Large industry no lifesaver for local communities

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.

Iceland’s government at odds with the national energy company

Differences of opinion are becoming evident between Iceland’s right-wing government and Landsvirkjun, Iceland’s national energy company. At a public meeting yesterday held by Landsvirkjun, the Minister for Industries and Innovation, Ragnheidur Elin Arnadottir, showed that she had become impatient with Landsvirkun’s reticence to work towards the completion of the partly-developed Century aluminium smelter at Helguvik, southwest Iceland. On the other hand, Hordur Arnarson, Landsvirkjun’s CEO, has said in the past that the Alcoa aluminium plant in East Iceland is nowhere near profitable enough, and that Landsvirkjun intends to maximize the profits from its power plants, getting the best prices possible for its energy.

Now the Minister of Finance, Bjarni Benediktsson, says that he wants to get a new board of directors into Landsvirkjun, even though the current board has another six months to go. In reply to a question from another politician today, he said there wouldn’t be a change of emphasis with the new board but that increased investment in industry (read Helguvik) was needed, and that Landsvirkjun shouldn’t be an obstacle to the development of industry in Iceland.

Arnarson’s predecessor, Fridrik Sophusson, had been a Minister in Benediktsson’s Independence Party prior to becoming Landsvirkjun’s CEO. Sophusson was very cooperative with the right-wing government that ruled Iceland for 12 years or more, and developed the controversial Karahnjukar power plant in East Iceland to power the Alcoa smelter.

The new government are clearly pining for the good old days.