Elkem restructures foundry business unit: Elkem plans to build new ferrosilicon plant at Icelandic Alloys - and has decided to build recovery plant at Elkem Bjølvefossen

Today Elkem`s board of directors AS has discussed a possible transfer of production of special ferrosilicon from Elkem Bjølvefossen to Icelandic Alloys. This will imply an investment of NOK 270 million in a new alloying and finishing (FSM) facility. Final decision is subject to approval in Orkla`s board of directors. A demonstration plant for recovering spent potlining material from the aluminium industry is to be established at Bjølvefossen, an investment of NOK 30 million.

Due to be ready in February 2008, the new production plant at Icelandic Alloys will have an annual capacity of 60,000 tonnes. The new unit will be operable by 38 people.
"The investment in Icelandic Alloys will create the world's most competitive supplier of ferrosilicon products for the iron foundry industry, with favourable electricity prices, large and efficient furnaces, and a new, modern plant for alloying and finishing," says Elkem chief executive John G Thuestad.
"We will further develop our cost-efficient production and strong market position, with deliveries of products and solutions which reach deep into the foundries and enhance value creation for our customers."
The expiry of existing electricity contracts for Bjølvefossen in January 2007 and  January 2011 will lead to a sharp increase in energy costs for the plant. Iceland has one of the world's best power regimes.

While Elkem believes that an industrial power regime can and should be established in Norway, a Norwegian system is not expected to be competitive with Icelandic terms for this investment.

Industrial demonstration recovery plant at Bjølvefossen
Elkem Bjølvefossen currently employs 160 people. Today's business will largely continue until the Icelandic plant is ready to take over in February 2008.
Through an open and extensive process with the Elkem Bjølvefossen employees,  Elkem intends to establish a plant for recovering resources from waste materials in the aluminium industry. NOK 30 million will be invested initially in a demonstration plant. With a new power regime and other conditions in place, this will lay the ground for  an investment in Ålvik of around NOK 100 million.
"A profitable recovery plant could solve environmental problems for the aluminium sector and secure work for about 50 people. In the longer term, opportunities could also be opened for other types of waste" explains Thuestad.
"Together with central government, Hordaland country council, Kvam local authority and the workforce, we will work actively for a good restructuring of the business."

Further information from:
John G Thuestad, president, Elkem AS, tel: +47 91 13 69 01
Tor Gule, senior vice president, foundry business unit, Elkem AS, tel: +47 90 88 10 04
Fredrik Behrens, plant manager, Elkem Bjølvefossen AS, tel: +47 90 08 00 55

Facts about Elkem's foundry business unit
Elkem is the world's largest supplier of special alloys to the foundry industry. Car manufacturers, line pipe producers and other mechanical engineering companies represent the most important customer categories. Production is pursued at Elkem Bjølvefossen and Elkem Bremanger in Norway, Elkem Chicoutimi in Canada, Elkem Foundry Products in France and Elkem Carbon in China.
Facts about Elkem
        One of Norway's major industrial companies and a leading world producer of metals and materials. The company is actively involved in developing world-class high-tech solutions for industry, including a new process for producing silicon for solar cells.

     Metals and materials from Elkem are needed to make a number of products with an important place in modern society, including aluminium in cars, silicon metal in microchips and microsilica in bridges.
     The company's principal products are aluminium, energy, silicon metal, ferrosilicon/special alloys for the foundry industry, carbon and microsilica.
     With 2 800 employees, Elkem has production plants in Europe, North and South America, and Asia, as well as an extensive network of sales offices and agents in all the most important markets.


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