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Becromal and Landsvirkjun sign electricity supply contract

August 15, 2007

Becromal Iceland and Landsvirkjun today signed a contract for an electricity supply for a planned power foil manufacturing plant in Akureyri, in the presence of the Minister of Industry, the Minister of Finance, representatives from Landsnet and other companies and institutions with vested interests. Construction work on the factory is expected to be completed next year when manufacturing will begin. The export value of goods produced is expected to be approximately ISK 7-9bn annually.

At the same time, Akureyri Town Council and Becromal signed a cooperation agreement concerning the site of the plant and location issues in the town.

Five times the electrical power consumption of the Eyjafjordur region
This electricity contract guarantees Becromal 75 MW of power from Landvirkjun, and includes an option to increase consumption to 100 MW at a later date. The initially energy needs of the manufacturing facility will be approximately 640 GW per annum, which is about five times more electricity than the entire Eyjafjordur region uses in a year, and corresponds to a 10% increase in power production by Landvirkjun compared with last year.

However, an additional power station will not be necessary to support this energy sale, although increasing power consumption in the country as a whole will hasten the need for construction in this sector. Landsnet will strengthen its transmission capacity in the North during the next few years in line with increased regional power requirements.

90 new jobs – an operation without the release of greenhouse gases
Production of power foil is a specialised high technology process that does not release greenhouse gases, and will create 90 new quality jobs. The raw material - pure, high quality aluminium - is rolled and electroplated in unique assembly units. The product, power foil, is then used in capacitors.

The already high demand for capacitors is increasing further as they are used in all electronic equipment. The demand for smaller electronic equipment is rising, for example in safety equipment for cars, solar cells for power generation, flat screens, computers, telephones, etc. These uses call for higher voltage capacitors with great reliability, and Becromal is a leading producer of power foils for these components.

Icelandic investors participate in the development
Icelandic investment company Strokkur Energy Ltd., specialising in investments in the renewable energy sector, has become a participant in the development of Becromal in Iceland, and owns a 40% share in the company along with Italian parent company Becromal SpA. Landsbanki is supervising the financing of the project.

Further information
The location of the plant and its importance to the region. The Akureyri Region Business Agency (AFE) has worked on this effort for the past three years on behalf of the town of Akureyri. From the beginning it has been apparent that an operation of this type would suit Akureyri very well, and the Agency contacted many companies in this sector all over the world in order to acquaint them with the benefits of relocating to Akureyri. Becromal showed special interest and joint preparatory work has been ongoing since. Pursuant to the agreement signed today, the location for the plant was chosen to be in the industrial and port area at Krossanes, in the northern part of the town. Additionally, the town has decided to support the development of the plant by participating in the training and education of employees. This kind of operation is new to Iceland and the Akureyri Vocational College will be involved in the project. Some employees will also train abroad.

Becromal is an Italian family-owned company, founded in 1955, producing power foils for capacitors. Becromal enjoys a 16% market share for this product, and operates plants in Italy, the United States and Norway.

Capacitor production
The electroplating of power foils (foil forming) for use in capacitors is a very power intensive process, in particular for the so-called high voltage capacitors (HV capacitors). It is estimated that each kilogram of aluminium requires 250-300 kWh in energy use. In comparison, the production of 1 kg of crude aluminium in smelters requires 13 kWh. Total production at the plant will be of a magnitude of 12 million square meters of power foil per year.

The market for electrical capacitors is divided between low and high voltage components. In the past, the market for capacitors has seen an average growth of 5-8% per year, and this rate of expansion is expected to continue. More energy is required for the production of power foils for high voltage capacitors than for low voltage capacitors.

The cost of energy plays an important role in this production. For instance, energy accounts for 42% of the production cost during the manufacture of a 600V power foil. This ratio increases with higher voltage, and demand for 500-900V capacitors has increased significantly.

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