Financing of PCC’s Iceland silicon project concluded

• KfW IPEX Bank’s investment finance package worth 194 million US dollars
• PCC project to contribute to securing commodity supplies for German industry
• SMS Siemag to build turnkey production plant
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Duisburg, on 11 June 2015. The project company PCC BakkiSilicon hf, in which PCC SE is a majority shareholder, is to receive an investment finance package of 194 million US dollars (around 170 million €) from KfW IPEX Bank for the construction of an advanced silicon metal production plant. In all, the investment volume of the PCC Bakki Silicon Project located on the outskirts of Húsavík in the north of Iceland amounts to approximately 300 million US dollars (around 265 million €). The financing structure put in place over a term of 15 years not only includes Hermes cover (Germany’s export credit guarantee scheme) but also untied loan guarantees under Germany’s UFK programme.

The German federal government offers UFK guarantees in support of commodity projects abroad that are regarded as inherently worthwhile or which are of particular interest to the Federal Republic. “The competition for commodities is becoming ever tougher against the background of countries endeavouring to bolster their own manufacturing base and in the face of the increasing importance of China. So we are delighted that our investment in Iceland will also help secure raw material supplies to Germany’s industry,” says Dr. Peter Wenzel, Executive Vice President at PCC SE.

The core facility in the project is the silicon smelter owned and operated by PCC BakkiSilicon hf. Once completed it will be one of the most advanced silicon smelting plants in the world, capable of producing over 32,000 metric tons of high-purity silicon metal per year. The sale of this material is, to a large extent, already covered by long-term purchase agreements involving German companies as the primary customers, thus reducing dependence on volatile spot markets for such commodities. The aluminium industry is a major user of silicon metal as an alloyant, while demand for high-quality silicon metal products is also growing in the chemical and electrical industries.

The quartzite required as a feedstock in the production of silicon will be primarily supplied to the smelter from a PCC quarry in Poland on the basis of a long-term contract. The energy employed by the production process is to be provided by the state-owned Icelandic utility Landsvirkjun, again on the basis of a long-term supply agreement. Construction of the turnkey facility has been entrusted to the Düsseldorf company SMS Siemag AG, a world leader in metallurgical plant and metal rolling equipment The project will create 120 new direct jobs. This is KfW IPEX Bank’s first large-scale finance package for a commercial project of this kind in Iceland.

Video about PCC’s silicon metal project in Iceland:

Development of the infrastructure for our silicon metal plant that is being built in a new industrial zone on the outskirts of Húsavík to the north of Iceland.