Looking to move or repurpose the silicon plant at Helguvík

Arion Bank and PCC have broken off formal talks on the potential acquisition by PCC of the silicon plant at Helguvík in south-west Iceland. At the same time Arion Bank has terminated its electric power agreement with Landsvirkjun since the production of silicon was a prerequisite for the agreement. It therefore seems likely that the silicon plant at Helguvík will not recommence operations and that it will instead be moved or repurposed.

Arion Bank acquired the silicon plant in 2018 following the bankruptcy of the previous owner, United Silicon hf. Since then, the Bank’s subsidiary Stakksberg ehf. has devised a remedial action plan for the plant and has sought suitable buyers capable of operating the plant responsibly. After consulting the appropriate authorities, a new environmental impact assessment based on the remedial action plan was completed and the plant attracted considerable interest from investors. Arion Bank made the stipulation that prospective buyers had to be dependable companies with extensive experience of operating silicon plants.

At the beginning of 2022 the Bank entered exclusive negotiations with PCC which has operated a silicon plant at Bakki in northern Iceland and maintained good relations with the local community. The Bank believed that PCC possessed the necessary expertise and experience to successfully run the plant at Helguvík. Representatives of PCC and Arion Bank agreed that a prerequisite for recommencing silicon production at Helguvík was that it would be done with the consent of the authorities and residents of Reykjanesbær. PCC has recently presented its ambitious plans to various stakeholders and the outcome of this process is that the company believes there is no basis to continue negotiations on the acquisition of the silicon plant by PCC.

Consequently, Arion Bank will now seek to sell the existing infrastructure at Helguvík, either to be transported elsewhere or to be used for the purpose of developing other activities than silicon production at the site. Discussions have already begun with several prospective parties, both Icelandic and international. This decision has no impact on the book value of the asset, although the valuation will be reviewed in response to how these negotiations develop.

Benedikt Gíslason, CEO of Arion Bank:

“The history of the silicon plant at Helguvík is well known. We have considered it our duty to try our utmost to utilize the infrastructure and assets invested in at the site. During this period we have taken into account all stakeholders, not least the residents of Reykjanesbær, who experienced discomfort during the short time the plant was operational. We devised an ambitious remedial action plan for the plant which underwent an environmental impact assessment, and tried to find buyers who have the necessary expertise and capability to operate the plant in an environmentally friendly manner, in harmony with the local community. The Bank believes it has exhausted all options for operating a silicon plant at the site and thus a new phase begins, where the aim is to move the plant or to repurpose it.”