Fimmtudagur 26. september 2002

-samkomulag um könnunarviðræður
Fulltrúar Alcoa og Fjárfestingarstofunnar – orkusviðs, fyrir hönd iðnaðar- og viðskiptaráðuneytisins og Landsvirkjunar, undirrituðu í dag samkomulag um könnunarviðræður um möguleika á byggingu álvers í Reyðarfirði.

Hér fyrir neðan er hægt að lesa samninginn á ensku: JOINT ACTION PLAN BETWEEN INVEST IN ICELAND AGENCY AND ALCOA INC.

This JOINT ACTION PLAN (“JAP”) sets forth the basic understandings between INVEST IN ICELAND AGENCY (“Invest in Iceland”), an agency of the Ministry of Industry and Landsvirkjun (the National Power Company) with its office in Reykjavik, Iceland and ALCOA INC. (“Alcoa”), a Pennsylvania corporation with a mailing address of 201 Isabella Street, Pittsburgh, Pennsylvania, USA, regarding the evaluation of an Alcoa aluminum smelting opportunity in Iceland.

The project as currently conceived consists of: 1) hydroelectric plant and geothermal power plants to be developed in the east of Iceland; 2) a primary aluminum smelter to be built in Reyðarfjörður, along with necessary physical infrastructure; 3) site and harbour facilities; and 4) other infrastructure.

The power plants will provide sufficient firm electrical power to support a primary aluminum smelter of an estimated initial capacity of 240,000 metric tons per year, expandable to 360,000 metric tons per year. Power is expected to be available for the smelter in 2006 or sooner. The power plants will be organized by Landsvirkjun or a limited liability company wholly or partly owned by Landsvirkjun, and will provide power to the smelter under a long-term agreement. The site and harbour facilities for the aluminum smelter will be provided by the government and/or the local municipality. The government of Iceland and/or the local municipality will be responsible for developing other necessary infrastructure investments.

Alcoa is a world-leading producer of primary aluminum, fabricated aluminum and alumina. It is active in all major aspects of the aluminum industry – technology, mining, refining, smelting, power generation, fabricating and recycling. It has over 129,000 employees in 38 countries. Alcoa is interested in expanding its primary aluminum production capacity, and believes that the combination of hydropower and the potential smelter site could be of interest.

Therefore, Invest in Iceland and Alcoa enter into this JAP for the purposes of setting forth their desire, plans and undertakings with respect to the possible development of an aluminum smelter in Iceland (the “Smelter”).

In consideration of the undertakings contained, the parties agree as follows:

1.TASK. Invest in Iceland and its owners and Alcoa have begun preliminary discussions about the possibility of Alcoa investing in the aluminum reduction project (the “Project”) in Iceland. The parties will evaluate the feasibility of the Project and other relevant issues to implement the smelter. The parties shall also evaluate possibilities and ways of taking over the preliminary work already taken place in the east of Iceland on the Project and take up discussions with Landsvirkjun on preconditions on delivery of power in 2006 or sooner. During the term of this JAP the parties will draft a MEMORANDUM OF UNDERSTANDING (MOU) describing their further work on the Project, mutual confidentiality, exclusivity and other relevant issues. The MOU shall be signed when this JAP expires, by Alcoa, the government of Iceland and Landsvirkjun, if they agree on working further together on the Project.

2. PROJECT REVIEW. From the date of this JAP, Invest in Iceland and Alcoa agree to cooperate to allow Alcoa to evaluate the Project. Alcoa’s evaluation will include preliminary due diligence into the siting, construction, and infrastructure required by the Smelter, including port or dock access or development, roads and facilities, transshipment and other material handling facilities, electric, gas and water utility requirements, solid and waste water treatment facilities, emission control technology, labour requirements, and will begin to assess regulatory requirements (including environmental approval or permits). As an initial step, Alcoa will analyze the environmental impact of the power generation and Smelter project regarding the construction of the Kárahnjúkar power plant and any other plants that are expected to supply the Smelter, the transmission infrastructure necessary to transmit the power to the Smelter, and the terms and conditions of a long-term power purchase agreement with Landsvirkjun. Alcoa will also consider technology and ownership structure issues and opportunities as part of its analysis. Invest in Iceland shall assist Alcoa in the preliminary work described above and provide all necessary general information on Iceland and the Project.

3. TIMING AND TERM. Alcoa will begin its evaluation immediately following the signing of this JAP, and anticipates that its first-stage review can be completed within May 24th 2002. Alcoa will spend significant time and utilize significant resources both internal and external in its efforts. In consideration of this, Invest in Iceland and Alcoa agree for the period of the JAP that Invest in Iceland will not participate in similar discussions with any other party without the prior written consent of Alcoa. Both parties interpret this as no JAP, no MOU and no PROJECT REVIEW as described above in item 2. Following this Alcoa, the government of Iceland and Landsvirkjun will sign a MOU describing in further details the Project and their further mutual work. The MOU shall be in effect for 7 (seven) weeks from the day of signing. At the end of the term of the MOU the parties will meet to confirm their agreement on the direction of the Project, including Alcoa recommending the Project to its Board of Directors for approval, and to define the next steps in establishing mutually attractive commercial parameters for Alcoa’s investment in the Project. If Alcoa, the government of Iceland and Landsvirkjun are unable to ultimately agree upon interim milestones or binding definitive agreements to implement the Project, the MOU will terminate when the 7 (seven) weeks period expires.

4. COMMUNICATIONS. The parties agree to coordinate the development and release of any public announcement about the subject matter of this JAP. Neither Invest in Iceland nor Alcoa will disclose the existence of, or the nature of the discussions between them without informing the other in advance.

5. NON-BINDING NATURE OF THE JAP. The parties agree that this JAP is non-binding and that any final memorandum or binding agreement between them is conditioned upon:
(a) Execution of mutually acceptable definitive agreements;
(b) Approval of the Boards of Directors of Invest in Iceland and Alcoa; and
(c) Receipt of necessary or desirable government approvals.
(d) Such other conditions as the parties may agree.

IN WITNESS WHEREOF the parties have duly executed this JAP as of the date below written.


Signed on April 19th, 2002.