Advanced silicon metal production plant in Iceland

PCC BakkiSilicon hf.

Húsavík (Iceland)

32,000 metric tons per year of silicon metal

The plant was commissioned in 2018. The construction time of the facility with an annual capacity of 32,000 tons took a total of about three years, including a delay of half a year. The start of the commissioning phase began on April 30, 2018, with the start-up of the first of two electric arc furnaces. After the furnace vessel was heated up, the raw materials quartz, coal, and wood chips were filled in the correct mix. Once the raw materials were also heated to about 2,000 degrees Celsius, the production of liquid silicon metal began. The official production start in the form of the first tapping took place on May 11, 2018. On August 31, 2018, the second furnace could also be started. On October 30, 2019, the Final Acceptance Certificate (FAC) was signed, and the plant was thus transferred to regular operation. For details on the project progress from the start of construction in mid-2015 and image material please click here >>

Silicon metal is produced at temperatures of around 2,000 degrees Celsius in electric arc furnaces with the addition of wood and coal from the raw material quartz. The new plant obtains the central raw material quartz mainly from PCC's own quarry in Zagórze, Poland. However, the corresponding logistics effort is more than compensated for by the advantages in electricity procurement. And the dust emissions generated during silicon metal production are almost completely removed from the ambient air in the PCC plant by high-performance filter systems. The entire production is therefore extraordinarily sustainable.

The production process is very energy-intensive, which is why Iceland, with its rich geothermal and hydropower resources and comparatively low electricity costs, has offered itself as a location. In March 2014, PCC BakkiSilicon hf. concluded a Power Purchase Agreement (PPA) with Iceland's largest energy provider, Landsvirkjun. The favorable conditions are guaranteed for 15 years, and the contract includes an extension option. In the initial operating phase since 2018, the plant is supplied with a capacity of 58 MW. For the entire new industrial area, Landsvirkjun has developed a new geothermal area near Húsavík and built a 90 MW power plant there. The corresponding logistics effort for delivering raw materials to Iceland and shipping the silicon metal to customers is more than compensated for by the advantages in electricity procurement - both from economic and ecological perspectives.

Silicon metal is used in a wide variety of applications in the chemical industry, e.g. in the production of silicones and silanes, and in the production of high-strength aluminum alloys for the automotive industry. It is also a primary input material in the manufacture of photovoltaic modules.

The silicon metal to be produced in Iceland has already been largely marketed to customers in German industry through long-term contracts. In this way, PCC is making an important contribution to securing the raw material supply of silicon metal in Germany.

The financial closing of the project took place in early June 2015. We achieved decisive progress in financing in the previous year. On September 25, 2014, we received the preliminary cover commitment from the Interministerial Committee of the Federal Government in the form of a so-called UFK guarantee. It was a prerequisite for a financing commitment from KfW IPEX-Bank, Frankfurt am Main, and was granted to the project due to its raw material policy worthiness through future sales to German customers: PCC is contributing to the future raw material security of German industry with the investment in Iceland. By the end of 2014, we were able to secure the financing of the Iceland project in its entirety. The investment volume of a total of around 300 million US dollars (approximately 265 million euros) is largely covered by a loan from KfW IPEX-Bank, with about a quarter of the volume being borne by Icelandic pension funds and the Icelandic bank Islandsbanki. PCC SE concluded the corresponding contract with the Icelandic company Bakkastakkur slhf. at the end of December. The silicon metal project is also supported by the Icelandic state. In 2013, the Icelandic parliament passed several laws with a large majority for the development of the Bakki industrial area where the plant is being built. One of the laws exclusively regulates our project and includes, in particular, financial support for the initial investment in the context of site preparation of the construction site as well as long-term tax benefits.