Foreword by Helge Aasen:
Equipped for new, sustainable growth
Many people are surprised when they discover the degree to which the smelting industry is driven by innovation. They associate the plants with pollution, strenuous jobs and the production of simple raw materials. The fact that, for example, Elkem's plant in Bremanger produces a special silicon quality that is found in almost all Apple and Samsung mobile phones comes as a surprise to most people. However, the fact remains that that ever since Elkem was established by Sam Eyde in 1904, we have been pursuing new products and new production methods, with hydropower and competence as our mainstays.
Our goals are ambitious. Elkem wants to contribute to a sustainable future by developing advanced silicon and carbon-based solutions that create value to all our stakeholders. This means that we have to run our production processes in a safe and environmentally friendly manner, with the lowest possible energy consumption and lowest possible emissions.
It is true that, historically, the industry had a very poor safety record. Helge Førde, who is celebrating 50 years as an employee at the plant in Bremanger, Norway, describes how work-related accidents used to be a part of the everyday work at the plants. This is no longer the case. 2013 was the second year in a row without work-related incidents that resulted in permanent injury anywhere in the Elkem Group. We are constantly trying to improve our employees' working environment. One example of this is Elkem Carbon's zero dust vision. Dust is bad for health and the environment, but it also represents a waste of resources and time due to increased maintenance.
The Elkem Business System forms the core of our corporate culture and routines. It provides a basis for training and involves the entire organisation in problem solving, continuous improvement and innovation.
In 2013, Elkem achieved many important results. We started up a large new furnace in Salten with the goal to produce a tailored silicon product, Si99, for silicone, and at the same time reduce NOx emissions. In advance, we had carried out studies and measurements that showed NOx emissions greater than previously estimated by both the authorities and Elkem. Our extensive research managed to explain the reasons for the discrepancy. Based on this knowledge, we have developed a new technology and modified the design of the new furnace such that NOx emissions have been reduced by 40%. This could mean a lot with regards to how smelting furnaces the world over are operated in the future.
As the opportunities for producing electricity based on solar and wind power improves, the world will become less dependent on fossil energy sources. As a silicon producer, Elkem is working in the frontier for the development of a new generation of batteries. Silicon can be used as the anode in lithium batteries, dramatically increasing battery capacities and revolutionising their use. For example, this could make it possible to store electricity from solar and wind power, enabling properties to run their own independent power plants.
Several of our plants have established, or are in the process of establishing, energy recovery plants, and we are always on the lookout for any form of energy waste. Elkem Solar's method for producing super pure silicon for the solar cell industry is our most widely known recent innovation. Our method cuts energy consumption by 75% compared with conventional technology, which is important when the aim is to make solar energy the biggest source of electricity in large parts of the world.
We made two important investments in 2013. Elkem entered into a 50/50 joint venture with Argentinian investors, Grupo Andreani and Grupo Araújo, to build a new ferrosilicon plant near Paraguay's capital, Asunción. This will be a world-class plant, strategically placed in a rapidly growing market with access to hydropower, charcoal (CO2 neutral reducing agent) and other raw materials.
In Sarawak, Malaysia, construction has commenced of an electrode paste plant, which will be ready for production in 2015. This plant will also use hydropower as its energy source.
2013 was a demanding year for Elkem from a financial perspective, primarily due to overcapacity within polysilicon for the solar industry. The result after tax for 2013 amounted to minus NOK 600 million. Elkem Solar experienced a production stoppage in 2013 and this had a negative impact amounting to NOK 450 million.
In June 2013, the board of Elkem decided to strengthen the company's balance sheet by a converting a NOK 4.4 billion shareholder loan into equity. In March 2014, Elkem Solar's capital base was strengthened through a share issuance of USD 200 million to a Hong Kong based financial investor, Guangyu International Investment Company, which now owns a 50% stake in Elkem Solar.
Both the Elkem Group and Elkem Solar have a sound financial base and are well equipped for growth based on materials that are required for sustainable global development.
Helge Aasen, CEO