Question-and-Answer Session
Jason Fairclough -- Banc of America Securities-Merrill Lynch
Hi. Jason Fairclough from Banc of America Securities-Merrill Lynch. Just a couple of questions on Qatalum, if I may. I mean it looks like it’s going to be a pretty impressive facility. Obviously it’s a project that you inherited it from the – before your time as CEO. If you look at the total price tags, it looks a little steep. I mean at $5.7 billion it’s probably the most expensive smelter that’s ever been built on a per ton of annual capacity basis. What do you think of this as an investment? Would you build this today if you could choose? If you’re looking Phase II and you had Phase II on the same terms, would you invest in Phase II?
Svein Richard Brandtzaeg
I would say that when this is finished, this operation will be among the 10% best in the world cost-wise. So it’s definitely a very important strategic investment for Hydro. And we would do it again. We’re also very aware of the fact that expansion of this plant, we are locked into the investment a lot like infrastructure already in the first half. It means that the second half, the expansion of Qatalum would be very profitable. So it is again establishing a strategic foothold in important area with low energy cost, and then also preparing for further development of this – this operations.
Jason Fairclough -- Banc of America Securities-Merrill Lynch
(inaudible) answers. I’ll just push you a little bit, if that’s okay. Your predecessor talked about Phase II as having limited economies of scale. So there was limited advantages in terms of infrastructure, because you were already so huge in Phase I. Do you have a different view on that?
Svein Richard Brandtzaeg
The limited economy of scale is very much related to the fact that this electrolysis lines cannot be expanded very much. They are 1.25 kilometer long and they are utilizing their technical capacity on the rectifiers to the maximum. So normally when you are talking about the Brownfield expansion, it’s expansion of electrolysis lines, which is again a low-cost expansion. This – an expansion of Qatalum means that we will build parallel electrolysis lines, meaning that we also have to invest in new rectifier and high-voltage systems, which is important part, 20% approximately of total investment cost. But there are a lot of infrastructure now on this site that can be utilized in the next phase. And we have the raw material, the picture there, for example, showing the storage for raw materials. We have transport systems; we have a lot of facilities that can be also utilized for the second part. But again, this economy of scale cannot be utilized in the way as you normally think about an expansion. Prolonging electrolysis lines suspension cannot be done in this case.
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