Primary Energy Announces Interim Agreement and Upgrade of the North Lake Energy Facility

Improvements demonstrate the importance of North Lake to the site host

OAK BROOK, IL, Jan. 25 /PRNewswire/ - Primary Energy Recycling Corporation (TSX: PRI), a clean energy company that generates revenue from capturing and recycling recoverable heat and byproduct fuels from industrial processes, announced today the signing of an interim agreement with ArcelorMittal to proceed with upgrading the capacity of its North Lake Energy facility by 20%.

The upgrades announced today will re-rate the existing steam turbine generator, as well as certain key plant equipment, to 90 megawatts in a two-phase plan. In order to coordinate the North Lake upgrade schedule with the estimated completion of ArcelorMittal's new waste fuel fired boiler - the power source for the additional steam turbine capacity - the parties agreed to proceed with the Phase I upgrade work prior to the signing of the long term renewal and extension of the tolling agreement for the North Lake facility. ArcelorMittal has agreed to reimburse North Lake for the cost of Phase I activities in the event the tolling agreement is not renewed by February 28, 2011. The Phase II upgrade work is contingent on finalization of the tolling agreement renewal. 

"Proceeding with the upgrade work with ArcelorMittal's reimbursement commitment emphasizes the strong degree of cooperation between the two parties, and shows the mutual desire to keep the project on schedule," said John Prunkl, Chief Executive Officer of Primary Energy Recycling. "The long term renewal agreement is in the final stages of negotiation and drafting, and then the host's internal review process must be completed. This is an exciting step towards North Lake's renewed, long term operational role of efficiently utilizing waste fuel to improve industrial competitiveness while reducing net pollution into the environment." 

Phase I of the upgrade consists of detailed engineering on the high pressure steam turbine, a four week major overhaul in March, 2011 on the low pressure steam turbine, replacement of blading that failed in the third quarter of 2010, and to make other plant repairs, inspections and upgrades to support 90 megawatt operations. The total estimated cost of the Phase I work is between $2.2 and $2.5 million.  

The Phase II work consists of replacing the high pressure steam turbine rotor with an upgraded design, a cooling tower cell expansion, transmission line relocation and controls replacement. This work is expected to culminate with a four week outage in the second or third quarter of 2012.  The total estimated cost of the two-phase upgrade is estimated between $9 million and $11 million. Primary Energy has sufficient unrestricted cash currently on hand to fund the entire cost of the upgrade if it proceeds to completion.

The North Lake Energy project, located in East Chicago, Indiana, recycles blast furnace gas into electricity, and currently has an electrical capacity of 75 megawatts. The project supplies a portion of ArcelorMittal's Indiana Harbor East mill with electricity recycled from blast furnace gas that would otherwise be flared.  Primary Energy built and owns the project while ArcelorMittal delivers steam from the existing blast furnace gas recovery boilers.

ArcelorMittal is the world's leading steel company, with operations in more than 60 countries.

About Primary Energy Recycling Corporation
Primary Energy Recycling Corporation owns a majority interest in Primary Energy Recycling Holdings LLC ("PERH"). PERH, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 per cent interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8M lbs/hour. PERH creates value for its customers by recycling recoverable heat and byproduct fuels from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for resale back to its customers. For more information, please see www.primaryenergyrecycling.com.

Forward-Looking Statements
When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to renewal of the North Lake tolling agreement, operating performance, regulatory parameters, weather and economic conditions and the factors discussed in the Company's public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect new events or circumstances except as required by applicable securities laws.

SOURCE Primary Energy Recycling Corporation