Long-term PPA
Elkem and Landsvirkjun have signed a new power purchase agreement (PPA) that secures long-term electricity supply at competitive terms and enhanced operational flexibility for Elkem's ferrosilicon plant in Iceland.
The new PPA superseding the existing agreement and remaining in effect until 2039, covers a contracted volume of 127 MW and is structured on a take-or-pay basis. The agreement, which provides flexibility for both parties, will from April 2029 have power price with a fixed floor price and partial link to the market price for ferrosilicon. With this mechanism, both parties benefit from higher ferrosilicon prices, while the plant remains competitive during periods with lower market prices.
“We are pleased to have reached a new agreement with Elkem, one of Landsvirkjun’s longest standing customers,” said Hörður Arnarson, CEO of Landsvirkjun. “Our companies have enjoyed a strong and mutually beneficial partnership for decades. This agreement builds on that relationship and provides a solid foundation for continued cooperation. We look forward to supporting Elkem’s future operations and development in Iceland."
"Today's agreement demonstrates the value of the long-standing partnership between Elkem and Landsvirkjun," said Birkir Guðmundarson, acting plant manager of Elkem Iceland. "It gives us greater visibility and helps us preserve flexibility as we continue to improve performance and assess strategic opportunities for the plant."
The new power agreement will improve the plant's competitiveness and strategic attractiveness. This will be an important element in the ongoing strategic review of the Iceland plant announced in the second quarter of 2026 and the continued work to evaluate all strategic alternatives to secure viable operations.
Elkem Iceland operates three furnaces and employs approximately 160 people. With an annual production capacity of 120,000 metric tonnes, the plant is one of the world’s largest ferrosilicon facilities outside China. Its products are primarily supplied to customers in Europe, Japan and North America and are used in the automotive, construction, renewable energy and defence industries.
