Silicon metal production plant of PCC BakkiSilicon hf. in April 2018. Húsavík (Iceland)
32,000 metric tons per year of silicon metal
The plant was commissioned in 2018. The construction period for the plant, with an annual capacity of 32,000 tons, totaled approximately three years, including a six-month delay.
The commissioning phase began on April 30, 2018, with the start-up of the first of the two electric arc furnaces. After the furnace vessel had been heated, the raw materials quartzite, coal, and wood chips were fed in the correct mixture. Once the raw materials had also been heated to approximately 2,000 degrees Celsius, the production of liquid silicon metal began. Official production, marked by the first tap, commenced on May 11, 2018. The second furnace was also started up on August 31, 2018.
On October 30, 2019, the Final Acceptance Certificate (FAC) was signed, and the plant was thus taken over for regular operation.
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Silicon metal is extracted at temperatures of approximately 2,000 degrees Celsius in electric arc furnaces from the raw material quartzite, with the addition of wood and coal. The new plant primarily sources the key raw material, quartzite, from PCC's own quarry in Zagórze, Poland. However, the associated logistical effort is more than offset by the advantages in electricity procurement. And the dust emissions generated during silicon metal production are almost completely removed from the ambient air at the PCC plant by high-performance filter systems. The entire production is therefore exceptionally sustainable.
The production process is very energy-intensive, which is why Iceland, with its rich geothermal and hydropower resources and comparatively low electricity costs, has proven to be an ideal location. In March 2014, PCC BakkiSilicon hf. concluded a Power Purchase Agreement (PPA) with Landsvirkjun, Iceland's largest energy provider. The favorable conditions are guaranteed for 15 years, and the contract includes an extension option. In the first operational phase since 2018, the plant is supplied with 58 MW of power. For the entire new industrial area, Landsvirkjun has developed a new geothermal area near Húsavík and built a 90 MW power plant there. The associated logistical effort for delivering raw materials to Iceland and shipping the silicon metal to customers is more than offset by the advantages in electricity procurement – from both economic and ecological perspectives.
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.
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 finalized 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.
Further investments
