The plant manufactured chemicals related to the production of fertilizer, initially potassium nitrate from arc-produced nitric acid and later ammonia, hydrogen, and heavy water.

The Telemark power-based industry adventure started in 1902 when Sam Eyde, along with Norwegian and Swedish investors, bought Rjukan Falls—establishing A/S Rjukanfos on 30 April 1903.

[2] The test plant for the Birkeland–Eyde process in Notodden started operation on 2 May 1905 as the first in the world to produce synthetic potassium nitrate.

On 2 December 1905 Norsk Hydro-Elektrisk Kvælstofaktieselskab (now Norsk Hydro) was founded, and plans to start a new plant in Rjukan were initialized; moving closer to the source of power would improve efficiency and not make it possible for the newly independent Government of Norway to hinder construction of hydroelectric power by foreign investors—a major political issue at the time.

[7] The 1920s were a tough time, and production decreased, but in 1929 the electric arc technology was replaced by the Haber process, with the intermediate ammonia being synthesized at Vemork and transported by rail and ferry to Herøya outside Porsgrunn on the coast, where limestone easily could be shipped in,[8] and finished fertilizer shipped out, reducing the tonnage from Tinn.

[9] The ammonia plant was established at Rjukan in 1927, following a 1925 agreement between IG Farben of Germany, who transferred the Haber patents to Norsk Hydro in exchange for a quarter ownership, and the distribution of the products through them.

By 1934 it was discovered that the plant was making heavy water as a byproduct; since there was a market for this amongst scientists at the time, up to 4 kilograms (8.8 lb) were produced per day.

The hydrogen plant required direct current, that could not be transported longer distances without large energy loss; therefore it had to be located right beside the power station.

[10] The establishment at Rjukan allowed for the exploitation of hydroelectricity from the lake Møsvatn through five power stations along the river Måna, Svelgfoss I (1907), Lienfoss (1909), Vemork (1916), Såheim (1916) and Frøistul (1926).

[10] To transport the products to the coastal port at Skien, Norsk Hydro needed to build an extensive railway network.

Cargo was stored in tank cars and transported down the 16-kilometre (10 mi) Rjukan Line to Mæl, where it was transferred to the Tinnsjø railway ferry.