Two of the Grupo Villar Mir companies, Fertiberia and Ferroatlántica, are highly energy-dependent, given their energy-intensive basic industries nature. Thus, the Grupo Villar Mir is, through Fertiberia, the highest industrial natural gas consumer in Spain, with an annual consumption of 0.55 bcm (550 million cubic metres).

In order to guarantee the supply of both natural gas and electricity at competitive prices independently and in the long run once the current rate system disappears, the Grupo Villar Mir started, through its subsidiary Energía y Gas de Huelva, S.A.U., the administrative proceedings for the construction of an energy complex in the outer port of Huelva, called “Energás Project”, consisting of:

• A regasification plant with a 4 bcm/year regasification capacity, to be increased to 6 bcm; and

• Two 400 MW combined-cycle units for power generation from natural gas.

• Port infrastructures for the berth of two methane tankers with a 150,000 m3 capacity each, as well as direct gas supply lines to the ammonia plant of Fertiberia in Palos and to the combined cycle units.

Work continued during this year to obtain the administrative permits for the regasification plant and the two combined cycle units, submitting the necessary information to be included in the new “2010-2020 Electricity and Gas Industries Planning”.

Such permits are expected for 2010 for its launching and construction.

The FERROSOLAR project consists in the production of photovoltaic-solar-quality silicon metal (99.999% purity) through electrometallurgy procedures from standard quality silicon metal used for the aluminium and silicone industries.

Silicon metal is the raw material used in the production of photovoltaic solar cells, currently the renewable energy source with the best outlook.

Solar quality silicon has been produced through chemical methods -highly expensive and with very low outputs- making the availability of silicon metal the main “bottleneck” in the development of said energy and, furthermore, increasing its production cost.

The Grupo Ferroatlántica, the world’s leading producer of silicon metal, has been investing significant human and financial resources for five years in two ambitious R+D+I projects: one in Spain and another one in France to produce it through electrometallurgy (electric furnace) in its own plants in Spain, France, South Africa and, in a foreseeable future, China.

The new technology, totally developed by Grupo Ferroatlántica, will considerably reduce costs and, above all, increase the production capacity markedly.

Industrial-level production has already started, and the first volumes have already been marketed to the most important solar cell manufacturers.

Grupo Ferroatlántica is planning to build, through its subsidiary Ganzi Ferroatlántica Silicon Industry Company Ltd., the world’s largest silicon metal plant in the province of Sichuan (China).

The project’s implementation will imply a 260 million Euros investment and will generate 600 direct jobs.

The project is expected to be developed in two stages, and once they are both concluded, the facilities will have an annual production capacity of 128,000 tons of silicon metal, 10,000 tons of photovoltaic silicon metal and 50,000 tons of microsilica.

The necessary raw material to produce silicon metal (power, quartz and charcoal) can be obtained locally in appropriate quantity and quality.
The beginning of the construction is scheduled for the second half of 2010, which will enable the commissioning of the first furnace in early 2012 and the last furnace in 2014.

The basic engineering is concluded and different actions have been developed during the period needed to clear and complete the acquisition of land where the plant will be located and to obtain the necessary permits to start construction work.

Upon concluding this Annual Report, most administrative proceedings had been fulfilled and the most important pending condition to start works is the concession of the fourth hydraulic plant in the Liqiu river, an issue that should be fully resolved before the end of June 2010.

The most important VM Energía project is the construction and operation of four hydroelectric plants in the Liqiu river in the province of Sichuan (China) through Villar Mir (Ganzi) Energy Development Company Limited (VMGED).

The installed power will be 560 MW and, in addition, a dam will be built to have a 247 Hm3 head reservoir to regulate inflows. Total investment amounts to 560 million Euros and, once operational, it will generate 2,632 GWh/year.

The purpose of these plants is to guarantee power supply to the silicon metal and photovoltaic-solar-quality silicon plant Grupo Ferroatlántica is going to build in the district of Ganzi (China).

In August 2009, VMGED was granted the concession of the first 400 MW, and during the period progress has been made in the negotiations to obtain all the necessary permits to start the project execution.

The purpose of this project is to build, together with Sonatrach, the world’s largest ammonia production plant and to market this product internationally. The Grupo Villar Mir holds a 51% share in the project and the Algerian energy giant, Sonatrach, 49%. The plant will be located in the industrial area of Arzew, with a 3,300 tons/day production capacity, i.e. 1.1 million TPY and a USD 1.25 billion investment.

It should be noted that the plant will be independent in terms of power consumption, only requiring sea water and natural gas, even though it will be connected to the national mains to avoid downtime. The production process used by the plant is based on the modification of natural gas with steam.

The expected completion period is 38 months. The plant could be under regular production after 42/44 months since project award.

As to the number of employees, the construction stage will require more than 3,000. Afterwards, once operational, and thanks to highly automated production systems, only 150 firm positions are estimated.