Musings, politics and environmental issues

Posts tagged ‘Rio Tinto Alcan’

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.


Environmental damage in Iceland minimized

The minke whale hunting season for the year has finished, with a final total of 17 whales. That’s their worst catch ever, and they clearly haven’t caught any since the end of July as I updated Minke whaling gets off to a shaky start on August 1 with the news that only 17 whales had been caught this year. They had been hoping to at least equal last year’s catch of 46 whales, and preferably to exceed it.

The main person behind minke whaling, Gunnar Bergmann Jonsson, says that they will “most probably” go out whale killing next year, though the hunting season will be shorter, only two to three months. I can’t see how it’s economical for him to employ people for the season and catch so few. Maybe next year there will be no whaling in Iceland and most of the rest of the world will rejoice, as fin whales have now not been hunted for the last two seasons due to bureaucracy in Japan, not to mention stores of unsold meat.

Another piece of good news is that Silicor Materials has told Icelandic port officials that it no longer intends to build the solar silicon plant in Grundartangi, which had been highly controversial and I had already predicted would not be built. They had had funding problems, amongst other things. The decision will please many people.

The United Silicon plant will remain closed for the next few months – if it ever reopens at all.

Iceland’s oldest aluminium smelter, currently owned by Rio Tinto Alcan and located just outside the Greater Capital Area, is up for sale. Apparently some entities have shown interest – my inkling is that Century Aluminium might be interested, as their proposed aluminium smelter close to the United Silicon smelter has never been completed. But Rio Tinto say that if they can’t find a suitable buyer, they’ll keep the plant.

The other big news, of course, is the fall of the Icelandic government and the election which will now take place on October 28. Apart from the stated reason for the election, which centred around the father of our current Prime Minister signing a letter of support for the clemency of a sex offender, it’s obvious that Bright Future and Vidreisn (Reform) had always been dissatisfied to some extent with working with the Independent Party in the Coalition, both in terms of working procedures and having to water down their politics. Everyone knew the situation was delicate from the start.

Fun and games.


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.

Icelandic power plants revisited

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.

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.