Landsvirkjun - Company Announcement

Landsvirkjun and Alcan Iceland Ltd. sign new power contract

Landsvirkjun and Alcan Iceland Ltd. have signed a new energy contract for the
aluminium smelter in Straumsvik. The agreement is subject to standard
conditions precedent, including the approval of the respective boards of
directors. These shall be fulfilled before 31 August 2010. 

The agreement is twofold. First, it involves a renegotiated price on current
sales of energy for the smelter‘s present production (2.932 GWh), and secondly
the provision of additional power (658 GWh) for the smelter‘s planned
production increase. The new energy price will take effect on 1 October 2010.
The price is in USD and connected to US Consumer Price Index (CPI). The link to
aluminium prices is removed. The contract is valid until 2036 and thus involves
an almost 12 year extension from the current contract. 

Hörður Arnarson, Landsvirkjun‘s CEO says the agreement is the first step in the
company‘s new strategy for pricing energy contracts in Iceland in line with
trends in international markets. He says the agreement is in many ways a
landmark event in the company's energy sales. 

To meet increased energy sales Landsvirkjun will build the Budarhals power
plant, tenders for which will be issued in the coming weeks. The plant is
expected to start delivering power in 2013. Financing is underway, proceeding
on schedule and expected to be completed by 31 August 2010. 


For additional information: 
Ragna Sara Jónsdóttir
Head of Corporate Communications
sara@lv.is
515 9000 / 849 2122