Velkomin til ISAL 1

ISALand the ISAL Production Upgrade

2

ISAL – General Information

• Founded in 1966

• Production started in 1969 with capacity of 33,000

tons (120 pots)

• Major expansions:

– 1972 (2nd potroom)

– 1997 (3rd potroom)

• Designed for 150,000 tons

• Production in 2011 >185,000 tons

3

National Aluminium Production

Century Norðurál

ISAL

Alcoa Fjarðarál

Century - Helguvik

Alcoa - Bakki

Aluminium production in Iceland

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000

1995 2007 2008 plan

ton

s

1995 2007 2009

• Current share:Alcoa: 41%

Century: 33%

RTA: 26%

• Best estimate: ca. 40% of viable hydro power already harnessed

National production

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National Electricity Use

• Total production in 2008: 16,488 GWh

• Thereof three aluminium plants: 70%

RTA; 2924; 18%

Alcoa; 4572; 28%

Century; 4053; 25%

Elkem; 885; 5%

All others; 2794; 17%

Households; 860; 5%

Distr. losses; 400; 2%

Source: National Energy Institute of Iceland (2009)

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National Electricity UseHeavy Industries vs.Rest

• Share of heavy industries has risen to 80% of national production

– three aluminium smelters + Elkem

2008

Source: National Energy Institute of Iceland (2009)

Note the increase since 2006

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The Production Process

4 tons of bauxite 2 tons of alumina

1 ton of aluminium

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Our Products

• Sheet ingots for rolling mills

• 200 different types of products

• A specialized casthouse adds to the

possibilities of value creation

• Our metal is used for:

– Cladding in construction

– Packaging (food, medicine)

– Automotive

Constellium Singen rolling mill

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Raw Materials

• Power from Landsvirkjun, the

National Power Company

• Alumina from Brazil

• Anodes from Holland

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Hydro Energy = Less Total Emission

1,52,0

9,8

14,4

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

ISAL Average sized smelterusing hydro energy

Average sized smelterusing energy derived

from natural gas

Average sized smelterusing energy derived

from coal

CO2

eq (t

/t A

l)

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GHG emissions: dramatic reduction

• Absolute emissions reduced by 50% since 1990 in spite of 100% production

increase

• PFC (strong greenhouse gas) almost eliminated: industry leading

0

1000

2000

3000

4000

5000

6000

7000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

YT

D

kg/t

Al

Series2 Series3 Series4

In 1990: 6,5 t/t Al

In 2010: 1,6 t/t Al

0

1000

2000

3000

4000

5000

6000

7000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

YT

D

kg/t

Al

Series2 Series3 Series4

In 1990: 6,5 t/t Al

In 2010: 1,6 t/t Al

0

1000

2000

3000

4000

5000

6000

7000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

YT

D

kg/t

Al

Series2 Series3 Series4

In 1990: 6,5 t/t Al

In 2010: 1,6 t/t Al

0

1000

2000

3000

4000

5000

6000

7000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

YT

D

kg/t

Al

Series2 Series3 Series4

In 1990: 6,5 t/t Al

In 2010: 1,6 t/t Al

Fossil fuel PFC From anodes

EnvironmentWorld’s best PFC performance

• International Aluminium Institute’s 2008 report:

ISAL no.1 world-wide with respect to PFC

emissions @ 23 kg/t Al

• World average: 700 kg/t Al

• If ISAL was at the world average the plant would

annually emit an additional 130kt of CO2eq

• ISAL has managed to maintain this success

• 2008: 23 kg/t Al (no. 1 world-wide)

• 2009: 17 kg/t Al

• 2010: 20 kg/t Al

• 2011: 37 kg/t Al

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Fluoride Emission

0,00

0,20

0,40

0,60

0,80

1,00

1,20

2004

2005

2006

2007

2008

2009

2010

2011

2012

YT

D

kg/t

Al

Limit in the operating licence = 1,0 kg/t Al

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Measured for 40 years

0

5

10

15

20

25

30

35

40

196

81

969

197

01

971

197

21

973

197

41

975

197

61

977

197

81

979

198

01

981

198

21

983

198

41

985

198

61

987

198

81

989

199

01

991

199

21

993

199

41

995

199

61

997

199

81

999

200

02

001

200

22

003

200

42

005

200

62

007

200

82

009

201

0

Flu

or

[pp

m]

Fluorine in vegetation2-3 km from the plant

Grass and hay Limit

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Talented People

• Almost 500 employees

– 20% women

– 80% men

• Average turnover rate: 3,5%

• Average tenure: >13 years• Gender equality policy

• Equal wages for same work• Diverse background:

– University degree; engineering, technology, business administration, psychology etc.

– Craftsmen; electricians, mechanics, auto mechanics, painters etc.

– Unskilled workers

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Education: ISAL school

• Started in 1998

• School for unskilled workers

• One of the keys to increased productivity

• Courses tought by both ISAL and outside specialists

• 206 graduates to date

• Advanced program for graduates– 35 graduates to date

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Safety

• Chief Executive Safety Award in 2010

• 6 million work-hours without a serious accident (December 2011)

• 6 years without a serious accident achieved in January 2012

– 2012 YTD: Two serious accidents

Serious Accidents (LT)per 200.000 work-hours

00,20,40,60,8

11,21,41,6

Rate 0,94 1,42 0,47 0,24 0 0,23 0 0 0 0 0 1,4

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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Emphasis on Employees’ Health

• No Smoking work area

• Monitoring of key factors, such as:

– Air quality

– Noise mapping

• Health risk analysis of tasks

• “Bicycle to Work”:

– National competition

– Gold-medal winners eight years

in row!

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Community and CSR

• ISAL Community Fund– USD 200,000 to diverse projects

and causes

• Local youth sports

• Sponsor of annual cultural award

• Cooling water provided to neighbouring golf-course

• Wetland restoration– Agricultural University

Velkomin til ISAL 19

New power contract &Production increase

New power contract$347M investment

470 man-years20% production increase

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New power contract (2010)

• Runs until 2036

• Previous contract ran until 2014– with 10 year extension option

• Crucial to ISAL’s future

• Current power (335MW) +

75MW additional power

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IPU: Production increase (“creep”)

Three objectives:

1. Reliability– prevent 2006 failure

2. Compliance– upgrade gas treatment

center

3. Increase production by

20%, to 230 kta– within current buildings

– complicated and

challenging project

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2006-failure: Loss of USD 35m

• 19 June: Explosion due to ferro-resonance destroys all six 33 kV potential

transformers, disabling a whole rectifier station

• Result: All 160 pots freeze in Potline 3

• 15 July: First pot restarted

• 31 August: All pots restarted

– Restart accomplished in record time and without serious accidents

• Loss: USD 35m

– mainly pot recovery costs and production loss

• Substation is still exposed to single-mode failure

• Further risk mitigation only possible with investment in alternative DC power

routes

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Scope

• Investment: $347M

• Man-years: 470

• Scheduled completion of works

is December of this year

• Creep scheduled to be

completed in H1 of 2013

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Casthouse conversion

$140M investment150 man-years

From sheet ingots to billets

• Production of sheet ingots will

cease; will produce billets instead

• More valuable product

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What are billets for?

• Used to make profiles

• Construction, automotive etc.

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Scope and schedule

• Investment: $140M

• Man-years: 150

• Casthouse expanded

– considerable construction

• Height of project was summer 2011

– 150 workers on site

• First billet production: this summer

• Will continue to produce 50% ingots for

2 years

• Full conversion to billets before year-end

2014

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Thank you