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 around 120 permanent on-site jobs, turnkey construction by Düsseldorf plant constructor SMS group GmbH.

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Major construction site of PCC BakkiSilicon hf as of April 2016. In the foreground: Coal store under construction.

Principal/Segment:PCC BakkiSilicon hf
Location:Húsavík (Island)
Production capacity:32,000 metric tons per year of silicon metal
Planned commissioning:2018
Project status:The building work is proceeding to schedule and to budget. The detailed design work on the facility, and the terracing of the site, have now been largely completed, with the first foundations also having been put in place. We will thus see some of the main buildings completed in the course of the summer of 2016. Among other things, all the side walls of the first main building have now been erected. This coal storage facility measuring over 120 metres long and 30 metres wide should therefore now be completed in July 2016, a little before the planned date.

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We have also instigated recruitment activities in order to ensure that we have the necessary personnel available to operate the plant once it has been commissioned in 2018; an important step has already been taken in this regard with the hiring of a very experienced management team.

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.