When the debate about building Karahnjukar dam and the corresponding aluminium plant in East Iceland were at their highest, one of the arguments used was that it would provide employment in the area and people would no longer move away from the area in search of jobs. But that hasn’t come to pass – once again, although there has been a 1% increase in population in Iceland as a whole, three areas have seen a decrease over the past year, and one of them is East Iceland – home to the Fjardaraal aluminium smelter, owned by Century.
Of course, the construction of the dam and smelter led to more people living in the area, but a goodly proportion of these were brought in from other countries. And accommodation had to be provided. Houses and apartment blocks were hastily constructed in local towns such as Egilsstadir, but residents of the new buildings have complained about mould problems in the buildings which have led to health problems. And I seem to remember that many buildings are empty there.
Increased employment was also one of the arguments given by proponents in favour of an aluminium smelter in Northwest Iceland. But if the Fjardaraal smelter hasn’t encouraged people to stay in the area, wouldn’t the same be true of a plant in the northwest?
Increased employment was also given as an argument for building the Helguvik aluminium plant in the southwest. That plant was meant to be completed in 2010 but nothing has happened recently and it remains only partly built. At the time the plant was started, the area had high unemployment because the US military had just left the area. But now the area boasts the highest population increase in Iceland, and the airport authorities say they will need to bring people in from outside Iceland to work at the airport (to cope with Iceland’s growing number of tourists) as the local area won’t be able to supply them. The prosperity there has nothing to do with aluminium plants or silicon plants that are also planned for Helguvik.
Meanwhile, close to Reykjavik, the management and owners of the Rio Tinto Alcan aluminium smelter at Straumsvik have been in pay negotiations with the workforce there for over a year. One gets the impression that the Icelanders working there are seen as pawns by Rio Tinto and are not taken seriously.
I recently wrote about an aluminium plant that some people want to build in northwest Iceland at Hafurstadir, near the village of Blonduous. Since then things have moved on and a letter of intent (or some such agreement) was signed by Klappir Development, the Icelandic company involved, and Chinese company NFC. Quite rightly, a lot of discussion has ensued about where the power for the plant will come from and if enough power will be available (answer: theoretically potentially yes, practically definitely not).
But there are other issues too. The plant is intended to have a capacity of 120,000 tonnes a year, but in fact all the Icelandic plants that have started small, or have originally been designed to have a small capacity like the half-built plant at Helguvik, have since been enlarged because it’s much more economic to run a large plant than a small plant. So it’s not just a case of providing initial energy as it’s likely that more energy will be needed for future expansion.
Proponents of heavy industry always point to the jobs that will be provided both in construction and operation. But at the new geothermal plant at Theistareykir where construction has just started in the north of Iceland, the builders have had to import/employ a team of Polish builders because no one in Iceland wanted to do it. The situation is likely to be the same here.
And what about greenhouse gas emissions? If all the heavy-industry developments envisaged in Iceland go ahead, greenhouse gas emissions in Iceland will increase significantly but the Icelandic government has just said (in Icelandic) that they’ll attempt to reduce greenhouse gases by 40% cf. 1990 by 2030. I’m not sure that the heavy industry proponents have taken that in mind.
Finally, energy now costs more than it used to for large-scale users, and the low market price of aluminium at the moment would mean that the cost of electricity would be prohibitive.
Rio Tinto Alcan has just had to reimburse Iceland’s national power company, Landsvirkjun for building the country’s latest hydroelectric plant to come on line, Budarhals power plant, when it wasn’t needed. Originally the RTA aluminium company was going to expand its smelter in Straumsvik, just outside of Reykjavik, considerably and needed extra energy to do so. Landsvirkjun was asked to provide the extra energy needed, and so built the Budarhals plant, but now much of the energy is not needed because RTA have not expanded their capacity as expected.
Meanwhile, the parliamentary committee on industry has decided to move eight power plants from the pending more research category of the Rammaáætlun plan (which categorizes potential geological and hydropower plants into exploitable, needing more research, and preservation categories) into the exploitable category, without any consultation with people/organizations that have been working on the matter. The plants concerned include some of the plants in the Lower Thjorsa which had been moved into the pending category by the previous government. The three Lower Thjorsa plants had been thought of as operating as one unit and recently one of the plants had been moved back to the exploitable category after due consideration.
But being able to exploit only one of the three plants is not much good, so it’s not too surprising that the other two plants have been moved back as well. So Urridafoss waterfall will be under threat once more.
However, with excess capacity available in the Budarhals plant, it’s unlikely that new plants will need to be developed in the immediate future. Or at least, that SHOULD be the case.
Good news for once! It seems that Michael Bless, the CEO of Century Aluminium which is trying to build an aluminium plant at Helguvik in southwest Iceland, is now pessimistic that the plant will ever be built and says it might be shelved. At a meeting with Bank of America Merrill Lynch, he said that building will not continue unless it is seen that the plant would be very profitable – which is unlikely due to the low price of aluminium at the moment and the fact that energy to the plant has not yet been finalised, nor have the costs of the hypothetical energy. I have written a number of articles and blogs about the problems of the Helguvik plant – does anyone want another one about the current state of affairs?
It now seems that one of the main proponents of the plant outside of Century themselves, the mayor of the local town of Reykjanesbaer Arni Thor Sigfusson, is also much more pessimistic than he was about the plant being built. He had always welcomed the advent of the plant because it would provide employment for the area.
Iceland’s current government has been keen on getting the plant finished. No word has come from them today, maybe because they are trying to deal with the current Budget for next year and tying themselves in twists because of it.
Maybe we can now say: RIP Helguvik.