OSLO, Feb 26 (Reuters) – Norway’s Norsk Hydro has made a $345 million binding offer to buy a Rio Tinto aluminium plant in Iceland in its drive to produce more aluminium using renewable energy sources and bolster its position in Europe. The deal would raise its capacity to produce primary aluminium by 210,000 tonnes to 2.4 million tonnes this year, it said. It will enable Norsk to produce more than 70 percent of its aluminium using renewable energy versus two-thirds of its output in November. Iceland generates all its electricity from hydropower and geothermal energy. Norsk Hydro in November launched a low-carbon brand of aluminium and expected customers ranging from carmakers to packaging firms to pay a premium to help slow climate change. Producing aluminium requires great amounts of energy. “Having presence across the value chain is essential to create value from this growth and promote sustainable practices in our global operations,” Norsk Hydro CEO Svein Richard Brandtzaeg said in a statement. The Icelandic plant also delivers 230,000 tonnes of extrusion ingot used in the European construction and transport sectors, from a newly built casthouse. “This will further strengthen Hydro’s position as the preferred and leading extrusion ingot supplier in Europe,” the company said. The transaction, which also includes Rio Tinto’s 53-percent stake in an anode facility in the Netherlands and its 50-percent stake in an aluminium fluoride plant in Sweden, is expected to close in the second quarter.