Landsvirkjun and Alcan Iceland Ltd. sign new power contract
The agreement is twofold. First, it involves a renegotiated price on current sales of energy for the smelter‘s present production (2.932 GWh), and secondly the provision of additional power (658 GWh) for the smelter‘s planned production increase.
The new energy price will take effect on 1 October 2010. The price is in USD and connected to US Consumer Price Index (CPI). The link to aluminium prices is removed. The contract is valid until 2036 and thus involves an almost 12 year extension from the current contract.
Hörður Arnarson, Landsvirkjun‘s CEO says the agreement is the first step in the company‘s new strategy for pricing energy contracts in Iceland in line with trends in international markets. He says the agreement is in many ways a landmark event in the company's energy sales.
To meet increased energy sales Landsvirkjun will build the Budarhals power plant, tenders for which will be issued in the coming weeks. The plant is expected to start delivering power in 2013. Financing is underway, proceeding on schedule and expected to be completed by 31 August 2010.
Hörður Arnarson, Landsvirkjunn's CEO and Rannveig Rist, CEO of Alcan Iceland,
by the signing of the contract