Landsvirkjun, the national power company of Iceland, and Grundartangi, the primary aluminum plant of Norðurál, reached an agreement on terms to extend their 161 MW power contract, originally initiated in 1997. After an informal review by the EFTA Surveillance Authority (ESA), the contact has been officially signed. The signed contract will now be sent to ESA for formal and final review; the final decision from the Authority is expected before the end of this year.
The four-year contract extension covers 161 MW of power, which is nearly one-third of the energy required at Norðurál‘s aluminum smelter located at Grundartangi. The contract extension will come into effect in November 2019.
At the same time, Moody’s Investors Service has upgraded Landsvirkjun‘s credit rating for unguaranteed debt to Baa3 from Ba1. Credit rating for Landsvirkjun’s debt supported by a guarantee of collection is upgraded to Baa1 from Baa2. Outlook is stable. The rating action follows Moody’s upgrade for the Republic of Iceland from September 1, 2016.
“Landsvirkjun is now investment grade for unguaranteed debt with both Moody’s and S&P, which is very good news,” said Hordur Arnarson, Landsvirkjun CEO. “To achieve investment grade increases trust amongst lenders and supports Landsvirkjun’s operations with improved access to capital and lower financing cost. Landsvirkjun will continue to focus on reducing leverage and further improving the operation and financials of the company.”
If you’re interested in learning more about Landsvirkjun, visit their website to plan your trip to a power station today!