation differences | (0) | - | - | - | - | - | (0) |
Closing balance | (1) | - | - | - | - | - | (1) |
Carrying amount | |||||||
Closing balance | 49 | 257 | 200 | 319 | 225 | 407 | 1 458 |
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 2023 consists mainly of capitalisation of development projects of NOK 100 million of which NOK 20 million is related to Elkem's
biocarbon initiative.
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 | 103 | 828 | 567 | 775 | 335 | 568 | 3 175 |
Additions 2) | - | - | 24 | 1 | 0 | 310 | 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
If the fair value at the time of acquisition of the group’s interest
in the net assets of the acquired subsidiary exceeds the cost
of the acquisition (negative goodwill), the differences are
presented directly in the statement of profit or loss as other
items. Judgement is applied in determining net identifiable
assets and hence in determining the amount of goodwill.
Accounting principle application and judgement for
Amounts in NOK million | 2023 | 2022 |
Opening balance | 984 | 941 |
Business combinations (note 4) | 23 | - |
Currency translation differences | 8 | 43 |
Closing balance | 1 015 | 984 |
Origin of goodwill per CGU and operating segment
31 December 2023
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 excluding Xinghuo/Yongdeng, Elkem | ||||
Guangdong, and Elkem Silicones Korea | 85 | - | - | 85 |
Elkem Rana AS | - | 40 | - | 40 |
Elkem Nagpur | - | 38 | - | 38 |
Elkem Oilfield Chemical FZCO | - | 24 | - | 24 |
Elkem Dronfield Ltd. | - | 17 | - | 17 |
Elkem Materials Processing Services BV | - | 0 | - | 0 |
Elkem Ferroveld JV | - | - | 41 | 41 |
Elkem Carbon Slovakia a.s. | - | - | 21 | 21 |
Elkem Participaçòes Indústria e Comércio Limitada | - | - | 9 | 9 |
Elkem Carbon (China) Co., Ltd. | - | - | 1 | 1 |
NEH LLC | - | 96 | 18 | 113 |
Total goodwill | 710 | 215 | 89 | 1 015 |
Origin of goodwill per CGU and operating segment
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 excluding Xinghuo/Yongdeng, Elkem | ||||
Guangdong, and Elkem Silicones Korea | 80 | - | - | 80 |
Elkem Rana AS | - | 40 | - | 40 |
Elkem Nagpur | - | 38 | - | 38 |
Elkem Oilfield Chemical FZCO | - | 23 | - | 23 |
Elkem Dronfield Ltd. | - | 16 | - | 16 |
Elkem Materials Processing Services BV | - | 0 | - | 0 |
Elkem Ferroveld JV | - | - | 43 | 43 |
Elkem Participaçòes Indústria e Comércio Limitada | - | - | 8 | 8 |
Elkem Carbon (China) Co., Ltd. | - | - | 1 | 1 |
NEH LLC | - | 93 | 17 | 110 |
Total goodwill | 705 | 209 | 69 | 984 |
This disclosure covers the impairment assessment for
goodwill, intangible assets, property plant and equipment
and right-of-use assets (non-current non-financial assets).
Impairment is recognised when the carrying value of an asset
or cash generating unit (CGU) exceeds its recoverable amount.
As a starting point Elkem uses the value in use method for
estimating recoverable amount in an impairment test. The
value in use calculation is based on a discounted cash flow
(DCF) model. The cash flows are derived from the strategic
plan 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. An exception from this is
ongoing projects with known technology where both future
cash inflows and remaining investments are included.
A long-term growth rate is calculated and applied to project
future cash flows after the fifth year. If the value in use
calculation indicates an impairment, the fair value less cost to
sell will be estimated and the higher of this amount and the
value in use is applied as the recoverable amount.
impairment trigger exist. Management assesses a wide range
of quantitative and qualitative information before concluding on
the trigger review. Triggers normally assessed in Elkem include:
→
performance compared to budget since the last
trigger review
→
the expected development in sales prices and the cost
of materials, employees and other operating expenses
in both the short and medium term
→
supply/demand balance
→
regulatory changes and new technology
→
competitive situation
There is significant judgment required to determine the CGU
for impairment testing. For impairment testing of property,
plant and equipment intangible and right of use assets the
CGU is the lowest level that generates cash inflows. This can
be both a single plant or a combination of plants depending on
the facts and circumstances. For goodwill the unit of testing
is a combination of CGUs and is based on the level where
synergies are expected to be realised following a business
combination. The combination of CGUs for impairment testing
of goodwill is determined to be the operating segments as
The value-in-use calculations 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. There is also uncertainty in
estimating replacement investments and the growth rate
in the terminal value. The estimated future pre-tax 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, the market risk premium
and the beta. Elkem uses a beta per business segment and
the beta is found using observable betas of comparable
companies for each business segment. Elkem has performed
sensitivity analysis for key drivers in the impairment test to
Impairment assessment for non-current non-financial assets
including goodwill
The impairment assessment for non-current non-financial
assets is performed on two levels.
→
For non-current non-financial assets other than goodwill
a quarterly trigger assessment is performed for each of
the separate CGUs within the three operating segments
Silicones, Silicon Products and Carbon Solutions. If
a trigger is identified an impairment assessment is
performed for the CGU.
→
Goodwill acquired through business combinations are
allocated to the operating segments Silicones, Silicon
Products and Carbon Solutions. Each of the operating
segments consist of several CGUs, typically a plant
or a group of plants. Impairment testing of goodwill is
done annually, or more frequently if indicators exist,
for the group of CGUs that is included in the respective
operating segments.
The following table gives an overview of carrying amount of
total non-current non-financial assets and goodwill allocated
to each of the operating segments. The table also includes the
pre-tax discount rate for each operating segment.
Operating segment
Carrying amount |
Of which goodwill |
Pre-tax discount rate |
||||
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
31.12.2023 |
31.12.2022 |
31.12.2023 |
31.12.2022 |
Silicones |
17 458 |
15 152 |
710 |
705 |
11.9% |
10.5% |
Silicon Products |
6 874 |
6 041 |
215 |
209 |
11.9% |
10.1% |
Carbon Solutions |
1 108 |
886 |
89 |
69 |
12.3% |
10.2% |
Goodwill |
25 440 |
22 080 |
1 015 |
984 |
||
Elkem analyses both quantitative and qualitative triggers that
may indicate that a CGU is impaired. Quantitative indicators
include Elkem’s market capitalisation, return on capital
employed compared to WACC and EBITDA margin compared
to budget. Qualitative indicators include significant adverse
changes in expected sales volumes or margins, raw material
prices, power prices and supply and changes in regulations.
The impairment assessment for goodwill allocated to the
operating segments and for the respective CGUs within the
operating segments performed at year-end is covered for each
operating segment below.
Discounted cash flow models are applied to determine the
value in use for the operating segments. Key assumptions used
in the calculation of value in use are sales prices and volumes,
raw material prices and discount rates.
A range of important assumptions used in the impairment
assessment is common for all GGUs/operating segments
and are to large extent determined at the group level in
relation with the budget and strategic forecast process.
These assumptions are described below. In addition, certain
assumptions such as sales prices, cost of materials and supply
/ demand balance are specific for the respective CGUs /
operating segments. These assumptions are described within
the below impairment assessments done for each operating
segment and underlying CGUs.
Common assumptions for all operating segments and CGUs
Financial forecasts
The 2024 budget approved by the board is used as a basis for
the 2025-2028 strategic plan and hence the forecasts which
is used for the impairment assessment. When preparing the
budget and strategic plan a range of both external and internal
sources are considered. External sources include market
reports and price indexes. Internal sources include agreed
sales volumes for the period, the effect of implemented cost
saving initiatives and planned investments and maintenance.
EBITDA level represents the operating profit (loss) before
depreciation and amortisation. The key assumptions used in
reaching the forecast figures are sales prices, total volume and
product mix, operating costs, and productivity targets. See
Note 6 Operating segments for Elkem’s definition of EBITDA.
Other operating costs
These are estimated based on the current level and adjusted
for expected inflation in the respective locations where the
business is situated. Operating costs are also impacted by
ongoing operational efficiency programmes. Changes to the
outcome of these initiatives may affect future 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 projection. However, capex
includes remaining investments on strategic projects in an
advanced stage where only a small part of the total investment
remains before start up.
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 target 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. For the operating segments with
cash inflows and outflows in different currencies these are
translated to NOK in the goodwill impairment test and a NOK
10 year risk-free interest rate is used in the WACC. The rates
are adjusted for inflation differential and country risk premium.
The discount rates also consider 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.
Growth rates
The expected growth rates for a cash-generating unit (CGU)
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 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 2% for Silicon Products and Carbon Solutions with a
significant market exposure in Europe and 2.5% for Silicones
due to a significant part of the market exposure being in
developing markets.
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 is based the currency rates used in
the strategic planning process. These are also used when
translating the cash inflows and outflows in the operating
segments to NOK in the goodwill impairment test. The long-
term inflation (CPI) are based on external predictions and
reflect the CPI in which each CGU is located.
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.
Impairment assessment for operating segments and CGUs
Elkem Silicones
The Silicones division has experienced a challenging market
situation that has resulted in a weak financial performance in
2023. The challenging market situation can be explained by
several factors:
→
Supply/demand imbalance in the market following
increased production capacity in China and delayed
recovery of demand in Chinese construction industry
after the COVID pandemic as well as lower demand for
specialties in all regions
→
Chinese commodity prices reaching a 10-year low in
August 2023 without a comparable reduction in raw
material cost resulting in a significant pressure on
EBITDA and ROCE.
→
Higher pressure on commodity prices compared to
specialty prices.
Based on the above indicators and weak financial
performance, impairment triggers have been identified for
the following CGUs:
→
Xinghuo/Yongdeng
→
Elkem Guangdong (Polysil)
→
Elkem Silicones excluding Xinghuo/Yongdeng, Elkem
Guangdong, and Elkem Silicones Korea
Impairment tests have been performed for these CGUs in
parallel with the goodwill impairment test performed for the
Silicones division. The assumptions used, and the assessments
made for the goodwill impairment test for the division is to
a large extent applicable to the different CGUs due to the
global characteristics of the Silicones market and Elkem’s
ability to adapt production at the plants across the different
geographies based on supply and demand in the different
markets. However, there are some differences in markets and
product mix that will impact the outcomes. Below the results
for each test is summarized including sensitivities.
Silicones operating segment
The conclusion is no impairment for the goodwill allocated to
the Silicones operating segment. Key assumptions used in
reaching this conclusion:
→
External markets analysts expect continued challenging
supply/demand balance both in China and globally for the
next two years, before a gradual recovery towards the end
of the forecast period resulting in a more balanced market
→
The strategic capacity increase investments in China
and France are expected to ramp up production during
2024 and 2025. The new assets are expected to yield
cost savings, more efficient production and an improved
specialty ratio that will improve both absolute and stability
in margins
→
Cost saving programmes initiated in 2023 are expected
to give lasting reductions through reduced operating
expenses going forward
→
A more balanced market, combined with an increased
specialty ratio, results in improved average sales prices
and combined with reduced cost leads to a gradually
improving EBITDA-margin throughout the forecast period
Given the challenging market situation throughout 2023 and
the uncertainties regarding the timeline and level of market
improvement both within the next 12 months and in the
longer term, relevant and reasonable sensitivities have been
performed to indicate a range of outcomes.
→
A scenario where volumes and prices decrease with
5% across all years in the forecast would result in no
impairment. In this scenario employee benefit and other
operating expenses have been adjusted to reflect lower
activity. Further, as sales prices for commodity products
are closely aligned with raw material prices these have
also been reduced with 5%.
→
An increase in WACC of 0.5 percentage point – would not
result in an impairment
→
A 11% reduction in base case EBITDA for each year in the
forecast period would result in a break even scenario
Elkem Silicones Xinghuo/Yongdeng
Elkem has identified impairment indicators within Elkem
Silicones Xinghuo/Yongdeng. The total carrying amount of the
CGU is NOK 9,849 million. The impairment indicators are largely
due to falling sale prices and volumes caused by a supply/
demand imbalance in the Silicones markets globally.
The assumptions applied follow the assumptions as applied
for the goodwill, see above. It is expected that 2024 and 2025
will be challenging before gradually improving towards the end
of the forecast period. Pre-tax discount rate used in the DCF
calculation for the CGU is 10.4%.
Given the challenging market situation throughout 2023 and
the uncertainties regarding the timeline and level of market
improvement both within the next 12 months and in the
longer term, relevant and reasonable sensitivities have been
performed to indicate a range of outcomes.
→
A scenario where volumes and prices decrease with
5% across all years in the forecast– would result in no
impairment. In this scenario employee benefit and other
operating expenses have been adjusted to reflect lower
activity. Further, as sales prices for commodities are
closely aligned with raw material prices these have also
been reduced with 5%.
→
Increased WACC of 0,5 percentage point – would not
result in an impairment
→
A 12% reduction in base case EBITDA for all future
periods – would result in a break even scenario
Elkem Silicones excluding Xinghuo/Yongdeng, Elkem
Guangdong, and Elkem Silicones Korea
Elkem has identified impairment indicators within Elkem
Silicones excluding Xinghuo/Yongdeng, Elkem Guangdong,
and Elkem Silicones Korea which primarily includes operations
in EMEA and AMS. The total carrying amount of the CGU is
NOK 6,177 million. The impairment indicators are largely due
to falling sale prices and volumes caused by a supply/demand
imbalance in the Silicones markets globally and pressure on
specialty prices.
The assumptions applied follow the assumptions as applied
for the goodwill, see above. It is expected that 2024 and 2025
will be challenging before gradually improving towards the end
of the forecast period. Pre-tax discount rate used in the DCF
calculation for the CGU is 11.5%.
Given the challenging market situation throughout 2023 and
the uncertainties regarding the timeline and level of market
improvement both within the next 12 months and in the
longer term, relevant and reasonable sensitivities have been
performed to indicate a range of outcomes.
→
A scenario where volumes and prices decrease with
5% across all years in the forecast– would result in no
impairment. In this scenario employee benefit and other
operating expenses have been adjusted to reflect lower
activity. Further, as sales prices are closely aligned with
raw material prices these have also been reduced with 5
%.
→
Increased WACC of 0.5 percentage point – would not
result in an impairment
→
A 12% reduction in base case EBITDA for all future
periods – would result in a break even scenario
Elkem Silicones Guangdong
Elkem has identified impairment indicators within Elkem
Silicones Guangdong. The total carrying amount of the CGU
is NOK 627 million. The impairment indicators are largely due
to weaker financial performance than forecasted in last year’s
impairment test due to lower sales prices and volumes.
The assumptions applied follow the assumptions as applied
for the goodwill, see above. It is expected that 2024 and 2025
will be challenging before gradually improving towards the end
of the forecast period. Pre-tax discount rate used in the DCF
calculation for the CGU is 9.9%.
Given the challenging market situation throughout 2023 and
the uncertainties regarding the timeline and level of market
improvement both within the next 12 months and in the
longer term, relevant and reasonable sensitivities have been
performed to indicate a range of outcomes.
→
A scenario where prices decrease with 5% across all years
in the forecast would result in an impairment of NOK
50 million. In this scenario employee benefit and other
operating expenses have been adjusted to reflect lower
activity. For Guangdong sales prices are less correlated
with raw material prices than for the other CGUs. The raw
material prices have therefore been reduced with 2%
→
Increased WACC of 0.5 percentage point – would result in
an impairment of NOK 35 million.
Other mandatory tests
Silicon Products and Carbon Solutions
For Elkem Silicon Products and Carbon Solutions the
impairment test has been done based on approved business
plans for the period 2024-2028 an a terminal value for the
subsequent years. The estimated value in use exceeds the
carrying amount.
2022 Impairment assessment
In 2022 Elkem identified impairment indicators for Elkem
Silicones Guangdong, but no impairment was recognised.
Impairment triggers have been identified for the CGU in 2023
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 manufacturing of the products and
an allocation of direct fixed operating expenses. Judgement
is applied in determining the share of cost to be allocated to
inventory from departments that perform both production and
overhead related tasks.
The cost of CO
2
allowances that Elkem needs to purchase in
addition to allowances received from the government, see note
8 Other operating income, are based on estimated production
/ emissions for the year. The cost is allocated to cost of
conversion proportionally with estimated produced volumes
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.
The income from the Norwegian government CO
2
compensation scheme is recognised in inventory based on
estimated compensation per produced ton and accrued
proportionally with produced volumes.
Cost of production is presented 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 consolidated statement
of financial position is based on the separate entity's
classification.
The allocation of fixed production overheads to the costs of
conversion is based on the normal capacity of the production
facilities. Judgement is applied in determining normal level
of production per plant, but is also aligned with comparable
| 31.12.2023 | 31.12.2022 | |||||
Amounts in NOK million | Cost price | Provision | Net total | Cost price | Provision | Net total |
Raw materials | 2 359 | (39) | 2 321 | 3 322 | (12) | 3 310 |
Semi-finished goods | 467 | (0) | 466 | 402 | (41) | 361 |
Finished goods | 5 385 | (238) | 5 147 | 6 035 | (142) | 5 893 |
Operating materials and spare parts | 1 121 | (36) | 1 084 | 792 | (31) | 761 |
Total inventories | 9 331 | (314) | 9 018 | 10 550 | (226) | 10 325 |
This year's change in provision for impairment of inventory, a
loss of NOK 81 million (loss of NOK 14 million), is recognised as
Trade and bills receivables are initially recognised at transaction
price, which in most cases corresponds to their nominal amount.
Elkem mainly has receivables without stated interest rate and
no significant financing component and the trade and bills
receivables are therefore subsequently measured at nominal
amount, less any provision for expected credit loss. Judgement
has been applied in assessing derecognition of trade receivables
included in factoring arrangements.
When Elkem’s Chinese entities sells goods to a customer a trade
receivable is established. The customer can then issue a bank
guaranteed bill that is used to settle the trade receivable. A bill
receivable is transferable and can be used to pay trade payables
(endorsed) or be settled in cash with a finance institution
(discounted). Bills receivables are mainly bank acceptance bills
that are guaranteed by a financial institution The duration of a
bill receivable is normally below 6 months.
Trade receivables are derecognised when settled, replaced by
bills receivables or when transferred to a third party and Elkem
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. See below for details on the different agreements.
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
Amounts in NOK million | 31.12.2023 | 31.12.2022 |
Trade receivables | 2 417 | 3 208 |
Trade receivables, related parties (note 32) | 29 | 19 |
Allowance for expected credit losses | (59) | (65) |
Bills receivables | 823 | 1 086 |
Total trade receivables | 3 209 | 4 248 |
Elkem has entered into factoring agreements with a
credit limit of a total of EUR 195 million (EUR 162), NOK
2,191 million (NOK 1,698 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 at 31 December 2023, NOK 94
million (NOK 106 million) is recognised as current liability (see
note 24 Provisions and other liabilities). In addition, Elkem
has entered into factoring agreements without recourse.
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 2023
NOK 1,806 million (NOK 1,777 million) of Elkem’s trade
receivables are derecognised under these agreements.
Bills receivables consist of NOK 822 million (NOK 1,086
million) bank acceptance bills and NOK 1 million (NOK 0
million) commercial acceptance bills.
A total of NOK 1,531 million (NOK 4,033 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 has 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 | 31.12.2023 | 31.12.2022 |
Not due | 1 956 | 2 392 |
Overdue by: | ||
1–30 days | 312 | 527 |
31–60 days | 78 | 92 |
61–90 days | 38 | 124 |
More than 90 days | 62 | 91 |
Total trade receivables 1) | 2 445 | 3 227 |
1)
Bills receivables are not included in the ageing table
Movements in allowance for expected credit losses
Amounts in NOK million | 2023 | 2022 |
Opening balance | (65) | (69) |
Business combinations (note 4) | - | - |
Realised losses during the year / Received on earlier losses | 0 | 5 |
Provision for expected credit losses | (14) | (27) |
Reversal of earlier provisions | 16 | 29 |
Currency translation differences | 2 | (2) |
Closing balance | (59) | (65) |
Analysis of allowance for expected credit losses, presented
based on related trade receivables
Amounts in NOK million | 31.12.2023 | 31.12.2022 |
Not due | (10) | (13) |
Overdue by: | ||
1–30 days | (1) | (1) |
31–60 days | (4) | (0) |
61–90 days | (4) | (3) |
More than 90 days | (41) | (48) |
Total allowance for expected credit losses | (59) | (65) |
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 with gains and losses
presented in other items. 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). Dividends from such
investments are presented as other items in the statement of
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
loans and receivables outside of trade and bills receivables and
in determining the level of credit loss.
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. Elkem calculates the expected credit
losses (ECL) for other receivables in accordance with the
simplified approach. The assessment is based on historical
experienced losses adjusted for forward-looking estimates on
| Non-current | Current | |||
Amounts in NOK million | 31.12.2023 | 31.12.2022 | 31.12.2023 | 31.12.2022 |
Other shares | 26 | 24 | - | - |
Restricted deposits | 51 | 46 | - | - |
Other deposits | 15 | 10 | - | - |
Pension assets, defined benefits and contribution plans (note 9) | 29 | 41 | 3 | 2 |
Prepayments for construction of fixed assets | 18 | 99 | - | - |
Prepayments for goods and equipment | - | - | 143 | 150 |
Prepayments for other expenses | 80 | 77 | 103 | 90 |
Prepayments to related parties (note 32) | - | - | 2 | 15 |
Receivables from related parties, interest-bearing (note 32) | 1 | 1 | - | - |
Receivables from related parties, interest free (note 32) | - | - | 8 | 7 |
Grants receivable (note 8) | 220 | 306 | 671 | 620 |
Value added tax | 61 | 64 | 742 | 418 |
Corporate income tax receivables | - | - | 261 | 338 |
Interest receivables | - | - | 0 | 0 |
Other receivables | 9 | 8 | 115 | 47 |
Fixed assets under disposal | 2 | - | - | - |
Other assets | 45 | 39 | 14 | 11 |
Total other assets | 556 | 716 | 2 062 | 1 698 |
Provision for impairment included in total other assets, | (68) | (75) |
mainly prepayments.
Restricted deposits consist mainly of restricted deposits
related to the ongoing tax litigation in Elkem's business
in Brazil of NOK 18 million (NOK 15 million), see note 24
Provisions and other liabilities, and deposit for pension
guarantee, related to unfunded pension liabilities for salaries
When Elkem’s Chinese entities purchases goods from a
supplier a trade payable is established. Elkem can issue a bank
guaranteed bill that is used to settle Elkem’s trade payable.
The issued bill payable is a document where Elkem as the
buyer formally agrees to pay for purchased goods or services
at maturity date and is normally guaranteed by a financial
institution. The bills payables are initially recognised when
the supplier accepts the bill of exchange and is recognised
at the amount equal to the trade payables it replaces. The
duration of a bill payable is normally below six months. When
the bill payable is guaranteed by a financial institution Elkem
is normally required to deposit a certain per centage of the
nominal value of the bill payable into a restricted bank account.
The deposit is assessed to be a collateral/prepayment for
the issued bill and is presented net with bills payable in the
statement of cash flows, but presented gross in the statement
of financial position. All bills payables in Elkem are bank
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.
Deposits where the access are restricted for use by the
bank (more than 3 months) are presented separately in the
statement of financial position and excluded from cash and
See note 16 Leases for accounting policies for right-of-use
Non-current |
Current |
|||
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
31.12.2023 |
31.12.2022 |
Interest-bearing liabilities |
||||
Lease liabilities (note 16) |
464 |
475 |
125 |
103 |
Loans from external parties, other than bank |
5 279 |
3 697 |
1 060 |
10 |
Bank financing |
7 767 |
6 160 |
18 |
74 |
Accrued interest |
- |
- |
28 |
17 |
Total interest-bearing liabilities |
13 509 |
10 331 |
1 231 |
204 |
Total bills payables |
- |
- |
1 466 |
1 742 |
Total interest-bearing liabilities including bills payable |
13 509 |
10 331 |
2 697 |
1 946 |
Interest-bearing assets |
||||
Cash and cash equivalents |
- |
- |
6 367 |
9 255 |
Restricted deposits bills payable |
- |
- |
351 |
395 |
Other restricted deposits |
51 |
46 |
37 |
12 |
Receivables from related parties |
1 |
1 |
- |
- |
Loans to external parties |
9 |
8 |
- |
- |
Accrued interest income |
- |
- |
- |
0 |
Total interest-bearing assets |
60 |
55 |
6 756 |
9 663 |
Net interest-bearing assets / (liabilities) |
(13 449) |
(10 276) |
4 059 |
7 717 |
Interest-bearing liabilities by currency
31.12.2023 |
31.12.2022 |
|||
Amounts in NOK million |
Currency amount |
NOK |
Currency amount |
NOK |
EUR |
771 |
8 664 |
630 |
6 620 |
USD |
2 |
20 |
3 |
31 |
NOK |
3 647 |
3 647 |
2 753 |
2 753 |
CNY |
2 656 |
3 800 |
1 963 |
2 809 |
Other currencies |
- |
74 |
- |
66 |
Total interest-bearing liabilities |
16 206 |
12 278 |
||
Maturity of interest-bearing liabilities
31 December 2023
2029 |
|||||||
Amounts in NOK million |
2024 |
2025 |
2026 |
2027 |
2028 |
and later |
Total |
Lease liabilities |
125 |
79 |
63 |
48 |
44 |
230 |
589 |
Loans from external parties, other than bank |
1 060 |
1 031 |
2 354 |
500 |
1 393 |
- |
6 339 |
Bank financing |
18 |
83 |
547 |
5 770 |
191 |
1 221 |
7 830 |
Bills payable |
1 466 |
1 466 |
|||||
Accrued interest |
28 |
28 |
|||||
Total interest-bearing liabilities excluding prepaid loan fees |
2 697 |
1 193 |
2 964 |
6 318 |
1 628 |
1 452 |
16 252 |
Prepaid loan fees |
(45) |
||||||
Total interest-bearing liabilities |
16 206 |
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 |
Loan agreements
The main non-current loan agreements as of 31 December
2023 are a term loan of EUR 500 million (EUR 500 million),
issued bond loans of a total of NOK 2,750 million (NOK 2,500
million) and a series of loans issued in the Schuldschein
market of EUR 225 million (EUR 113 million). The main loan
agreements are granted to Elkem ASA. In addition, Elkem
Silicones Xinghuo is financing parts of its upgrade of property,
plant and equipment with a unsecured term loan of CNY 1,533
million (CNY 650 million). The interest rates for the non-current
loan agreements are in the range of 5.65% to 6.27% for the
bond loans, 1.82% to 5.64% for the loans in the Schuldschein
market and 2.80% to 3.65% for the PPE loans. For the term
loan the interest rate is 5.23%.
Elkem ASA has placed a series of unsecured floating rate
loans in the Schuldschein market. Total size of the transaction
amounts to EUR 200 million where of EUR 52 million was
drawn in December 2022 and EUR 148 million in January 2023.
Elkem ASA has also issued green bonds of NOK 1,000 million
in August 2023. In addition Elkem Silicones Xinghuo has
financed parts of its upgrade of property, plant and equipment
with unsecured term loans of a total of CNY 899 million in
January, September and December.
The term loan of EUR 500 million is 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. Based on inital testing of the
KPI's there will be no change to the margin in 2024.
One of the loans issued in the Schuldschein market (EUR 15
million), is a fixed rate loan with a fixed rate of 1.82%. Given
the market conditions as at 31 December 2023 the loan would
have been approximately EUR 0.4 million lower, due to the
difference between fixed and market rate. The green bond
consists of one part with floating interest rate and one part
with fixed interest rate. Elkem has entered into an interest
swap from fixed to floating interest rate for the part of the
green bond with fixed rate. As at 31.12.2023 the fair value of
this swap is NOK 12 million.
The bond loans are listed on Oslo Børs from January 2024. The
fair value of the bond loans is negative NOK 12 million.
The loan facilities are unsecured, but part of the loans has
financial covenants related to them, see below.
Credit facilities
As of 31 December 2023 the group is granted credit facilities
of NOK 6,293 million. The facilities remain undrawn at 31
December 2023.
As of 31 December 2022 the group is granted credit facilitie
s
of NOK 6,356 million. At 31 December 2022 NOK 14 million
is drawn.
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 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 tha
n
bank (Schuldschein), in Norway. The interest-bearing loans i
n
China have no connected financial covenants. In addition to
the covenants on these loan facilities in Norway there are loa
n
covenants related to the credit facilities in Elkem Metal Cana
da
Inc of CAD 2 million. The financial covenants are calculated
monthly, based on last 12 months figures, and reported
quarterly. Elkem ASA and Elkem Metal Canada Inc. are
compliant with their covenants at the end of 2023 and 2022.
Elkem initiated a waiver process during first quarter of 2024,
and requested the lenders’ consent for a temporary waiver
of the current Interest Cover Ratio to ensure that Elkem has
sufficient headroom to operate through these uncertain time
s.
The covenants for the interest-bearing loan facilities in Norw
ay
relate to the financial performance of Elkem and are as
specified in the table below.
Covenant Elkem related to drawn loan of NOK 8,148 million
(NOK 6,501 million) in Elkem ASA
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
Loan covenant |
Total Equity |
NOK |
24 458 |
28 773 |
Total Assets |
NOK |
50 500 |
52 781 |
Equity ratio |
48% |
55% |
> 30% |
EBITDA excluding income/loss from associated |
|||
entities and joint ventures |
NOK |
3 726 |
12 790 |
Net interest payable |
NOK |
597 |
219 |
Interest cover ratio |
6.24 |
58.38 |
> 4.00 |
Movements in interest-bearing liabilities 2023
Cash |
|||||||
flows |
Non-cash changes |
||||||
Additions, lease |
|||||||
modifications, |
Acquisition |
Currency |
|||||
Receipts/ remeasurements |
/ Disposal of |
translation |
|||||
Amounts in NOK million |
31.12.2022 |
Payments and terminations |
subsidiaries Reclassification |
differences |
31.12.2023 |
||
Lease liabilities |
475 |
- |
210 |
- |
(227) |
6 |
464 |
Loans from external parties, |
3 697 |
2 590 |
- |
- |
(1 164) |
157 |
5 279 |
other than bank |
|||||||
Bank financing |
6 202 |
1 286 |
- |
- |
(19) |
343 |
7 812 |
Total movements non-current |
10 374 |
3 876 |
210 |
- |
(1 410) |
506 |
13 555 |
Lease liabilities |
103 |
(209) |
- |
- |
227 |
3 |
125 |
Loans from external parties, |
10 |
(114) |
- |
1 164 |
0 |
1 060 |
|
other than bank |
|||||||
Bank financing |
74 |
(113) |
- |
31 |
19 |
7 |
18 |
Total movements current |
187 |
(436) |
- |
31 |
1 410 |
11 |
1 203 |
Total |
10 561 |
3 440 |
210 |
31 |
- |
516 |
14 758 |
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 |
Net changes in bills payables and restricted deposits 2023
Non-cash |
||||
changes |
||||
Cash flows |
Currency |
|||
Receipts/ |
translation |
|||
Amounts in NOK million |
31.12.2022 |
Payments |
differences |
31.12.2023 |
Restricted deposits bills payables |
(395) |
47 |
(3) |
(351) |
Bills payables |
1 742 |
(284) |
7 |
1 466 |
Total |
1 347 |
(237) |
4 |
1 114 |
Net changes in bills payables and restricted deposits 2022
Non-cash |
||||
changes |
||||
Cash flows |
Currency |
|||
Receipts/ |
translation |
|||
Amounts in NOK million |
31.12.2021 |
Payments |
differences |
31.12.2022 |
Restricted deposits bills payables |
(601) |
231 |
(25) |
(395) |
Bills payables |
2 096 |
(449) |
96 |
1 742 |
Total |
1 494 |
(218) |
70 |
1 347 |
The cost of CO
2
allowances that Elkem needs to purchase in
addition to allowances received from the government (note 8
Other operating income), are based on estimated production
/ emissions for the year. The liability related to the purchase
of allowances is accrued for using an average cost method
with the assumption that the allowances received from the
government is consumed evenly across the year. The provision
for the purchase of allowances is measured at the agreed
purchase price for forward purchases and the remaining at the
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.
The estimate uncertainty primarily relates to environmental
measures related to closed production sites and landfills.
The potential outcome can vary within a relatively wide range
depending on the final scope of the measures required and the
cost of fulfilling the measures. In these cases, the estimated
provision is made based on a combination of expert opinions
and management’s assessment of the known facts and
Details of provision and other liabilities
| Non-current |
Current |
|||
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
31.12.2023 |
31.12.2022 |
Employee withholding taxes and other public taxes |
- |
- |
143 |
160 |
Value added tax |
- |
- |
252 |
137 |
Prepayments |
- |
- |
112 |
195 |
Prepayments from related parties (note 32) |
- |
- |
10 |
17 |
Liabilities to related parties (note 32) |
- |
- |
17 |
30 |
Provisions |
262 |
216 |
101 |
102 |
Contingent consideration acquisition of subsidiaries |
- |
- |
- |
42 |
Accrued expenses |
- |
- |
389 |
516 |
Grants, deferred income (note 8) |
- |
- |
34 |
8 |
Grants payable (note 8) |
17 |
16 |
- |
- |
Advances on export exchange contracts (ACC) |
- |
- |
106 |
160 |
Recourse liabilities factoring agreement (note 21) |
- |
- |
94 |
106 |
Settlement liabilities factoring agreements |
- |
- |
71 |
- |
Other liabilities |
- |
- |
53 |
72 |
Total provisions and other liabilities |
279 |
232 |
1 381 |
1 545 |
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 instalments and the
payments have not differed significantly from the maximum
that was recognised initially. As at 31 December 2023 the
contingent consideration is fully paid.
Elkem has for its Carbon operations in Brazil entered into
Advances on foreign exchange contracts (ACC) with financial
institutions. Under these contracts Elkem receives full or
partial prepayments from the financial institution before the
goods are shipped. The prepayments are used to finance
imports of raw materials.
Movements in contingent consideration
Amounts in NOK million |
2023 |
2022 |
Opening balance |
42 |
203 |
Fair value adjustment of contingent consideration upon payment |
(3) |
(0) |
Unwinding |
0 |
4 |
Payments |
(38) |
(176) |
Currency translation differences |
(1) |
12 |
Closing balance |
- |
42 |
Movements in provision
2023
Site Environmental |
Other |
Total |
|||||
Amounts in NOK million |
Restructuring |
restoration |
measures |
Litigations |
Customers |
provisions |
provisions |
Opening balance |
17 |
34 |
190 |
62 |
9 |
7 |
318 |
Additional provisions recognised |
43 |
2 |
6 |
5 |
1 |
10 |
67 |
Used during the year |
(15) |
(1) |
(1) |
(3) |
(5) |
(12) |
(37) |
Reversal of provisions recognised |
- |
- |
- |
- |
(1) |
- |
(1) |
Currency translation differences |
(0) |
0 |
9 |
7 |
1 |
0 |
16 |
Closing balance |
44 |
35 |
203 |
71 |
5 |
5 |
363 |
Hereof non-current |
- |
35 |
167 |
59 |
- |
1 |
262 |
Hereof current |
44 |
- |
36 |
11 |
5 |
5 |
101 |
Closing balance |
44 |
35 |
203 |
71 |
5 |
5 |
363 |
Movements in provision
2022
Site Environmental |
Other |
Total |
|||||
Amounts in NOK million |
Restructuring |
restoration |
measures |
Litigations Customers |
provisions |
provisions |
|
Opening balance |
70 |
32 |
109 |
66 |
4 |
134 |
415 |
Additional provisions recognised |
- |
2 |
83 |
7 |
6 |
0 |
99 |
Used during the year |
(31) |
(0) |
(2) |
(17) |
(1) |
(127) |
(180) |
Reversal of provisions recognised |
(26) |
- |
(1) |
(1) |
(1) |
- |
(28) |
Currency translation differences |
3 |
0 |
0 |
7 |
1 |
0 |
12 |
Closing balance |
17 |
34 |
190 |
62 |
9 |
7 |
318 |
Hereof non-current |
- |
34 |
131 |
50 |
- |
1 |
216 |
Hereof current |
17 |
- |
58 |
12 |
9 |
6 |
102 |
Closing balance |
17 |
34 |
190 |
62 |
9 |
7 |
318 |
Restructuring
The provision is related to Elkem's cost saving programme
in Silicones division.
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. Provisions are made
for each case based on estimates that are quality assured by
external parties. The estimates are manly unchanged from last
year, except from effects from inflation. It is expected that the
engineering work in Canada will start in 2024, with execution
in 2025. For the other projects the timing of when the work will
start is uncertain. A reasonable possible change in the estimate
for the environmental measures are aroud 20%.
Litigations
The provisions due to litigations are mainly related to the
Carbon division in Brazil.
Federal tax cases in Brazil can take a substantial amount
of time before resolution by the authorities, hence the time
of settlement is uncertain. The main part of the provision
is related to cases back to 2006. 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.
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
Non-derivative financial assets include trade receivables,
Non-derivative financial liabilities include interest-bearing
Elkem has long-term power purchase contracts settled in Euro
which is different from both Elkem and the counterparty’s
functional currency. The currency portion of these contracts is
an embedded derivative and is recognised and presented as
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. Elkem’s
principle is that power delivered in a different grid area than
the grid area where the power is consumed will meet the own
use criteria.
The group currently has no energy contracts in Norway that do
not meet the own use criteria except for the 30-øringen power
contract. This contract originally had net settlement and was
therefore classified as a derivative and cannot subsequently
be reclassified to own use. The 30-øringen derivative is
Estimates are used to estimate fair value for financial assets an
d
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
Assets by category
31 December 2023
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 |
745 |
232 |
- |
- |
- |
977 |
|
Other assets, non-current |
22 |
7 |
- |
18 |
75 |
456 |
556 |
Trade receivables |
21 |
- |
- |
- |
3 209 |
- |
3 209 |
Derivatives, current |
269 |
142 |
- |
- |
411 |
||
Other assets, current |
22 |
- |
- |
- |
123 |
1 939 |
2 062 |
Restricted deposits |
23 |
- |
- |
- |
388 |
- |
388 |
Cash and cash equivalents |
23 |
- |
- |
- |
6 367 |
- |
6 367 |
Total |
1 022 |
374 |
18 |
10 163 |
2 394 |
Liabilities by category
31 December 2023
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 |
23 |
- |
- |
13 509 |
- |
13 509 |
Derivatives, non-current 2) |
(127) |
362 |
- |
- |
235 |
|
Provisions and other liabilities, non-current |
24 |
- |
- |
- |
279 |
279 |
Trade payables |
- |
- |
5 281 |
- |
5 281 |
|
Interest-bearing liabilities, current 1) |
23 |
- |
- |
1 231 |
- |
1 231 |
Bills payables |
23 |
- |
- |
1 466 |
- |
1 466 |
Derivatives, current 2) |
(48) |
114 |
- |
- |
66 |
|
Provisions and other liabilities, current |
24 |
- |
- |
729 |
652 |
1 381 |
Total |
(174) |
475 |
22 216 |
930 |
Assets by category
31 December 2022
Assets at fair value |
|||||||
Assets at fair |
Assets at fair |
through other |
Loans and |
Non-financial |
|||
value through |
value - hedging |
comprehensive |
receivables at |
assets |
|||
Amounts in NOK million |
Note |
profit or loss |
instruments |
income |
amortised cost |
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 |
- |
885 |
618 |
1 545 |
Total |
15 |
144 |
18 490 |
850 |
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
Total |
Total |
|||||||
Amounts in NOK million |
Level 1 |
Level 2 |
Level 3 |
2023 |
Level 1 |
Level 2 |
Level 3 |
2022 |
Financial assets at fair value through profit or loss |
7 |
24 |
990 |
1 022 |
7 |
287 |
819 |
1 113 |
Derivatives designated in a hedging relationship |
- |
153 |
221 |
374 |
- |
(55) |
1 222 |
1 167 |
Assets at fair value through other comprehensive income |
- |
- |
18 |
18 |
- |
- |
18 |
18 |
Total assets |
7 |
178 |
1 229 |
1 414 |
7 |
233 |
2 058 |
2 297 |
Financial liabilities at fair value through profit or loss |
- |
(174) |
- |
(174) |
- |
(27) |
42 |
15 |
Derivatives designated in a hedging relationship |
- |
475 |
- |
475 |
- |
144 |
- |
144 |
Total liabilities |
- |
301 |
- |
301 |
- |
117 |
42 |
159 |
Level 1:
Financial assets measured at level 1 apply to external quoted
shares, which are measured based on the quoted prices.
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 derivative contracts,
contingent consideration and shares in unlisted companies.
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.
Assumptions for valuation of the contracts
→
Discount rate: 4.98% (4.87%) 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 2023
until 2030.
→
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 Provisions and other liabilities for value of
contingent liabilities.
Movements in fair value measurement level 3
Amounts in NOK million |
2023 |
2022 |
Opening balance |
2 016 |
212 |
Acquisition / business combinations |
2 |
(58) |
Transfer to / from other levels |
- |
3 |
Transfer to investment in equity accounted companies |
(11) |
- |
Change in fair value recognised in OCI, cash flow hedges |
(704) |
1 227 |
Hedge ineffectiveness |
58 |
1 391 |
Disposal |
(1) |
(5) |
Settlement / realised effects |
(137) |
(735) |
Other changes in fair value through profit or loss, unrealised |
4 |
(7) |
Currency translation differences |
1 |
(12) |
Closing balance |
1 229 |
2 016 |
(b) Details of financial instruments
Details of currency exchange contracts
31 December 2023
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 |
9 |
USD |
7 |
Fwd |
1,3454 |
2024 |
1 |
68 |
NOK |
1 897 |
EUR |
164 |
Fwd |
11,5408 |
2024 |
43 |
1 848 |
NOK |
193 |
JPY |
1 976 |
Fwd |
0,0975 |
2024 |
48 |
142 |
NOK |
234 |
JPY |
2 266 |
Fwd |
0,1031 |
2025-2026 |
61 |
163 |
NOK |
167 |
USD |
16 |
Fwd |
10,1675 |
2024 |
0 |
167 |
USD |
1 |
JPY |
168 |
Fwd |
0,0070 |
2024 |
(0) |
12 |
NOK |
807 |
EUR |
76 |
Embedded 2) |
10,6493 |
2024 |
(54) |
851 |
NOK |
5 101 |
EUR |
458 |
Embedded 2) |
11,1367 |
2025-2034 |
(235) |
5 148 |
Total fair value 3) |
(136) |
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 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 |
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 commodity contracts and interest
rate swap within the scope of IFRS 9
31 December 2023
Notional | ||||
Amounts in NOK million | Volume GWh / Oz | Due | Fair value | amount 1) |
Power contract '30-øringen' | 501 GWh | 2024 | 303 | 172 |
Power contract '30-øringen' | 3006 GWh | 2025-2030 | 907 | 1 105 |
Commodity contracts Platinum | 1176 Oz | 2024 | 0 | 3 |
Interest rate swap | 350 MNOK | 2023-2028 | 12 | 94 |
Total fair value contracts within scope of IFRS 9 2) | 1 223 |
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' | 3 507 | 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 |
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/
Financial assets
31 December 2023
Gross amount | ||||||
of financial | Net | Financial | ||||
liabilities set | amounts | instruments | ||||
Gross | off in the | of financial | not set off in | |||
amount of | statement | assets | the statement | Cash | ||
financial | of financial | recognised / | of financial | collateral | Net | |
Amounts in NOK million | assets | position | presented | position | pledged | amount |
Power contracts including embedded derivatives | 1 211 | - | 1 211 | - | - | 1 211 |
Forward currency contracts | 153 | - | 153 | 7 | - | 160 |
Total | 1 364 | - | 1 364 | 7 | - | 1 371 |
Financial liabilities
31 December 2023
Gross amount | ||||||
of recognised | Financial | |||||
Gross financial assets | Net | instruments | ||||
amount of | set off in the | amounts | not set off in | |||
recognised | statement | of financial | the statement | Cash | ||
financial | of financial | liabilities | of financial | collateral | Net | |
Amounts in NOK million | liabilities | position | presented | position | pledged | amount |
Power contracts including embedded derivatives | 289 | - | 289 | - | - | 289 |
Forward currency contracts | 12 | - | 12 | 7 | - | 19 |
Total | 301 | - | 301 | 7 | - | 308 |
Financial assets
31 December 2022
Gross amount | ||||||
of financial | Net | Financial | ||||
liabilities set | amounts | instruments | ||||
Gross | off in the | of financial | not set off in | |||
amount of | statement | assets | the statement | Cash | ||
financial | of financial | recognised / | of financial | collateral | Net | |
Amounts in NOK million | assets | position | presented | position | pledged | amount |
Power contracts including embedded derivatives | 2 123 | (1) | 2 122 | - | - | 2 122 |
Forward currency contracts | 147 | - | 147 | 21 | - | 168 |
Total | 2 269 | (1) | 2 268 | 21 | - | 2 289 |
Financial liabilities
31 December 2022 | Gross amount | |||||
of recognised | ||||||
financial | Financial | |||||
Gross | assets set | Net | instruments | |||
amount of | off in the | amounts | not set off in | |||
recognised | statement | of financial | the statement | Cash | ||
financial | of financial | liabilities | of financial | collateral | Net | |
Amounts in NOK million | liabilities | position | presented | position | pledged | amount |
Power contracts including embedded derivatives | 23 | (1) | 22 | - | - | 22 |
Forward currency contracts | 86 | - | 86 | 21 | - | 108 |
Total | 109 | (1) | 108 | 21 | - | 129 |
Elkem has applied IFRS 9 for hedge accounting. Elkem applies
cash flow hedging and net investment hedging. Cash flow
hedging is applied to one power contract, interest rate swap
and for hedging of sales in foreign currency.
The 30-øringen power contract is delivered in the power
price area NO2 in the south of Norway but is used to hedge
cash flows for all the Norwegian plants including plants in
other power price areas. At initial hedge designation there
was a strong economic relationship between the prices in the
different price areas. However, due to the at times significant
differences in prices between the price areas the last 2.5
years, significant judgement is required to assess if there is
still an economic relationship between the hedged item and
the hedging instrument. There is an expectation that the price
differences will be reduced over time due to for example grid
improvements and changes in the supply/demand balance.
Given the strict requirements in IFRS 9 for being allowed to
discontinue hedging and the fact that the 30-øringen is a long-
term contract with expiry in 2030 it has been assessed that
there is still an economic relationship between the hedging
See disclosures describing estimation uncertainty for financial
assets in note 25 Financial assets and liabilities.
Elkem's hedging instruments
Cash flow hedge
Elkem has forward currency contracts and embedded EUR
derivatives in power contracts 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
derivative contracts, 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. Elkem has a policy
of floating interest rate on long term financing. In 2023 Elkem
issued financing with fixed interest rate and entered into a
interest rate swap from fixed to floating interest rate. 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 interest expense when realised.
Net investment hedge
Elkem has a EUR 500 term loan. EUR 275 million of the loan
was designated as a hedge of the net investment in the group’s
subsidiaries with EUR as functional currency. In November
2023 EUR 45 million was discontinued as a consequence of
reduced value of net investments in euro, reducing the amount
of the loan designated as a hedge of the net investment to
EUR 230 million. The fair value and carrying amount of the
borrowing at 31 December 2023 was NOK 2,585 million
(NOK 2,891 million). The change in foreign exchange loss of
NOK 199 million (a loss of NOK 142 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
recognised from the net investment hedge.
See note 27 Financial risk for Elkem's hedging policy.
Cash flow hedging instruments, by type | ||||
31.12.2023 | 31.12.2023 | 31.12.2022 | 31.12.2022 | |
Assets | Liabilities | Assets | Liabilities | |
Amounts in NOK million | fair value | fair value | fair value | fair value |
Forward currency contracts | 141 | 12 | 110 | 80 |
Power contracts financial institutions | - | - | 28 | - |
Power contract '30-øringen' | 220 | - | 1 235 | - |
Power contracts embedded derivatives | - | 463 | (207) | 56 |
Interest rate swap | 12 | - | - | |
Currency effect loan EUR | - | - | - | 8 |
Commodity contracts Platinum | 0 | - | 1 | - |
Total hedging instruments | 374 | 475 | 1 167 | 144 |
Less non-current portion | ||||
Forward currency contracts | 60 | - | 87 | - |
Power contracts financial institutions | - | - | - | - |
Power contract '30-øringen' | 162 | - | 861 | - |
Power contracts embedded derivatives | - | 362 | (207) | - |
Interest rate swap | 9 | - | - | - |
Currency effect loan EUR | - | - | - | - |
Commodity contracts Platinum | - | - | - | - |
Current portion of hedging instruments | 142 | 114 | 427 | 144 |
As at 31 December 2023 financial power contracts designated
in a hedging relationship comprise 14% of expected
consumption in Norway in the period 2024 - 2030.
Elkem has hedged approximately 19% of the expected
revenues in EUR and approximately 2% of expected revenues
in USD for 2024. For the years 2025-2034 EUR is hedged at a
range of 1 - 6%.
Financial instruments
31 December 2023
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 |
153 |
129 |
69 |
52 |
8 |
- |
Embedded EUR derivatives |
(289) |
(463) |
(101) |
(96) |
(84) |
(182) |
Power contracts |
1 211 |
220 |
58 |
42 |
38 |
83 |
Interest rate swap |
12 |
12 |
3 |
3 |
3 |
4 |
Commodity contracts Platinum |
0 |
0 |
0 |
- |
- |
- |
Total 1) |
1 087 |
(102) |
28 |
1 |
(36) |
(95) |
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 |
|
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 357 million (NOK 1,471 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 357 million (NOK 1,471 million)
recognised in 2023, NOK 273 million (NOK 1,422 million) relates
to hedge ineffectiveness caused by these price differences.
The remaining gain of NOK 84 million (NOK 49 million) is
related to discontinuation of power hedging caused by furnace
curtailments in Norway.
Realised effects hedge accounting
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
Realised effects from forward currency contracts, recognised in revenue |
(229) |
(14) |
Realised effects from embedded derivatives EUR, recognised in revenue |
(122) |
(29) |
Realised effects from EUR loans, recognised in revenue |
(15) |
(5) |
Realised effects from platinum contracts, recognised in revenue |
1 |
0 |
Realised effects from power contracts, recognised in raw materials and energy for production |
112 |
377 |
Realised effects hedge discontinuation, recognised in other items |
85 |
38 |
Realised effects from interest rate swap, recognised in finance expenses |
(1) |
- |
Realised effects Salten Energigjenvinning, business combination (note 4) |
- |
58 |
Total realised effects hedge accounting |
(170) |
424 |
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
2023
Opening |
Net change |
Reclassified |
Closing |
|
Amounts in NOK million |
balance |
in fair value |
to P&L |
balance |
Hedging of future sales, forward currency contracts |
30 |
(130) |
229 |
129 |
Hedging of future sales, embedded EUR derivatives in own use power contracts 1) |
(263) |
(322) |
122 |
(463) |
Hedging of future sales, currency effects EUR loan |
(8) |
(7) |
15 |
- |
Hedging of future sales, platinum contracts 2) |
2 |
(1) |
(1) |
0 |
Hedging of future need for power, contracts with financial institutions |
28 |
(22) |
(6) |
0 |
Hedging of future need for power, contract '30-øringen' 2) |
1 235 |
(824) |
(190) |
220 |
Change in fair value of derivatives designated as a hedging of future interest expense |
- |
11 |
1 |
12 |
Total (before tax) |
1 023 |
(1 294) |
170 |
(102) |
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 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 |
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, |
58 |
0 |
(58) |
- |
business combination (see note 4) |
||||
Total (before tax) |
455 |
992 |
(424) |
1 023 |
1)
Hedge accounting from 2016.
2)
Elkem is exposed to financial risk 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 risk, 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 Financial assets and liabilities and
26 Hedging). 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
31.12.2023 |
31.12.2022 |
||||
Amounts in NOK million |
Fair value |
Adjusted NPV |
Fair value |
Adjusted NPV |
|
Discount rate (used 5.0% (4.9%)) |
change with -3.5 %-point |
1 211 |
1 323 |
2 037 |
2 239 |
Discount rate (used 5.0% (4.9%)) |
change with +3.5 %-point |
1 211 |
1 115 |
2 037 |
1 869 |
CPI (used 2.0%) |
change to 1% |
1 211 |
1 241 |
2 037 |
2 084 |
CPI (used 2.0%) |
change to 3% |
1 211 |
1 180 |
2 037 |
1 988 |
Power price |
decrease -10% |
1 211 |
982 |
2 037 |
1 721 |
Power price |
increase + 10% |
1 211 |
1 439 |
2 037 |
2 353 |
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 mainly in 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 dollars
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 367 million from hedging
programme (loss of NOK 49 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 |
2023 |
2022 |
Net foreign exchange gains (losses) - forward currency contracts - recognised in other items |
(26) |
9 |
Operating foreign exchange gains (losses) - recognised in other items |
308 |
387 |
Net foreign currency exchange gains (losses) on financing activities - recognised in foreign exchange gains (losses) |
(106) |
85 |
Currency translation differences - recognised in other comprehensive income |
476 |
765 |
Hedging of net investment in foreign operations - recognised in other comprehensive income |
(199) |
(142) |
Total |
453 |
1 104 |
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
2023 |
2022 |
|
USD |
10.1655 |
9.8714 |
EUR |
11.2380 |
10.5130 |
CNY |
1.4308 |
1.4309 |
CAD |
7.6706 |
7.2879 |
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 2023
Amounts in NOK million |
USD |
EUR |
CNY |
CAD |
NOK |
Other |
Total |
Other non-current assets |
- |
- |
- |
- |
- |
- |
- |
Trade receivables |
544 |
27 |
- |
- |
- |
113 |
685 |
Other assets |
- |
- |
- |
- |
- |
- |
- |
Restricted deposits |
- |
- |
- |
- |
- |
- |
- |
Cash and cash equivalents |
913 |
3 380 |
329 |
(331) |
0 |
673 |
4 964 |
Total monetary assets |
1 457 |
3 408 |
329 |
(331) |
0 |
786 |
5 649 |
Interest-bearing liabilities |
- |
8 560 |
- |
- |
- |
- |
8 560 |
Other liabilities |
- |
- |
- |
- |
- |
- |
- |
Trade payables |
650 |
219 |
- |
- |
0 |
89 |
959 |
Bills payable |
- |
- |
- |
- |
- |
- |
- |
Total monetary liabilities |
650 |
8 778 |
- |
- |
0 |
89 |
9 518 |
Derivatives, notional value |
167 |
7 847 |
- |
- |
- |
305 |
8 318 |
Net currency exposure financial position |
641 |
(13 217) |
329 |
(331) |
0 |
392 |
(12 187) |
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) |
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 |
31.12.2023 |
31.12.2022 |
|||
Change in |
Effect on profit |
Effect on |
Effect on profit |
Effect on |
|
Amounts in NOK million |
FX rate |
before tax |
pre-tax equity |
before tax |
pre-tax equity |
EUR |
5% |
(113) |
(548) |
(46) |
(431) |
EUR |
-5% |
113 |
548 |
46 |
431 |
USD |
5% |
40 |
(8) |
79 |
(31) |
USD |
-5% |
(40) |
8 |
(79) |
31 |
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 2023
Amounts in NOK million |
USD |
EUR |
CNY |
CAD |
NOK |
Other |
Total |
Other non-current assets |
61 |
319 |
36 |
28 |
69 |
43 |
556 |
Trade receivables |
879 |
243 |
1 366 |
13 |
101 |
607 |
3 209 |
Other assets |
36 |
293 |
460 |
14 |
1 018 |
241 |
2 062 |
Restricted deposits |
0 |
0 |
383 |
- |
4 |
1 |
388 |
Cash and cash equivalents |
1 265 |
3 672 |
1 536 |
(14) |
(1 155) |
1 063 |
6 367 |
Total monetary assets |
2 242 |
4 526 |
3 781 |
41 |
37 |
1 955 |
12 583 |
Asset non-monetary items |
2 562 |
6 687 |
13 685 |
1 075 |
12 033 |
1 876 |
37 917 |
Total assets |
4 803 |
11 213 |
17 466 |
1 116 |
12 070 |
3 831 |
50 500 |
Interest-bearing liabilities |
20 |
8 664 |
2 334 |
- |
3 647 |
74 |
14 741 |
Other liabilities |
67 |
222 |
198 |
9 |
595 |
290 |
1 381 |
Trade payables |
756 |
1 172 |
2 418 |
92 |
576 |
268 |
5 281 |
Bills payable |
- |
- |
1 466 |
- |
- |
- |
1 466 |
Total monetary liabilities |
843 |
10 058 |
6 416 |
101 |
4 818 |
632 |
22 868 |
Liabilities non-monetary items |
118 |
708 |
264 |
210 |
1 646 |
228 |
3 174 |
Total liabilities |
960 |
10 766 |
6 680 |
311 |
6 464 |
860 |
26 042 |
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 |
(iii) Interest rate risk
Elkem's interest rate risk arises from interest-bearing liabilities
granted by external financial institutions, factoring agreements
(Note 21 Trade receivables), liabilities related to factoring
agreements and advances on export exchange contracts
(Note 24 Provisions and other liabilities). In addition Elkem
has supplier finance agreements of NOK 143 million (NOK
94 million) classified as trade payables. 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 and 2023 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 future interest rate hikes.
Elkem has the following items exposed to interest rate risk
31 December 2023
Amounts in NOK million |
Floating |
Fixed |
Total |
Interest-bearing liabilities (Note 23) |
16 038 |
169 |
16 206 |
Derecognised trade receivables under factoring agreements (note 21) |
1 806 |
- |
1 806 |
Advances on export exchange contracts (note 24) |
106 |
- |
106 |
Recourse liability factoring agreement (note 24) |
94 |
- |
94 |
Settlement liability factoring agreements (Note 24) |
71 |
- |
71 |
Supplier finance agreements |
143 |
- |
143 |
Interest-bearing assets (note 23) |
(6 816) |
- |
(6 816) |
Bills payables (note 23) |
(1 466) |
- |
(1 466) |
Restricted deposit bills payable (note 23) |
351 |
- |
(351) |
Net exposure |
10 327 |
169 |
9 793 |
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 2023, with all other variables held constant, the profit
(loss) for the year would have been NOK 81 million (NOK 25
million) lower. The expense that Elkem is charged for the issued
bills relates to the fact that Elkem does not receive interest on
the deposit that is paid into a restricted bank account when a bill
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 0 million (NOK 5 million)
on trade receivables.
The maximum exposure to credit risk for trade receivables for
the group is NOK 3,218 per 31 December 2023 (NOK 4,257
million). See 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
2023 Elkem has unrestricted cash and cash equivalents of NOK
6,367 million (NOK 9,255 million). In addition, revolving credit
facilities amount to NOK 6,293 million (NOK 6,356 million), of
which NOK 6,293 million is undrawn (NOK 6,342 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 2023
and also complied with the covenants as of 31 December 2022,
see note 23 Interest-bearing assets and liabilities.
The policy is to have cash equivalents 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 2023 for Elkem is
shown in the table below.
Year / maturity
Amounts in NOK million |
2024 |
2027 |
Total |
Total amount of credit facilities |
674 |
5 619 |
6 293 |
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 2023 |
||||||||
2029 |
Carrying |
|||||||
Amounts in NOK million |
2024 |
2025 |
2026 |
2027 |
2028 |
and later |
Total |
amount |
Trade receivables |
3 209 |
- |
- |
- |
- |
- |
3 209 |
3 209 |
Derivative assets |
384 |
292 |
241 |
240 |
239 |
124 |
1 520 |
1 388 |
Total assets |
3 593 |
292 |
241 |
240 |
239 |
124 |
4 729 |
4 597 |
Trade payables |
5 281 |
- |
- |
- |
- |
- |
5 281 |
5 281 |
Derivative liabilities |
67 |
54 |
51 |
42 |
20 |
117 |
352 |
301 |
Lease liabilities |
125 |
105 |
84 |
65 |
58 |
264 |
701 |
589 |
Loans from external parties, other than bank |
1 416 |
1 333 |
2 596 |
611 |
1 475 |
- |
7 431 |
6 339 |
Bank financing |
383 |
448 |
909 |
6 114 |
236 |
1 326 |
9 416 |
7 830 |
Bills payable |
1 466 |
- |
- |
- |
- |
- |
1 466 |
1 466 |
Total liabilities |
8 737 |
1 940 |
3 640 |
6 833 |
1 789 |
1 708 |
24 646 |
21 805 |
31 December 2022 |
||||||||
2028 |
Carrying |
|||||||
Amounts in NOK million |
2023 |
2024 |
2025 |
2026 |
2027 |
and later |
Total |
amount |
Trade receivables |
4 248 |
- |
- |
- |
- |
- |
4 248 |
4 248 |
Derivative assets |
698 |
434 |
346 |
306 |
287 |
482 |
2 554 |
2 273 |
Total assets |
4 946 |
434 |
346 |
306 |
287 |
482 |
6 802 |
6 521 |
Trade payables |
5 335 |
- |
- |
- |
- |
- |
5 335 |
5 335 |
Derivative liabilities |
109 |
8 |
- |
- |
- |
- |
117 |
109 |
Lease liabilities |
103 |
101 |
79 |
65 |
55 |
291 |
695 |
578 |
Loans from external parties, other than bank |
103 |
1 009 |
1 299 |
979 |
518 |
105 |
4 014 |
3 706 |
Bank financing |
140 |
73 |
102 |
125 |
5 395 |
827 |
6 661 |
6 276 |
Bills payable |
1 742 |
- |
- |
- |
- |
- |
1 742 |
1 742 |
Total liabilities |
7 532 |
1 191 |
1 480 |
1 169 |
5 968 |
1 223 |
18 564 |
17 747 |
(d) Climate risk
Governance
In Elkem the responsibility for climate-related issues sits with
the board, and the management of risks and opportunities
related to climate is integrated into Elkem’s overall business
strategy. The Audit committee has board level responsibility
related to managing sustainability, non-financial reporting,
internal control, and sustainability-related risk. The CEO,
supported by the CFO and SVP Technology, ensures daily
operational responsibility for climate-related issues. Regular
reporting to the board and proactive engagement with
stakeholders, including investors and banks, are integral to
Elkem's governance structure.
Strategy
Elkem's climate strategy spans short-, medium-, and long-
term horizons, evaluating transition risks and opportunities.
Recognising its role in the full silicon value chain, Elkem
addresses specific climate risks tied to its carbon-intensive
production process. Elkem has established its climate
roadmap, which is the company's transition plan that
outlines the initiatives and actions to be taken to meet the
goal of the Paris Agreement of well below 2°C temperature
increase. Elkem proactively identifies climate impacts and
pursues a dual-play growth strategy focused on reducing
fossil CO
2
emissions and promoting circular economies. The
climate roadmap integrates with Elkem's corporate strategy,
emphasising its commitment to a sustainable future.
Risk Management
Climate-related considerations are a key part of Elkem's risk
management process, with a comprehensive assessment
presented annually to the board. The evaluation identifies
potential financial impacts on Elkem's EBIT and equity within
a 5 year timeframe. The risk mapping process categorises
risks into strategic, financial, raw material, production and
process, and market and product risks. Climate related risks
can be split into transitional and physical climate risks. The
key transitional risks include regulatory risks, such as changes
in the framework for CO
2
quotas and CO
2
compensation.
Elkem monitors physical climate risks through site-specific
analyses, recognising the potential impact of climate change
on its operations. Central physical climate risks for Elkem are
drought and extreme weather events, but the effects differ
from site to site. Elkem has not identified any immediate need
for action related to the buildings and assets identified.
In addressing emission abatement project profitability, Elkem
employs an internal carbon price aligned with market trends.
Risks are categorised by financial impact (high, medium,
low) and frequency (low, medium, high). As Elkem navigates
climate-related challenges and opportunities, the company
remains committed to responsible governance, sustainable
strategies, and effective risk management practices.
Key risks and opportunities
Elkem’s key transitional climate risk is changes to existing
regulations and carbon pricing mechanisms, and the
emergence of new regulations. Use of a carbon material is
necessary when producing silicon and ferrosilicon, hence
emissions of CO
2
is inevitable, resulting in significant scope
1 emissions. Elkem falls under the ambit of EU’s emission
trading system (ETS), and changes to number of free
allowances and pricing of quotas influence Elkem’s cost of
raw materials and energy for production. In addition, Elkem
is eligible for CO
2
compensation in Norway for the implicit
CO
2
quota costs in Norwegian electricity prices. In 2022, the
government decided to compensate companies for the CO
2
quota price above NOK 200 per quota. In 2023, this floor was
increased to NOK 375 per quota. Prior to 2022 there was no
floor and hence compared to previous years Elkem’s share
of CO
2
cost in the power prices that are compensated is
reduced. Elkem is not covered by Carbon Border Adjustment
Mechanism (CBAM) currently, but if Norway choses to adopt
CBAM this would also affect Elkem, and there is significant
concern that the scheme has shortcomings that would be
unfavourable for Elkem when competing in global markets. To
mitigate this risk Elkem is working to reduce its CO
2
emissions
through the use of biocarbon as a reductant, and research and
testing of carbon capture technology.
Elkem’s production sites face different levels of physical
climate risk. Changes to severity and frequency of extreme
weather could pose risk to many of the sites, but the location
and infrastructure mitigates this risk. Elkem has not identified
any immediate need for action related to buildings and assets
identified. Elkem is however, monitoring temperature increases,
increased dry spells, ocean rise, and extreme weather events to
secure assets and avoid business interruptions.
Elkem’s opportunities related to climate change are significant.
Elkem’s products are a key component to the green transition,
examples of this being silicones used in electric vehicles (EVs),
silicones, silicon and foundry products used in renewable and
nuclear energy production, and silicones and microsilica in
construction. There is also a potential in recycling and reuse
related to silicone production.
Another key component in the green transition is batteries, and
a vital component of batteries are anodes. Elkem developed
a new technology for production of synthetic anode graphite
to batteries based on 100+ years of experience in large-
scale manufacturing of carbon materials in high temperature
processes. The process has a 90% lower CO
2
footprint
compared to existing materials. This technology resulted in the
establishment of Vianode AS, a company where Elkem owns
40%, that is set to capitalise on the increased demand for
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
Elkem’s management reports. Elkem initiated a waiver process
during first quarter of 2024, and requested the lenders’
consent for a temporary waiver of the current Interest Cover
Ratio to ensure that Elkem has sufficient headroom to operate
through these uncertain times.
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 2022 Elkem distributed NOK
6.00 per share in dividends and for the year 2023 the board
has proposed to not pay dividends.
As at 31 December 2023, Elkem's equity was NOK 24,458
million, including non-controlling interests of NOK 133 million.
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 Shareholders to the
financial statement of Elkem ASA.
Number of shares in million shares
| 2023 |
2022 |
|||||
Shares |
Treasury |
Total issued |
Shares |
Treasury |
Total issued |
|
outstanding |
shares |
shares |
outstanding |
shares |
shares |
|
Beginning of the year |
634 476 985 |
4 964 393 |
639 441 378 |
633 037 606 |
6 403 772 |
639 441 378 |
Capital increase |
- |
- |
- |
- |
- |
- |
Increase in treasury shares |
(2 000 000) |
2 000 000 |
- |
(5 000 000) |
5 000 000 |
- |
Sale of treasury shares |
1 413 303 |
(1 413 303) |
- |
6 439 379 |
(6 439 379) |
- |
End of the year |
633 890 288 |
5 551 090 |
639 441 378 |
634 476 985 |
4 964 393 |
639 441 378 |
The share capital of Elkem ASA is NOK 3,197,206,890 divided
on 639,441,378 shares of NOK 5 nominal value. Of this amount
Elkem ASA held 5,551,090 treasury shares, 0.9% of total
issued shares. Elkem has in 2023 acquired 2,000,000 own
shares that will be used as settlement in Elkem's share option
scheme. Total transaction value was NOK 45 million. Elkem
has in 2023 sold 1,413,303 shares in connection with Elkem's
share option scheme. Total consideration was NOK 36 million.
In the annual general meeting held on 28 April 2023, 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 2024, but not later
than 30 June 2024. 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 28 April 2023, 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% of the current share
capital. The authorisation is valid until the annual general
meeting in 2024, but not later than 30 June 2024. 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 28 April 2023, 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 2024, but not later than 30 June 2024. 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 on profit
attributable to ordinary shareholders and weighted-average
number of ordinary shares outstanding after adjustment for
2023 | 2022 | |
Weighted average number of shares outstanding | 634 991 082 | 633 563 574 |
E ffects of dilution | 798 645 | 2 025 138 |
W eighted average number of shares outstanding - diluted | 635 789 727 | 635 588 712 |
O wners of the parent's share of profit (loss) (NOK million) | 72 | 9 561 |
E arnings per share (NOK) | 0.11 | 15.09 |
D iluted earnings per share (NOK) | 0.11 | 15.04 |
The following table gives a detailed overview of changes
in working capital in the statement of cash flows. Working
capital is defined as accounts receivables, inventories, other
current assets, accounts payables, current employee benefit
obligations and other current liabilities. Accounts receivables
are defined as trade receivables less bills receivables. 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 payables 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 | 2023 | 2022 |
Changes in accounts receivable | 924 | 324 |
Changes in inventories | 1 660 | (2 258) |
Changes in other current assets | (375) | 99 |
Changes in accounts payable | (349) | 134 |
Changes in other current liabilities including employee benefit obligations | (275) | 118 |
Total | 1 584 | (1 583) |
Liquidity effects of contingent considerations
Amounts in NOK million
2023
2022
Settlement of contingent consideration
39
160
Discounting element on settlement of contingent consideration
4
12
Fair value adjustment on settlement of contingent consideration
(3)
(0)
Foreign exchange gains (losses) from date of control
(2)
4
Total payment of contingent consideration related to acquisitions (IFRS 3)
38
Elkem group that are under control (either directly or indirectly),
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 operations.
Transactions with related parties
2023
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 | - | (282) | 77 | (223) | 0 | - |
Related parties within Sinochem | 206 | (636) | 2 | (102) | - | - |
Other related parties | - | (17) | - | (23) | - | - |
Total | 206 | (935) | 79 | (348) | 0 | - |
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-lese
Balances with related parties
| Non-current |
Current |
|||
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
31.12.2023 |
31.12.2022 |
Receivables from joint ventures and associates, interest-bearing |
1 |
1 |
- |
- |
Receivables from joint ventures and associates, interest free |
- |
- |
0 |
- |
Receivables from related parties within Sinochem, interest free |
- |
- |
8 |
7 |
Trade receivables, joint ventures and associates |
- |
- |
12 |
15 |
Trade receivables, related parties within Sinochem |
- |
- |
16 |
4 |
Prepayments to related parties within Sinochem |
- |
- |
2 |
15 |
Liabilities to related parties within Sinochem, interest free |
- |
- |
(17) |
(30) |
Trade payables, Bluestar Elkem Investment Co. Ltd. S.A |
- |
- |
(5) |
(5) |
Trade payables, joint ventures and associates |
- |
- |
(94) |
(71) |
Trade payables, related parties within Sinochem |
- |
- |
(54) |
(79) |
Prepayments from joint ventures and associates |
- |
- |
(10) |
(17) |
Prepayments from related parties within Sinochem |
(0) |
- |
||
Net balances with related parties |
1 |
1 |
(141) |
(161) |
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 3.8% (3.0%).
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
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 41.0 million is paid as of 31 December 2023. In
addition Elkem has committed to sell the land, buildings and
equipment needed to establish the cogeneration facility and
committed to supply steam. The sale is partly effected in 2023
resulting in a gain of CNY 9 million (NOK 12 million), wherof
CNY 3 million (NOK 4 million) representing Elkem's share of
the gain is eliminated in the consolidated financial statements.
The facility is up and running and Elkem purchase power
generated by the facility.
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
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 |
Book value pledged assets |
||||
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
Pledged liabilities |
94 |
125 |
Building |
10 |
30 |
Machinery and plant |
7 |
0 |
|||
Accounts receivables |
102 |
106 |
|||
Inventories |
67 |
- |
Elkem makes limited use of guarantees, see specification below.
Guarantee commitments |
||
Amounts in NOK million |
31.12.2023 |
31.12.2022 |
Guarantee commitment KLIF (Climate and Pollution Agency) |
40 |
40 |
Guarantee commitment tax cases Brazil |
47 |
38 |
Events after the reporting period
Events after the reporting period related to Elkem'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 Elkem's financial position at the end of
the reporting period, but will have effect on future financial
would have had a material impact on the financial statements
Table
of contents
Financial statements
Income statement
280
Balance sheet
281
Cash flow statement
282
General information
Note 1
General information
283
Note 2
Significant accounting policies
283
Note 3
Accounting estimates
288
Income statements
Note 4
Operating income
288
Note 5
Grants
289
Note 6
Employee benefit expenses
290
Note 7
Employee retirement benefits
291
Note 8
Other operating expenses
292
Note 9
Operating lease
293
Note 10 Other gains (losses) related to operating activities
293
Note 11
Finance income and expenses
294
Note 12 Taxes
294
Balance sheet
Note 13
Property, plant and equipment
296
Note 14 Intangible assets and goodwill
297
Note 15
Investments in subsidiaries
298
Note 16
Investments in joint ventures
299
Note 17 Inventories
301
Note 18 Trade receivables
301
Note 19 Other assets
302
Note 20 Equity
303
Note 21 Shareholders
304
Note 22 Interest-bearing assets and liabilities
304
Note 23 Provisions and other liabilities
307
Note 24 Financial instruments
308
Other information
Note 25 Financial Risk
310
Note 26 Related parties
310
Note 27 Pledge of assets and guarantees
312
Note 28 Supplemental information to the cash flow statement
312
Note 29 Events after the reporting period
313
Income statement - Elkem ASA
Amounts in NOK million
Note
2023
2022
1 January - 31 December
Revenue
Other operating income
Total operating income
4
4, 5
11 034
593
11 628
15 912
543
16 455
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
(6 340)
(1 429)
(2 745)
433
(463)
(20)
(10 563)
(6 183)
(1 348)
(2 684)
1 712
(407)
(3)
(8 912)
Operating profit (loss)
1 065
7 543
Income from subsidiaries and associates
Income (loss) from joint ventures
Finance income
Foreign exchange gains (losses)
Finance expenses
Profit (loss) before income tax
15
16
11
11
11
203
(63)
426
(313)
(851)
467
229
(17)
166
(62)
(267)
7 593
Income tax (expenses) benefit
Profit (loss) for the year
12
(102)
365
(1 603)
5 990
Balance sheet - Elkem ASA
Amounts in NOK million
Note
31.12.2023
31.12.2022
Assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments in subsidiaries
Investments in joint ventures
Derivatives
Other assets
Total non-current assets
13
14
14
15
16
24
19
4 578
12
88
12 902
843
977
6 295
25 695
4 098
16
81
12 604
639
1 559
4 278
23 275
Inventories
Trade receivables
Derivatives
Other assets
Cash and cash equivalents
Total current assets
17
18
24
19
22
2 421
1 312
410
904
3 331
8 379
2 753
1 582
709
1 786
5 316
12 145
Total assets
34 074
35 420
Equity and liabilites
Paid-in capital
Retained earnings
Total equity
20, 21
20
3 498
9 912
13 410
3 493
10 515
14 009
Interest-bearing liabilities
Deferred tax liabilities
Pension liabilities
Derivatives
Provisions and other liabilities
Total non-current liabilities
22
12
7
24
23
11 103
514
84
235
84
12 019
9 074
741
80
-
82
9 977
Trade payables
Income tax payables
Interest-bearing liabilities
Derivatives
Dividend
Provision and other liabilities
Total current liabilities
12
22
24
20
23
1 261
55
6 459
66
-
803
8 644
1 353
1 330
3 903
108
3 813
927
11 435
Total equity and liabilities
34 074
35 420
Oslo, 12 March 2024
Zhigang Hao
Chair
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Bo Li
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
2023
2022
1 January - 31 December
Operating profit (loss)
Changes in fair value of derivatives
Amortisation, depreciation and impairment losses
Changes in working capital
Changes in provisions, pension obligations and other
Interest payments received
Interest payments made
Income taxes paid
Cash flow from operating activities
13, 14
28
1 065
(157)
483
474
(90)
147
(787)
(1 332)
(198)
7 543
(1 042)
410
(875)
(94)
91
(269)
(450)
5 314
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 contribution to joint ventures
Increase in loans to subsidiaries
Repayment on loans to subsidiaries
Dividend and group contribution
Other investments / sales
Cash flow from investing activities
13, 14
5
13
15
16
22, 26
22, 26
15
(1 035)
93
24
-
(337)
(267)
(795)
12
203
1
(2 100)
(619)
42
5
38
(913)
(267)
(1 848)
334
138
0
(3 089)
Dividend paid to owners
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
22
22
22, 26
22, 26
(3 815)
(8)
2 590
(167)
2 064
(351)
312
(1 900)
(38)
5 702
(6 131)
1 578
(380)
(1 169)
Change in cash and cash equivalents
(1 986)
1 056
Currency translation differences
Net change in cash and cash equivalents
0
(1 985)
0
1 056
Cash and cash equivalents opening balance
22
5 316
4 260
Cash and cash equivalents closing balance
22
3 331
5 316
Notes to the financial statements - 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.
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 for 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 Elkem ASA 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 are classified on 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 have 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 are passed to the buyer when the
goods are handed over to the carrier engaged by the buyer.
"C" terms, where Elkem ASA arranges and pays for the main
carriage but without assuming the risk of the main carriage.
The risk and reward are passed to the buyer when the goods
are handed over to the carrier engaged by the seller.
"D" terms, where Elkem ASA 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 as revenue 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 Elkem ASA 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 are presented net as
reduction of impairment losses to assets / receivables, included
in other operating expenses. Interest income is recognised on
accrual basis. Dividends and group contributions are recognised
when Elkem ASA's 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 policy decisions. 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 decisions about the relevant activities.
Interests in subsidiaries and associates are recognised at cost
less any write-down for impairment. Dividends and group
contributions are recognised as an income from subsidiaries
and associates when Elkem ASA's right to receive dividends is
determined by the shareholders' meeting. If dividends or group
contributions exceed withheld profits after the acquisition
date, the excess amount represents repayment of invested
capital, and the distribution will be deducted from the recorded
value of the acquisition in the balance sheet.
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 venture's 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 presented 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
intangible 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 are presented at cost, less
accumulated depreciation 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 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, 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
are 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,
Elkem ASA 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 all substantial 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
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.
Non-financial commodity contracts, where the relevant
commodity is readily convertible to cash and where the
contracts are for own use, are recognized in the balance sheet
at cost and in the income statement on realisation. This applies
to power purchase contracts intended for use in the plants'
production processes.
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 Financial
Instruments for all hedge accounting.
Cash flow hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualified as cash flow hedges, are
recognised in equity and accumulated under the heading
of retained earnings. Gains / losses recognised in equity are
reclassified into the income statement in the same period(s) as
the forcasted transaction occurs. The unrealised gains / losses
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 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 by the
Norwegian Tax Office (NTO). Provisions are made at the
amount expected to be paid or according to the decision by the
NTO for cases where the NTO has reached a conclusion. The
provision for cases where the NTO has reached a conclusion
is reversed when it is virtually certain that the decision will be
overruled, which is normally when the tax position is settled in
favour of Elkem ASA 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
Elkem ASA 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, Elkem ASA revises its estimates of the
number of options that are expected to vest based on the non-
market vesting and service conditions. Elkem ASA 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 that 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 statements. 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.
Taxes
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. See details
on current uncertain tax positions in note 12 Taxes.
Provisions and other liabilities
Elkem has several types of provisions due to its operations,
see note 23 Provisions and other liabilities. 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 Elkem ASA. 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.
The estimate uncertainty primarily relates to environmental
measures and site restoration related to closed production
sites and landfills. The potential outcome can vary within
a relatively wide range depending on the final scope of the
measures required and the cost of fulfilling the measures.
In these cases, the estimated provision is made based
on a combination of expert opinions and management’s
assessment of the known facts and circumstances.
Financial instruments
Elkem ASA holds financial instruments such as forward
currency contracts, interest rate swap and commodity
derivative 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. 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 note 25 Financial assets
and liabilities in the consolidated financial statement. Non-
financial commodity contracts, where the relevant commodity
is readily convertible to cash and where the contracts are for
own use, are booked at the lower of cost and the estimated
obligation if it is a onerous contact.
Net book value of contracts booked at fair value as at 31
December 2023 is in total positive NOK 1,087 million (positive
NOK 2,160 million), see note 24 Financial instruments.
Impairment of investments in subsidiaries,
associates, jointly controlled entities and tangible
and intangible assets
The value-in-use calculations 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. There is also uncertainty in
estimating replacement investments and the growth rate
in the terminal value. The estimated future pre-tax 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, the market risk premium
and the beta. Elkem uses a beta per business segment and
the beta is found using observable betas of comparable
companies for each business segment.
4. Operating income
Operating income by type
Amounts in NOK million
2023
2022
Revenue from sale of goods, Silicon Products
8 553
12 227
Revenue from sale of goods to related parties
1 749
2 985
Other operating revenue
161
134
Other operating revenue to related parties
571
565
Total revenue
11 034
15 912
Grants (note 5)
558
530
Insurance settlement
0
12
Other
35
1
Total other operating income
593
543
Total operating income
11 628
16 455
Operating income by geographic market
Amounts in NOK million
2023
2022
Nordic countries
United Kingdom
Germany
France
Italy
Poland
Spain
Netherlands
Other European countries
2 291
487
2 245
1 107
661
235
422
64
1 408
2 569
795
3 408
2 166
677
224
445
85
1 759
Europe
8 921
12 129
Africa
37
29
North America
South America
521
120
1 458
51
America
640
1 509
China
Japan
South Korea
Other Asian countries
101
482
137
1 294
397
1 040
126
1 207
Asia
2 013
2 770
The rest of the world
16
18
Total operating income
11 628
16 455
5. Grants
2023
2022
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
9
-
28
-
CO
Compensation from the Norwegian Environment Agency
2
Other government grants
549
-
-
1
497
2
-
-
Total government grants
558
1
527
-
Norwegian NO
x
Other grants
fund for reduced emission of NO
x
-
-
28
-
1
1
64
-
Total other grants
-
28
3
64
Total grants
558
29
530
64
Grants receivables related to fixed and intangible assets (note 19)
-
64
Grants receivables related to income (note 19)
583
489
Grants, deferred income (note 23)
(1)
(7)
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 is approved by the EFTA surveillance authority
ESA. The current scheme ends 31 December 2025. 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. For compensation granted for 2023, the
Norwegian government has introduced a deduction of 375
NOK/tonne CO
2
(up from deduction of 200 NOK/tonne for
2022). As the grant partially 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 its 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 reduce NO
x
emissions
from the industry in Norway.
Other
The remaining grants are mainly related to R&D and energy
recovery projects.
6. Employee benefit expenses
Amounts in NOK million
2023
2022
Salaries, holiday pay and variable compensation
(1 152)
(1 090)
Employer's national insurance contributions / social security tax
(154)
(141)
Pension expenses (note 7)
(89)
(78)
Share-based payments
(6)
(24)
Other payments / benefits
(28)
(15)
Total employee benefit expenses
(1 429)
(1 348)
Average number of full time equivalents
1 348
1 308
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 2023", note 9 Employee benefits and note 10
Share-based payments in the consolidated financial statements.
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's contributions to the employees' individual
pension plan assets constitute 5% of base salary up to 7.1
G and 15% between 7.1 G and 12 G. G refers to the national
insurance scheme's basic amount in Norway, amounting to
NOK 118,620 as at 1 May 2023. Pension on salary above 12 G
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 2023 is 2.6% of the employee’s salary
between 1 and 7.1 G, covering this year’s pension payments and
contribution to a security fund for future pension obligations.
The premium in per cent of salary for 2024 will be 2.7%. At 31
December 2023 there is 1,652 (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 12 G, for which the
expense is 15% of annual base salary that exceeds 12 G 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
2023
2022
Defined benefit plans
(4)
(4)
Defined contribution plans
(66)
(57)
Early retirement scheme (AFP)
(19)
(18)
Total pension expenses
(89)
(78)
Amounts in NOK million
31.12.2023
31.12.2022
Present value of pension obligations
(84)
(80)
Net value pension liabilities
(84)
(80)
Active participants in pension scheme for salary above 12G
47
49
Retired participants
42
45
Changes in actuarial gains / (losses) recognised in equity / deferred tax
(1)
6
Principal assumptions used for the actuarial valuation
2023
2022
Discount rate
1)
4.8%
4.2%
Annual regulation of pensions paid
2.3%
1.9%
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
2023
2022
Distribution expenses
Commission expense sales
Machinery, tools, fixtures and fittings
Repair, maintenance and other operating expenses
Other 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
(623)
(126)
(459)
(301)
(554)
(99)
(58)
(37)
(2)
(486)
(2 745)
(707)
(138)
(381)
(246)
(600)
(70)
(51)
(26)
(1)
(463)
(2 684)
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
17
57
10
74
During 2023, Elkem ASA expensed NOK 163 million (NOK
193 million) related to research and innovation activities,
which includes product and business development, technical
customer support and improvement projects.
Grants received related to research and development amount
to NOK 9 million (NOK 28 million) and are included in other
operating income.
Audit and other services
Amounts in NOK million
2023
2022
Audit fee
(8)
(6)
Other assurance services
(1)
(1)
Total fees to auditor
(8)
(7)
9. Operating lease
Amounts in NOK million
2023
2022
Leasing expenses, current year (note 8)
(58)
(51)
Minimum future lease payments due in accordance with
non-cancellable operating lease contracts:
Within one year
(25)
(27)
Within two years
(27)
(25)
Within three years
(26)
(25)
Over three years
(255)
(227)
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 145 million.
10. Other gains (losses) related to operating activites
Amounts in NOK million
2023
2022
Changes in fair value commodity contracts (note 24)
(1)
(2)
Embedded EUR derivatives power contracts, interest element (note 24)
(73)
218
Ineffectiveness on cash flow hedges (note 24)
357
1 466
Net foreign exchange gains (losses) - forward currency contracts (note 24)
(156)
(103)
Operating foreign exchange gains (losses)
306
134
Total other gains (losses) related to operating activities
433
1 712
11. Finance income and expenses
Amounts in NOK million
2023
2022
Interest income
106
29
Interest income from related parties (note 26)
319
130
Other financial income
2
7
Total finance income
426
166
Net foreign exchange gains (losses)
(313)
(62)
Interest expenses
(646)
(215)
Interest expenses to related parties (note 26)
(200)
(48)
Interest on net pension liabilities
(3)
(3)
Other financial expenses
(2)
(2)
Total finance expenses
(851
(267)
Net finance income (expenses)
(738)
(163)
Foreign exchange gains (losses) in 2023 and 2022 are mainly
related to the bank loans in EUR and loans to related parties
in EUR, USD and CNY.
12. Taxes
Income tax recognised in income statement
Amounts in NOK million
2023
2022
Current tax expenses
(64)
(1 330)
Deferred tax
(44)
(270)
Other taxes
6
(3)
Total income tax (expenses) benefit
(102)
(1 603)
Reconciliation of income tax (expense) benefit
Amounts in NOK million
2023
2022
Profit before tax
Applicable tax rate Norway
Tax expense at applicable tax rate
Permanent differences
Tax effects of income from Norwegian controlled foreign companies (NOKUS)
Tax effects share of profit (loss) from joint ventures
Dividend within the Tax exemption method
Gain on realised shares
Tax effects other permanent differences
Other effects
Previous year tax adjustment
Other current taxes
Total income tax (expenses) benefit
467
22%
(103)
(22)
(14)
45
-
(3)
(11)
6
(102)
7 593
22%
(1 670)
(16)
(4)
31
20
19
20
(3)
(1 603)
Effective tax rate
22%
21%
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 2023 is NOK 595 million (NOK
595 million), book value NOK 0. Elkem Silicones France SAS
has not repaid anything under this agreement in 2023 or 2022.
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 has appealed. Based on legal
advice, Elkem’s assessment is that the defence against the
action will be successful. 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
31.12.2023
31.12.2022
Derivatives
(239)
(475)
Property, plant, equipment and intangible assets
(291)
(244)
Pension liabilities
18
17
Trade receivable
3
2
Inventory
(8)
(42)
Provisions and other liabilities
3
1
Other differences
0
(1)
Net deferred tax assets (liabilities)
(514)
(741)
Movement in net deferred tax assets (liabilities)
Amounts in NOK million
2023
2022
Opening balance
(741)
(306)
Charged to profit (loss)
(44)
(270)
Changes in deferred tax hedges charged to equity
271
(146)
Change in actuarial gains (losses) charged to equity
0
(1)
Effect of merger
-
(19)
Closing balance
(514)
(741)
13. Property, plant, and equipment
2023
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
Transferred from CiP
Reclassifications
Impairment losses
Depreciation
Closing balance
10
-
-
(1)
-
-
9
805
0
125
1
(0)
(73)
857
2 683
4
499
(1)
(20)
(352)
2 814
25
0
19
-
-
(8)
36
575
929
(643)
-
(0)
-
861
4 098
934
-
-
(20)
(433)
4 578
Historical cost
Accumulated depreciation
Accumulated impairment losses
Closing balance
10
-
(0)
9
2 013
(1 151)
(5)
857
6 588
(3 688)
(86)
2 814
114
(78)
(0)
36
861
-
-
861
9 586
(4 917)
(92)
4 578
Estimated useful life
Depreciation plan
Indefinite
5-40 years
Straight-line
3-30 years
Straight-line
3-20 years
Straight-line
Impairment losses in 2023 are primarily related to
impairment as a result of fire at Salten NOK 17 million.
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
14. Intangable assets and goodwill
2023
Amounts in NOK million
Goodwill
Software
Other
intangible
assets
Intangible
assets under
construction
Total
intangible
assets
Opening balance
Additions
Transferred from CiP
Amortisation
Closing balance
16
-
-
(4)
12
40
1
25
(23)
43
11
-
4
(3)
12
30
32
(29)
-
33
81
33
-
(25)
88
Historical cost
Accumulated amortisation
Closing balance
40
(28)
12
234
(191)
43
31
(19)
12
33
-
33
298
(210)
88
Estimated useful life
Amortisation plan
10 years
Straight-line
3-10 years
Straight-line
3-10 years
Straight-line
2022
Amounts in NOK million
Goodwill
Software
Other
intangible
assets
Intangible
assets under
construction
Total
intangible
assets
Opening balance
Additions
20
-
50
0
13
-
48
0
111
1
Disposals
Transferred from CiP
Reclassifications
-
-
-
-
3
6
-
-
0
(16)
(3)
-
(16)
-
6
Amortisation
Closing balance
(4)
16
(19)
40
(3)
11
-
30
(22)
81
Historical cost
40
216
28
30
274
Accumulated amortisation
Closing balance
(24)
16
(177)
40
(17)
11
-
30
(193)
81
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
31.12.2023
31.12.2022
Elkem Carbon AS
100%
Norway
122
125
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
785
Elkem Japan K.K
100%
Japan
0
0
Elkem Korea Co. Ltd.
100%
Republic of Korea
19
19
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.
100%
Belgium
34
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
2 165
2 163
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
4
5
Elkem Silicones Shanghai Co., Ltd.
100%
China
109
109
Carrying
Carrying
Owner share
amount
amount
Investment in subsidiaries of Elkem ASA
Vote rights (%)
Country
31.12.2023
31.12.2022
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%
5 015
4 716
NEH LLC
USA
100%
98
98
Total
12 902
12 604
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.
Impairment
For details see note 19 Impairment assessments
in the consolidated financial statement.
Income from investments in subsidiaries
Amounts in NOK million
2023
2022
Dividends and group contributions from subsidiaries
181
138
Net income on disposal of subsidiary
-
92
Dividends from associates (note 19)
22
-
Total income from subsidiaries and associated companies
203
229
16. Investments in joint ventures
Owner share
Owner share
Company
Voting rights
Voting rights
Accounting
address
Country
2023
2022
method
Elkania DA
Hauge i Dalane
Norway
50%
50%
Gross method
Vianode AS
1)
Oslo
Norway
40%
40%
Equity
Salten Energigjenvinning AS
2)
Oslo
Norway
-
-
Equity
1)
The share of ownership is equal to Elkem ASA's voting rights, with the exception of Elkem ASA's investment 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
2023
2022
Opening balance
639
46
Acquisition of shares and capital contribution
267
267
Change in equity interest, to subsidiary
-
(47)
Change in equity interest
-
383
Share of profit / (loss)
(63)
(17)
Share of other comprehensive income
(0)
7
Closing balance
843
639
Main figures for Elkania DA accounted for using the gross
method, showing Elkem ASA's portion.
Amounts in NOK million
31.12.2023
31.12.2022
urrent assets
C
48
47
on-current assets
N
28
24
urrent liabilities
C
4
18
on-current liabilities
N
9
8
et assets
N
63
45
tal revenue
To
46
53
tal expenses
To
(28)
(29)
inancial items
F
(0)
(0)
Tax
-
-
tal profit / (loss) for
To
the year
18
24
17. Inventories
Amounts in NOK million
31.12.2023
31.12.2022
Finished goods
1 029
1 206
Semi-finished goods
273
228
Raw materials
742
1 012
Operating materials and spare parts
377
307
Total inventories
2 421
2 753
Provisions for write down of inventories
81
2
18. Trade receivables
Amounts in NOK million
31.12.2023
31.12.2022
Trade receivables
364
518
Trade receivables, related parties
961
1 075
Provision for doubtful accounts
(13)
(11)
Total trade receivables
1 312
1 582
Elkem ASA and its subsidiary Elkem Carbon AS have entered
into a factoring agreement with a credit limit of EUR 100
million, NOK 1,124 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 receivable 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 at 31 December 2023, NOK 61 million (NOK
50 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
2023 NOK 999 million (NOK 1,235 million) of Elkem ASA’s trade
receivables is derecognised under these agreements.
Analysis of gross trade receivables by age,
presented based on the due date
Amounts in NOK million
31.12.2023
31.12.2022
Not due
267
269
1 - 30 days
70
204
31 - 60 days
12
6
61 - 90 days
6
23
More than 90 days
9
16
Total trade receivables
364
518
Elkem ASA 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 allowance for expected credit losses
Amounts in NOK million
2023
2022
Opening balance
(11)
(10)
Losses during the year
(0)
0
New provisions
(4)
(3)
Reversed provisions
2
1
Closing balance
(13)
(11)
Analysis of allowance for expected credit losses,
presented based on related trade receivables
Amounts in NOK million
31.12.2023
31.12.2022
Not due
(1)
(2)
Overdue by:
1 - 30 days
(0)
(1)
31 - 60 days
(2)
(0)
61 - 90 days
(2)
(0)
More than 90 days
(8)
(8)
Total provisions for doubtful accounts
(13)
(11)
19. Other assets
Non-current
Current
Amounts in NOK million
31.12.2023
31.12.2022
31.12.2023
31.12.2022
Shares in associates
1)
9
9
-
-
Other shares
9
8
-
-
Restricted deposits
32
31
-
-
Other deposits
1
1
-
-
Pension assets, defined benefits and contribution plans
-
-
2
1
Prepayments
1
1
56
30
Loans and deposits to related parties, interest-bearing (note 26)
6 236
4 221
122
1 074
Grants receivable (note 5)
-
-
583
553
Value added tax
-
-
69
75
Interest receivable from related parties (note 26)
-
-
62
26
Other receivables
9
8
4
19
Other assets
0
0
6
6
Total other assets
6 295
4 278
904
1 786
1)
Elkem ASA owns 25% of the shares in EPB Chartering AS and 20% of the shares in Future Materials AS. Elkem has received NOK 22 million in
dividends during 2023, see note 15 Investment in subsidiaries.
20. Equity
2023
Share
Other paid
Total paid
Retained
Total
Amounts in NOK million
capital
in capital
in capital
earnings
equity
Opening balance
3 197
296
3 493
10 515
14 009
Profit for the year
-
-
-
365
365
Cash flow hedge
-
-
-
(960)
(960)
Share of items booked against equity from joint ventures
-
-
-
(0)
(0)
Remeasurement pension obligations gains (losses)
-
-
-
(1)
(1)
Currency translation differences
-
-
-
0
0
Share-based payments
-
8
8
-
8
Net movement treasury shares
-
(3)
(3)
(5)
(8)
Dividends
-
-
-
(2)
(2)
Closing balance
3 197
301
3 498
9 912
13 410
Share capital
The share capital of Elkem ASA is NOK 3,197,206,890 divided
on 639,441,378 shares of NOK 5 nominal value. Of this amount
Elkem ASA held 5,551,090 treasury shares as at 31 December
2023. Each share has one vote.
Other paid-in capital
Other paid-in capital consists of par value of Elkem ASA's
treasury shares negative NOK 28 million (negative NOK 25
million) and other capital contributions from owners (e.g.
share-based payments).
Other retained earnings and dividends
Other retained earnings consist of all other net gains and
losses not recognised elsewhere. For the year 2023 the board
of directors has proposed to not pay dividends. The dividend of
NOK 2 million relates to adjustment of dividends paid for 2022,
in 2023.
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
Profit for the year
-
-
-
5 990
5 990
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
-
-
-
4
4
Dividends
-
(2 716)
(2 716)
(1 079)
(3 795)
Closing balance
3 197
296
3 493
10 515
14 009
21. Shareholders
The table shows shareholders holding 1% or more of the total
639,441,378 shares outstanding as of 31 December 2023,
according to information in the Norwegian "securities registry
system" (Verdipapirsentralen).
Name
Number of Shares
Ownership
Bluestar Elkem International Co., Ltd. S.A.
338 338 536
52.9%
Folketrygdfondet
27 267 701
4.3%
Must Invest AS
17 689 827
2.8%
Pareto Aksje Norge Verdipapirfond
15 315 726
2.4%
Verdipapirfondet Storebrand Norge
8 704 395
1.4%
1)
The Bank of New York Mellon SA/NV
7 393 161
1.2%
State Street Bank and Trust Comp
1)
6 928 605
1.1%
Total shareholders with ownership greater than 1%
421 637 951
65.9%
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 2023" and note 9
Employee benefits in the consolidated financial statement.
22. Interest-bearing assets and liabilities
Non-current
Current
Amounts in NOK million
31.12.2023
31.12.2022
31.12.2023
31.12.2022
Interest-bearing liabilities
Deposits from related parties (note 26)
Loans from external parties, other than bank
Bank financing
Accrued interest
Total interest-bearing liabilities
251
5 279
5 573
-
11 103
171
3 688
5 214
-
9 074
5 382
1 051
-
26
6 459
3 831
1
56
16
3 903
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
-
32
6 236
-
9
-
-
6 276
-
31
4 221
-
8
-
-
4 260
3 327
4
-
122
-
62
-
3 515
5 316
-
801
272
-
26
-
6 416
Net interest-bearing assets / (liabilities)
(4 826)
(4 814)
(2 944)
2 512
Interest-bearing liabilities by currency
31.12.2023
31.12.2022
Currency
Currency
Amounts in NOK million
amount
NOK
amount
NOK
EUR
905
10 170
710
7 469
USD
157
1 597
106
1 045
NOK
5 274
5 274
4 137
4 137
Other currencies
-
520
-
326
Total interest-bearing liabilities
17 561
12 977
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 2023
Amounts in NOK million
2024
2025
2026
2027
2028
2029 and later
Total
Deposits from related parties
Loans from external parties, other
Bank financing
Accrued interest
than bank
5 382
1 051
-
26
251
1 031
-
-
-
2 354
-
-
-
500
5 619
-
-
1 393
-
-
-
5 632
-
6 329
-
5 619
-
26
Total
6 459
1 282
2 354
6 119
1 393
-
17 607
Prepaid loan fees
Total interest-bearing liabilities
(45)
17 561
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
Loan agreements
The main non-current loan agreements as of 31 December
2023 are a term loan of EUR 500 million (EUR 500 million),
issued bond loans of a total of NOK 2,750 million (NOK 2,500
million) and a series of loans issued in the Schuldschein
market of EUR 225 million (EUR 113 million). The interest
rates for the non-current loan agreements are in the range of
5.65 % to 6.27% for the bond loans and 1.82% to 5.64% for
the loans in the Schuldschein market. For the term loan the
interest rate is 5.23%.
Elkem ASA has placed a series of unsecured floating rate
loans in the Schuldschein market. Total size of the transaction
amounts to EUR 200 million, of which EUR 52 million was
drawn in December 2022 and EUR 148 million in January 2023.
Elkem ASA has also issued green bonds of NOK 1,000 million
in August 2023.
The term loan of EUR 500 million is 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. Based on inital testing of the
KPI's there will be no change to the margin in 2024.
One of the loans issued in the Schuldschein market (EUR 15
million) is a fixed rate loan with a fixed rate of 1.82%. Given
the market conditions as at 31 December 2023 the loan would
have been approximately EUR 0.4 million lower, due to the
difference between fixed rate and market rate. The green bond
consists of one part with floating interest rate and one part
with fixed interest rate. Elkem has entered into a interest swap
from fixed to floating interest rate for the part of the green
bond with fixed rate. As at 31.12.2023 the fair value of this swap
is NOK 12 million.
The bond loans are listed on on Oslo Børs from January 2024.
The fair value of the bond loans is negative NOK 12 million.
The loan facilities are unsecured, but part of the loans have
financial covenants related to them, see below. Elkem initiated
a waiver process during first quarter of 2024, and requested
the lenders’ consent for a temporary waiver of the current
Interest Cover Ratio to ensure that Elkem has sufficient
headroom to operate through these uncertain times.
Credit facilities
Elkem ASA is granted credit facilities of EUR 500 million (NOK
5,619 million) and NOK 250 million, a total of NOK 5,869
million in granted credit facilities. Both facilities remained
undrawn at 31 December 2023 and 31 December 2022.
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 8,148 million (NOK 6,501 million)
have covenants as described below. Elkem ASA is compliant
with its covenants at the end of 2023 and 2022.
Covenants Elkem group
Amounts in NOK million
31.12.2023
31.12.2022
Loan covenant
Total equity
Total assets
Equity ratio
24 458
50 500
48%
28 773
52 781
55%
> 30%
EBITDA excluding income/loss from associated entities and joint ventures
Net interest payable
Interest cover ratio
3 726
597
6.24
12 790
219
58.38
> 4.00
23. Provisions and other liabilities
Non-current
Current
Amounts in NOK million
31.12.2023
31.12.2022
31.12.2023
31.12.2022
Employee withholding taxes, social security tax and other public taxes
-
-
94
103
Value added tax
-
-
39
29
Prepayments from customers
-
-
25
24
Payables to related parties (note 26)
-
-
44
60
Provisions
47
45
6
3
Obligation to finance subsidiary
37
37
-
-
Contingent consideration related to purchase of subsidiary
-
-
-
42
Accrued expenses
-
-
285
358
Employee benefits
-
-
214
248
Deferred income, government grants
-
-
1
7
Recourse liability factoring agreement (note 18)
-
-
61
50
Settlement liability factoring agreements
-
-
32
-
Other liabilities
-
-
2
5
Total provisions and other liabilities
84
82
803
927
The contingent consideration related to purchase of
subsidiaries relates to the acquisition of Polysil on 1 April 2020.
The consideration is fully paid by the end of 2023.
Movements in provision
2023
Amounts in NOK million
Site restoration
Environmental
measures
Total provisions
Opening balance
Additional provisions recognised
Closing balance
32
1
34
16
4
20
48
5
53
Hereof non-current
Hereof current
Closing balance
34
-
34
14
6
20
47
6
53
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.
Elkem has embedded EUR derivatives in own use 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 2023 constitute a loss
of NOK 122 million (loss of NOK 29 million).
Details of currency exchange contracts
31 December 2023
Purchase
Purchase
Sale
Sale
Type of
Currency
Fair
Notional
currency
ccy million
currency
ccy million
instrument
rate
Due
value
1)
value
2)
CAD
9
USD
7
Fwd
1,345
2023
1
68
NOK
1 897
EUR
164
Fwd
11,541
2023
43
1 848
NOK
193
JPY
1 976
Fwd
0,098
2023
48
142
NOK
234
JPY
2 266
Fwd
0,103
2024-2026
61
163
NOK
167
USD
16
Fwd
10,167
2023
0
167
NOK
807
EUR
76
Embedded
3)
10,649
2023
(54)
851
NOK
5 101
EUR
458
Embedded
3)
11,137
2024-2034
(235)
5 148
EUR
1
USD
1
4)
Fwd
0,917
2024
(0)
1
Total fair value
(136)
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
3)
10,452
2023
(22)
723
NOK
3 688
EUR
335
Embedded
3)
11,017
2024-2034
42
3 520
Total fair value
80
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.
4)
Currency exchange contract with related parties
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 112 million (gain of NOK
377 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) related to operating activities.
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 2023 the fair value of
these contracts is higher than cost (zero).
Interest rate swap
Elkem ASA has a policy of floating interest rate on long-term
financing. In 2023 Elkem issued financing with fixed interest
rate and entered into an interest rate swap from fixed to
floating interest rate. Hence, the effective part of changes in
fair value of the financial instruments is booked against OCI,
and recycled to profit or loss as a regulatory interest expense
when realised.
Details of fair value of power derivative
contracts and interest rate swap
31 December 2023
Amounts in NOK million
Volume GWh
Due
Fair value
Notional amount
1)
Commodity contract "30-øringen"
501
2024
303
172
Commodity contract "30-øringen"
3 006
2025-2030
907
1 105
Interest rate swap
350 000
2024-2028
12
94
Total fair value
1 223
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"
501
2023
608
158
Commodity contract "30-øringen"
3 510
2024-2030
1 430
1 199
Total fair value
2 080
1)
Notional amount based on currency rates at 31 December.
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; in
note 4 Composition of the group and note 5 Equity accounted
investments and joint operations. Details of transactions
between Elkem ASA and the parent company, subsidiaries,
joint ventures and associates, and related parties within
Sinochem are disclosed below.
2023
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
-
-
-
(0)
-
-
Subsidiaries
1 749
(1 325)
519
(571)
319
(200)
Joint ventures and associates
-
-
52
(145)
-
-
Total related parties transactions
1 749
(1 325)
571
(716)
319
(200)
2022
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
-
-
-
-
-
-
Subsidiaries
2 985
(1 148)
554
(540)
130
(48)
Joint ventures and associates
-
-
12
(145)
-
-
Total related parties transactions
2 985
(1 148)
565
(685)
130
(48)
Balances with related parties
Non-current
Current
Amounts in NOK million
31.12.2023
31.12.2022
31.12.2023
31.12.2022
Trade receivables, subsidiaries
-
-
957
1 068
Trade receivables, joint ventures and associates
-
-
4
6
Loans to subsidiaries, interest-bearing
6 236
4 221
-
801
Deposits from subsidiaries, interest-bearing
-
-
122
272
Interest receivable from subsidiaries
-
-
62
26
Deposits from subsidiaries, interest-bearing
(251)
(171)
(5 382)
(3 831)
Other payables to subsidiaries, interest free
-
-
(44)
(60)
Trade payables, Bluestar Elkem Investment Co. Ltd. S.A
-
-
(5)
(5)
Trade payables, related parties within Sinochem
-
-
(0)
-
Trade payables, subsidiaries
-
-
(422)
(412)
Trade payables, joint ventures and associates
-
-
(12)
(30)
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 2023" and note 9
Employee benefits in the consolidated financial statement.
Commitment with related parties
Elkem has no commitments to related parties.
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 intra-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
31.12.2023
31.12.2022
Guarantees given on behalf of the operating plants regarding environmental obligations
40
40
Guarantees given on behalf of subsidiaries regarding financing
738
681
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 liabilities is
NOK 61 million (NOK 50 million).
28. Supplemental information to the cash flow statement
The following table gives a detailed overview of changes in
working capital in the cash flow statement. Working capital is
defined as trade receivables, inventories, other current assets,
accounts payable, current employee benefit obligations and
other current liabilities. Other current assets are 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
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
2023
2022
Changes in trade receivables
269
166
Changes in inventories
331
(1 074)
Changes in other current assets
(4)
127
Changes in accounts payable
(53)
(183)
Changes in other current liabilities including employee benefit obligations
(69)
90
Total
474
(875)
29. Events after the reporting period
No events have taken place after the reporting period that
would have had a material impact on the financial statements
or any assessments carried out.
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 2023
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, 12 March 2024
Zhigang Hao
Chair of the Board
Dag Jakob Opedal
Vice chair
Olivier Tillette de
Clermont-Tonnerre
Board member
Yougen Ge
Board member
Bo Li
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
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.
2023
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
(2 142)
2 610
1 164
(585)
318
170
781
743
106
(182)
63
(516)
199
1 365
Impairment losses
Amortisation and depreciation
EBITDA
(605)
3 304
1 286
(532)
318
94
2 312
3 771
2022
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
743
9 632
1 063
(283)
(257)
9 642
2 594
313
(85)
(67)
17
(2 151)
635
10 898
Impairment losses
Amortisation and depreciation
EBITDA
2 022
10 226
1 166
(283)
(257)
28
1 999
12 925
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 receivables 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
2023
2022
Reinvestments
(2 351)
(1 682)
Strategic investments
(2 866)
(2 797)
Periodisations
1)
361
421
Investments in property, plant and equipment and intangible assets
(4 856)
(4 058)
1)
Periodisations reflects the difference between payment date and accounting date of the investment.
Amounts in NOK million
2023
2022
Cash flow from operating activities
3 006
9 314
Income taxes paid
2 281
1 345
Interest payments made
716
319
Interest payments received
(179)
(66)
(Gains) losses on disposal of subsidiaries
-
159
Changes in provisions, bills receivables and other
(190)
539
Changes fair value of derivatives
59
1 139
Other items
(516)
(2 151)
Realised effects from hedge ineffectiveness and discontinuation of hedging
199
635
Reinvestments
(2 351)
(1 682)
Cash flow from operations
3 027
9 551
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,
inventories, other current assets, accounts payable,
current employee benefit obligations and other current
liabilities. Accounts receivable defined are 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 receivables, 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.
→
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
31.12.2023
31.12.2022
Inventories
9 018
10 325
Trade receivables
Bills receivable
Accounts receivable
3 209
(823)
2 386
4 248
(1 086)
3 162
Other assets, current
Other receivables to related parties, interest free
Grants receivables
Tax receivables
Accrued interest
Other current assets included in working capital
2 062
(8)
(671)
(261)
(0)
1 122
1 698
(7)
(620)
(338)
(0)
733
Trade payables
Trade payables related to purchase of non-current assets
Accounts payables included in working capital
5 281
(1 313)
3 968
5 335
(1 117)
4 219
Employee benefit obligations
912
994
Provisions and other liabilities, current
Provisions, contingent considerations and contract obligations
Liabilities to related parties
Other current liabilities included in working capital
1 381
(101)
(17)
1 263
1 545
(144)
(30)
1 371
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
6 383
22 754
854
1 458
1 015
1 296
(17)
(1 295)
32 449
7 637
19 520
779
1 385
984
1 039
(16)
(1 018)
30 310
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
31.12.2023
31.12.2022
Net interest-bearing assets / (liabilities)
Other restricted deposits, non-current
Receivables from related parties
Loans to external parties
(9 390)
(51)
(1)
(9)
(2 559)
(46)
(1)
(8)
Accrued interest income
-
(0)
Net interest-bearing assets / (liabilities) less non-current interest-bearing assets (NIBD)
(9 450)
(2 615)
EBITDA
3 771
12 925
Leverage ratio
2.5
0.2
Elkem ASA
Visiting address:
Postal address:
P.O. Box 334 Skøyen,
NO-0213 Oslo
T:
+47 22 45 01 00
F:
+47 22 45 01 55
.elkem.com