No silicon metal smelter will be operated in Southwest Iceland

It’s official. PCC SE, the owners of the silicon metal plant near Húsavík in North Iceland, have decided not to buy the original silicon metal plant at Helguvík in Southwest Iceland, which was closed down by Iceland’s Environment Agency in September 2017 after only nine months of intermittent operation, fires, pollution and scandals. Not to mention opposition by locals and some members of the city council.

Arion Bank had set up a subsidiary, Stakksberg, which was given the task of selling the smelter that had been owned by United Silicon. Stakksberg got some alterations done and even got an environmental impact assessment done on the revamped smelter. But no one seemed seriously interested in buying the beleaguered smelter – until PCC started toying with the idea earlier this year.

When PCC announced that they were thinking of buying the plant, alarm bells started ringing with local residents who were vehemently against the plant starting up again, and the local council also stated that they were totally against the idea. PCC had previously said that they would only buy the plant if there was general support from local residents and the local authority. Which there wasn’t.

Local opposition seems to have won out. Benedíkt Gíslason from Arion Bank said yesterday that the bank had terminated discussions with PCC and that they had done everything they could to sell the plant, but to no avail. Arion has now terminated discussions with Landsvirkjun, the national power company who were going to provide power to the smelter.

Gíslason told the local paper, Víkufréttir: “A new chapter will now begin, either with removing the smelter or providing it with a new role”. Local residents are happy. Gíslason had previously said announced a devaluing of the Helguvík smelter, due to little interest, and had not excluded the possibility of dismantling the plant.

The local authority, Reykjanesbaer, actually has plenty of space for new industry as Helguvík was also supposed to house an aluminum smelter and a second silicon metal smelter, neither of which are going ahead.

Update: Gíslason now says that the site, buildings and smelter are now valued at 1.5 billion krónur (= $10.6 million), and the bank have lost a total of 22 billion krónur (= $155.4 million) on the plant.

Iceland’s first silicon smelter might get dismantled

Arion Bank, which has been trying to sell the disused (read closed-down) silicon metal smelter at Helguvik in southwest Iceland since late 2017, has now not excluded the possibility of dismantling it instead of selling it.

Earlier this year, PCC SE – the mother company of PCC Bakki, which operates the PCC silicon smelter in north Iceland – had expressed an interest in buying the Helguvik smelter and are currently getting a reliability check done which should be completed by September.

Prices for silicon metal increased by 450% between 2020 and 2021, which probably explains why it was feasible to restart the PCC Bakki smelter a year ago after it had been closed for eight months as well as why PCC SE are considering buying the Helguvik smelter. The price increase in just two months, September and October 2021, accounted for 200% of this increase.

Yet the city council have been vehemently opposed to the reopening of the smelter. Although the local council elections at the weekend have resulted in a slightly different makeup of the council, it’s unlikely that this will make much difference.

Arion Bank had been unwilling to consider the possibility of dismantling the Helguvik smelter as so much money had been spent on alterations to comply with demands from Iceland’s Environment Agency. But they now say they are examining the possibility of selling the infrastructure so it can be used for other operations.

Perhaps they are facing up to the fact that a silicon metal smelter in Helguvik is unwanted. And that the locals don’t want to be guinea pigs again.

Equilibrium in silicon metal smelters can take 2-4 years

Before the PCC silicon metal smelter began operation at Bakki, near Husavik in North Iceland, Kristjan Thor Magnusson, head of the pertinent local authority, said that he had been told that “it could take 2-4 years to achieve equilibrium in the operation of silicon metal smelters”.

The Bakki smelter suffered numerous problems initially, both technically and financially, and even closed for nine months in 2020 as a result. Admittedly the situation has changed for the better since it reopened, but Magnusson says that “now and then” residents of the nearby community of Husavik (pop. 2,400) complained about odour and smoke before it was closed temporarily.

The owners of the Bakki plant, PCC SE, recently signed a letter of intent with Arion bank, saying they were interested in buying the now defunct silicon metal plant, once owned by United Silicon, at Helguvik, southwest Iceland. The bank has been trying to sell the Helguvik smelter since Iceland’s Environment Agency closed down the smelter in 2017 after numerous complaints from local residents (population of the nearest town is approx. 20,000), but up till now no one has been seriously interested.

The interest of PCC in buying and operating the Helguvik plant has aroused huge opposition of the local council and local residents.

Fridjon Einarsson, leader of the Reykjanesbaer council, points out that over the last 30 years, the Helguvik site has supposed to be the site of a factory producing steel grating, then an aluminium smelter, and then two silicon metal smelters. The only one of these that came to fruition was one of the silicon metal smelters, and “our experience of this was terrifying“, he told a journalist from the Icelandic media Kjarninn. The council lost ISK 10 billion ($79 million) as a result of these endeavours.

All eleven councillors are against the plant reopening, so even if the makeup of the council changes after the next elections in May, it is unlikely that their stance would change significantly.

For their part, Arion bank says that they are considering three options: selling the disused smelter to another company that will operate a silicon metal plant there; deconstructing the smelter; and using the existing facilities for a different kind of operation. But in reality, they say that only the first option is feasible.

But IF the smelter starts functioning again as a silicon metal smelter and IF it generally takes 2-4 years for a smelter to start running smoothly, that is a long time for residents to have to put up with odours, pollution and the like.

And the population of Reykjanesbaer is nine times bigger than that of Husavik.

Iceland’s Planning Agency gives cautious approval to EIA for revamped silicon metal smelter

It doesn’t make sense. At a time when Iceland has said it will reduce its greenhouse gas emissions by 55% by 2030 relative to 2005, Iceland’s Planning Agency (PA) has given its opinion on an environmental impact assessment that will permit the operation of a silicon metal plant at Helguvik in southwest Iceland – yes, the one that Iceland’s Environment Agency closed down in September 2017 because of constant technical problems that resulted in intermittent use, furious neighbours, unexplained odour pollution and health problems, not to mention fires.

The PA say that new modifications should mean that nearby residents will experience odour less frequently and less intensely than when the smelter was previously operating under United Silicon, as emissions will be released through a 52-m high chimney instead of through a filter shaft. The odour has been attributed to a VOC (volatile organic compound) though it is not known which one.

Stakksberg, which was primed by Arion Bank to sell the smelter after it was closed down and was responsible for carrying out the EIA, say that if local residents notify the presence of an odour, they will measure the level of VOCs near the plant. However, given the previous problems with the smelter, the PA recommend that an operating licence should only be given for the first stage of the operation, with one light arc furnace operating, until experience has been gained of the design modifications.

If the revamping of the smelter proves successful, the PA envisage “some environmental impact” in the first stage but “considerable environmental impact” in the final stage.

The smelter is expected to use 155,000 tonnes of coal a year in the first stage of the operation, but if four furnaces operate the figure will increase to 400,000 tones of coal annually.

The PA anticipate a lot of opposition from local residents if operation of the smelter resumes, and they are not mistaken in this regard as ASH, the group opposed to heavy industry in the area has encouraged residents to comment on the EIA of the proposed smelter.

The local council is also opposed to reopening of the plant, due to past experience and local opposition.

Nevertheless, nothing will happen until a buyer is found for the smelter. Though Stakksberg has sometimes said that there are a number of buyers interested in the smelter, nothing has happened so far. Besides having to deal with angry residents and a council opposed to the plant, a prospective buyer will have to bet on the new design proving successful.

Stakksberg can now apply for building permission needed for the necessary improvements.

The silicon plant’s emissions will fall under the EU’s Emission Trading System, so technically the 11% of Iceland’s total 2019 emissions that could be produced by the plant it it ever gets to the “fully functioning” stage, with four furnaces, will not affect Iceland’s proposed “reductions in greenhouse gases” that it has to account for to the EU.

A good overview has been provided here. Though in Icelandic, Google translate could provide some idea at least of the issues.

Update, 13 January: PCC SE, owners of the PCC Bakki silicon metal smelter in north Iceland, are apparently interested in buying the Helguvik smelter. The local council have told PCC it would be a definitive NO on their part.

All is not well with Iceland’s silicon metal industry

Judging from the websites of Stakksberg and PCC, the reader may be inclined to assume that everything is progressing well for Iceland’s silicon metal industry.

Stakksberg is the company set up by Arion Bank to try and sell the silicon metal smelter originally owned and operated by United Silicon in Helguvik, southwest Iceland, but which was closed down by Iceland’s Environment Agency in September 2017 after only nine months of (intermittent) operation. Their intention was to sell the plant after the necessary renovations had been done and a new environmental impact assessment had been prepared.

Indeed, the most recent press release on their news page (which is only in Icelandic, and is dated 7 May 2020) states that a preliminary EIA of improvements is now accessible on the website of Iceland’s Planning Agency.

The opening page of their English website states:

“Stakksberg owns a plant in Helguvik, which produces 99% pure silicon (Si) and has a production capacity of 23,000 tonnes per year. The silicon is used, among other things, to manufacture solar cells and computer circuits. Some 70 persons will be employed at Stakksberg’s plant in Helguvik when the plant starts its operation.”

Soon after Stakksberg took over, they said that there was some interest from prospective buyers regarding the smelter. But that was three years ago. More recently, due to continued difficulties in selling the plant – some of which are attributed to the difficult state of the silicon metal market – the value of the plant has been reduced to the sales value of the plot itself and to salvaging and resale price of the smelter’s equipment.

Perhaps it’s time for Stakksberg to update their website.

Meanwhile, up in North Iceland, PCC Bakki appear to have a more positive view of the market price for silicon metal, and intend to reopen in “spring”, which in Iceland usually means April/May. Little information is available from their website, as the most recent news there is dated December 5, 2019. Earlier this year, the Icelandic media reported that PCC had started employing people again, but on the Jobs section of their website they say they are accepting general applications which would be valid for three months. And if an applicant hasn’t heard within three months, they are welcome to apply again. That’s not very fair on potential applicants, if PCC are serious about restarting in “spring”.

PCC have not updated their Facebook page since February, when they advertised for an “electrician supervisor” to carry out maintenance.

I still think it unlikely that PCC will reopen.

Update: The newspaper Morgunblaðið reported this morning that a cargo ship with raw material for PCC Bakki had docked at the nearby town of Husavik yesterday morning. The director, Runar Sigurpalsson, says they hope to reopen at the end of April but there are still various various loose ends that have to be sorted out.

Update 19 April: The PCC Facebook page yesterday stated that they intended to do a small start-up today (which was expected to emanate pale smoke or heat mist, along with a “fireside smell” which they hoped would not trouble people in the vicinity). But today they say that they have had to postpone the startup for 24 hours and will now do it tomorrow…

Update 23 April: They started it up yesterday.

Helguvik silicon smelter now valued as “salvage”

The former silicon smelter in Helguvik, southwest Iceland, has been devalued by Arion Bank, the smelter’s largest creditor, so that its book value is now based on the value of the property and resale price of the plant’s equipment.

At a debriefing meeting of the bank, the CEO, Benedikt Gislason is quoted as saying (in Icelandic) that the revised book value was “an indication that there is little hope that the smelter will restart. It would be interesting to see different, greener operations happening there in the future”. One of the reasons that the PCC silicon smelter in north Iceland suspended operations last summer was the bad state of the silicon metal market, so it’s hardly likely that a company would want to bet on spending millions on buying and modifying a plant when the potential market is so fragile.

Nevertheless, the plant is still listed under the bank’s “Assets for Sale”.

The smelter, which was closed down in September 2017 by Iceland’s Environment Agency only nine months after it started operating, is now valued at ISK 1.6 billion kronur (approx. $US 12.5 million). The company operating it, United Silicon, was deemed bankrupt the following January, and Arion Banki set up Stakksberg to deal with the aftermath, including selling the plant. Ahem. I don’t know how long it usually takes to sell a non-functional silicon smelter, but three years seems a long time to me.

Stakksberg obviously realized that it would make more sense to sell the plant in a functional state and set out to remedy the numerous faults listed by the Environment Agency and produced a preliminary environmental impact assessment for the plant. This process is still ongoing, but when it commented on the preliminary EIA the Environment Agency said that overall, the impact of the operation would be considerably negative, while the impact on air quality would likewise be considerably or even substantially negative. The effects on odour pollution, hydrology and appearance would also be considerably negative.

The local council is against the reopening of the smelter, and many locals also sent in comments, mostly about health problems if the plant would start functioning again. I also commented on the preliminary EIA, though I do not live near the site.

A few hundred metres from the disused smelter lies a half-built aluminium smelter. Plans are now afoot to use the site for fish-farming (salmon), albeit by Samherji, Iceland’s largest seafood company and main mover in the Fishrot scandal.

As Gislason said last week, it would be nice to see the old silicon smelter site used for greener operations.

PCC Bakki silicon metal smelter to close

 

On Thursday last week, PCC Bakki sent out a press release saying that they would be shutting down the smelter at the end of July. The closure is supposed to be temporary, as they hope to restart after 6-9 months. But whether it will restart is another question.

PCC blame COVID-19 and lack of demand due to it. The Icelandic press, however, have been quick to point out that PCC has suffered economic and technical problems for a long time and have intimated that COVID may just be a pretext. Note that no news of this has appeared on PCC’s international site, nor their Icelandic site, nor their Icelandic Facebook page. Nor has it appeared on any of the English-language news sites in Iceland that I have checked.

Around 80 of 130 workers will be laid off, with more leaving after some modifications have been made to the plant. PCC’s idea is to rehire its current employees when it restarts again. The local council says that efforts will be made to find alternative work for those with families, who have become settled in the nearest town to the plant, Húsavík, but that people living in accommodation on site are likely to be more mobile and will move elsewhere to look for work. An unnamed shop steward said that PCC employees had sensed for some time that the plant would close.

Personally, I can’t see any of the workers deciding to stay in the area on the basis that it might/will reopen at some stage.

Rún­ar Sig­urpáls­son, CEO of PCC Bakki, is realistic and told an Icelandic newspaper that “he hoped he would be able to reclaim his staff. It’s no more complex than that … Whether it will be 6 months or 12 months I can’t say”. But he says that the global demand for silicon metal is low at the moment and the price is low. And the COVID-19 pandemic is by no means over, and it’s impossible to predict when it will end. He then said that for the company to restart, the price for silicon metal would have to rise significantly.

PCC have to keep paying Landsvirkun, their energy provider, as they have a take-or-pay energy agreement. Generally, the buyer has to keep paying energy costs, or at least 80% of the negotiated energy. When no income is being generated, this will be yet another setback that the company will have to face.

One of the arguments put forth for constructing smelters in Iceland has been that it will provide employment, meaning employment for the local community. But this doesn’t happen. Building is usually done by foreign workers as locals don’t want to do it, and it turns out that 30 of the 40 families that have been affected by PCC’s imminent closure are foreign, as are the 40 workers living in purpose-built site accommodation.

Meanwhile, comments on the new EIA for the former silicon metal plant in Helguvík have just closed. Stakksberg, a company set up by Arion bank to see to the sale of the plant that was shut down in September 2017 by the Environment Agency, has been trying to sell the plant for the last three years and I suspect that they hope that if a new EIA is approved, it will help the sale. The locals are against it re-opening, and the local council was also very critical of the EIA, especially in hindsight of its earlier experience with the Helguvík smelter. In my comment to the Planning Agency about the EIA for the Helguvík smelter, I asked whether notice had been taken of the problems suffered by the PCC smelter – and that was a few days before PCC announced they were closing.

I suspect that neither smelter will be operating a year from now.

Update, 2 July: PCC have another glitch to face. About 25% of the silicon metal produced by PCC goes to the USA and is used by the car industry. Not only is the car industry now selling far few cars because of lockdown, travel  restrictions and the like, but American silicon metal manufacturers Ferroglobe and Missisippi Silicon are now pressurizing the American government to impose a tax on silicon metal from Iceland, Bosnia, Malaysia and Kazakhstan because these countries hamper normal pricing and healthy competition.

Difficult silicon market hinders sale of Helguvik smelter

Iceland’s Arion Bank, which has a number of holding companies including Stakksberg, the company entailed with the task of trying to sell the silicon metal smelter in Helguvik originally owned by United Silicon and closed down by the Environment Agency (EA) in September 2017, has sent out a statement saying that they have reduced the value ascribed to Stakksberg from 6.9 billion kronur (USD 52.9 million) at the end of March 2019 to 3.2 billion kronur (USD 25.6 million) nine months later.

Stakksberg has been rectifying some of the problems with the smelter identified by the EA, and has been trying to find a buyer for almost two years. The smelter’s original owner, United Silicon, went bankrupt in January 2018, but in December 2017 they too were searching for buyers.

According to Stakksberg’s homepage, the idea was to have the smelter up and running in the last quarter of 2020.

Arion Bank says that because of “uncertainty in the market, several manufacturers have reduced their production or closed smelters. Thus unused manufacturing capacity is available that might well have a negative effect on the sale of the silicon metal smelter in Helguvik”.

If they have done their homework, potential buyers – if there are any – would be aware of the problems faced by PCC Bakki Silicon in the north, who asked for more funding last year. PCC have also had unexpected problems with Iceland’s winter weather, and say that the problems they have encountered were not those they were expecting – despite using best available technology, etc. None of this would be of any comfort to prospective buyers of the Helguvik smelter down south.

People involved in ASH, the campaign group against the reopening of the Helguvik silicon smelter, are overjoyed however, as there was a lot of opposition by locals to the smelter during the short time that it was operating.

It’s not just the silicon metal industry that is facing problems. Because of worsening conditions in the aluminium market, which are “very demanding”, Iceland’s oldest aluminium smelter is going to operate at 15% reduced capacity in 2020, with a corresponding decrease in electricity use. The plant is currently Iceland’s second largest user of electricity.

This smelter, which is situated on the outskirts of the capital city, is currently owned by Rio Tinto Alcan but was searching for a new owner two years ago. Norsk Hydro was going to buy it but the sale fell through seven months later.

Update, 12 February 2019: Rio Tinto has just announced that it will do a strategic review of its Icelandic smelter at Straumsvik, due to high electricity costs – which Icelanders consider are actually very low – and “historically low” aluminium prices. They may even close the smelter. The review is expected to be completed within the next few months.

 

Former United Silicon smelter rears its ugly head again

At a packed residents’ meeting last night over the future of the silicon metal plant in Helguvik formerly owned by United Silicon, Thordur Thordarson from Stakksberg said, in  response to a question about whether the thought had ever occurred to them to simply dismantle the plant, “Too much money has been spent on the silicon metal smelter already. If we abandon the aim of resurrecting the plant, it would be inexcusable handling of money.”

But the local campaigning group ASH say that they don’t want it to reopen.

Stakksberg is the company set up by Arion Bank to deal with the mess left by United Silicon. They intend to sell the plant when the extensive repairs and modifications have been completed. They say that the plant should be operational by 2020.

The meeting was called at two days’ notice. In the intervening period, considerable media attention was directed at the dormant plant, and the other silicon plant designed to be adjacent to the (Stakksberg) plant. The latter plant, which would be operated by Thorsil, had virtually disappeared off the drawing board as nothing had been heard about it for about two years – until someone from the local council said that the two silicon metal smelters would rescue Helguvik harbour.

The meeting, which lasted for almost three hours, consisted of explanations by Thordarson followed by powerpoint presentations by a Verkis engineer and a consultant from Norwegian firm Multiconsult. The first EIA for the Stakksberg/United Silicon plant was ostensibly prepared by Verkis, while Multiconsult were brought in last year to advise on problems – apparently, seven silicon metal smelters operate smoothly in Norway (though, unbeknown to the Multiconsult engineer, there appear to be health problems such as silicosis afflicting the workers).

Thordarson said that the “most able specialists” were advising Stakksberg. Note that United Silicon also said they had experts on hand to deal with any problems, and look what happened there.

Two of us brought up the matter of PCC Bakki, whose silicon smelter has been beset by problems and where start-up has not been easy, to say the least. Thordarson said he was not aware of the situation there, but “must look into it”. Unbelievable!!!

Other issues were brought up during question time. If Thorsil gets to operate with four furnaces and Stakksberg with four, how will anyone know which smelter is to blame if pollution levels rise sky high? No one knew the answer.

The Multiconsult person said that routine maintenance would mean that the furnaces would be shut down sometimes. Each time a furnace is restarted, there is the risk of burning odours. Multiply that by four (or eight) and there could be constant problems. One of the additions to the plant will be an emergency smoke stack that will operate during start-up. Some people are not convinced that this will make a difference.

Outside of the meeting, ASH is preparing a group lawsuit to call for a citizen’s referendum to try and stop the plant from becoming operational again.

A scoping document (in Icelandic) for a fresh EIA has been put forward and can be seen here.

 

 

Fire at PCC silicon smelter

The Icelandic media have just reported that a fire broke out last night at the PCC silicon smelter at Bakki, Husavik. The fire was in the furnace building and lasted about three hours. No one was hurt.

PCC have not put any news on their website since 8 June, so I don’t know whether it’s actually been operating as their last news said that they intended to start up the furnace again after midnight, i.e. June 9. I emailed them two weeks or so ago to ask if the reason nothing new was on their website was because nothing newsworthy was happening, but they didn’t reply. They had generally reported when the plant was being started up again but this time they didn’t.

Perhaps now the Environment Agency will start looking more closely into the operation at Bakki.

Today is the deadline for comments on the scoping document for improvements to the United Silicon plant which the company Stakksberg are overseeing. Stakksberg was set up specifically by Arion Bank for the process, as it is intended to sell the plant and get it operating again, though probably this will not happen before 2020. Karen Kjartansdottir, who was in charge of publicity for United Silicon, is now doing the same for Stakksberg.

Fire in silicon smelters is not unheard of, at least not in Iceland, as three fires occurred in the United Silicon plant at Helguvik, southwest Iceland, before the plant was eventually closed by the Environment Agency. Activists from ASH, the group opposed to heavy industry at Helguvik, are not surprised by the fire at Bakki – the best possible technology was supposedly being used at Bakki but STILL a fire can occur.

Problems with the United Silicon plant were partly attributed to the owners using a mismatch of equipment. But it appears that silicon smelters are proving more of a problem than the Icelandic authorities – not to mention the Icelandic government –  originally thought.

Stay tuned – this blog will probably get updated.

Update: PCC Bakki are on Facebook.  They have news (in Icelandic) there, including about the fire. They want to start up the other furnace as soon as possible while the other is getting repaired/checked. They have also now (mid-afternoon Tuesday) updated the news page on their website with information about the fire.

Update 19 July: They have still not started up the smelter again. “It is clear that changes have to be made,” they say.

Update 25 July: They began to start it up again yesterday morning (the process has to be done gradually), but shut it down 8 hours later due to a leak in the cooling system. They warned that villagers might be aware of odour.