Welcome to all of you following us on webcast this morning. We are going to present the results for the third quarter 2018. The results will as normal be presented by our CEO, Svein Brandtzæg , and CFO Eivind Kallevik. After that, we will have time for questions here in Oslo and also from the audience. Svein.
Thank you very much, Inga. Let me start with the highlights from the third quarter this year. The underlying result was NOK 2.7 billion, up from NOK 2.4 billion in the same quarter last year. We are now comparing our results with the same quarter in 2017. We are producing at 50% in Alunorte, in Paragominas, and also Albras in Brazil, which affect the volumes of course, but also some cost inefficiencies. We have signed a technical and social agreement with authorities in Brazil in the quarter, and I will come back to the Brazil situation later in my presentation.
The main factors that are affecting the underlying results in the third quarter this year is higher all-in aluminum prices, 17% higher than the same quarter last year, and also higher alumina prices which were 50%, more than 50% higher than the third quarter in 2017. This was more than offset by higher raw material costs, especially the alumina cost was high, but there were also some higher fixed costs. Energy delivered a solid result due to higher prices and good production. We also had stable results in our downstream operations, same level as the third quarter 2017. Obviously, we are focusing very much on improving our businesses, and the Better program is on top of the priority list, and we are also obtaining several good improvements along the value chain.
Due to the situation in Brazil, we will not be able to deliver on the target, which is NOK 0.5 billion in 2018. With regards to the global market, we are now in a deficit situation. There is also some uncertainties related to the U.S. tariffs, the RUSAL sanctions, and also the situation in Alunorte. We are taking down the expectation for growth for primary aluminum this year from 4%-5% to 3%-4%. We also see that the expectation on production and then the growth of production has been taken down from 2%-3% to 1%.
Before going into more details on the market and the results, let me then move over to Brazil and the situation we have in Alunorte and our operations in Brazil. With regard to the embargoes, to give you an update here, we have an embargo on 50% production from SEMAS. That was confirmed by the court, that limited production to 50% capacity, but also the court decided that we could not use the DRS2, the new area for storage of bauxite residues. This was on the request from Ministério Público.
Ibama, uh, uh, upholds the, uh, embargo on the new, uh, bauxite residue area, DRS2, but gave us an, uh, exceptional, uh, authorization to use the press filter together with, uh, the, uh, the new or the, the old, uh, uh, area for storage of bauxite residue, DRS1, on October 5. That means that we can now continue to, uh, use, uh, the old bauxite residue area, DRS1, together with the press filter. On operations, as I said, we are operating at fifty percent capacity in Alunorte. Paragominas is directly connected to Alunorte, so we are also operating at fifty percent capacity in our bauxite mine, Paragominas and as Albras only have one source of, uh, alumina, the aluminum smelter beside Alunorte, we are operating also Albras at fifty percent.
We have now secured sourcing of alumina for the smelters for the rest of the year, and we have done a third-party sourcing for the smelters for the volumes that we are not having from Brazil. With regard to the disruption in production in the beginning of the month, it will have limited financial implications as we came back to 50% production very quickly after the decision to close the operations in the beginning of the month after the report came from the experts in geotechnical and the geotechnical advisors.
Just to give you an overview of the situation, this map shows the old area for storage of bauxite residue, DRS1, and also the new area, DRS2, which is the, I would say together with the press filter, the only sustainable way to store bauxite residues in, for Alunorte. The press filters and drum filters, you see the location and the bauxite residues it is transported from the press filter to the DRS1 today. We have also a transport system over to DRS2 that is ready to use.
Again, this is the future operations for Alunorte to use the press filter together with DRS2. If you move over to the disposal system, there has been quite a lot of discussion between or regarding the old and the new bauxite residue areas, the DRS1 and the DRS2. We have the planning for the depletion of DRS1 quite some time ago. That's why we decided already in 2014 to invest in the most technically advanced and the most environmentally friendly way to handle bauxite residues. We invested in press filter together with the new bauxite residue deposit area DRS2.
It was planned to ramp up the DRS2 and the press filter at, in parallel with the ramping down the drum filter and DRS1. The embargo on the press filter and the DRS2 stopped the commissioning and the learning curve that we were expecting to have for some months, leading to also more drum filter residue going into DRS1, which also accelerated the depletion of DRS1. The initial assessment was positive with regard to extending the lifetime of DRS1.
However, the findings and external report that came in October 3rd made the management of Alunorte to decide to stop the production because there were clear conclusions in that report that the combination of drum filter and the DRS1 was coming to an end. If you then look further on the DRS2 and the press filter, as I said, the combination between DRS 2 and press filter is the sustainable and the only sustainable solution for long-term operations for Alunorte. The press filter is creating a drier, what we call a filter cake, and also stackable material. It's more, much more environmental friendly and also gives a much smaller environmental footprint than the combination of drum filter and DRS1 .
We have 8 filters in place, 8 press filters in place already. The first part of commissioning period showed that this could be a limiting factor. We are now installing a 9th filter that will be in operation in the Q2 or Q3 next year. The fact that DRS2 and the press filter was a part of the embargo that interrupted the commissioning of the press filter, we this stopped the learning curve and with all new equipments, we know that it's necessary to have optimization and fine-tuning, and that was lost for the last 8 months. Now we are back in operation with the press filter.
The postponed commissioning of the press filter and the fact that we could not use any more the drum filter on DRS1 could imply a delay in the ramp up of Alunorte. The agreements that we have signed in Brazil with authorities can be divided in two parts. It's a technical part, which consists of studies and audit that we are going to do. It's also a strengthening of the water treatment system. It's also food costs for the neighbors and settlements or fines. The different elements that is going to be delivered on, some of them is already delivered.
On the social agreement, that is about building housing and infrastructure and donate that to the state of Pará that will handle this for the population, and that will have a cost of BRL 150 million. We have organized the follow-up of this as a special workforce. There's an organization that is following that up, and we are committed to deliver, of course, on both agreements that we have signed with the Ministério Público, government of Pará and ourselves. With regard to the process going forward now, we are fully committed, as I said, to deliver on the agreements. We are now constructing a new water reservoir in Brazil, in Alunorte, to make Alunorte even more robust.
We're also constructing a new water treatment system that will be finished in the second quarter. The water reservoir system will be finalized in the end of this year. We also have the sustainable Barcarena initiative that we have talked about previously, that we are committed to deliver on. That will go on over several years. We continue constructive dialogue with the government of Pará, the Ministério Público and SEMAS and t hat is ongoing as we speak. We are now establishing a common platform where we can then agree to lift the embargo. We also are working constructively with the authorities on legal and political process that is ongoing.
The big question when we are going to lift, or when we expect to lift the embargo is a question I cannot answer exactly now. We are working hard to make sure that we can lift this embargo as soon as possible. I cannot give you any timeline when the embargo will be lifted. If you then move over to the market, we have had about 4.1% higher demand in the third quarter this year compared to the third quarter last year. 5.4% in China and 2.5% outside China. If you look at the situation in the quarter itself with regard to supply demand, it was quite balanced in China and with a deficit of about half a million tons outside China.
On the right side, if you add up the numbers and look at the 12 months rolling situation, we are now in a substantial deficit in the global primary aluminum market. As I said, we are taking down the growth expectation for this year from 45% to 3%-4%. We expect that the global inventories now are going down. We have seen about 300,000 tons lower inventories. The total inventories are still at around 11 million tons if you add up the registered inventories and also the unregistered inventories. If you take a closer look at the supply demand balance, there are some changes since the previous quarter. What we have not changed is the growth figures for China, which is still 45%-46%.
Growth outside China has been taken down from 3%-4% to 2%-3%. That is what we expect now for the year 2018. We're also taking down the growth of production in China from 2%-3% to 0%-1%. Also the growth outside China to 1%-2% from 2%-3%. All in all, when we add this up, we will see a deficit this year of about 1.5 million-2 million tons globally. If you then move over to the pricing, the Primary Metal prices, the LME and the Shanghai prices, there are quite some deviations between these prices, which also incentivize exports out of China.
We see now 7% higher export out of China since the previous quarter, and 27% higher export compared to the third quarter last year. The market price went down from $2,257 per ton in the previous quarter to $2,068 per ton in the third quarter. The LME varied between $2,050 and $2,100 per ton. The realized price was $2,194 per ton, up from $2,183 in the previous quarter, and $1,921 per ton in the third quarter last year.
If you look at the standard ingots premiums in the U.S. market, $475 per ton, and we saw a price around $143 per ton in the quarter. It's more at $134 per ton in the European market. If you look at the alumina prices, also here, big variations, quite volatile in the quarter, varying from $445 per ton up to $640 per ton in the quarter. The realized alumina price was $460 per ton up from $430 per ton in the previous quarter, and $297 per ton in the third quarter of 2017.
We see there are some price arbitrage and export from China. There are some changes there, but we still see about 400,000 tons of alumina exported out of China. The volatile situation is of course, as I mentioned previously, influenced by the RUSAL situation, t hat's the Alunorte situation, but also a strike in Australia. As I said, we have now secured sourcing of alumina to the smelters for the rest of 2018. If you then move downstream and look at the extrusion market and the rolled products market, we see that the extrusion market in Europe is on the way to grow at the speed of 2%-3%, and the extrusion market in U.S. is now growing at the speed of 5%.
In the extrusion market is solely demand in building and construction, it's really the transport and automotive that is growing at a very high speed. This is due to substitution, in North American market, we see now that we expected 6% growth in this market previously. We now see 6.9% growth, it's driven by heavy truck and trailers that is now at higher levels, higher growth levels than what we expected in addition to the substitution. In the rolled products market, we expect somewhat below 4% growth in Europe. Also here, strong development in transport and automotive in addition to building and construction. Again, in the North American market, it's the heavy truck and trailer market that is now consuming more and more aluminum.
In total, around somewhat below 4% growth in the rolled products market in Europe and 4% growth in North America. We have talked about the cost development for the input factors for alumina production and aluminum production during the last quarters. The caustic soda has of course been one of the major factors that have more than doubled over the last two years. We see now during the last quarters that the prices are coming down on caustic soda. We see fuel oil still increasing in price, and coal price is now moving sideways. For aluminum metal production, it is the alumina price that has increased significantly. We see now in this quarter that this will be lower price than in the previous quarter.
On the anode input factors like coal tar pitch and petroleum coke, it the price is moving sideways. You should keep in mind that there are 2-3 months time lag from the market prices is changing to see this as a profitable resource if you do. If you move over to the business areas and start with Vågsøy Aluminum, we had higher costs in the quarter this year compared to the third quarter of last year, but similar level as the previous quarter. We have high alumina sourcing costs and also increased raw material prices that are affecting the cost level. We also have co-positive currency development with the strengthening dollar compared to the DRM.
Margins are high due to high alumina prices. On the metal production side, also here we have higher costs than the third quarter last year. Similar level as the previous quarter. Higher margins due to higher prices. Increased alumina cost is of course a major factor here, but we also have positive contribution from power sale in Albras. We then move on to rolled products, 2% higher sales year to date compared to the same period last year. Very much driven by automotive, fairly flat on the other products. We sold 27% more body in white material this quarter compared to, or this period compared to the same period last year. This can be ascribed to much better performance on the automotive line three that we have had some ramp-up problems previously.
Comparing this quarter with the 3rd quarter, isolated, it's fairly flat on the total volumes. Lower sales on can, this can be ascribed to some operational issues at Alunorte, which can also be seen when we compare the 3rd quarter this year with the 2nd quarter this year. We have 6% lower sales, which is more than the normal seasonal variation, this can be ascribed to the fact that there are some issues related to the coal mills in Alunorte, which is one of the biggest rolling mills in the world. This rolling mill have had some operational issues, as I mentioned, some downtime that has led to lower output and lower stability. This is something that we are addressing.
This is a joint venture together with Novelis. We are now using the best people to solve these issues. This operational performance is now also going to be seen into the fourth quarter this year. The recycling facility for used beverage cans in Germany is moving slowly in the right direction, but we still have to solve a technical issue there that is about dust accumulation that will be now solved with in connection with the maintenance stop in the end of the year and beginning of next year. We are targeting stable output at level of 40,000 tons as a run rate towards the end of 2019. In Extruded Solutions also have continued focus on a value above volume strategy, which has helped the business to deliver better results.
If we take away the integration cost in Brazil, this is another quarter where Extruded Solutions is delivering better results in quarter than the same quarter the year before, as they have done every quarter since 2013. You see the positive development on the margins, in each business area except Precision Tubing, and that is the area where we have the integration cost in Brazil. The Brazilian operations is a part of the Precision Tubing business. The integration is continuing. That was after the acquisition of the Arconic extruders in Brazil, and they are now being integrated to the Hydro system gradually.
There are several interesting opportunities to develop the extrusion business, and one is the fact that we are now investing in a big press in Cressona, which is our biggest extrusion plant in U.S. That will increase the capacity with 5,000 tons and will supply the high demanding automotive and transport market like Ford in U.S. Again, this is a good example of the direction where we are targeting markets which will require high quality, advanced technology and competence. The investment is estimated at $45 million for this new press in Cressona. On the primary side, we also have interesting opportunities.
We have previously talked about the investment decision that we made for bringing Husnes back to full speed. We have now also made a final build decision for Husnes, meaning that Husnes will double the production with the time that is necessary now. Well, after the time that is necessary to change the cathodes and prepare the plant for full production. We will think that or the plan is to have the production in the first half of 2020, meaning that we will then ramp up the plant during the first half of 2020 and bring production from 95,000 tons to 190,000 tons in Husnes. That is an investment cost of NOK 1.4 billion.
Husnes was taken down to 50% capacity during the finance crisis in 2009. We're also investing in a remelt facility in Slovakia. We have a smelter there that have a capacity of 170,000 tons, and this remelt though will add another 50,000 ton capacity and will handle processed scrap in the Central European area. Again, this is a good logistical solution for handling the scrap and a good investment for Hydro, which is EUR 13 million. In Spain, also in Madrid, we have a remelt that will now also take care of recycling material.
We will now add EUR 10 million in investment that will give a capability to this plant to recycle post-consumer scrap and produce the Hydro CIRCAL 75R product, which is the product based on 75% or more recycled material, which is a sustainable product, low-carbon product for the extrusion market. Finally, Energy. Energy delivered a strong result, very much driven by, of course, good production, but also higher prices. The prices were affected by high CO2 prices and also high coal prices on the continent, but also a very negative hydrological balance. Altogether, it resulted in a very strong result. We had in the end of the quarter, about 7 terawatt hours below the normal.
We are now after a heavy rainfall that we have observed during the last weeks. We've seen that the hydrological balance is around 4 TWh below normal. This is also affecting the prices that is now coming down. With this, I give the word to Eivind, please.
Thank you, Svein, good morning to all of you from me as well. This quarter, we delivered an underlying result before financial items and tax of approximately NOK 2.7 billion, which is up NOK 300 million compared to the same period last year, and roughly in line with what we delivered in second quarter this year. The main factors contributing positively to the NOK 2.5 billion this quarter are higher realized prices for aluminum, as well as higher realized prices for alumina, contributing some NOK 1.4 billion and NOK 1.1 billion respectively. Currency development, mainly the weakening of the BRL versus the US dollar, contributed to the result with roughly NOK 300 million, or NOK 500 million.
Energy had an all-time high result this quarter, up some NOK 300 million compared to the same period last year. On the negative side, though, we've also seen significant increase in raw material costs over the last 12 months, reducing the results with some NOK 2.9 billion. The alumina cost increase in Primary alone is about NOK 1.4 billion. Higher carbon, higher power price added almost NOK 500 million to the negative side. Another NOK 500 million comes as raw material cost increases in Bauxite & Alumina through higher fuel, higher energy, and higher bauxite costs. In addition, there's also somewhat higher fixed costs, both in Primary as well as in BNA, adding NOK 400 million to the fixed cost line.
We also saw some negative volume effects on the upstream side, taking down the results with roughly NOK 500 million. That is primarily driven by the situation that we have at Alunorte. The downstream results are relatively flat between the periods. The last item, the other item, is the combination of several items adding up to positive NOK 0.4 billion. The largest gain here is the profitability around the sale of excess power in Brazil related to the Alunorte curtailment. We take a quick look at the key financials. Revenues are up some NOK 17 billion between the quarters. This is mainly impacted by the inclusion of Extruded Solutions, as well as reflecting increased prices, which is then partly offset by the lower volumes.
This quarter, we have excluded from reported EBIT of NOK 2.1 billion, a loss of roughly NOK 620 million. Of this, roughly NOK 519 million relates to the signed TOC and PCA agreements in Brazil. With that exclusion, we end up with an online EBIT of NOK 2.7 billion. The financial expenses of NOK 0.4 billion are mainly unrealized. Roughly NOK 0.3 billion of that is a result of the weakening BRL versus the US dollar impacting the dollar debt that we do carry in Brazil. As a result of this, the income before tax in Q3 was roughly NOK 1.6 billion, compared to NOK 2.8 billion in the same period last year. The income taxes then represents roughly 43%.
This gives us a net income of NOK 0.9 billion, which is down from NOK 2.2 billion in the same quarter last year. The underlying net income, however, was NOK 1.7 billion, which is slightly down from NOK 1.8 billion in the same quarter last year. Consequently, e arnings per share is also slightly down to NOK 0.75 per share. NOK 0.75 per share. We now turn to the business areas and start with Bauxite & Alumina. The underlying EBIT for this business area improved from NOK 413 million in Q3 2017 to NOK 685 million in the third quarter of 2018.
Let me one, let me remind you once again that this excludes the NOK 519 million that is related to the TOC and the PCA agreement. By far the main driver behind the improved results this quarter is the 55% higher realized alumina price. This lifts the results with roughly NOK 1 billion. In addition, the weakening of the BRL versus the U.S. dollar of roughly 25% also contributed positively to the results with approximately NOK 400 million. At the same time, the 50% production restrictions at Alunorte and consequently then at Paragominas had a negative volume effect of roughly NOK 300 million. In addition to the volume shortfall, the lower production also means the higher fixed cost per ton as the fixed cost remains relatively stable on an absolute level, and then has the result impact as a consequence.
We also had the higher sourcing cost this quarter, since we have to source more third-party alumina at increased tax index to compensate for the shortfall in Alunorte. In total for 2018, we anticipate to source an additional 1 million-1.5 million tons of alumina on the market on top of the normal sourcing situation of 2 million-2.5 million tons per year. Another major driver in the negative direction, is of course the raw material cost, which reduced the resource to roughly NOK half a billion as energy and caustic soda and bauxite prices all increased since the Q3 2017 results. Just to give you an impact or an indication of the impact on the results, of the curtailment of Alunorte and Paragominas.
If we'd assume that Alunorte and Paragominas were at full production, and we used the realized price of $360, which we had prior to the curtailment or the embargo, and the cost level that we had in the third quarter this year, the underlying EBIT for this business area would be roughly $1.3 billion. Now, iIf we take the realized price level that we had in the third quarter this year of approximately $460, then the underlying EBIT for BNA would be approximately $2.3 billion. I think it is fair to assume that the Alunorte situation in particular has had an impact in terms of lifting alumina prices for the quarter.
We look into fourth quarter, as already explained, we do have good and constructive dialogue with the authorities. We do not have a clear and indication as to timeline as to when we can take Alunorte back up to 100%. On the raw material cost side, if we look at the market prices today, we do not expect any further increases on the caustic side b ut we do continue to see an increased cost both for fuel oil as well as for coal. The financial and operational impact of the events we had in the period from October 3 to October 8 is expected to be relatively minor. The volume shortfall that we lost in this period is expected to be 20,000-30,000 tons, which are tons that we cannot recuperate for the rest of this period.
Like I was taking you through all the actions and efforts we are doing to resume full operations at Alunorte. In this period, we also made several commitments and investments both on the social, regulatory, and an operational side. Let me take a little bit of time to go through these investments and what they are and the value of those. The TAC or the Term of Adjusted Conduct, which was signed with Ministério Público and the government of Pará on September 5th, they outlined several actions and initiatives that need to be taken. This has an estimated cost of BRL 168 million. Most of these have been expensed now in Q3, with approximately BRL 35 million left to be capitalized over the coming years.
The terms of commitment were signed with the same parties that, or with the government of Pará. That outlines investments of a social nature, of approximately BRL 150 million. BRL 168 million, I'm sorry. Most of these have been expensed, also in this quarter. Full amount was expensed this quarter. Another social initiative that has been previously announced is the Sustentel Barcarena initiative. That is BRL 100 million, which we've committed to invest the next 10 years. Those costs will be expensed as they are incurred. The final three items on this list relates more to operational investments, which is necessary to ensure and prepare Alunorte for the increased climate risk picture and the related extreme weather events that we saw in February of 2018.
Like I've mentioned, the water treatment plant, which has a somewhat increased CapEx up to BRL 235 million compared to BRL 195 million previously communicated. The original investment for this was to increase the water reservoir capacity up with 150% and the water treatment capacity with 50%. As we've matured the project, we now see that we can actually increase the water reservoir capacity with 350%, and this will still be delivered within the fourth quarter of this year. In addition, we've seen that there is a further need to strengthen the infrastructure around the water treatment and management system. We will do this by the second quarter of 2019.
This mainly relates to additional pipes and valves in the infrastructure surrounding this area, and this amounts to an additional budget of BRL 250 million. Furthermore, in addition to the improvements that I've just mentioned, there is also some need for upgrades to the refinery itself, also to cater to future extreme weather events. This amounts then to BRL 190 million. These investments will be carried out in the period of 2018 to 2020. To summarize, the total operational, social, and regulatory commitments related to the Alunorte situation now adds up to BRL 1.1 billion, with approximately BRL 710 million of this will affecting CapEx in 2018 to 2020.
These investments are necessary to improve the preparedness for an increased climate risk, establish the license to operate long-term in Pará, and ultimately then to assume full operations in Alunorte. Return to Primary Metal. The underlying EBIT decreased in the third quarter from the same quarter last year, from $1.3 billion the recent quarter to $861 million. We did realize the 17% higher all-in aluminum prices, up from $2,182 to $2,561 per ton, lifting the results with approximately $1.3 billion. At the same time, we've seen a very strong cost push in the Primary Metal division, primarily driven by alumina, but also by pet coke and to a certain extent, energy.
The higher alumina cost is reflecting the 2-3 months lag that we have, the higher PAX level, as well as a higher amount sourced on the PAX index. Altogether reducing the result with some NOK 1.4 billion. The higher carbon costs, including pet coke and pitch, reduced the results with roughly NOK 300 million. Fixed costs are also somewhat up compared to Q3 2017. This is mostly related to additional manning for the Karmøy technology pilot, altogether approximately NOK 200 million. Production and sales volumes are down somewhat, primarily due to the Albras curtailment. That, of course, is partly offset by the volumes we get from the Karmøy technology pilot, with another NOK 200 million in result.
In Q3, we did see a significant positive contribution from the sale of excess power following the production curtailment in Albras smelter in Brazil. Of course, in the dry season, as we've just been through in Brazil, the prices are structurally high in this period. When we look into Q4, and assume that the Albras smelter is still curtailed, we will continue to sell excess power, but prices are starting to come down on the back of more normalized precipitation and lower demand in Brazil. On the price side for aluminum, we have sold approximately 60% of the primary production in Q4 at the price level of $2,050. We've also booked roughly 55% of the premium for Q4 at $445 per ton.
In aggregate for Q4, we expect premiums to come in in the range of $350-$400 per ton. We look at the raw material cost situation in Q4. We do expect fairly stable carbon and energy costs in the fourth quarter compared to this quarter. However, due to the higher PAX index and the relatively higher sourcing on PAX index, we continue to expect higher alumina costs in the fourth quarter to the tune of roughly $200 million. Let me also spend just some words on Karmøy this quarter. On October 17, Karmøy experienced a temporary power disturbance. The power was restored and production was stabilized.
In this proce s, it was decided to, in a controlled manner, to take down some of the cells as a precautionary measure to ensure safe operations going forward. The expected volume of financial impact for this for the fourth quarter is relatively limited, we expect a production loss of roughly 10,000 tons for the fourth quarter, with no expected impact for Q1. We look to metal markets. They delivered an online EBIT this quarter of NOK 3 million compared to NOK 91 million in the third quarter last year.
If we exclude NOK 81 million in negative current effects, which was also the main deviation between the quarters, the result is NOK 78 million, down from NOK 107 million last quarter or the third quarter last year, which is largely in line with the guidance we have on a NOK 100 million run rate per quarter. When we look into the fourth quarter, it is basically just normal guidance that by nature, the results of metal markets are volatile, driven by the LME prices and currency effects. We turn to the downstream areas and start with rolled products. The rolled products area also delivered a somewhat lower result in Q3 of NOK 82 million, compared to the second quarter last year of NOK 95 million. On the positive side, we did see improved margins on the average for the portfolio.
In addition, the production performance in Alunorte, in automotive line 3, as well as UBC, was also improved compared to the same quarter last year. The volume perspective, the volumes are still flat despite the improved performance at automotive line 3, and this is as some that I can explain, primarily explained by the operational issues we've had in Alunorte. On the cost side, we have somewhat higher personnel costs, as the annual wage increase is now kicking in. We do have higher energy costs in Germany, on the unhedged volumes, for our system. The main effect, though, for this quarter is really related to raw material.
In particular, alumina cost development that has a significant cost development or cost impact on the Alunorte smelter. The total negative effect this quarter for higher raw material cost in Q3 was roughly NOK 150 million, more than offsetting the improved energy contract we have for the smelter, as well as the higher aluminum prices so far. We look into Q4, you should expect a normal seasonal decline for the fourth quarter and expect continued margin pressures as we have seen also in previous periods for key areas within the Rolled Products area. When it comes to Alunorte, we are working to fixing those operational issues, but we do not expect that to be fully resolved in the fourth quarter.
On the raw material side for Norsk, do remember that the results are impacted by the raw material cost and LME price. We do expect further increases in alumina cost for the smelter in the fourth quarter. Let me just remind you that based on Q3 results, another 10% change in the PAX price for our products would have a negative cost impact of $120 million on alumina alone. We look to Extruded Solutions, to make the results comparable, I will compare this on a pro forma basis. The biggest impact on pro forma basis is the excess value depreciation that we've added. That's roughly $300 million on an annual basis on previous quarters' results.
The underlying result this quarter was NOK 497 million, slightly down from NOK 510 million in the same quarter last year. On the positive side, that's what I can explain, the net added value over the kilo continued to improve strongly on a year-over-year, reflecting the value over volume strategy. However, the net added value improvement this quarter was more than offset by increased production costs, partly due to ramp-up of new production lines, as well as some smaller operational issues. The North American operations also suffered from the Section 232 tariffs, as well as a somewhat lower Midwest Premium. Precision Tubing had a negative effect from the integration of the 2 new extrusion plants we acquired from Arconic in Brazil.
Looking at the fourth quarter, we are working hard on stabilizing the new product lines, and we expect to see improvements on those. We are putting in place mitigating actions to offset the trade-related or the Section 232 increased costs in the U.S. However, we do expect to see impact of that also in Q4. Let me again remind you, as the same as for Rolled Products, Q4 is the seasonal weaker quarter for Extruded Solutions due to demand, but also due to the fact that we shut down plants for the annual maintenance period in the wintertime. Turning to Energy, the underlying EBIT increased by roughly 80% from 3rd quarter of 2017 to the 3rd quarter of 2018 results, up from NOK 368 million to the record NOK 652 million.
The main driver for this increased results was significantly higher spot prices, increasing from NOK 258 per megawatt hour up to NOK 475 per megawatt hour in Q3 2018 in the NO2 pricing area where we sell most of our own produced power. The price effect alone is roughly NOK 300 million in improved results. Despite the dry summer, power production was also higher last year. This is both due to price signals that we saw in the market, but also due to higher reservoir inflows in August as well as September. This also increased the spot sale, again, improving the results. These positive effects were partly offset by the repricing of power contract to Rolled Products, having a quarterly impact of roughly NOK 60 million compared to the same quarter last year.
As always, also here, let me remind you that the price and volume development in energy for the quarter is always uncertain as it depends on precipitation and price signaling. In October, the prices in NO2 has come down and has averaged so far 388 NOK per megawatt hour. Quickly on other and eliminations. This quarter, this netted to a negative NOK 97 million compared to positive NOK 181 million last year and negative NOK 229 million last quarter. One factor reducing the results compared to last year is of course the Extruded Solutions, as we do not include those results in other eliminations anymore.
The other line comprises of corporate costs in addition to some other elements such as industrial parks, industrial insurance, as well as the integration costs related to the Sapa acquisition. This quarter was negative with NOK 190 million, which is very much in line with the quarterly guidance that we've given you of NOK 175 million-200 million. Finally, eliminations amounted to NOK 97 million positive in Q3, this mainly then reflects the reduced internal margins, as well as somewhat reduced internal stock of sourced volumes in Primary Metal. On the net debt side, this has decreased NOK 1 billion between the second quarter of this year to the end of the third quarter of 2018.
We had an underlying EBIT of roughly NOK 4.5 billion. I'll explain the underlying EBIT development of NOK 2.7 billion in detail. Of course, it's NOK 1.8 billion of depreciation on top of that. We've seen a working capital increase this quarter of NOK 1.6 billion. This is due to inventory buildup and raw material buildup that we've seen primarily in many of our business areas. Normally, we would see a decline in the third quarter as we get into the decently weaker demand situation in the second half of the year. This year, we've taken a more cautious approach to secure sufficient alumina units in order to mitigate risks in this rather unpredictable market that we're currently operating in.
Taxes and other adjustments include tax payments as well as dividends received from Portalum and then t hat gives us an operating cash flow of some NOK 2.7 billion. We've invested roughly NOK 1.5 billion this quarter. This includes the final payment from Enova related to the carbon technology pilot of approximately NOK 300 million. That brings the total investment in 2018 to NOK 4.4 billion. The total CapEx guidance we gave you at last capital markets day was roughly NOK 8.1 billion. We still foresee that we will stay within that range for the year as such. The last part, the other line, is mainly currency-related effects. With that, Svein, I leave it with you.
Thank you, Eivind. Just to sum up, safety will always have first priority in Hydro. It's also now very important for us to continue the constructive dialogue with the authorities in Brazil to resume 100% production in Aluminos, Alunorte, and Albras. We will also continue the value-creating integration with the Extruded Solutions business area, the previous Sapa, that continues. Also, we have strong focus on project execution going forward. With that, thank you very much for your attention.
Okay. Thank you very much, Svein and Eivind. Then we open for questions, first from the audience here in Oslo. Any questions? Do you have any questions, Liam, from the web? Yeah.
Question from Liam Fitzpatrick from Deutsche, as well as Daniel Major, UBS. Can you give any guidance on the cost levels into Q4 for primary and BNA?
Sure. On the black material and energy, we really do not see any significant cost increases into Q4. There will be a continued cost increase in Primary Metal for alumina costs, to the range of roughly $200 million, the way we see it today. On the BNA side, we don't see an increase in costs for fourth quarter, but we still see some increase in fuel oil as well as pet coke for the quarter.
A question from Menno Sanderse, Morgan Stanley. The downstream rolling business continues to encounter operational issues. Does this business need a structural review of operating processes or more investment in assets and people to make it work? The last two years suggest the profit potential is materially lower than we expected. Does Hydro agree with that view?
Well, with regard to rolling, there's been a high investment level over some years. We could always discuss if there has been too many projects at the same time. We also see now that, like the automotive line three, where we have had the ramp-up issues, that this is also now on the way towards the plant level. We have the used beverage can recycling line that was a very complex integrated recycling line that we also have been struggling with. This is a prototype that had never been built before, but it's also a very efficient production line when it is in full production. We are very clear about what is necessary to bring that production line back to speed.
The other was Alunorte, where normally we had some issues related to Alunorte after a maintenance stop in the beginning of the year. This year, we came up to full speed very quickly. Now in the second half, we have experienced some cold metal issues. This is a big rolling mill, so when we have some issues in production there, it has a impact on the rest of the value chain because the materials from Alunorte, it goes also further to get invoice the biggest cold metal we have in our system . We have now, of course, put people in place, the competence in place. We have the capabilities to solve these problems.
In Alunorte, we also have the joint venture partner, Novelis, the biggest rolling company in the world, that is also, of course, supporting this process. This is going to be solved, but I cannot give you a timeline exactly when this will be brought back to full speed.
A question from Cedar Ekblom, Bank of America Merrill Lynch. How long can you extend the life of DRS 1 with the use of press filter? How long have you got before you have to move to DRS 2 even with the use of press filter?
As I mentioned, the sustainable solution there is the combination with the press filter and the DRS2. That is something we have planned for since we started or decided on the investment in 2014. When we now have the press filter up and running, we of course are now discussing with authorities to open the embargo for DRS2. In the meantime, we are using DRS1. We see the lifetime of DRS1 together with the drum filter that was now ended. Together with the press filter, we will continue operations into towards the next 12-18 months.
Daniel Major, UBS, presenting material to the federal court. As far as I understand it, an agreement needs to be made between Government of Pará and Ministério Público before material is presented to start the process with embargoes. Does this mean that the September agreement really indicate any possible momentum at all?
Yes. I think we can say that the September agreement has been a very important part of the fundament there. Then, it's ongoing discussions now with the authorities, and as you mentioned, it's both Ministério Público, it's Government of Pará, it's the local environmental agency, SEMAS and t his is continued in a constructive way. Of course, we want to lift the embargo on DRS2 and also for the 50% production as soon as possible, but we need to take the time that is necessary here. Also, we do all the processes the authorities need to have in connection with these embargoes.
A final question from Truls Engene at SEB. What is the status of the audits under the TAC on Alunorte and DRS2 and when are these audits expected to be concluded?
Okay. They are different audits. There is environmental assessments that is ongoing audits that will take 1 to 2 years. We will come back with information of this when the conclusion has been made. Some of these audits are environmental based on environmental measurements and reviews that has to be done. This is something we would come back to later. As I said, we are committed to follow up the TAC agreement and the TC agreement according to what we have signed into.
Okay. any other questions from here? No. I would like to say thank you very much for coming this morning, and have a great day. Thank you.