Welcome everyone to the presentation of third quarter results for Hydro. They will, as usual, be presented by CEO Svein Richard Brandtzæg and CFO Jørgen A Rostrup. After the presentation, as usual, we will have time for some questions and for one-on-one interviews after that. Let's start with Svein Richard.
Thank you, Inger. Let me first start with a recap of the transaction that we announced last week. Where we now plan to create a joint venture with Orkla. 50/50 joint venture, where we are combining the extrusion activities in Hydro with Sapa Extrusion. This will be a leading number one company in Europe. It will have number one position in U.S., and have strong positions in emerging markets, both in South America and in the growing markets in Asia. This combination will create a strong unit where we take the best management from both companies. We are combining technology and competence, which will give that company very good capabilities in a challenging extrusion market. The synergy potentials is estimated to be NOK 1 billion per year.
There will be 25,000 employees, and the turnover will be almost NOK 50 billion per year. For Hydro, this is value creating from day one, because I'm very happy for the valuation of our assets in this respect. We have, again, taken leadership in this industry and created a strong player, and in many respects, changed the landscape in aluminum extrusion. Let us then move over to the third quarter result. NOK 8 million as an underlying result is very much influenced on the lower alumina prices and the lower aluminum prices.
The alumina prices went down 10% in the quarter, and we had 7% lower aluminum prices than the quarter before, where we had $2,167 per ton aluminum price, and this quarter, realized price was $2,022 per ton. We had record high bauxite production in Paragominas, and I will come back to that later. In downstream, we saw lower volumes, seasonal variations, but volumes reduction in extrusion was beyond seasonal variation. More stable in the Rolled Products, and to some extent, compensated the results by cost reduction efforts in the downstream business. In energy, we had lower production and lower prices. In fact, the spot prices in this quarter was 32% lower than the previous quarter.
If you then take a closer look at Extrusion, where we compare on the left side, the volumes from in this quarter compared to the previous quarter, we have seen a decline in volumes between 7%-13% in Extrusion Eurasia, 9% down. If you compare with the quarter last year, the third quarter last year, we can see a stable situation in Precision Tubing and also Extrusion Americas, but a significant reduction in Building Systems and Extrusion Eurasia. That is reflecting the very challenging market in Europe and especially in building and construction in Europe. In total, 9% lower volumes in the quarter, compared to the previous quarter, and also 9% lower volumes this quarter compared to the quarter last year. In Rolled Products, the situation is more stable.
Somewhat better in Foil and Litho, and lower in packaging and building, in can beverage, in general engineering, in automotive and heat exchanger, stable volumes. Same volumes as previous quarter and also same volume this quarter as we had in the third quarter last year. Again, challenging market in Rolled Products, but I would say stronger than expected volumes due to seasonal variation in the third quarter. Again, situation where Rolled Products is delivering fairly good results in a challenging market situation. In primary aluminum, seasonal variation, again, somewhat lower demand. The blue curve on top here is the production. As you see, the production has been fairly stable. There has been disruptions due to production problems in South Africa and SUAL. Also a strike in Canada.
In total effect, this will have an effect of about 400,000 tons this year. There are also announced curtailments of 1.2 million tons this year. The effect in 2012 will be about 700,000 tons of these announced curtailments. We maintain 2% growth in the market outside China this year. Same message as the previous quarter. We expect a balanced market in 2012. When we look at the inventories, there has been fairly stable total inventories. Somewhat higher registered inventories. When we take a look at the total inventories, including the unregistered inventories, the situation is fairly stable. With regard to ingot premium, the standard ingot premium, there has been continued higher levels.
This is again a result of a fight for standard ingots. There is investors that are investing in aluminum standard ingot and having positions in warehouses and also the industry, the demand is also fighting for ingots. We have record high levels. This means that there are limited ingots available for the physical market. At least you have to pay a very high price to get it out from the warehouses. This means that for some of our metal products, we have taken down production because re-melting of standard ingots today at these levels is not profitable. That means that we have reduced their primary foundry alloys production. We have not announced this previously.
For example, in Årdal, we have taken down primary foundry alloy production due to the fact that it is not profitable where we have level of standard ingots between $230-$280 per ton as we see in the markets today. Aluminum price volatile in the quarter was strengthening during the quarter, especially due to the quantitative easing in the U.S. and Europe in the end of the quarter. It's coming down again now. It's around $2,000 per ton. Realized was $2,022. Again, it's still low levels. I would say fairly challenging levels for the aluminum industry at around $2,000 per ton as we see now.
I think this is a good opportunity to recap also and give you some updates on our acquisition in Brazil. It is now about 20 months since we closed the deal. First of all, I'm very happy that we can verify the rationale for the investment. First of all, there is a tough competition for raw materials. There's a fight for raw materials, also for bauxite. We have seen that the alumina and bauxite pricing in the market is changing. It's more commercialized pricing, not directly linked to LME. Alumina pricing today is standing on its own merits. It's very much linked to what we call a Platts Index and not as a percentage of LME as it was as a standard before.
We also see higher prices in percentage of LME, by the way, I'll come back to that. There is also a clear increase in cost of new capacity for bauxite alumina. Again, the strategic rationale can be verified. On the other hand, it's still challenging macro situation. There is increase in raw materials. As we see it now, compared to the LME level that is lagging behind, we see a quite strong pressure on margins in the alumina production. In Paragominas, I'm very happy to again confirm that we have increased production. It was some questions about how Hydro would handle the bauxite mining, which was not a core business until we acquired the Vale aluminum assets in 2011.
We have increased the volumes with 42%. This is due to operational improvements and also improved productivity in the mine. Alumina is, as I mentioned, changed on pricing. Previously, it was between 12.5% and 13% of LME. Now we see much higher levels in percentage of LME, but it's more and more priced on index. As we see in a situation during last year where LME has been very volatile, the alumina price has been fairly stable. Again, we also see that, in addition to the fact that it's more index priced, we see also that there are more short-term contracts in the market, which is also positive with regard to further commercialization of alumina going forward. We follow carefully the development in China.
This curve shows this bar shows the import-export balance in China. The green bars are the bauxite imports. As you can see, in the beginning of this year was a very strong increase in bauxite imports, mainly from Indonesia, some volumes also from Australia. In May, Indonesia introduced a ban on export of bauxite to China. They gave some licenses to some players with 20% export tax, which will be increased to 50% export tax next year, and total ban from 2040. China is now looking around for more bauxite in the world. I'm also happy to see that they are even looking into the Atlantic region to get hold of bauxite.
We have sold two big cargos to China from Brazil, which shows that China is now going quite far to get access to bauxite. The alumina import to China has increased 200% during the last year. It makes more sense to import alumina than bauxite, but we still see that they are looking for bauxite. They have a lot of capacity for alumina production in China. On the primary side, however, we see that China continue to keep a good balance between supply and demand. With regard to semis and semi-fabricated products, it's fairly stable. Similar volumes as we saw last year on export. I mentioned the tough situation with regard to raw materials.
In a situation from quarter one 2010 until today, LME has gone down with 12%. If you then take a look at the development of the caustic price, caustic soda has increased with 119%. There's 30% increase in coal price, and also some increase in fuel oil price. But here we have not included ICMS tax, which we paid in the second and third quarter this year, which would add another 30% to the fuel oil price in these last two quarters. Again, it is a quite tough situation in this market with low LME and also very high raw material costs.
We said when we announced the deal with Vale that Paragominas and Alunorte as an integrated system was very competitive. When we now are showing you here the benchmark of Hydro in green together with the biggest players in this market, in fact, we have the highest EBITDA margin in this comparison. We see that the EBITDA margin is going down due to the weaker market and also the increase in raw material cost. Hydro has the strongest competitive situation during this period. Again, we have very good assets, Paragominas and Alunorte, altogether efficient. We are the best in the industry in this benchmark, in this respect, but that doesn't mean that we can rest on this situation.
We continue with our improvement program, and we have introduced previously this year a NOK 1 billion improvement program for Bauxite & Alumina, where we are focusing on performance and productivity. Again, this is important to keep the leading position, the competitive position. We continue to right size and also to improve maintenance, several productivity factors in bauxite and in Paragominas Bauxite Mine and Alunorte Alumina Refinery. Again, this is a part of the total package, which also includes the commercialization of Bauxite & Alumina, where we're also supporting the index pricing related to the Platts Index. If you then move over to Primary Metal, we have reduced the cash cost of Primary Metal with $200 since last year.
One third of this is related to the fact that we are now included Qatalum in these figures. One third is due to lower alumina price, and the rest is due to cost reductions and also somewhat help from the currency and also some raw materials. The $300 program continues according to plan, and remember, this is a program that is related to our fully owned smelters. We are going to go more into details on the $300 program when we come to the Capital Markets Day. In as a part of the $300 program, there is also improvement on costs and margins, which is quite challenging in a situation where we have a very high standard ingot premium.
We will come back to that in the Capital Markets Day. In Qatalum, we have production above nameplate capacity. It's going full speed with very good production parameters. You remember that we had a fire in the seawater cooling tower the seventeenth of March this year, and this is now under reconstruction. The level of reconstruction is now down to the extent where we can restart the second steam turbine. Now we are running all four gas turbines and also both steam turbines in Qatar. Next step for Qatar is to optimize the production and take the costs down to the level where we have our ambitions. Qatalum will still be one of the most efficient smelters in the world. Thank you for your attention so far. I leave the word now to Jørgen to go through some more details.
Thank you, Svein Richard . We will move over to some of the financial numbers for the quarter. As Svein Richard said, NOK 8 million EBIT result, down NOK 541 million compared to first quarter. Price is predominantly the reason behind this, some other effects that I will get back to. Let me stop here for a second, referring to the announcement of the planned joint venture with an extrusion with Alcoa. We have reported Extruded Products as normal, as part of our running business this quarter. We have not reported it as a business for sale or discontinued operations, simply because our decision to combine extrusion with Sapa was made in fourth quarter.
It was made after the thirtieth of September, so no decision was finally taken at the time of closing of the account. We expect that when closing the transaction, this could result in a gain to be recognized for Hydro related to the merger in the magnitude of approximately NOK 500 million . Let me shortly comment on Other and Eliminations segment. I will not revert to that. It is a charge of NOK 64 million versus NOK 166 million in the previous quarter, so there is a less charge of NOK 102 million. The charges for services, corporate staff and other businesses is approximately NOK 150 million.
In the better part of the range where we have guided, I think forward you should assume around 150 we have managed to bring down the charge somewhat. That means that the variation of NOK 100 million on quarter is related to elimination of internal gains and losses on inventories. It's a positive effect of NOK 90 million versus a negative effect of NOK 23 million last quarter. If we go to the waterfall analysis and take a helicopter view on the result, it's NOK 500 million in change quarter on quarter. This is, as Svein Richard said, predominantly related to the LME effect on the alumina and aluminum prices that we have achieved in the quarter.
This effect is in the range of NOK 0.6 billion, evenly divided between bauxite, alumina result, and the effect of prices on Primary Metal. There are some minor net effects. The energy, lower prices and volumes this quarter compared to last quarter is estimated to approximately NOK 0.1 billion. Volume effects and other effects is NOK 0.1 billion. The volume effect is somewhat larger than this net number. Cost has benefited us in a positive way of NOK 0.3 billion in a quarter. This is obviously variable cost, where alumina to Primary Metal is obviously one effect, but also on energy as well as carbon.
The other effect is fixed cost partly as a result of our ongoing program, but even more this quarter of what we could call non-recurring events and cost elements. Third quarter is typically somewhat lower on the cost side than fourth quarter. You should not expect this part isolated to continue. The cost program will continue. Okay, look at key financials. Revenue is down NOK two and a half billion, approximately to NOK 19 billion. It's 12% down, and that is reflecting what we have said on volumes and prices. Underlying EBIT, we have talked about down NOK 500 million to NOK 8 million . Reported EBIT is negative NOK 414 million, meaning that we have excluded this quarter NOK 422 million from underlying EBIT.
One quarter of that, approximately NOK 100 million, is related to derivative effects on the LME and power side, mainly related to an increasing LME in the quarter. The remaining is impairment and restructuring and rationalization charges related to the continued restructuring of our portfolio. Very little of that is cash, so it's mostly non-cash elements. If you look at the financials, we have positive financial income of NOK 245 this quarter. This is due to net currency gains of NOK 283 million related to a strengthening Norwegian krone versus other currencies and in this regard versus U.S. dollar. This give negative income before tax of NOK 169.
There is a small tax charge due to the power surtax. There is a tax-reported net loss of NOK 231 million and underlying net loss of NOK 20 million. If we then move into the business areas, we at least believe we were quite clear on our guidance last quarter. We guided in particular on the two upstream aluminum areas that the result would be weak for the quarter. I believe that is the characteristic we can put on it today. We are NOK 200 million down from last quarter to negative NOK 386 million on operating income, EBIT underlying.
Only marginally positive EBITDA for the quarter before appreciation, that is. It is a result of weak prices and the raw material side, as Svein Richard explained. Prices were significantly down. It was from just below $300 to $270, which is 9% down. Somewhere between 10% and 20% of our alumina portfolio today is sold on index prices. Then the opposite of that is that the majority of our alumina is sold on legacy contracts to the LME, as we have discussed earlier.
We expect that the share of volume sold on index prices will increase going forward until after 2015, 2016, where a large part of our contract portfolio can be renewed at different pricing structures to put it that way. Remember what Svein Richard had showed you, the index prices are in dollar terms around $320 a ton now, while we have sold our portfolio mix at an average price of $270. There is a $50 difference there today or approximately 15%. Record high production in Paragominas, as mentioned, 15% up. We are very pleased with that.
We are for the quarter at an annual run rate of 9.7, which is as close as you can get to the designed capacity. We have periods with less maintenance where we are at nameplate capacity. This is a very good development for the mine. Alunorte production was a bit more disappointing in the quarter. We saw a slight decrease from last quarter. We had some issues in the calciners, which is the last part of the production process. We had some production issues there.
This means that we have in stock 150 kilotons of what we call hydrates being stored and being ready for the last production part in quarter four, which combined with hopefully a good performance on the rest of the system should point to high production in Alunorte in the fourth quarter. Except from that, I would just say that remember that alumina production is priced approximately one month lag to the LME. There is probably the current pricing environment probably gives an upside the fourth quarter compared to the third quarter on this.
that we expect cash costs to come down in fourth quarter, primarily due to the fact that we have again been relieved and got exemption from the ICMS tax that we discussed last quarter. We are exempted from that with effect from October 1. There might be some smaller inventory effects on this in fourth quarter, but very limited. The charge of NOK 150 million that we had due to this for the last couple of quarters should more or less disappear in fourth quarter. Primary Metal underlying EBIT negative NOK 10 million versus NOK 240 million in the second quarter, which means a change of NOK 250 million.
Prices and volumes negative effect quarter-over-quarter is NOK 300 million due to the price reduction of LME, predominantly of $150 per ton. Offsetting the price effect has been reduced raw material cost, amounting to in total approximately NOK 100 million. We have also seen, as I said, a decline in fixed cost in the quarter. However, probably mostly one-off items. I will get back to Qatalum in a minute. NOK 140 million down on the effects mainly related to the disappearance of the insurance settlement that we had in the second quarter.
We have sold 80% of our production capacity, if you exclude the Qatalum volumes, at $100 below the price that we saw in third quarter. We will, as Svein Richard had said, see somewhat reduced sales volumes. One reason is that we are now totally out of Kurri Kurri, including remelting activity, we have stopped everything. The other is remelt volumes in general due to the profitability in that part, we will see somewhat reduced volumes in the fourth quarter. As I said, maybe some reaction on the fixed cost, but not a significant impact. If we then move to Qatalum for a minute.
First of all, we are very happy to see high and stable production volumes above nameplate capacity and our good people down there are able to keep it that way, even with the challenges they had in parallel on the fire in the cooling system a few months back. Underlying net income is down NOK 144 million, as I said, predominantly related to the insurance settlement last quarter of NOK 144 million. EBITDA is down NOK 160 million in the quarter, however, still positive at NOK 179 million. This is a top quartile smelter, so it's two ways to look at this.
Obviously the earnings in Qatalum today is not as they should be, but it is for us also a clear illustration of the challenges that this industry has and we are very glad that it's still earning money on operations and we will do what we can to keep it that way. If we look at the $140 and we know declining LME prices in the quarter, you should see a lower or a bigger decrease in earnings. When we don't see that, it is predominantly because cost side came in quite well this quarter. When some of you do your mathematics, I think you will see a cash cost, operating cost adjusted for the effects of the cooling tower incident being very favorable.
They are probably on the too strong side, we believe this quarter. We still believe we have the job to do that we have talked to you about earlier. This quarter came out low on operating cost, but again, it is one-off items, and we believe we are in the range somewhat above 1,500, and we'll continue with our effort to streamline the unit. Metal Markets is not much to talk about in this quarter. It's a low underlying EBIT result, but that is due to significant effects on currency and inventory valuation effects. If we look at the performance result, it is NOK 104 million compared to NOK 117 million last quarter.
Volumes are slightly down due to normal seasonality and some effects from the weaker market. Performance-wise, it is approximately the same. We have some currency effects due to the strengthening Norwegian kroner, so it's a trans``lation effect more than anything else. We have the inventory valuation effects, which means that due to an increasing LME we have to take the hedge implications of that in our books. But the increasing value on the inventory, the physical stocks, we cannot due to accounting rules take before we are releasing that inventory, which is fourth quarter. There should be a positive effect from this being positive in next quarter. Let's look at the Rolled Products. It's as Svein Richard said, a good result from Rolled Products.
It is underlying EBIT of NOK 214 million versus NOK 204 million last quarter. We had stable sales volumes in the quarter compared to what normally is a weaker quarter. There has been seasonal decline in some part of it, but it's been offset by positive effects in the litho business both from demand and production performance, and also restart of the Hamburg rolling mills that we have had out for some time. We have also in the result benefited from dollar sales overseas sales versus the euro-based operation. It's NOK 90 million higher than third quarter last year, and then slightly higher than the second quarter.
I think you should more expect a result in line with the fourth quarter last year, for fourth quarter, this year. When we look at extruded, Svein Richard mentioned this, but we thought we could have one extra illustration for you. Of course, it's not on the dime accurate, but it's derived directly from our analysis. It's as good as we can see it. We have weak markets, and we have a tremendously weak market. We still see a decline in Europe, and the performance is, of course, not as it should be. What we have said is that we will do our utmost to compensate as much as we can by taking forceful measures in this situation.
We have talked to you about the program in extrusion, which we have said is EUR 80 million improvement within 2013 compared to 2011. Then we have more to go after that, but we are concentrating on that first part first. If you look at this, whether you look at it on a year-to-date basis, where we have a 5% decline all in all, and where Building Systems is actually 13% down, which means that it is both hitting on the volume side, but it's also hitting on the margin side because the margin mix, the margin of the product mix changed dramatically because of that. We have, through our cost improvements, at least compensated for the market decrease more or less.
Even so, more so in third quarter against third quarter, where the two dominant and almost only factors explaining the result change, quarter on quarter 11 to 12 is the 9% decrease in volumes, still taking place, as Svein Richard said, but our cost improvement program, that is counteracting that effect. That is kind of an easy illustration of what we believe is the understanding of our numbers and of our actions. We are NOK 26 million down to NOK 27 million in the quarter. As I said, 9% decrease in volumes, which means more than a seasonal decline, again alluding to the fact that we still see continued weakness in the market.
Going forward, we believe this will continue or be at the same low level, but we will definitely continue and expect to see further effects from our rationalization program. Energy, fairly simple explanation on the development. This quarter, high reservoirs has been the name of the game in the Nordic markets and in Norway in particular. Therefore also attached to that low prices. Also the fact that we have been running without Rjukan production system most of the quarter due to a significant revamp. First phase of that project is explaining the result. The Nordic hydrological balance was 6 terawatt hours above normal level at the end of the quarter.
Water reservoirs are 10 percentage points higher at 91% of reservoir filling capacity in Norway at the end of the quarter. We as a company also have higher resources than in the normal situation. As I said, result is down on prices and lower production, NOK 142 million change to NOK 220. We expect prices to pick up due to increased consumption and colder weather. We expect our production to pick up due to the fact that we now have Rjukan back in production again. We were very happy to see that we were able to go from a planned shutdown of 16 weeks to 12-13 weeks of production shutdown for this period process.
Let me end my part with net cash and net debt development in the quarter. We started the quarter with NOK 0.4 billion in net debt. We have generated from operations 1.1 billion in total. That is 1.3 on EBITDA, so from operation and then it is 0.2 in generated cash from reduced operating capital. We have among other things paid some taxes, so there are some other effects on 0.4. We have invested 1 billion in the quarter. We guided on Capital Markets Day last year that we would invest for between NOK 4.5 billion and NOK 5 billion in 2012.
We believe this number now is much closer to NOK 4 billion, so we have been able to continue our cash and capital discipline focus and bring the sustaining CapEx level a little bit further down, which is good. At this $2,000 level, we are covering our investments but not more is the easy evaluation of this. There are some translation effects on the increase in Norwegian krone on our dollar debt, which means that we are basically zero net cash net debt situation at the end of the quarter.
Thank you, Jørgen. Right now, we don't expect any support from the market, so we have to create the results ourselves. There is a high degree of uncertainty in the macroeconomic environment. We all know the situation in Europe with the sovereign debt crisis that is heavily influencing our market, especially in Southern Europe, especially in building and construction, but also generally in Europe. The growth figures in U.S. is uncertain. It's expected to continue to grow, but at low levels. The growth in Asia, especially in China, is still a question mark, and it remains to be seen. All these factors which influence the situation for the aluminum industry. For us, it's to continue with our improvement programs along the whole value chain. We have the NOK 1 billion improvement program in Bauxite & Alumina.
We have the $300 program in Primary Metal. We have also introduced an improvement program in Qatalum, and also the joint venture in primary aluminum. We have the Climb 10 program, improvement program in Rolled Products. Until the closing of the deal with Orkla, we will continue our own to improve the Extrusion business. In with regard to portfolio management, of course, the deal with Orkla shows that we have again taken leadership in this industry, creating a strong industrial player, and again, changing the landscape in aluminum. We will continue to plan for the integration during the winter and the spring, and we expect the closing of this deal in the second quarter next year.
We will continue to run the tight ship and have capital discipline, focus on net operating capital, and keep a very low capital expenditure level going forward. Thank you very much for your attention. We are ready for questions.
Yes. We open for questions from the audience. Please wait for the microphone that Irene will give you, and please introduce yourselves also for the people following us on webcast.
Bengt Jonassen from Carnegie. I think I have three questions. Firstly, in Brazil, could you give an update with respect to the potential lowering of energy, electricity prices, which will affect Albras smelter? Also, when I look at Rolled Products, you have seasonally quarter-over-quarter flat, whereas market statistics says lower quarter-over-quarter sales in Europe, particularly in Europe. Have you gained market share, or is it inventories that has been low at your customers? The final question, a comment on extrusion ingot premiums at Rotterdam. This has started to increase during the summer, which I cannot find in any, let's say, volume statistics in the extrusion market. So has this market also been, let's say, influenced by financially motivated parties entering this market as well?
With regard to the energy situation in Brazil, we are quite active to follow up the intention from the President Dilma Rousseff in Brazil that is planning to create a so-called industry regime for energy. I was in Brazil one and a half weeks ago, had a meeting in Brasília, and at least the signals are very positive. It is too early to conclude on what will be the real effect in the end. The potential is up to 28% reduction in the power prices in Brazil for aluminum industry. This is valid for Hydro and also the other players in the primary aluminum production in Brazil. With regard to Rolled Products, you should remember that we are also exporting products out of Europe.
We see that in some market segments we have maintained our market share. In some market segments we have in fact decided to reduce our market share, and we also increased our market share in some other areas. It goes up and down. Due to the competitive situation, we have been able to export more Rolled Products to U.S. and Asia, for example. The can business is a good example of the global product which can be exported from our main assets in Germany. Sheet and foil is also products that can be exported.
All in all, we also see that the packaging, for example, the packaging segment is very stable, even in Europe. The demand, people are still eating and drinking as before, so the demand for packaging products in aluminum is almost the same as before. The last question was about extrusion ingot premiums. Of course, the challenge there is that the extrusion ingot premiums is based on top of LME. Sheet ingot premiums is priced on top of standard ingot premium.
There we have three elements for sheet ingots is LME, standard ingot premium, and then the conversion premium for sheet ingots, which means that when the standard ingot premiums goes up in sheet ingots, that's okay for us because then we got benefits from the standard ingot and also then the conversion premium. In extrusion ingot, we get a challenge due to the fact that the standard ingot premium is not separated from the extrusion ingot premium. We have gained higher extrusion ingot premiums in the market, but not sufficient, I would say, to compensate for the change in standard ingot premium. For the re-melters that are re-melting standard ingots and produce extrusion ingots, it's a very challenging situation. That's why we have taken down the volumes in our re-melters.
We have taken down the volumes also in our primary smelters, where we have done re-melting during the last years. This is due to the effect on standard ingot premium. Even with higher extrusion ingot premium, it has not been enough to compensate.
May I add that we have no reason to believe that there is a new pattern in the marketing of the extrusion ingot. We haven't seen that. If there are any significant and lasting effects that we see now, we have registered the same as you're pointing to, then it is simply because the balance is a little bit adjusted and because of the fact that the margin on top of the standard ingot is simply too tight now for profitable business on extrusion ingots. It's early, let's wait a little bit. There are no fundamentals as we can see it, but there might be. We don't know.
Hans-Erik Jacobsen, Swedbank. Given the positive developments within the global bauxite and alumina markets, how likely is it that you will move ahead with a CAP project now?
If you take a picture of the global situation here, we still feel that there is enough capacity going forward, and we don't want to be too early with that investment. I think it's better to wait for the growth and that we get much more decent pricing of bauxite and alumina before we make the final decision on that. There is still uncertainty, but the CAP project will definitely be one of the most attractive alumina projects in the world today. We have full control of the project. We have full control of the timing, and we will choose to continue to delay that project.
Yeah. In the middle there.
Thank you very much. Sorry. Henrik Schultz, SpareBank 1 Markets. Could you elaborate, excuse me, on some of the details of the improvement program in Bauxite and Alumina? I'm referring specifically, of course, to the NOK 1 million that you mentioned. I suspect that you're, from that, you're taking out the possible effect of the raw material price rise or increase or whatever. I assume you're also stripping out of that unexpected improvements from the renegotiation of contracts and the price setting mechanisms and so on and so forth. I assume volumes seem to be plateauing a little bit at the moment, nameplate capacity on the bauxite side, little lower volumes, own production on the alumina side. I'm just wondering if you could provide some details of how you expect improvements going forward, which elements will be involved, please?
Again, as with the $300 program, there are several elements that goes into the improvement program Bauxite & Alumina. Close to half of it is commercialization. The, it's commercial effects that we see now is already in place. As you know, we are locked in with contract up to 2015, and from then we get released from the old Vale contracts. We are in the market with the index pricing of big volumes of alumina. We are talking about improvements in Paragominas, in Alunorte. It's about maintenance, I would say preventive maintenance, better maintenance, operations. It's productivity. We are talking about again de-manning in Paragominas and Alunorte.
On top of that are several other effects that we will come back to in the Capital Markets Day. I think there are details that we will come back to, but there is, it's quite extensive program in all parts of the value chain, which is also valid for Bauxite & Alumina here.
I have a follow-up question, if that's fine. With the extruded products and the joint venture plans, it seems to me that if you compare the ambitions on the cost-saving side and the restructuring expense and investments require NOK 1.6 billion, for example, and the timeframe that compared to other projects that you have implemented in extrusion yourselves as well as Sapa
Mm-hmm.
The plan seems to strike me as slightly unambitious. I don't know whether you have any comments to that, in terms of, I mean, putting the whole thing together, the restructuring synergies expected on the one hand, the costs involved on the other hand, and the timeframe, thirdly, seems to me to add up to a slightly unambitious program compared to other programs. I don't know whether you have any comments.
Yeah. We have had obviously, again, a helicopter view on the situation from both parties. There's of course limitation of how deep we can go into the issues in the situation before closing. We have clearly seen that there is a potential of NOK 1 billion on synergies, and the estimated cost is, as you say. Of course, we have the ambition to do the best out of it. We are not going to limit any potentials that could be discovered after closing. We will take all measures that is available, all possible potentials will be utilized to get the best possible play out in that respect.
Okay. Any more questions from the audience? No? I would just like to say thank you very much for coming. See you later, and have a good day.