Musings, politics and environmental issues

Posts tagged ‘Nordural’

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.



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.



Environmental effects of silicon metal manufacturing plants

Until recently I was taken in by the propaganda that silicon metal manufacturing plants were relatively benign and produced metal that would be used for solar panels and the like. But having now read an environmental impact assessment for the proposed Thorsil plant in Helguvik, I have now changed my mind. They pollute. And in Helguvik, on the southwest tip of Iceland near its international airport, there will not be just one silicon metal plant but two, coupled with a second Nordural aluminium smelter if that ever gets finished (which I doubt). There is also a waste incinerator nearby and various other industries that pollute to a greater or lesser extent.

The Thorsil EIA admits that pollutant levels will sometimes exceed the limit values set in regulations, but says this will happen within the “dilution area”, where concentrations are expected and allowed to be higher. But what they appear not to have done and should have is to carry out a GIS (Geographical Information System) and overlay what is actually within the dilution area and the dilution area together. The northernmost edge of the local town of Reykjanesbaer is less than 1.5 km from the plant. And the local horse-owners are up in arms because the local stabling area (and summer pasture for horses) is within the dilution area (1 km from the plant), and they are concerned because of what happened to horses just outside the dilution zone of the Century/Nordural aluminium smelter in Grundartangi, West Iceland. Here is a link to the protest by horse owners and locals who descended on the local town hall to demand a local referendum about the influx of polluting industry in Helguvik. The main pollutant of concern is said to be sulphur dioxide, SO2.

Silicor Materials are also planning a solar silicon plant up at Grundartangi where the Nordural aluminium smelter and Elkem ferrosilicon plant are based. The Planning Agency said that its environmental effects would be negligible as it is not supposed to release sulphur dioxide or fluorides, and so it would not need an EIA performed on it. But not everyone is in agreement. The local conservation group, Umhverfisvaktin, is up in arms. Grundartangi does not need any more polluting industry either.