Saving Iceland

Hydro

Hydroelectric dams have fueled the proliferation of aluminum smelters in

other parts of the world, often at the expense of local communities. As

Joji Carino of the World Commission on Dams reported in 2000, “The

experience of indigenous peoples and ethnic minorities with dam projects is

rife with alienation, dispossession both from their land and other

resources, lack of compensation or inadequate compensation, human rights

abuse and lowering of living standards.” (Joji Carino, “Review of

Hydroelectric Projects and the Impact on Indigenous Peoples and Ethnic

Minorities,” World Commission on Dams, 2000)

Details on the relationships of smelters to some massive hydroelectric

projects follow.

Brazil

The Brazilian aluminum industry tripled in size from 1978 to 1985, when the

Tucurui dam was completed in the Amazon. The dam, created a 2,500 square

kilometer lake and spawned the Albras, Alumar, and Alunorte alumina

refinery and aluminum smelters owned by Alcoa, Alcan, Billiton, and a

consortium of Japanese companies. These aluminum operations consume over

half of the dam’s power. (Latin American Newsletters, Nov. 23, 1984;

Financial Times, Nov. 16, 1995)

The Brazilian government, which owns the dam, offers the power plant’s

electricity to the aluminum producers for half the price of standard

industrial charges. A “decisive factor in the industrialization of Amazonia

is the abundance of cheap electricity generated” by Tucurui, reported Inter

Press Service in 1988. The dam, financed by the Japan Import-Export Bank,

displaced more than 25,000 people. (See Human Rights and Banks chapters for

more details) (Inter Press Service, Dec. 20, 1988)

Controversy over Tucurui and other projects led to a temporary decline in

the rush to dam Amazonia. In 1995, the Financial Times, reported that

“building more giant hydro-electric dams in the Amazon, like the Tucurui

dam… would now be difficult to finance because of environmental

concerns.” (Financial Times, Nov. 16, 1995)

However, a project named Serra Quebrada, proposed by Alcoa, Alcan,

Billiton, Shell and Dow in 1989, remains active. The companies want to

build a 1,328 megawatt dam on the river Tocatins in central Amazonia. In

1994, the Brazilian government included Serra Quebrada on its list of new

hydroelectric projects, totaling over 20,000 megawatts, to be completed by

2004 (Brazilian embassy in Washington, Nov. 17, 1995; American Metal

Market, Aug. 25, 1989; Gazeta Mercantil, July 25, 1989)

The Serra Quebrada project is expected to flood 5% of the lands of the

Apinaji indiginous peoples. (“Indigenous and riverside communities react to

big projects,” Servico Brasileiro de Justica e Paz, Nov. 4, 1999)

In 1999, leaders of six indigenous river-bank dwelling peoples of the

Tocatins and Araguaia declared that the Serra Quebrada project “places the

survival of our children and the future of our nation and our land, already

too small for us, at risk. We Apinaj people have the river as our source,

because our culture is the mother earth, the river, nature, and animals. We

do not accept this dam. We will fight to the death so that our children may

live in peace. We do not accept Serra Quebrada Dam. Our will must be

respected.” (“Letter by leaders of indigenous and river bank communities

regarding the impacts of the Araguaia-Tocantins Hidrovias and large dams,”

distributed by Glenn Switkes, International Rivers Network, Oct. 22, 1999

(see www.irn.org))

Canada

In Quebec, Alcan owns and operates 3,600-megawatts worth of dams that

directly supply power to the company’s smelters. Alcan also has a long-term

agreement to purchase, annually, between one and three billion

kilowatt-hours of electricity from Hydro-Quebec. This supply far exceeds

Alcan’s smelter capacity in Quebec. The company sells surplus energy to

neighboring utilities or customers. (Alcan 10-K, FY1999)

Pechiney is another transnational with a beneficial contract with

Hydro-Quebec. In 1984, according to Roger Moody, Quebec Premier Rene

Levesque and Pechiney “signed a C$1.5M deal, under which Pechiney (with a

50.1% share) gets remarkably cheap power for the new Becancour smelter on

the St. Lawrence river and the Quebecois get both the pollution and the

brunt of the cost.

“Pechiney was offered 40% of the normal industrial electrical rate to run

the smelter for five years, and cheap power for another 15 after that… It

is worth noting that Pechiney began talks on the smelter in 1974 with

former Quebec premier Robert Bourassa who paved the way for the James Bay

hydro-electric scheme – a project of monumental catastrophe for the Cree

and Inuit people of the region.” (From Roger Moody, “Gulliver PUK

(Pechiney-Ugine-Kuhlmann) Dossier” in The Gulliver File – Mines, people and

land: a global battleground, Minewatch, 1992).

Cameroon

In Cameroon, Pechiney’s 90,000 ton Alucam smelter consumes half of the

power produced by the national electrical company’s 387MW Song Loulou dam.

The smelter “was created… to absorb the excess power produced at Cameroon’s

first hydro-electric installation nearby,” reported African Economic

Digest. (African Economic Digest, May 19, 1997)

Ghana

Kaiser’s 200,000 ton Valco smelter in Ghana draws almost one-third (320 of

1000MW) of the power available from the Volta River Authority grid. (Africa

Energy & Mining, Jan. 25, 1995).

Iceland

Norsk Hydro is studying the possibility of building a 240,000 to 480,000

ton smelter in Reydarfjordur. It has signed a preliminary agreement with

the Icelandic government.

According to Mining Annual Review, “Environmentalists, including the

Iceland Nature Conservation Association and the World Wildlife Fund,

expressed anger towards Norsk Hydro over plans for a new greenfield smelter

in Iceland. They claimed the associated power plant will cause the

destruction of wilderness in northeastern Iceland.” (Stephen Johnston,

“Aluminium,” Mining Annual Review, March 2000)

The smelter project depends upon the approval of the Kárahnjúkar 680 to 750

MW hydropower project. This scheme would dam a glacial river and create a

50 to 60 kilometer reservoir. Iceland’s government and Hydro will decide

whether the project will go forward by early 2002. (Home page of

Kárahnjúkar Hydropower Project in Iceland at www.karahnjukar.is/english)

Indonesia

In the 1980s, a consortium of Japanese companies built a 225,000 ton per

year in Asahan, North Sumatra, with backing from the . The Inalum smelter

draws power from three power stations on Lake Toba, the largest lake in

southeast Asia. The Japanese government loaned over billions toward the

smelter/dam project. (See Banks chapter for more details) (Indonesian

Investment Highlights, Aug. 1, 1997; Indonesian

Commercial Newsletter (Feb. 7, 1994).

“During the basic survey (of the project), separate bathrooms were built

for Japanese and Indonesian workers,” wrote Yoko Kitazawa in 1990. “To

secure the land for the project, the Indonesian Army evicted the residents,

and the Indonesian government compensated them. Kuala Tanjung, where the

smelter was built, was a fishing village of about 300 households. There

were about 100 households on the factory site who were compensated for

their losses. However, the other 200 households that were in the area used

for the project’s roads and other infrastructure were not compensated.

Although the 20 households of a village on the site of the power plants

were compensated for their eviction, an aboriginal ethnic minority group of

20,000 people living downstream were not supplied electricity from the

power plants, and some were evicted.” (Yoko Kitazawa, “The Japanese economy

and south-east Asia: the examples of the Asahan aluminum and Kawasaki Steel

Projects,” chapter 3 in Lim Teck Ghee and Mark J. Valencia (eds.), Conflict

over Natural Resources in South-East Asia and the Pacific (United Nations

University Press, Singapore; Oxford University Press, Oxford), 1990.)

The dams, with a combined 606MW of power generating capacity, were built at

the outfall of Lake Toba, where a canyon marks the start of the Asahan

River. “The mighty force of the river has been harnessed by a hydroelectric

project, built with a massive infusion of Japanese aid money that brought

promises of power, light and industrial development for this impoverished

patch of North Sumatra,” reported the Los Angeles Times (June

9, 1992).

“But downstream in the jungle and pine forests of the Asahan Valley,

villages of Batak-minority tribesmen, with their characteristic horned-roof

cottages, are lit only by oil lamps, receiving none of the… electricity

generated by the project. The $2 billion Asahan

hydroelectric and aluminum project – an enterprise of such national

prestige that the Indonesian government engraved the image of one of its

dams on the 100-rupiah note – stands today as an icon of Japan’s awkward

presence in developing Asia,” the Los Angeles Times report continued.

“Because the power generation falls short of expectations,

the aluminum plant takes almost all of the electricity – 95% or more –

leaving nothing for the local community and providing a fraction of the

power promised for prospective industry… ‘Inalum has no benefit for the

people living in the area,’ said Henry Sargih, head of an environmental

watchdog group in nearby Kisara. ‘Just a few Batak villages along the river

have electricity, and only because my group helped them build

micro-hydroelectric generators. The others use oil lamps.'” (ibid)

Lake Toba lies within a volcanic caldera formed 75,000 years ago. “The

modern age of Lake Toba can be dated precisely to 1978, when construction

began on two dams on the Asahan. The Inalum hydroelectric facility on the

Asahan River began supplying energy to an aluminum smelter on the east

coast of Sumatra in 1986,” explains Dr. David Read Barker.

“Operation of the Asahan River power plants is managed by the Asahan

Authority, a quasi-governmental organization based in Jakarta,” Dr. Barker

continues. “Inalum is said to have made multi-million-dollar annual

contributions, over the course of a decade or more, to a conservation fund

under the control of the Asahan Authority and the Ministry of Finance. But

at least until recently, there was no public accountability for the

conservation fund, and very little of it was spent for conservation around

Lake Toba.

“These hydropower projects have already had significant negative

environmental impacts on the Asahan River and on Lake Toba. With much lower

than average rainfall in 1998 and 1999, Inalum is drawing down the lake

level and using almost the entire flow of the Asahan River for power

production, leaving the formerly spectacular falls at Siguragura completely

dry…. Both the people and the environment of Lake Toba have paid a heavy

price for their huge export-oriented, foreign investment-financed natural

resource projects. These are ‘world-class’ examples of unsustainable

development from which almost everyone loses, even the foreign investors,”

concluded the professor. (Dr. David Read Barker, “Environmentally

Sustainable Development of Lake Toba: More public participation is needed

in the Toba-Asahan-Renun ecosystem,” Sustainable Development

International/Monitor International, Lake Toba Online, at

www.sustdev.org/laketoba/0899.shtml)

The Inalum consortium owns the power plants and the surrounding land. Under

its 30 year contract with the Indonesian government, at least 80 percent of

the dams’ electricity flow to the smelter. “By committing to the Asahan

project, the development of northern Sumatra will be controlled by Japan

for as long as 30 years, and the whole area, including its resources and

assets, will be placed under the control of Japanese enterprises, hindering

the independent economic development of Sumatra,” wrote Kitazawa.

(Kitazawa)

Mozambique

The new Mozal smelter in Mozambique draws its power, via lines run by South

African electricity giant Eskom, from the enormous Cahora Bassa dam on the

Zambezi River. . (Leon Pretorius, “Regional integration and development in

Southern Africa: A case study of the MOZAL Project and its implications for

workers,” International Labour Resource and Information Group, March 2000)

The 2,125-megawatt dam, located in western Mozambique, towers 560 feet high

and holds the 150-mile-long Lake Cahora Bassa. At its widest point, the

lake stretches across 19 miles. The dam was built in 1974.

(www.brittanica.com)

According to the Zambezi Society, the dam has “resulted in major

interference to the natural annual flooding regime of the river. Zambezi

Society research shows that as a result, the wetland eco-systems of the

delta have dried out considerably during the last few decades with major

consequences on wetland species such as the Wattled Crane, and the coastal

mangrove.” (Zambezi Society, “Impacts on the Zambezi Delta,” at

www.zamsoc.org/html/news.shtml)

Future expansion at the smelter may lead to the construction of a new 1,600

to 2,500-megawatt dam downstream from Cahora Bassa, at Mepanda Uncua, on

the Zambezi.

(“South African Power Pool: Water Colours the Landscape,” Financial Mail,

June 7, 1996)

Suriname

Alumina refineries, like alumina smelters, require a lot of energy. The

process of extracting aluminum oxide from bauxite ores requires a lot of

heat. In Suriname, Alcoa built a big lake to power its alumina refinery and

small Suralco smelter. According to the U.S. State Department, “Inexpensive

power costs are Suriname’s big advantage in the energy-intensive alumina

and aluminum business. In the 1960s, Alcoa built a $150-million dam for the

production of hydroelectric energy at Afobaka (south of Brokopondo), which

created a 1,550-square kilometer (600 sq. mi.) lake, one of the largest

artificial lakes in the world.” (Bureau of Inter-American Affairs,

“Background Notes: Suriname,” U.S. Department of State, March 1998)

Tajikistan

The Tursunzade aluminum smelter consumes almost 40% of Tajikistan’s

electricity. This power flows from the Nurek dam, completed in 1980. Nurek

is one of the largest hydropower stations in Central Asia and ranks among

the world’s highest, towering 310 meters above the outlet to the Vakhsh

river. (“Highest Dams (World and U.S.)” at npdp.stanford.edu/damhigh.html;

Bakhtior Islamov, “Aral Sea Catastrophe: Case for National, Regional and

International Cooperation,” Slavic Research Center, 1998; Business

Information Service for the Newly Independent States, “Commercial Overview

of Tajikistan: Part 3 – Selected Industry Sectors,” June 1998)

The Vakhsh river flows into the Amu Darya river, which in turn trickles

into the dying Aral Sea. The damming and diversion of water from the basin

are contributing to the Aral Sea’s demise.

Coal

Coal consumption in the aluminum industry is rising, particularly in Asia

and Australia.

Australia

A 345,000 ton per year smelter in Portland, Victoria state, Australia,

draws is power from brown coal deposits owned by the smelter’s joint

venture partners (Alcoa [45%], China International Trust and Investment

Corporation [22.5%], Marubeni [22.5%] and Eastern Aluminum Ltd. [10%]).

These brown coal deposits also supply about 40% of the electricity consumed

at Alcoa’s 180,000 ton smelter in Port Henry, Victoria. (Alcoa 10-K,

FY1999)

China

The 110,000 ton Fushun smelter is located in one of China’s coal centers, a

city of heavy air pollution. In 1993, the Fushun aluminum smelter landed on

a government “blacklist” of 3,000 industrial polluters. (China Daily, Jan.

14, 1996; Xinhua, Nov. 25, 1995; New China news agency, May 25, 1993; ENAL

newsletter, fourth quarter 1999; “Glitches hamper Chinese smelter,”

American Metal Market, Sept 6, 2000)

“Most of China’s smelters are small and consume relatively high amounts of

electricity,” reported the Journal of Commerce in 1986. “The oldest use

20,000 kilowatt hours a ton compared to a world average of 15,500. They

also operate at well below capacity. Fushun… runs at 20 to 40% of its

100,000 metric ton capacity because of electricity shortages.” (Journal of

Commerce, Nov. 7, 1986)

“China has no cheap natural resources of power for either its refineries or

its smelters. About 70% of its electricity is coal-fed, and refineries and

smelters have to compete with other industrial consumers for the available

resources,” reported Aluminium Today in 1997. (Aluminium Today, June 1997)

“The key to having a world-class, world-competitive aluminum smelter is a

reliable and competitive supply of electricity,” Bruce Heister, Alcan’s

executive vice-president for Asia/Pacific told China Economic Review. In

1997, Alcan launched a feasibility study on a proposed CN$1.4 billion,

240,000 ton smelter and power plant in Hejin City, Shanxi Province. “This

problem will be solved through State investment in the power industry,”

said a China official. (China Daily, Nov. 20, 1995; Canada Dept. of Foreign

Affairs and International Trade, “Canadian companies sign $2.3 billion in

commercial deals with Chinese partners,” press release,” November 27, 1997)

In 1997, the Toronto, Ontario, Canada-based China Energy and Power

Corporation (CEPCO) signed an agreement with Guizhou Province to help

develop “one of the largest remaining anthracite deposits in the world, a

project valued at $375 million,” according to the Canadian government. The

coal mining operation would help support the region’s aluminum and other

heavy industries. (Canada Dept. of Foreign Affairs and International Trade)

India

Aluminum smelter operators in India have set up near rich coal fields in

Orissa. The Nalco and Indalco smelters consumed about one-third of the

state’s 2,466 megawatts of coal-fired power. These smelters consume between

3 and 5 billion kilowatt hours of electricity each year. That is enough to

electrify between 310,000 and 515,000 households in the U.S. for another

year; put another way, it is enough power to light up every U.S. home for

more than one day each year. Power requirements will triple if smelter

construction and expansion plans are completed at Essar and the NALCO

smelter in Angul.

(fn: Calculations based upon the following: the manufacture of one

kilogram of aluminum demands 12 to 20 kilowatt hours of electricity.

(“Greenhouse worries for the aluminum industry,:” Energy, Economics and

Climate Change, Jan. 1992). In 1995, Indalco’s Hirakud smelters produced

24,000 metric tons of primary aluminum per year. Nalco’s Angul smelter

produces 218,000 tons. Nalco plans to expand production to 340,000 tons,

and production levels of 400,000 tons are planned at the new Essar smelter.

The average household in the U.S. consumed 9,700 kilowatt hours of

electricity in 1987 (Electric Power Trends, Arthur Andersen Consulting and

Cambridge Energy Research Associates, 1992 edition).)

Owners of Orissa’s aluminum smelters plan to expand their captive

coal-fired power to 1,680 megawatts. Adding in the expected future demand

of expanding and new alumina refineries, this sector’s power demand will

exceed 2,000 MW.

Indalco started burning coal in a 67.5 MW power plant to fuel its Ib Valley

smelter in 1994. The company plans to add 480 megawatts of captive power

capacity to help boost aluminum production. In 1938, Indalco started as a

subsidiary of Alcan, which holds 40 percent of the company’s equity. (Kumal

Bose, “Survey of India,” Financial Times, Nov. 17, 1995; “India:

Construction plans for $2 billion aluminum complex, Indal,” Export Sales

Prospector: Business Opportunities in Asia & the Pacific, Oct. 1, 1995;

“The slow growth of Indian aluminum,” Iron Age New Steel, Oct. 1995, pp.

56-60; “The Board of Indian Aluminum has agreed…,” Economic Times, Jan.

14, 1987)

NALCO’s captive power plant in Angul opened in 1986. The 720MW station

powers a complex that receives alumina from NALCO’s Panchpatmali mining and

refining plant and produces aluminum in a smelter. The company plans to

boost the station’s capacity to 960 megawatts. (Kumal Bose, “Survey of

India,” Financial Times, Nov. 17, 1995; “Indian Bauxite Mine Commissioned,”

Mining Journal, Jan. 3, 1986)

Coal mining has devastated the Ib Valley and Talcher/Angul regions of

Orissa. Villages vanish as heavy machines roll in and cut open the land.

Tens of thousands of Orissans are towns that no longer exist. Over 3,250

more people are slated to be relocated by World Bank-aided expansion of

four Orissa mines, two in Talcher and two in Ib Valley, by the year 2003.

The thunder of operations at the Bharatpur mine in Talcher often exceeds

regulatory limits as coal is extracted for the National Aluminum Company.

Inexorably, the coal-mining juggernaut is transforming Orissa’s

Talcher-Angul and Ib Valley regions into uninhabitable wastelands. For

further information, see the IPS report, “The World Bank’s Juggernaut: The

Coal-Fired Industrial Colonization of India’s State of Orissa”)

United States

In the U.S., Alcoa generates its own power for a smelter in Warrick,

Indiana, from nearby coal reserves. It also owns a lignite mining and

burning operation for its Rockdale, Texas, smelter. The mining of this

lignite has generated considerable opposition from local communities in

central Texas. (Alcoa 10-K, FY1999; see also the Human Rights and Corporate

chapters)

Gas

The Arabian Peninsula hosts two of the world’s five largest smelters. They

draw from nearby gas fields.

Alba in Bahrain operates its own 1,504-megawatt gas-fired power plant that

produces more than half of the country’s electricity. To accommodate

expansion, the plant’s captive gas-fired power plant equipment grew from an

initial 19 turbines with 360 megawatts in generating capacity in 1971 to 24

in 1984, to 33 turbines with 1,504 MW capacity in 1997. In the biggest

expansion, ABB of Switzerland installed six gas turbines in 1992.

(Aluminium Bahrain website, www.aluminiumbahrain.com/intro/al4.htm; Middle

East Business Intelligence, Jan. 5, 1996; AFP, Aug 27, 1995; Moneyclips,

Nov. 21, 1996; Cockerill Mechanical Industries,

www.cmi.be/utility-boilers/refer/alba_en.htm)

In the United Arab Emirates, Dubal operates its own 1,400MW gas-fired power

station. (Dubal website, www.dubal.co.ae)

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