Saving Iceland

The construction of Búðarháls Dam (Búðarhálsvirkjun) in Tungnaá river, will probably be further delayed due to the uncertain future of Landsvirkjun´s financial possibilities. Landsvirkjun is Iceland’s national energy company. The construction was originally supposed to start early next year, after being delayed since 2003. The estimated cost is 25 billion Icelandic krónur.

Because of the collapse of the Icelandic banks and the international financial crisis, most possibilities for foreign loans are now frozen. Landsvirkjun’s long time financement is therefore quite uncertain.

“This mostly impacts new constructions, like Búðarhálsvirkjun” says Þorsteinn Hilmarsson, Landsvirkjun’s PR manager. “It is necessary to insure the future financement before the construction starts.  ”

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Bloomberg – Iceland’s planned economic recovery, based on raising exports of aluminum, may take longer to achieve than the government expects as the global slowdown forces down commodity prices, Fitch Ratings said.

The island is relying on aluminum sales, which have overtaken marine exports as its biggest export, to pull it out of the worst recession in more than half a century. The metal made up about 40 percent of total exports in the first 10 months, compared with 27 percent a year earlier, according to the statistics agency. Still, increased reliance on aluminum comes at a bad time as prices have slumped more than 30 percent since the start of the year.

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Rio Tinto Alcan has taken back it’s plan to enlarge it’s aluminium smelter in Straumsvík, Hafnarfjörður, according to the Icelandic newspaper Fréttablaðið. Alcoa’s planned smelter construction in Bakki (north-Iceland) will also be delayed for the next years. Landsvirkjun (national energy company) and Þeistareykir hf. have agreed to discuss with other interested buyers of geothermal energy in the north of Iceland.

Last Wednesday, Jacynthe Côté, Rio Tinto Alcan’s director, told Össur Skarphéðinsson, the minister of industry, that the company’s planned 40 thousand ton enlargement in Straumsvík would not take place. The enlargement was planned to take place in 2009, inside the company’s already declaired zone. The smelter’s production capacity would have raised from 185 thousand tons to 225 thousand tons.

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Today Alcoa’s shares lowered 7,6%  after the company announced that it would decrease production by 350 thousand tons per year. The cut-down takes place in Alcoa’s smelters in Ferndale, Washington; and Baie Comeau, Quebec. Alcoa runs the Fjarðaál aluminium smelter in Reyðarfjörður, east Iceland. Earlier the company had announced 256 thousand ton cutback in Rockdale, Texas which means that Alcoa’s production downturn is 15%.
Alcoa also announced that a 2,2 million ton enlargement of an aluminium smelter in Wagerup, Australia would be delayed.  The project’s estimated cost was between 3 and 4 million dollars and Alcoa said it will restart when the state of market change. According to experts, there is still redundance of aluminium on the market.

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Landsvirkjun, Iceland’s national energy company, has announced that the tender offer of the dam Búðarhálsvirkjun will be delayed because of the current economical situation. This means that the planned expansion of Rio Tinto Alcan’s aluminium smelter in Straumsvík will also be delayed. Construction of Búðarhálsvirkjun, which was stopped a number of years ago, will dam the Tungnaá River, close to the lake Langisjór.

The construction of Búðarhálsvirkjun is expected to be around 25 billion ISK and the 85 MW dam is supposed to power R.T. Alcan’s increased production in Straumsvík, Hafnarfjörður. R.T. Alcan hopes to increase its production by 40 thousand tons per year without enlarging the smelter. But the company also hopes to enlarge the smelter further, though the people of Hafnarfjörður voted against it in a 2007 referendum, or to construct a new smelter i Thorlakshofn. The dam is also meant to create power for Verne Holdin’s data center to be built in Reykjanesbær. Read More

Haukur Már Helgason, Il Manifesto (Italian daily) – Last April, the government published a report about “Iceland’s image”, written by a committee of leading business people in Iceland. The report summarizes Iceland’s history thus: “For a long time, the nation lived through hardships, but once it achieved freedom and independence it took a leap from being a developing country to becoming one of the richest nations in the world, in less than a century.”

This October, the only growing business sector in Iceland is body guards. It’s booming. For the first time in Iceland’s history, the heads of state, politicians and stock exchange „entrepreneurs“ are surrounded by professional muscle-men. After six to ten years of private ownership, and constant staggering growth, all three major banks in Iceland collapsed in a week, unable to pay their debts. Economically they had become 10 times bigger than Iceland itself. The state, led by the Central bank re-nationalized all three of them, one by one. Read More

Preperation for a new aluminium smelter in Bakki by Húsavík, has been delayed and the test drilling for geothermal power plants around lake Mývatn have been laid off. A memorandum of understanding between Landsvirkjun (Iceland’s national energy company) and Alcoa was not renewed now in the beginning of November as Alcoa is not ready to put more finance in to more drilling.
The Bakki smelter was supposed to be powered by geothermal plants in Þingeyjasýsla, near lake Mývatn. Four billion Krona’s worth of test drillings were scheduled for next year, both in Krafla and Þeistareykir. Alcoa was supposed to pay half of the cost. The decision on the future of the drilling will now be delayed for at least one year, according to a joint announcement by Landsvirkjun, Alcoa and Þeistareykir efh.

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In Guinea, West Africa, people have stopped trains from Compagnie des Bauxites de Guinee (CBG) that move bauxite from mines to the harbors. Bauxite is the major raw material for aluminium production and Guinea is the world’s biggest bauxite exporter. The protests started yesterday morning, October 31st and have been increasing since than.
Protesters have been seeking out officialdom´s houses, robbed them and put fire to many houses. At least one woman died during riots that resulted from the actions. Today, the protesters have managed to stop many  trains interrupting the transport of bauxite, which is the country’s biggest export product. Read More

Andri Snær Magnason, Fréttablaðið – In these turbulent times interested parties use the opportunity to offer us “solutions” and relief. This time around it involves “alleviating all restrictions” and putting public energy companies up as 300 – 400 milliard collateral for two to three new aluminium plants. This is what is on the drawing board when the total debt of OR and LV (the central public energy institutions) are already at a dizzying 550 milliards – mostly because of Alcoa and Norðurál (Century Aluminum). This is why the banks always preached large-scale industry policies – more debt – more joy. It’s down to the price of aluminium to repay these loans, but aluminium prices are plummeting and a level of overproduction has already been reached. The nation believes that the magic term EXPORT EARNINGS is money that will end up in the nation’s pocket. News of export earnings and foreign currency receipts have time and again been directly false and treacherous. A bar chart published in the Morgunblaðið newspaper the 11th of October depicts the aluminium industry as more important than the fishing industry and considerably larger than the tourism industry. But the presentation is exactly as the INTERESTED PARTIES would like to have it portrayed in the media. When Alcoa Fjarðaál claims to export for 70 milliards a year, most Icelanders believe that this is currency that we can use. Read More