//Project engineering and construction of an advanced silicon metal production plant in Iceland

Project engineering and construction of an advanced silicon metal production plant in Iceland

In Iceland we are building one of the worlds most advanced and most environmentally compatible silicon metal production plants, with completion due in 2018. An important objective of this project, which accounts for an investment volume of around US$300 million, is to significantly extend our value chain, with the quartzite required as the feedstock for this facility being obtained from the Group-owned quarry in Zagórze, Poland. A JORC (Joint Ore Reserves Committee) certificate has already been obtained, confirming that the quarry is able to supply quartzite of sufficient quality and quantity in order to maintain silicon metal production for at least 15 years. 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. Our silicon metal output is, to a large extent, already covered by long-term purchase agreements involving German companies as the primary customers, thus contributing to the security of raw material supplies to Germany. The plant will satisfy high environmental standards and be supplied exclusively with electricity from renewable energy sources (geothermal). The production facility will create more than 100 permanent on-site jobs, turnkey construction by Düsseldorf plant constructor SMS group GmbH.

Major construction site of PCC BakkiSilicon hf as of November 2017.

Principal/Segment: PCC BakkiSilicon hf
Location: Húsavík (Island)
Production capacity: 32,000 metric tons per year of silicon metal
Planned commissioning: Q1/2018
Project status
For further details relating to project progress and photos, please click here >>

The construction work on our silicon metal plant in Iceland continues to progress well, with – in particular – each of the main buildings nearing completion (almost all production buildings are already covered with weatherproof cladding) and with the cold commissioning activities also underway. Since the beginning of November, the raw material stores for the hot commissioning phase have been filled with coal, quartzite and electrodes. At the same time, our project partners have completed the infrastructure work with road access including a tunnel, expansion of the port, the power grid hook-up and construction of the associated new power plant. Commissioning of the production facility is scheduled for completion in the first quarter of 2018.

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.