Saving Iceland

Jaap Krater, Morgunblaðið, 26-10-2008

In times of economic crisis, it is tempting to embrace new megaprojects such as new power plants and aluminium smelters. But will this realistically improve Iceland’s economic prospects?

Prime minister Geir Haarde recently explained on Stöd 2’s chat show Mannamál that one of the main reasons for the fall of the Krona, was due to the execution of heavy industry projects: the construction of Kárahnjúkar and Alcoa’s smelter in Reyðarfjörður. If more large projects are executed, what will the cost be for the Icelandic taxpayer?

Haarde’s comments were not surprising. Before construction of Kárahnjúkar many economists predicted the negative impact on inflation, foreign debt and the exchange rate of the ISK.

Of course there is some economic benefit from new smelters, but “it is probably outweighed by the developments’ indirect impact on demand, inflation, interest rates and the ISK exchange rate,” stated a report by Glitnir in 2006 on the impact of aluminium expansion in Iceland. The report expected an increase in inflation and a depreciation of the ISK.

“Kárahnjúkar will never make a profit, and the Icelandic taxpayer may well end up subsidising Alcoa,” said the eminent economist Thorsteinn Siglaugsson after publishing another report on the profitability of the Alcoa dam in East Iceland before construction commenced. 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

CONAKRY, GUINEA – At least one person was killed when police in Guinea cleared protesters from a railway carrying bauxite for Russian aluminium company RUSAL, police and industry sources said on Friday the 10th of October. RUSAL, after it’s merger with Glencore, is the largest owner of Century Aluminum, which owns the Grundartangi smelter in Iceland and has been preparing to construct a new smelter at Helguvik, south of Reykjavik. The trains, which have been blocked for five days, had still not restarted, the sources added. Read More

”They are saying in the paper every day, let’s throw up these aluminium smelters because of the economic crisis. This is a bad idea because in a way building smelters is part of the economic crisis. These huge loans that companies take is too big a chunk for the Icelandic economy to pay. We are on an economic roller coaster ride right now,” said Björk in a recent interview with ITN news. Read More

Alcoa, one of the world’s largest aluminum producers, has reported a 52-percent drop in third quarter profits and said it would conserve cash by suspending its stock buyback program and all non-critical capital projects. Alcoa, the first component of the Dow Jones industrial average to report earnings, said results were hurt by sharply lower aluminum prices, weaker demand and a charge from curtailing production at a Texas smelter. The company reported earnings of $268 million, or 33 cents per share, for the three months ended Sept. 30. That compared with $555 million, or 63 cents per share, during the same period last year.

Today, the 11th International Conference on Aluminium Aloys (ICAA) met with angry protests. Activists from the environmentalist network Saving Iceland disrupted the proceedings at the University in Aachen. Early this morning, during one of Rio Tinto Alcan’s lectures, the fire alarms in the building were put on. Later today – again during Rio Tinto Alcan’s lecture – stink bombs were thrown and a high volume rape alarm was put on and suspended out of reach by green and black helium baloons. The auditorium was also strewn with information leaflets. The aim was to call attention to the industry’s singular involvement in ecological destruction in Iceland, as well as on a global scale.

The ICAA conference is a weeklong event held at a different international location every 2 years. This is its first appearance in Germany and as such is run in parallel to the Aluminium trade fair in Essen, about 80 km away. This double event is sure to call together all major players of an industry that still tries to present itself as having a green conscience, and with some success: Alcoa has been included in the Dow Jones Sustainability Index, for the 7th year running. [1] Environmentalists dispute this depiction in the strongest terms.

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Today we received a letter from Denmark:

This morning, big banners were hanged on a building in Copenhagen saying: ,,Aluminium Industry is destroying all major Icelandic rivers!” A big advertisment from Icelandair Airline Company, showing Icelandic rivers, was hanging on this same wall last week.

The construction of the planned new Century aluminium smelter in Helguvík and Alcoa’s smelter in Húsavík, will lead to damming of more glacial rivers and geothermal areas. Today it looks like dams will be built in Þjórsá River, Tungnaá, Skjálfandafljót and Jökulsá á Fjöllum; only for further heavy industry projects.

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Alcoa is clearing Western Australia’s old growth Jarrah forests at an incredible rate. Vast areas of State Forest within an hour’s drive south east of Perth, Western Australia, are being devastated by bauxite mining. Jarrah forests are unique and under threat from many areas. They need to be preserved, not cleared. Alcoa’s present mineral lease covers 4,898 sq km of State forest. The current lease extends from Wundowie to the Preston River, south of Collie, plus a pocket at Julimar near Bindoon. Alcoa’s lease allows them access to the bauxite from 1961 to 2044. The Darling Range bauxite is the lowest grade ore mined on a commercial scale anywhere in the world. At present the royalty Alcoa is required to pay is just 1.65% on the value of alumina sales. Alcoa’s refineries at Kwinana, Pinjarra and Wagerup produce some 16 percent of world demand for alumina. Read More

Olga Galacho, The Herald Sun, Victoria, Australia– Aluminium titan Alcoa may pump more carbon into the state’s lungs than most companies. But it would have Victorians believe they can start breathing easy again after yesterday’s announcement that it has been recognised as a sustainability leader in its home country, the United States. The opening of its first new smelter in 20 years, in Iceland and powered by hydro-electricity, has cemented Alcoa’s position in the Dow Jones Sustainability Index, it seems.

The index tracks the financial prowess of “leading sustainability-driven” companies, and this year is the seventh in a row that the highly energy-intensive Alcoa has been included.

The news might be a relief to those who were considering investing in portable oxygen tanks after the Worldwide Fund for Nature (WWF) last week named and shamed Alcoa as one of 11 power generation owners doing “zero to reduce their emissions”. Read More