This decision forms part of a necessary restructuring of Elkem's silicon business in response to tougher international competition, particularly from China. That calls for a concentration of Elkem's silicon activity in fewer and larger units. The consequence is that the industrial community in Meråker must shift to other forward-looking activities. Elkem will give weight to implementing the restructuring as painlessly as possible, and will cooperate with the workforce and the local authorities to help secure new jobs and facilitate new industrial activity in Meråker.

       

The board of Elkem Meraker resolved unanimously on 11 January to shut down furnace 22 with effect from 1 June 2006. It has already been decided to close the two other furnaces at the plant.

       

        Several considerations underlie the closure decision, including the major restructuring programme currently under way in Elkem Silicon. Involving the concentration of Norwegian silicon operations in fewer and larger production units, this programme is needed to strengthen competitiveness in markets characterised by strong international competition.
It has been clear for a long time that the principal products at Elkem Meraker would be produced in future at other works in the group.

       

        Profitability at Elkem Meraker has been weak, and no early improvment can be expected - particularly in view of the strong competition from low-cost countries in the silicon market.

       

        Elkem Meraker has had problems with unstable operation in recent years. Continuing production would call for substantial investment which would be difficult to justify in light of the poor profitability.

       

        Frame conditions for power-intensive industry in Norway have worsened significantly in recent years, particulary for access to and prices of electricity. These conditions appear unlikely to improve in the near future. Existing power contracts at Elkem Meraker have relatively short duration and small volumes compared with the requirements for long-term industrial activity.

       

The closure date has been chosen in part on the basis of a detailed assessment of the time and process needed to transfer customer contracts to other Elkem plants. Elkem Meraker had about 100 employees at the end of 2005. Earlier decisions on shutting down two of its furnaces mean that the workforce is already being downsized by about 45 employees, so the 11 January decision will directly affect about 55 people.

       

Discussions will now be conducted with employees to ensure a good and orderly shutdown process in accordance with the Norwegian Work Environment Act and other existing agreements.

       

Weight will be given to making this process as painles as possible for the workforce, in part through:

-            assistance with and guidance on finding new jobs with the aid of professional advisers

-            support for further education and schooling

-            packages of measures based on individual assessments

-            a pre-emptive right to jobs at other Elkem companies.                      

       

Elkem and Elkem Meraker will work actively with the unions and the local authorities to find alternative uses for the industrial area, and to facilitate new industrial activity in Meråker in other ways.