//Construction and commissioning of an advanced silicon metal production plant in Iceland

Construction and commissioning of an advanced silicon metal production plant in Iceland

In Iceland, we built one of the world’s most advanced and most environmentally compatible silicon metal production plants. Silicon metal is used, among other things, as an aluminium alloyant; it is also employed in the chemicals industry for the manufacture of siloxanes and silicones. On April 30, 2018, the commissioning phase commenced with ignition of the first of the two electric arc furnaces.

Silicon metal production plant of PCC BakkiSilicon hf as of April 2018.

Principal/Segment: PCC BakkiSilicon hf
Location: Húsavík (Island)
Production capacity: 32,000 metric tons per year of silicon metal
Commissioning: The commissioning phase commenced on April 30, 2018 with ignition of the first electric arc furnace. After the furnace shell had been heated up, the input materials in the form of quartzite, coal and wood chip were charged in accordance with the specified ratio. The charge was heated up to around 2,000 degrees Celsius to initiate production of liquid silicon metal. The official start of production occurred with the first tapping operation performed on May 11, 2018.

For further details relating to project progress and photos, please click here >>

Production process: Silicon metal is extracted from quartzite, aided by the addition of wood chip and coal, in electric arc furnaces at temperatures of around 2,000 degrees Celsius. The new plant obtains its key raw material quartzite primarily from PCC’s own quarry in Zagórze, Poland. However, the related logistical costs are more than outweighed by the advantages of electricity procurement. And the dust emissions generated during silicon metal production are almost completely removed from the ambient air by high-performance filter systems installed in the PCC plant. Taken as a whole, therefore, the production process offers exceptional sustainability credentials.
Site advantages in Iceland: The production process is very energy-intensive, which is why Iceland with its rich geothermal and hydropower resources and relatively favorable electricity costs is so suitable as a location. In March 2014, PCC BakkiSilicon hf concluded a power purchase agreement (PPA) with Iceland’s biggest energy utility, Landsvirkjun. The favorable terms negotiated are guaranteed for 15 years and the contract includes an extension option. From 2018, during the first phase of operation, the plant will be supplied with 58 MW. A new geothermal energy source is being developed close to Húsavík with construction of a 90 MW power plant that will serve the entire new industrial area. The ensuing logistical costs for delivery of the raw materials to Iceland and shipment of the silicon metal to customers abroad are more than outweighed by the advantages in electricity procurement – both from an economic and an ecological point of view.
Applications: Silicon metal is used in a wide variety of applications in the chemical industry, e.g. in the production of silicones and silanes, and in the production of high-strength aluminum alloys for the automotive industry. It is also a primary input material in the manufacture of photovoltaic modules.
Customers: The silicon metal to be produced in Iceland has already been extensively earmarked for customers in German industry through long-term contracts. PCC is thus making an important contribution to securing supplies of silicon metal as an input material for value-adding production activities in Germany.
Financing and funding: The financial closing of the project took place at the beginning of June 2015 following significant progress made in securing finance during the previous year. On September 25, 2014, for example, we received a provisional cover note from the German government’s Inter-Ministerial Committee in the form of a UFK export credit guarantee. This was a precondition for securing the financing package of KfW IPEX-Bank of Frankfurt/Main. The UFK guarantee was granted because the project was deemed of particular interest to the German economy. The silicon metal produced is to be sold to Germany-based companies. PCC’s investment in Iceland will therefore contribute to securing raw material supplies for German industry in the future. The entire financing package for the Iceland project was finalised as of the end of 2014. The total investment volume of around US$300 million (approx. €265 million) will largely be covered by a loan from KfW IPEX-Bank while around one-quarter of the capital requirement will be provided by Icelandic pension funds and the Icelandic bank Islandsbanki. The associated contract was signed and sealed between PCC SE and the Icelandic company Bakkastakkur slhf. at the end of December 2014.

The Icelandic government is also supporting the silicon metal project. In 2013, the Icelandic Parliament passed with a considerable majority several laws to allow the development of the Bakki industrial park in which the silicon metal plant is to be built. One of the laws related exclusively to our silicon metal project with, in particular, financial support being provided for the initial investment required for ground preparation. Long-term tax concessions have also been granted.

Photo gallery showing progress since work on the site started in mid-2015

To enlarge the view, simply click on the photos.