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Incorrect information about energy prices on Alcoa website

June 8, 2006

Because electricity prices established in agreements between Landsvirkjun and its clients are confidential, they cannot be publicised, including here. However, the base price negotiated by Landsvirkjun and Alcoa is in fact considerably higher than the reported USD 15 per MW. While the website also stated that the energy price in Brazil was USD 30, these statements have now been removed from the Alcoa website.

Friðrik Sophusson, Managing Director of Landsvirkjun, says that at the moment, if aluminium production had already begun in Reyðarfjörður, the price of electricity charged to the plant would approach USD 30. This varies, as the price of electricity in the agreement is linked to the price of aluminium on the world market.  At present, the price of aluminium is quite high.

A statement has since been released by Alcoa, expressing apologies to Landsvirkjun. The statement said: "Alcoa Fjarðaál does not reveal the prices it pays for electricity in Iceland, which is of course a confidential matter. Because of the information revealed on the Alcoa website in Brazil, which cited a newspaper interview conducted with the Chairman and CEO of Alcoa in the previous year, it is necessary to point out that this was an absurd and incorrect comparison. It was a mistake to post that interview on the website, and it has now been removed. Alcoa Fjarðaál believes that the circumstances warrant its apologising to Landsvirkjun for this unfortunate incident."

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