Landsvirkjun, the Icelandic power utility, and Rio Tinto Alcan have successfully concluded negotiations on a renewed power contract for Alcan Iceland Ltd's aluminium smelter in Straumsvik, Iceland.
The new contract runs to the year 2036 whereas the current contract could be extended to 2024 based on Landsvirkjun and Rio Tinto Alcan reaching an agreement by 2014.
The new contract also provides for 75 megawatts of additional power, which is one of the conditions needed to carry out a planned amperage increase at the smelter. This project would increase its annual production capacity to almost 230,000 tonnes, an addition of approximately 40,000 tonnes per year.
"This is an important milestone for our plant. The renewal of the current power block and provision of additional power serve to strengthen the long term operation of the smelter," said Rannveig Rist, CEO of Alcan Iceland Ltd. "The smelter in Straumsvik directly employs 450 people and spends approximately ISK 1.5 billion in Iceland every month."
The contract is subject to approval by the respective boards of directors and certain conditions including clarification with respect to taxes paid by heavy industry. These conditions are to be met by August 31, 2010.
The conclusion of these negotiations is a sign of Rio Tinto Alcan's commitment to the continued success and further strengthening of its Icelandic operations, and a testament to the excellent relationship between Landsvirkjun and Alcan Iceland Ltd., which goes back more than 40 years.
