Musings, politics and environmental issues

Archive for July, 2019

Are Iceland’s aluminium smelters in trouble?

Aluminium companies in Iceland have not been doing too well recently. The original smelter just outside the capital at Straumsvik, which was opened 50 years ago and is now owned by multinational Rio Tinto but is up for sale, had an “incident” 10 days ago when an arc flash formed within one of its pots. Luckily, it happened at a time when no one was present in the room, as otherwise it could have been fatal.

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For safety reasons, all of the 160 pots in that pot room have been switched off – this represents about a third of the smelter’s production and represents a serious dent in the company’s operations. Last year, the company made a loss of about $US 41.3 million, so this setback doesn’t help – and won’t make the smelter easier to sell either.

Don’t bother looking for information about the incident on the company’s Facebook page or their website, as it isn’t there!

What has sparked my curiosity is that both the CEO of  East Iceland Fjardaal aluminium smelter, Magnus Thor Guðmundsson, and the Icelandic Senior Vice-President of Alcoa globally, Tomas Mar Sigurdsson, have announced their resignations very recently. Tomas Mar started off at the Icelandic plant before becoming involved with Alcoa Europe. He only became Senior Vice-President in November last year – not long ago.

Magnus Thor has been in various positions of responsibility within the East Iceland plant.

So is it coincidence that both decided to leave at a similar time? Well, the mother company’s finances have not been good. In the first quarter of 2019, Alcoa corporation announced a loss of $US 199 million while the second quarter loss was $US 402 million. So possibly they sensed that something was coming.

Alcoa, however, always add a paragraph about “forward-looking statements” to their annual reports, which presumably prevents them from being sued. This term seems to be American in origin but I suspect can be used in a variety of industries. Check out this explanation that they give:

Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning.

This concept is interesting in itself and can surely be applied to many companies who want to be somewhat ambiguous in their intentions.

The third aluminium company, Nordural, is owned by Century Aluminium and located at Grundartangi in West Iceland. Unlike the other smelters, this plant was operated with a profit of just over $US 94 million, though profits were down on the previous year by nearly $US 25 million.

Heavy industry in Iceland accounts for 82-83% all electricity produced. The Fjardaal smelter is the biggest user, and is responsible for 34% of the country’s electricity usage (and pays the lowest cost for it of all three smelters). Rio Tinto is responsible for 23% of electricity used and the Nordural plant uses 12%. Other heavy industry accounts for the rest.

 

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Is the U.S. military on its way back to Iceland?

The U.S. military left their military base in Iceland in September 2006. With that, the last vestiges of a military presence in Iceland disappeared, as Iceland does not have an army of its own.

But since 2016 (if not before) the American military has surreptitiously been carrying out various activities in the security zone of the former base, including submarine surveillance. And that same year, the U.S. military asked the State Treasury for more finance for submarine monitoring and other projects.

More details have emerged from time to time about this funding, and I wrote about it in an article and a blog. At the same time, there has been daily military presence at the former base.

Now it has emerged (Icelanders can read about it here) that the U.S. military want to set up basic facilities for about 1000 military personnel in the security zone, along with a zone with appropriate facilities where planes carrying “dangerous goods”, such as bombs and fuel, could land.

Why? It sounds very suspicious to me.

A friend in the U.S. warned me last year that Iceland would have to be careful that the U.S. did not start using the situation for “quiet back-room deals”

In 2016 I published an article that indicated, amongst other things, renewed military presence in Iceland.

Here is part of what I wrote:

… earlier this year (2016), the U.S. requested the use of a hangar for submarine monitoring, so they could fly over the sea and detect submarines using sonar.

Then in June the U.S. Department of Defense met with the Icelandic Foreign Affairs Minister, Lilja Alfredsdottir, about wanting to strengthen cooperation with the U.S. military once more, because the security situation had changed since 2006.

Then in July 2016, the Center for Strategic and International Studies (CSIS) published a report in which they openly suggest: “NATO can optimize its ASW [anti-submarine warfare] posture to ensure that the right capabilities are in the right places at the right time by reopening Keflavik Naval Air Station in Iceland and encouraging Norway to reclaim and reopen its submarine support facility at Olavsvern.”

The same article also details various activities related to the NATO agreement which are permitted.

Note that the CSIS link no longer works, and that Lilja Alfredsdottir is now Education Minister; Gudlaugur Thor Thordarson is now the Foreign Affairs Minister. I don’t know anything about Olavsvern, though I just found this article which again is based on the CSIS report.

Katrin Jakobsdottir, Iceland’s Left-Green Prime Minister whose party is opposed to NATO and military operations in general, says that the decisions were made before she became PM and she cannot do anything about it.

Nevertheless, many people are unhappy about the situation.

 

 

 

Weapons carrier wants to fly budget flights from Iceland

Two prospective new airlines have surfaced over the last few days in Iceland, which both intend to pick up the pieces from the now-defunct WOW Air and offer low-cost flights from Iceland to Europe and the US.

The first to be announced has the tentative working name of WAB – We are Back – and intends to fly to 14 US and European cities. Two ex-WOW executives are involved, and funding is mostly being provided by an Irish investment fund, Avianta Capital, which is owned by the daughter of one of the owners of Ryan Air, Aislinn Whittley-Ryan. You can read more about it here.

Then last night it was announced that a US company had bought most of what’s left of WOW Air, and had also requested to use the hangars previously used for WOW planes. Initially the name of the company was not revealed, but now it turns out that the company is probably Oasis Aviation Services. Like WAB, the idea is to run a low-cost airline.

Oasis specializes in transporting weapons from the US to Africa through its hub in Djibouti. Not nice! Their website calls it “Internationalist Air Cargo – Specialist in US Military Cargo”.

Oasis is owned by Michele Ballarin, a wealthy woman with links to Somalia who is also known there as Amira Ballarin, meaning Princess Ballarin. Besides breeding Lippizaner horses there, she has also been involved in many other activities, to various degrees of legality. You can read about her activities here.

Since WOW stopped flying at the end of March, tourist numbers have dropped dramatically – which is not surprising, as most people would have booked their summer holidays by then and those who had booked flights to Iceland with WOW would have had to rebook with another airline. With limited seat availability compared to the number who wanted to come, flight prices increased phenomenally and no doubt became out of reach for the average traveller. Tourist operators are worried.

Whether both airlines will eventually be flying to and from Iceland remains to be seen – I personally doubt that the market can support both of them  – but I would much prefer WAB to the Oasis lot.

Update 7 September: It was announced yesterday that Ballarin’s lot will start flying from October to the USA (Washington Dulles airport), under the trade name WOW. Later they will fly to other cities.

 

 

Whales to be killed commercially in Japan but not Iceland

Well, as some of the workers at the whaling station in Iceland intimated last year, Kristjan Loftsson has decided not to kill fin whales this year. One excuse given was somewhat feeble – they received permission to kill whales too late and it was thus too late to organise everything – but the main reason was that they couldn’t sell the meat that they’d sent to Japan.

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The minke whalers have also decided to hunt for sea cucumbers rather than whales this year, apparently “because it suits us better”. They abandoned whaling last year early on in the season. They will import minke whale meat from Norway this year to meet customer requirements. Is anyone protesting whaling in Norway?

This is the first time in 17 years that no whaling of any kind will be happening in Iceland.

Neither Kristjan Loftsson’s company Hvalur hf. nor the minke whale outfit IP-utgerd have excluded the possibility of whaling next year.  But this year at least the whales are safe.

The decision by the two companies provides even more rationale for the fact that the report commissioned by the Icelandic government on whaling was not accurate. The authors said that both minke whaling and fin whaling should be profitable, although they acknowledged that fin whaling wasn’t profitable between and including 2014 and 2017, much of the proceeds going on wages and transport to Japan.

And the minke whalers only caught 17 and 6 minke whales in 2017 and 2018 respectively, which can hardly be profitable. Indeed, the minke whaling company has gone bust more than once.

Some whales are not safe, though. Japan started commercial whaling this morning for the first time in 31 years, with quotas for 52 minke whales, 25 sei whales and 15 Bryde’s whales – 225 whales in total. Some whales have already been caught. According to a report in Japan Times, “the quota was calculated on the basis that it would not adversely impact stocks even if Japan kept hunting the whales for 100 years”. Good grief! 100 years!!!

They intend to kill the whales in nearby waters and in their exclusive economic zone but not in the Antarctic, where they have actually killed more whales annually than are allowed now. Last year, Nanami Kurasawa from the Japanese group IKAN told me that the stopping of “research whaling” in the Antarctic and Southern Hemisphere would mean that Japan would have to give up 333 minke whales from Antarctica, 134 sei whales and 43 minke whales from the North West Pacific. Distributors were worried, she said.

Nevertheless, whale meat consumption in Japan has dropped from over 200,000 tonnes in the 1960s to around 5,000 tonnes last year.