News Release on the Noral Project

Development of Power Plants and Aluminium Plant in East Iceland.

Ministries of Industry and Commerce
No 8/2000

The Minister for Industry and Commerce of Iceland and representatives for Hydro Aluminium as, Hæfi hf, Landsvirkjun and Reyðarál hf have signed a declaration emphasizing the interest and commitment of all the parties of the Noral-Project, to evaluate the feasibility of an aluminium plant in Reyðarfjörður, the necessary power-plants and the accompanying infrastructure. The aim is to be able to reach a final decision before February 1 2002 on whether or not to go ahead with the project.

With the declaration the parties want to co-ordinate their work with the aim to reach a final decision on whether or not to go ahead with the project before February 1 2002. A number of projects and agreements must be finalized prior to that decision

Reyðarál hf, a company jointly owned by Hydro Aluminium as and Hæfi hf, is responsible for the aluminium project in Reyðarfjörður. The owners of Reyðarál hf will provide the necessary resources for the preparatory work, which include the Environmental Impact Assessment for the plant as well as engineering and feasibility studies.

Landsvirkjun carries out all the preparatory work for the power projects in East-Iceland including the Environmental Impact Assessment. The aim is to supply hydroelectric power to the aluminium plant of Reyðarál hf. at a competitive price on the basis of a long-term contract.

The Government of Iceland will propose changes to the legislation to ensure that Landsvirkjun can proceed in order to obtain the necessary permits to proceed with the projects. The Government will seek to guarantee that necessary funds will be available for investments in public infrastructure, including investments by the local municipality.

The intention is to begin construction of the Kárahnukar power project during the summer of 2002, with commissioning in 2006. The construction of the potential first phase of the aluminium plant project is scheduled to begin in 2003, with production commencing in 2006. The Reyðarál Aluminium Plant will have an initial production capacity of 240.000 tons per annum, with an estimated increase to 360.000 tons production capacity p.a. at a later stage. The production capacity of the aluminium plant may be expanded in the future to 480.000 tonnes, if and when power and necessary permits have been made available.

Reykjavík, May 24, 2000