Intensified cost focus in demanding markets

Elkem

Profit from the silicon-related business (excluding Elkem Solar) increased substantially due to higher prices. The energy business delivered good results from its production activities as a result of higher prices than in 2007. However, Elkem's energy trading business posted weak results in 2008 with EBITA that was NOK 281 million lower than in 2007. Furthermore, costs expensed in connection with the estblishment of Elkem Solar were
NOK 186 million higher than in 2007.

Work on construction of the Elkem Solar factory and establishment of the new operational organisation in Kristiansand has been in full swing in 2008 and the plant is mechanically completed. The expansion of the hydropower plant at Sauda and relocation of the manufacture of foundry products from Bjølvefossen to Iceland were also focus areas in 2008.

Operating revenues	NOK 9,979 million
EBITA¹	NOK 942 million

Elkem is one of the world leaders in the environment-friendly manufacture of metals and materials.

Its main products are energy, silicon, special ferrosilicon alloys for the foundry industry, carbon and microsilica. Elkem also invests heavily in the solar industry.

The company has production facilities in Europe, North and South America, Africa and Asia, and an extensive network of sales offices in its main markets.

Energy

Elkem is a major power producer in Norway and one of the main players on the Nordic power trading market.

Elkem's energy operations consist of hydropower production and power trading. Its Norwegian hydropower plants are located in Salten, Bremanger and Sauda.

Profit from power production was significantly higher in 2008, largely due to higher average system prices. Power production totalled 3,207 GWh, on a par with 2007. However, due to weaker results from trading, the total energy business reported lower profit for 2008.

Silicon-related business

Solar:

High-purity silicon is used by the solar cell industry.

Silicon:

Is used by the chemical industry to produce silicones and by the electronics industry to produce polysilicon as a basis for semiconductors and solar cells. In the aluminium industry, silicon is used to
improve the strength of aluminium and in ceramics industry to for instance filter particles.

Foundry:

Production of special materials for the foundry sector and production of ferrosilicon based special alloys for use in the steel industry. The automotive industry, windmill manufacturers and other mechanical engineering industries are the main customer groups.

Microsilica:

Is added to concrete, structural and refractory materials, and is used for drilling in the petroleum
industry and as an additive in plastic and rubber.

Carbon:

Production of tamping clay and Søderberg electrode paste for use in metallurgical processing
and other industries. Prebaked electrodes are used in silicon production.

The silicon-related business comprises products for the solar industry, silicon, foundry products, microsilica, carbon and calcium carbide.

The solar business consists of Elkem's own project for manufacturing solar-grade silicon.

Elkem manufactures silicon at three smelting plants in Norway, while its foundry products are currently produced in Norway, Iceland, Canada and China.

The microsilica business consists of the purchase and sale of materials mainly filtered from tapping fumes from smelting plants. In 2008, production for the carbon business took place in Kristiansand (Norway), at two plants in Brazil, one in South Africa, and one in China.

Elkem's calcium carbide plant in the USA was sold in March 2008.