May 17, 2006
Alcoa, Government of Iceland and Municipality of Húsavík Sign Memorandum of Understanding

REYKJAVIK & NEW YORK – (BUSINESS WIRE) – May 17, 2006 – Alcoa (NYSE:AA), the Government of Iceland and the Municipality of Húsavík have signed a Memorandum of Understanding (MOU) to proceed with a feasibility study to develop a new 250,000 metric ton per year (mtpy) smelter in North Iceland. 

The MOU follows an agreement in March 2006 on the site selection for the potential new smelter located at Bakki, near Húsavík.  The MOU lists the work that Alcoa, the government of Iceland and the municipality of Húsavík will undertake in order to reach a conclusion on whether Alcoa will build a smelter in Bakki.
The feasibility study will be conducted in three phases ending October, 2006, March, 2007 and June 2008, respectively.  According to the MOU, the smelter could be developed in phases to begin production should power become available sooner than previously assumed.  The smelter will require approximately 3,500 Gw hours per year, or about 400 Mw.  In conjunction with the MOU, Alcoa intends to negotiate with Landsvirkjun on power provision and Landsnet on power transmission.
Further analysis conducted during the feasibility study will include assessments of geological conditions, environmental impact, agriculture, natural relic and archeological impact, affect on neighboring municipalities, landowners and community, and additional infrastructure requirements, among other tasks.  Phases 1 and 2 will conclude with interim reports, as well as a decision to proceed with the next phase.  Phase 3 will include Alcoa’s submission of an Environmental Impact Assessment (EIA), final analysis of the feasibility study, and definitive agreements to proceed.

Click image to enlarge.

MOU signed

From left: Bernt Reitan, Executive Vice President of Alcoa, Valgerdur Sverrisdóttir, Minister of Industry and Reinhard Reynisson, Mayor of Húsavík, sign the Memorandum of Understanding.