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Nordural and Landsvirkjun Reach Agreement on Terms for Power Contract Extension

May 13, 2016

Landsvirkjun and Nordural Grundartangi ehf. have reached an agreement on terms to extend the companies’ 161 MW power contract on market-based terms.

A draft of the contract has been sent to EFTA‘s Surveillance Authority, ESA, for preliminary review. Upon completion of this review, the companies intend to finalize the contract and submit it to ESA for formal and final approval.

The four-year contract extension covers 161 MW of power, which is nearly one third of the energy required at Nordural‘s aluminum smelter located at Grundartangi. The contract extension would come into effect in November 2019 and extend until the end of 2023; the terms of the current contract will remain in place through October 2019.

The agreed contract extension is linked to the market price for power in the Nord Pool power market, replacing the previous link to aluminum prices in the current contract.

Hörður Arnarson, Landsvirkjun‘s CEO:

"The agreed contract extension terms allow both parties to remain competitive. The agreement is the result of much work which has strengthened the parties‘ commercial relationship and mutual understanding of their operating environment. The agreement is a great milestone in the cooperation between the parties which now has a successful 20 year history."

Ragnar Guðmundsson, Nordural‘s CEO:

"We are pleased to reach agreement on terms for this four-year contract extension with Landsvirkjun. Landsvirkjun has been a reliable partner to Grundartangi throughout its history.  Concluding the extension will be important for further development of our production at Grundartangi where we are currently evaluating an investment in a new casthouse that will enhance our production portfolio."

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