Musings, politics and environmental issues

Posts tagged ‘Century Aluminium’

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.


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.

Update, 12 February 2019: Rio Tinto has just announced that it will do a strategic review of its Straumsvik smelter, 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.



Fluoride poisoning in horses confirmed

I wrote an article almost two years ago for Al Jazeera on fluoride pollution from accidents at aluminium plants in West and East Iceland and their effects on horses and sheep respectively. The horse owner, Ragnheidur Thorgrimsdottir, had been saying for almost 10 years that her horses were affected by the nearby Century aluminium plant but her concerns were dismissed by the smelter officials as well as by the Food and Veterinary Authority staff.
Nevertheless, a specialist group was set up to investigate the matter by the Ministry of the Interior of the previous Icelandic government and they have just come to the conclusion that fluoride pollution was probably to blame for the horses’ health problems. Seventeen horses have had to be destroyed because of health problems stemming from the pollution.
However, Century officials and the FVA still stand by their previous convictions and say that fluoride is not to blame.
Hmm… I think they won’t change their beliefs, no matter what the evidence.

One of the affected horses

One of the affected horses

Aluminium smelters, energy and the Eden project

Last week, Iceland’s national power company, Landsvirkjun, announced that they had successfully negotiated a new electricity price for 161 MW of electricity for the expansion at the Nordural (Century Aluminium) smelter at Grundartangi. The price will be valid from 2019 for four years and, for the first time ever, will be linked to the market price for electricity in the Nord Pool electricity market instead of being linked to the world price of aluminium, which is extremely low at the moment. This is a breakthrough, as up till now the aluminium companies have negotiated very low prices for contracts lasting much longer than four years – Landsvirkjun sells 37.5% of its energy to the Alcoa Fjardaal smelter in East Iceland, which came on line 10 years ago, and that contract doesn’t run out until 2048.

The Rio Tinto Alcan plant at Straumsvik, which reported a loss for the last financial year, also has a contract for cheap energy for a long time.

Meanwhile, out at Helguvik on the southwest tip of Iceland, what is supposed to be Nordural’s second aluminium plant remains half-built.


The Rio Tinto Alcan plant at Straumsvik

How about a competition: What can be done with a half-built aluminium smelter? I think that something along the lines of the Eden Project in Cornwall would be brilliant. It’s logo sums up the situation: Transformation: it’s in our nature.



New aluminium smelter under consideration in North Iceland

An Icelandic company, Klappir Development, is looking to build a new aluminium smelter in conjunction with a Chinese company, NFC, in North Iceland at Hafurstadir, between Blonduos and Skagastrond. They have apparently been looking into this since last summer if not before. The idea is to build a plant capable of producing 120,000 tonnes of aluminium a year, with a possible expansion of another 120,000 later.

I couldn’t believe my eyes when I first read about this. I thought, perhaps naively, that Iceland had its hands full with the half-built aluminium smelter at Helguvik in southwest Iceland, which has become a nightmare for its owners – Century Aluminium – due to energy shortages and other issues.

Energy shortage is likely to be a problem for the Hafurstadir plant too, according to Althingi member Jon Gunnarsson who is Chair of the Althingi’s commerce committee. In an interview with RUV, the Icelandic radio and television authority, he said that the idea is unrealistic as the initial energy needed would be 206 MW. Either improvements would be needed for the transmission network or new power stations would be needed.

Like Helguvik really.



New aluminium plant at Helguvik unlikely to happen – official

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.

Oil, gas, electricity and aluminium

While virtually everyone else in the world is looking to find alternative energy sources to oil and gas, Iceland’s PM, Sigmundur David Gunnlaugsson, has said that he doesn’t believe that alternative energy sources will fuel or power the world, and that Iceland should start seriously looking for oil and gas reserves. Up till now, Iceland has prided itself on using virtually only renewable energy sources for its electricity and domestic heating services, and has pondered the possibility of building a subsea energy cable to Europe – which will also use renewable energy.

In my opinion, the PM is taking Iceland 10 steps backwards, not forwards.

Of all the electricity produced in Iceland, 80% is used by aluminium companies and over heavy industry which take advantage of the cheap energy produced and sold by Landsvirkjun, the national power company. Indeed, Landsvirkjun’s CEO said a few days ago that the price that aluminium companies paid for electricity was still much lower than these companies had to pay elsewhere.

Nevertheless, the price of electricity is no longer linked to the world price of aluminium. And as the world price for aluminium continues to be at an all-time low, life is difficult for the aluminium companies. The other day, Rannveig Rist, CEO of the Rio Tinto Alcan plant at Straumsvik, just outside of Reykjavik, was complaining about the electricity price no longer being linked to that of aluminium; she said that this is still the case elsewhere. But it the electricity price is low, what does it matter if the price is linked to aluminium or not? I think she’s moaning….

The RTA plant is in fact in financial difficulties and made a loss last year. They have had to pay more for necessary resources such as alumina, plus their planned production increase never happened because the technology didn’t live up to expectations and was abandoned. And they have also had to lay off workers.

Be aware that Iceland’s current government was keenly trying to encourage companies to build smelters here when they were in power before, and Century Aluminium’s Helguvik plant is still very much in the beginning stages, despite supposedly starting operation in 2010. Given the problems at the Straumsvik plant and the fact that Century closed down two aluminium smelters elsewhere not so long ago, one wonders why Century is still pressing for the aluminium plant to be built. In a financial report by Moodys I saw a few months ago, they said that they were going to build the Icelandic plant because of the low energy prices here. Except of course there isn’t enough energy easily available (and that Icelanders will agree to being developed) and at the price that Century wants to pay.  Given the low price of aluminium, one wonders why Century doesn’t decide to abandon the whole project.

Article now up on renewed push for aluminium plants in Iceland

Check out my latest article for Inter Press Service on the Icelandic government’s renewed push for aluminium plants and power plants. In addition to what is in the article, other obstacles are still in the way for Helguvik: the problem of transmission lines has not been solved and, according to investigative journalist Sigrun Davidsdottir who found the information in a new report by the plant owners Century Aluminium, financing has not been procured for the plant.