It will spend $347M to modernise and increase the ISAL smelter’s capacity by 20% following the completion of a long-term energy supply agreement with Landsvirkjun, the Icelandic power utility.

It will spend a further $140M on a leading-edge casting facility to produce value-added billet at the site.

The investment will reinforce Rio Tinto Alcan’s market position in Northern Europe and demonstrates its long-term commitment to being a stable supplier of high-quality billet. Billet production is expected to commence in 2012.

The new energy contract started in October and will run until 2036. The contract provides for 75MW of additional power and for the continued supply of energy currently purchased by ISAL under various agreements, allowing Rio Tinto Alcan to carry out an amperage increase at ISAL.

The increased amperage is part of the modernisation project that will boost production capacity to approximately 230kt/y and ensures continued compliance with emission limits.

The smelter is expected to commence the gradual increase of its production in April 2012 and complete the production increase by July 2014.

In conjunction with its $140M investment, Rio Tinto Alcan will consolidate the expertise and production for the slab products from ISAL with existing operations in France and the UK.

The ISAL smelter started up in 1969. The facility houses 480 pots in three potrooms and employs approximately 450 people.