In 1969 the first of three aluminium smelters was built in Iceland at Straumsvík, near Hafnafjörður, on the South West side of Reykjavík by Alusuisse (subsequently Rio Tinto-Alcan). In 1998 a second smelter was constructed by Century Aluminum (now a subsidiary of controversial mining giant Glencore), at Hvalfjörður near Reykjavík, and in 2007 the third, run by Alcoa, was completed at Reyðarfjörður in the remotely populated East of the country. The Icelandic Government had been advertising the country’s vast ‘untapped’ hydroelectric and geothermal energy at ‘the lowest prices in Europe’ hoping to attract jobs and industry to boost Iceland’s already very wealthy but somewhat fishing dependent economy. The industry, which would permanently change Iceland’s landscape with mega-dams, heavy industry scale geothermal plants and several kilometer long factories, was promoted by the Icelandic Government and the aluminium companies as ‘good employment for a modern age’. However, ten years after the flagship Alcoa Fjarðaál project was completed, unemployment is higher than it was in 2005, and Iceland’s economy has become dependent on an industry which is vulnerable to commodity cycle slumps and mass job losses. Worse, the price charged for Iceland’s energy is tied to the price of aluminium and analyses of the country’s 2008/9 economic crisis suggest it was exacerbated by the poor terms of Iceland’s late industrialisation. Yet demands for further industrialisation remain, and more than 1000 Icelanders are employed in the aluminium sector.

This article exposes the conditions inside Iceland’s aluminium smelters based on interviews with workers conducted in 2012. The stories from two smelters share correlating accounts of being forced to work in dangerous conditions under extreme pressure, and without adequate safety equipment, leading to serious accidents which are falsely reported by the companies. These shocking allegations require serious attention by the trade unions, Icelandic government and health and safety authorities. This especially in the current context of labour disputes with the aluminium companies, alongside revelations about the same companies’ tax avoidance schemes and profiteering in the country.

Century, Grundartangi:

A former worker from the Century plant at Grundartangi shared his story, though did not want his identity revealed. Steini (not his real name) had worked at the plant for ten years and only quit recently.

“When I went to work there I thought of it as just a job and it was good pay. My experience of it was that they were taking our labour for cheap and making work us like slaves. The only thing we get out of it is our pay.

There were so many accidents that were their fault, not ours. They put so many rules in place, but you have to break the rules to get the work done, which they are pressuring you to do, then if something goes wrong its all your fault.”

Steini described how bonuses are awarded to the shift according to the number of accidents. If you have an accident and are off work you lower your annual bonus. At first the bonuses included smart new bikes, then they were reduced to a restaurant meal, and finally just pizza and beer.

He described the pressure of the job; how workers are pushed to work harder, but as soon as they get quick at the tasks they add more work so they are even more pressured. Akin to Alcoa Fjardaál in the East of Iceland the turnover rate is around 20% with only a handful of people staying for ten years as he had. Similarly, both Alcoa and Century Aluminum have gradually replaced permanent jobs with contract labour. Increasingly the work force was made up of University students on summer jobs which made the work even more risky as this short term labour was less experienced and more prone to accidents.

Shifts were twelve hours long, for 183 hours/month and the working hours were very unsociable, many at night for three days in a row. Steini described how most of the days off in between shifts were used to sleep and recover energy in order to work again. As the plant was expanded and more pots were added the work got harder.

“Everybody who works in Norðurál [Century] hates it. Most of the people are eating anti-depressants and everything. They hate the company, they hate the work but they are afraid to change and be without work.” He said.

He described how many accidents there were at the factory and how the company avoid paying compensation or having to report the severity of the incident;

“I got a broken finger, I burned my feet and once I had a forklift drop on my arm. I never got any compensation from the company and when I went to insurance companies I could get nothing either. The company ask you to come back to work as soon as you can move and just sit at the computer, then they count that as being ‘well’ in their records so it looks like less ‘work days lost’. The insurance companies also see it this way so it it very hard to get compensation.

One guy was doing something very risky and fell into the [molten aluminium] pot up to his knees. He was on morphine for a few weeks. I remember the health and safety guy coming out of a meeting with him smiling. He had admitted that it was all his own fault.”

Industry standards on reporting discriminate between lost time injuries and restricted work injuries, with the former being taken more seriously. Like Alcoa, Glencore claim that the ‘total recordable injury frequency rate’ (TRIFR) is being reduced annually. Nonetheless ten people died at Glencore’s global operations last year according to their 2015 Annual report, and sixteen in 2014.

Scandals over worker’s rights had previously erupted in Iceland during the construction of several mega power projects for the aluminium industry after the conditions of cheap foreign labour were exposed. More than a dozen Chinese and other foreign workers died during the construction of the Kárahnjúkar dam and several Romanian workers suffocated in geothermal pipes on the site of a Reykjavík Energy work camp in Hellisheiði where they worked up to 72 hour weeks.

Steini described the heat of the pot rooms and how restrictive and hot the many types of safety clothing are. As a result most workers chose to use the minimum amount of safety clothing, enabling them to be comfortable and work faster to get bonuses;

“You used as little safety equipment as you could so you could get the job done. When I was in the pot room I just used a paper mask for comfort. I stopped noticing the smell of the gases, then after a period working in the pot lining rooms I went back to the pot room and I really smelt it. It chokes your throat and you know it’s bad.”

‘Pot rooms’ are huge sealed troughs of carbon anodes and aluminium flouride through which up to 320,000 amps of electricity are passed to separate the strongly bonded oxygen from the alumina. Molten aluminium is then ‘tapped’ from the pots and cast into ‘ingots’. The process generates gases including inorganic fluorides, sulphur dioxide, CO2 and perfluorocarbons. Perfluorocarbons (PFCs) are extremely potent greenhouse gases lasting up to 50,000 years in the atmosphere. Tetrafluoromethane, the most common PFC is 6,500 times more potent a greenhouse gas than CO2 and its main global source is from aluminium smelters. Sulphur dioxide and fluoride emissions are acidic and can kill or stunt plant growth. Fluoride emissions also build up in the bones and teeth of animals and humans causing Skeletal Fluorosis, which weakens bones and can lead to bone deformation much like arthritis. Farmers living around Centrury’s smelter in Hvalfjörður claim their sheep and horses have got sick and even died from flouride poisoning.

Saga (not her real name) started work in Century Aluminum’s Grundartangi smelter in 2006, before turning twenty. It was her first big job and her introduction to the working world. She was working twelve hour shifts from the outset, and her work began in the pot rooms. Like Steini she described the fallacy of the health and safety training;

“We were told to wear dust-masks because of all the dangerous and unhealthy gases that come out of the pots, also because of the alumina, fluoride and other pollution in the air. You could always smell it all through the mask though. It was emphasized very heavily not to smoke inside because smoking inside the pot-rooms could result in ‘stone-lungs’ in few years time, which is very common amongst smelter-workers. That is because of all the pollution in there. If you would smoke inside, you were inhaling three times more tar and other stuff straight down to your lungs than if you where smoking outside in more normal surroundings. We also learnt that pregnant women are never allowed to enter the pot-rooms because there is a great risk of foetal harm.”

Saga accused Century of extremely low health and safety standards and condemned the company for making workers “repeatedly risk their lives to keep the smelter operational into the next shift”. She described being given second hand protective clothing in poor condition, and claimed that much of the equipment was in need of repair but was still being used as parts were hard to come by. Like Steini she had witnessed and experienced serious injuries, which had been misreported or disguised by asking workers to come in for office days when injured in order to improve the figures on workdays lost due to injury;

“Working for show” you could call it. I have even heard about workers with broken legs being made to show up for hanging out in the office for a few hours just to keep the records clean. It was easy to pressure people with many passive methods, such as bringing down the accident record which means that their shift doesn’t get a reward like the others that went through the year “without” accidents that caused absents.”

She gave a scathing and detailed account of the pressured and dangerous work environment;

“I witnessed others, and found myself, doing dangerous and life threatening things in the smelter. This was not because we had some kind of death wish or thirst for adrenaline but because there was no other way to finish our daily jobs on time. There is no other choice than to climb on that pot, drive that windowless forklift, work on this broken down and not really functioning crane today, not take proper breaks. Be one doing two people’s jobs, drive too fast because you have to hurry and “fixing” things with all possible and impossible ways so they will last just a little bit longer. I have seen people run away, scared for their lives, and then being forced back because somebody has to take care of what went wrong. I have witnessed what happens after a pot explodes.

Far too many people cram themselves into vehicles, because distances are very long and your main transport is your own two legs on the hard concrete floors. These are all labeled as dangerous things to do in there and in theory they are not “really” allowed. For example climbing on pots –which are very often badly closed and have broken lids or holes. Working alone on a crane, which is strictly speaking never allowed, always to be performed by a team of at least two workers. That’s because of the danger of people passing out from the heat, exhaustion, lack of liquid, rest or food, and a crane-operator could very likely be in a critical place when that happens, like over an open pot. Driving vehicles with the lights not working, broken windows or too filthy windows to actually see out is not allowed. Neither is the operation of any vehicles or cranes without proper training, or vehicles and cranes that are broken or not functioning properly. Having your shoes not closed all the way, having an old helmet, old shoes, no dust-mask, standing under an crane in use, not preheating your tools well enough to touch liquid metal or acid. Working in too much loudness, too much darkness or too much pollution. Not getting the breaks that you are entitled to. Teaching yourself how to do things. Working with a person you don’t trust or yourself being in so bad physical state, like suffering illness, fatigue, hunger, pain, that you don’t even trust yourself.

All of these things, I have had to do to finish my duties, just like everybody else in there (at least back then). Of course I could have said no at any given time, but you don’t really want to do that when you know that it is just going to be somebody else, a co-worker who is in the same shoes as you, that will have to take care of it and finish what you left. Everything has to be finished every day no matter what it takes.”

Alcoa Fjarðaál.

The Alcoa plant in the East of Iceland was heralded by the Icelandic Government as the saviour of the waning Eastern economy and a fantastic employment opportunity which would bring young people from Reykjavík to the East. Officials promised up to 1000 permanent jobs, plus another 2.5 jobs created in other sectors for each job in the aluminium industry. Ten years later, however, few of the promised benefits have come to the region, and overall unemployment in Iceland, which was less than 3% in 2005, reached 7.5% in 2009 and remained at 5% 2015.

Alex Smári drove the Alcoa bus from Stöðvarfjörður to Reydarfjörður from 2006 to 2008. He says people in the East believed work in the smelter would be easy, with good pay and plenty of time off, but the reality had turned out to be very different. He described workers returning from their shifts as ‘like corpses’ in the bus, and claims many quit their jobs after a short time. In his opinion the East has not become more thriving as the politicians and company promised, to the contrary “Fjarðabyggd is like a labour camp”.

One worker in the Alcoa Fjarðaál smelter was willing to speak to me though he did not want to be named. Bergur (not his real name) noted the high turnover of workers with many leaving after just a year or two. He claimed around 100 of the 450 employees in the smelter were foreign, suggesting that many in the East simply don’t want to work there. There are only a handful of people who have remained in employment with the company since the smelter opened in 2007.

“Out of twenty people on my shift that started working there five years ago there are only two left. Everyone else quit because they didn’t like working there. The turnover was 20% last year. 20% with all the unemployment in Iceland! It really tells a story.”

Like the Century workers he described how the managers push the workers to work as fast and hard as possible during the shift. However, once they have learnt to work faster the job load simply goes up again.

“The Alcoa building system is devised to suck every bit of what you have. You start with 100 people doing 100 people’s jobs and then you push everyone until 90 people are doing 100 people’s jobs, and then there are 60 and then 50. At Alcoa, everyone gets into the situation where he is working the whole shift doing his absolute best and still walking away with a kick in the butt for not finishing something or other.”

Bergur claimed company people had told them in a meeting that Fjarðaál is the most dangerous of Alcoa’s smelters in Europe. Shifts are twelve hours long and often at night and employees are expected to work 176 hours a month compared with only 142 hours on eight hour shifts at Rio Tinto’s Straumsvík plant near Reykjavík.

There is also a bonus system that rewards the workers for the quantity and quality of aluminium they produce. This means workers effectively get fined when a machine breaks or poor quality alumina is delivered, even though this is out of their control.

“Everything is connected to the bonus. If a crane breaks down and it holds off production it lowers the bonus for everyone. Now we have low quality alumina coming in which means we get through more anodes and that also lowers the bonus. When this situation is going on the workload gets substantially higher, so not only are you working a lot more, but you know you are getting less pay.”

As a result of this pressure Bergur claims the few days off between shifts are usually spent simply sleeping and recovering before work starts again. Contrary to Alcoa’s claims that the workplace is ‘family friendly’ he claims Alcoa Fjarðaál has become known locally as ‘the divorce factory’ since so many couples have separated due to the unsociable hours which affect their relationship.

Bergur also spoke about Alcoa’s use of contract labour, and its effect on worker’s rights and the strength of the unions:

“There are two groups of people working at Alcoa: There are Alcoa employees and there are contractors who are not part of Alcoa. We are doing the same work but they are not members of the unions. By having these two groups they can control the employees more easily and the unity within the factory will be less.”

“We have to live!”

Former Prime Minister of Iceland Halldór Ásgrímsson famously promoted the Alcoa Fjardaál project by proclaiming “we have to live!”. But what kind of livelihood have Icelanders been forced to accept? All of the workers expressed feeling misled by the government and the aluminium companies.

Saga claimed that prospective workers were denied information about the health and safety risks;

“Our government has been been eagerly promoting smelters as very agreeable and good working places for years. Smelters are being promoted in places where people don’t know them, don’t know the dangers, the threats and the health risks, and don’t feel they have a choice. How can a place where you are constantly breathing heavy pollution – alumina, fluoride and dangerous gases – that make you feel like your lungs took a severe beating every time you open up a pot, be a healthy and agreeable working place?”

Bergur analysed the Icelandic government’s claim that the smelter would reverse the East to West migration trend:

“The people who have quit there, who have returned to Reykjavik or whatever…I call those the sensible people. They have moved to the East to work for Alcoa, maybe both man and woman. They come with high hopes and determination to make this work. After working for a year, or a year and a half, the pressure which goes on at the shift becomes too much, and when they realise this is the system and will not change, that they are never going to be in a situation where you are working a relatively easy shift and going home not so tired….this is not going to happen. When they realise that, they quit and get out.”

Steini also questioned the government’s promotion of aluminium smelting as a good employment for Icelanders;

“People in Iceland just wanted jobs, but not necessarily this kind of factory. The question is who put this idea in our minds that the only way to get a job is by having an aluminium smelter?”

Of course, Icelandic smelter workers are not alone in their experience of pollution and dangerous working conditions, and there is much potential to link up with global struggles for workers rights. At Hindalco’s Hirakud aluminium smelter in Odisha, India, workers are taking the company to court asking why they were not told what they were breathing in. They were being moved from the pot-room every four years, told that this was due to the potential health effects of working in such high heats, but the effects of breathing in highly toxic fumes were never mentioned. They believe the company was deliberately concealing the dangers while trying to minimise them.

On top of poor working conditions, employment in the aluminium industry is innately insecure, as it is vulnerable to the peaks and troughs of the commodities supercycle. The recent commodities downturn led to the demise of the UK steel industry, including the likely closure of Port Talbot steel, cutting 11,000 jobs. The workers have already lost part of their pensions, a common phenomenon in the metals industry, as the owners – Tata Steel – claim they cannot afford to pay the full amounts. The rusting skeleton of Century Aluminum’s Helguvík smelter, abandoned midway through construction in 2009, stands as a stark reminder of the false promises and volatility of this industry.

Iceland’s aluminium workers cannot expect their employers, experts in anti-unionising and misleading PR, to protect their rights. Instead, they must properly inform themselves of the risks to their health and security, and contribute to the debate on what constitutes ‘a nice place to work’ in a modern Iceland.

Sources:

Cooke, K. and Gould, M.H. 1991. The health effects of aluminium, a review. The Journal of the Royal Society for the Promotion of Health. 111, 163-8.
Aslam M, Khalil K, Rasmussen RA, et al. (October 2003). “Atmospheric perfluorocarbons”. Environ. Sci. Technol. 37 (19): 4358–61.
Dr R. Liteplo and Ms R. Gomes, 2002, ‘Environmental Health Criteria for Fluorides’. International Programme on Chemical Safety, UNEP. http://www.inchem.org/documents/ehc/ehc/…

Indriði H. Þorláksson, economist and former tax director

Frumvinnsla áls – Lýsing á hinni mengandi og orkufreku framleiðslu álbarra

First published in Grapevine. Based on a 2010 article entitled “Í landi hinna klikkuðu karlmanna.” (“In the Land of the Mad Men”). Translated in part by Haukur S. Magnússon.

After the election, we see the old parties of economic mass destruction are coming back to power. Giving enormous promises of easy money to be wrestled from evil vulture funds, debt relief and tax reduction, The Progressive Party doubled in size after a few years of hardship. There is a jolly good feeling between the two young new leaders of a brave new Iceland, and when a radio host called them up and offered to play them a request, they asked for Duran Duran’s ‘Wild Boys.’ I Googled the lyrics, not quite remembering the lines, and got a nice chill down my back:

Wild boys fallen far from glory
Reckless and so hungered
On the razors edge you trail
Because there’s murder by the roadside
In a sore afraid new world

They tried to break us,
Looks like they’ll try again

Sounds quite grim. This, coupled with the new government’s announcement that it would be effectively dismantling the Ministry for the Environment and Natural Resources and that there will be no Minister for the Environment, gave me a strange flashback feeling. I decided to revisit the state of mind that we used to call normal in 2006. When the economic policy, the energy policy, the expansion of our towns, the mortgages on our homes—almost all aspects of our daily life had become totally mad. This is not my own diagnosis; if you search the homepage of the IMF for the phrase “Collective Madness,” you’ll find this:

“’Iceland, in the decade and a half leading up to the crisis, was an example of collective madness,’ said Willem Buiter, chief economist at Citigroup, a remark that elicited spontaneous applause from the more than 300 participants, many of them Icelandic policymakers, academics, and members of the public.”

In our daily lives, we usually sense what is normal and what is over the top. Sometimes the discourse will blind us; PR and propaganda can create a kind of newspeak. It can be a good exercise to try to talk about things in a foreign language, to view them in a new light. As an Icelander, you could for instance try to tell someone from another country that Iceland’s government sold one state bank and received payment in the form of a loan from another state bank—and vice versa. That the state banks were thereby handed to men that were closely connected to the then-reigning political parties. The manager of one of the parties became head of one of the banks’ board of directors, while the other party’s former Minister of Trade belonged to the group that was given the other bank. That man had access to every bit of inside information about the bank’s standing.

In the meantime, this former Minister of Trade became Central Bank Manager. He went to the US and made Alcoa an offer that the company could not refuse. He had thus set in motion the largest-scale construction project in Icelandic history, greatly increasing economic activity in Iceland—a grand boon for the bank he just finished selling to himself.

If you tell this story in a foreign language, people shake their heads. They gape in disbelief. They use words like “corruption” and “mafia.” They exclaim, full of disbelief and even disappointment, “no, not in Scandinavia!”

THE ACCEPTED INSANITY

It is insane to expand a banking system by tenfold in eight years. We know that now. It isn’t technically possible to grow all the knowledge and experience needed to build up and manage such a contraption in such a short time. Not even by shoving an entire generation through business school. It is impossible.

But the megalomania was not just confined to the banking sector. Energy production in Iceland was doubled from 2002–2007, when the huge Kárahnjúkar dam was built in the eastern part of the highlands—to serve one single Alcoa smelting plant. The energy it produces, about 650MW annually, is enough to power a city of one million people. Doubling the energy production in a developed country over a five-year period is not only unheard of, but it would also be considered ridiculous in all of our neighbouring nations. Most industrialised states increase their energy production by around 2–3% annually. Doubling it would be unthinkable. It has been proven again and again that gargantuan investments generally destroy more than they create.

In Iceland, however, the goal was to double the nation’s energy production AGAIN by building aluminium smelters in Helguvík, Húsavík and enlarging the Straumsvík smelter by more than threefold. The period of insanity was to be succeeded by a total and complete madness. This was to be funded by 4–5 billion dollar 100% loans to Icelandic energy companies from foreign banks. Nearly 20,000 dollars for every single Icelander—every loan directly connected to aluminium prices and secret energy prices. The media reported this as your everyday act of government job-creation. It was regarded extremist to ask critical questions. Many regarded it unthinkable for the survival of the nation NOT to do this.

Now we know that we did not only sacrifice our nature for the economy, we sacrificed nature and the economy. Again, we do not have to seek out the websites of activists or environmental groups for this information. We just go to the IMF reports:

“Executive Directors observed that the Icelandic economy is at a difficult turning point. The long economic expansion, initiated by aluminium sector investments, sustained by a boom in private consumption, and fuelled by ready access to external financing, contributed to a build-up of macroeconomic imbalances and financial vulnerabilities.”

COCAINE IN THE HOT WATER?

The madness made itself clear in the business of geothermal energy, making itself known in the form of financial troubles and enormous debt of the energy companies. The geothermal field had enjoyed an even and stable development since it got started in the early twentieth century. During the great depression, the City of Reykjavík created the world’s largest geothermal heating system by pumping hot ground water into the homes in the city. Later they started producing a small amount of electricity by harnessing steam through turbines. But one day it seemed as if someone drilled into a cocaine vein. Out of the twenty high temperature geothermal areas in Iceland, plans suddenly emerged to harness sixteen right away, all for the sake of the aluminium industry. The energy companies applied for permits to do research drilling in most of the remaining ones. In an instant, the field went from a very slow, conservative development to becoming a geothermal wild west.

In the south, a major development of all the geothermal areas from the Reykjanes Peninsula to Þingvellir was planned—a chain of power plants in pristine and delicate areas—to serve a Century Aluminium smelter in Helguvík. But the geothermal plants would not have sufficed—the remaining power would be squeezed from hydro electricity in the Þjórsá river—potentially threatening the greatest stock of North Atlantic Salmon in Iceland—and up in the highlands—threatening the Pink-footed Geese of Þjórsárver.

So what was referred to as “moderate development” when the parties of The Wild Boys were last in charge of our energy sector? Their plans went like this: A new Alcoa smelter in the east, a new Alcoa smelter in Húsavík, a new Rio Tinto Straumsvík smelter beside the old one, an expansion of the Century smelter in Hvalfjörður and a new Century smelter in Helguvík. Amounting to a total of 1.4 million tons of aluminium. Each one of them needing energy that could serve one million people in their daily lives. Each one of them demanding sacrifice of great natural wonders, wild rivers and pristine geothermal areas.

How did they fare? The Alcoa Smelter in the East has been built, with the destruction of two glacial rivers, Lagarfljót and 50 km2 of highland beauty. The expansion of the Rio Tinto smelter was stopped and the Húsavík smelter did not go through, however, a skeleton of the Helguvík smelter is currently rising—with no power in sight.

The Alcoa smelter in the north would have required all the harnessable power in the northern part of Iceland, only excluding Jökulsá á Fjöllum. Close to Mývatn, we have the Krafla geothermal area. After a long and often struggling forty-year development period, the available power from the area reached about 60 MW. Now, the goal was suddenly to quadruple the area’s energy production—expanding it by 150 MW in just a few years, and harnessing the beautiful Þeistareykir area to its utmost capacity—up to 200 MW. They also had their eyes set on Bjarnarflag and Gjástykki, delicate areas that should be regarded as national heritage sites. All this was to serve a new Alcoa factory they wanted to build close to Húsavík, the famous whale watching and fishing village in North Iceland. Having done all that, however, the energy production would still not reach the 600 MW that Alcoa really needed—the harnessing of two more glacial rivers would have been necessary: Skjálfandafljót with the waterfall Aldeyjarfoss and the glacial rivers running from Hofsjökull.

The interesting thing is not how crazy this seems in hindsight, how extreme, how mad this reality was — but that outsiders did not see this plan as collective madness. The scheme was praised in international media as being a progressive plan for “clean” energy, and we still have members of parliament that regret that this did not happen. And the fact that our labour unions and politicians have referred to this when they say that “nothing is happening” in terms of business and job creation in Iceland. Or that they refer to this when they say “we have still only harnessed X% of our energy.” They are talking about this as a normal feasible future state of Iceland.

Why are people so crazy? Is it or was it a good idea to indebt the nation by a total of 5 billion dollars to place two Alcoa smelting plants in the same constituency? To surround the Faxaflói bay, where 70% of Iceland’s population resides, with three smelters? The answer is simple: The mad men still think so. One of the new Independence Party MPs, Brynjar Níelsson, has no regrets for the death of the river Lagarfljót in service of Alcoa. He said it was apparent that protectionists loved a few fish more than they did people.

But you can still ask like a fool: Did Iceland really have enough accumulated knowledge and manpower to multiply all our energy companies in the space of ten years? Was there never a doubt in the geologist’s mind when he found himself in a magical place such as the Torfajökull area above Landmannalaugar, Kerlingarfjöll or the steam areas around Reykjavík? Did they really want to do drill, pipe and harness EVERYTHING, right away? And do it all for the sake of a single industry—the aluminium industry. Did it have to be the role of a marginalised group of a few activists to use their spare time to criticise this?

OF “REYKJAVÍK” KNOWLEDGE

I was once at a meeting in Húsavík, where I screened my film, ‘Dreamland.’ At that meeting, the local geothermal plant manager claimed he could easily harness 1,000 MW out of geothermal areas north of Mývatn. I asked if it wasn’t correct that scientists are concerned about overexploitation of the country’s geothermal areas. The scientists’ criticisms were quickly blown off the table as “Reykjavík knowledge,” and in that instant every alarm bell went off.

Now we understand that power is not as plenty as the hype promised, and now most Icelanders understand that energy production on the banks of Lake Mývatn in Bjarnarflag might just jeopardise the ecosystem in that wonderful lake. But you wonder if the people developing our most delicate areas possess good enough judgement to work close to natural wonders. It seems like they are ready to take the risk, to see what happens.

I found an interview with the aforementioned plant manager from 2002. At that time, he had drilled a big hole for 170 million ISK because a Russian company potentially wanted to build an aluminium oxide factory and a giant aluminium plant in Húsavík.

If one sets aside minor ethical facts, such as the Russian aluminium industry being run by the mafia at that time, one is still left to ponder the fact that almost no industry in the world produces as much and as toxic waste as aluminium oxide production (or alumina, as it is called). Those that followed the horrible events when a red slush toxic lake in Hungary broke should know what comes with an alumina refinery. But this local hard-working man had spent more than one and a half million dollars looking into the feasibility of such a plant in Húsavík. Things have been so good here that people think they are untouchable.

Even though the companies engage in malevolent practices in other countries, they would never do that here. Sure.

THE HOLY LOCAL

It seems that for some reason the most unbelievable hogwash gets promulgated without any critical thought. We enter a boom after boom and never learn from mistakes. We can look further back in history to see how madness is mixed up with ambition, how extreme and unrealistic views of the future are presented and taken seriously.

In an edition of Morgunblaðið from March 1987, one can read a prediction of the impending evolution of local fur farming until 1996. At that time, thirty fur farms were operated in Iceland. Morgunblaðið cites a report that predicts Iceland will foster 600 mink farms by 1996. They assume a twenty-fold growth in ten years, as if nothing were more natural. A month later, this optimistic story ran: “The mink stock will double this year.” Only three years later, in April of 1990, we find this dramatic headline in a copy of Morgunblaðið: “Fur farming: The industry is on its last legs. Many farmers on the edge of despair.”

In this country everything is considered normal if a “local” wants it. Nothing in Iceland is as crazy as the holy local is when he wants a smelter or an oil refinery, no matter how large or out of proportion. He has the sacred right to that, especially if he uses “job creation” as an argument. Numbers that would be considered sizeable in large nation’s economic statistics, energy resources and infrastructure that are earmarked by the world’s superpowers as being “strategically important” are subject to “the will of the locals.” The nation’s energy resources and nature are in the hands of a smattering of district councils that have no staff and no expertise while the majority of Icelanders that reside in the capital area seem by default “local” to nowhere.

So, the locals of the east destroyed their highlands, the locals of the south want to dam the wonders of the Skaftá area, the lower part of the Þjórsá river and the locals of the southwest are ready to harness almost every single geothermal area. And this seems to be a global problem—rural communities losing their youth and talents to the cities of the world are willing to sell off their forests, their mountains, their rivers and valleys for some hope of development and a future.

It is strange to see that one of the major driving forces behind this development resides within our labour leaders, who have been demanding extreme leverage and risk on behalf of public energy companies. If there should be a hesitation in the risk taking, the responsible parties are “dragging their feet.” The labour unions’ “stability agreement” with the former government entails that “every obstacle be removed” that somehow hinders the proposed Helguvík aluminium plant. It is exactly this kind of thinking that lead to almost 200 foreign workers being left disabled and unemployable as a result of working on building the Kárahnjúkar dam. Conditions of workers were severely compromised to make the dam construction process cheap enough. Every obstacle was removed to provide Alcoa with energy prices that save them 200 million USD annually. That amounts to the combined yearly wages of more than 10,000 teachers.

The noble cause of creating jobs becomes quite grim if it involves harming the work capacity of so many. The PR people talk about a ‘multiplication effect’ of every job in a smelter—but wouldn’t it be polite to subtract the disabled workers? People will go so far to satisfy their prince charming that they behave like the ugly stepsister in the fairy tale, cutting their toes off to fit the glass shoe.

HOUSE OF CARDS

The Helguvík aluminium smelter close to Keflavík Airport is a symbol of how poorly run Iceland can be; the Helguvík aluminium smelter is already being built, even though nobody knows where we can scramble together its required 600 MW of energy. The Helguvík smelter is a symbol of how weak the nation’s administration can be, of how shattered professionalism and long-term thinking can become, and how the media all but encourages unlawful activities in their headlines, if job creation is at stake. They started to build the smelter without access to power sources, and without the necessary power lines planned or agreed upon by landowners.

Why start building, then? Because in 2006, the Wild Boys were in power, showing their ambition and “competence” by signing long term sales agreements for cheap energy before the energy sites had been researched, planned or developed. Now Reykjavík Energy and HS Orka are bound by agreements that neither company wants to fulfil due to foreseeable losses from selling the energy below its production costs.

The sharks were very aware that they were taking advantage of a country with mad politicians in a rare period in our history. When they were willing to sell almost everything, anything, anywhere to anyone. In a remarkable investor report called: “Harnessing unlimited power and profit from the world’s most progressive energy program,” an analyst made this great comment:

“It works out great for Iceland, too. It is very cheap for Iceland to deliver power to Century. The Icelandic power companies will make extraordinary profits on that power if aluminium prices stay strong. And if aluminium prices weaken, Iceland is not biting the hand that feeds it.”

This is how politicians build an elaborate house of cards that combine risk, debt and commitment that collapses if only one of the cards falls. Thus, the hands of future city governments have been tied and an insane construction binge in important areas has been commenced, all to benefit one company that’s lacking most of the needed permits.

Could anyone recount the details of the Century Aluminium Helguvík Smelter project at an international conference without being booed off the stage as a fraud? At an aluminium conference, however, such a man would actually bring more lust than an exotic dancer.

Despite being in the hands of extreme capitalists, the labour movement has not called for professionalism or long-term thinking in energy affairs. It simply demands that “every obstacle be removed.” Get the trucks rolling immediately.

In 2006 we were in the middle of a revolution, but the Wild Boys did not call themselves “The Aluminium Revolutionary Front”—they defined themselves as the norm, even though their scale was insane. If they were criticised, they started thinking of themselves as persecuted. Warlords are always persecuted moderates when they’re merely conquering neighbouring nations in the name of peace.

THE CORE OF THE PROBLEM

Throughout the years, polls have shown that a large part of Icelandic males aged 40–70 have been in favour of the collective insanity seen in the energy policy of 2006. The biggest problem seems to be with male voters of The Independence Party, where a vast majority has even considered the most extreme energy policy as the sole basis for the continued survival of Icelanders. That explains the great emotional attachment they have to dams and smelters. To secure their survival, the majority of them wants to cut back on our environmental regulations, and they have no standards whatsoever on the ethical background of the corporations coming to Iceland.

Therein lies Iceland’s most serious political ill. If everything were normal, our males would be conservative, moderate, aversive to risk, frugal, orderly and even a bit boring. This is an important group of people in every society. It contains a lot of average household fathers; it contains pillars of society, company directors, influentials, MPs and even journalists and editors. These are men that have the power to define what is normal and what is abnormal and/or excessive.

OF RESPONSIBLE PUNKS AND SURREALISTS

It is harmful for communities when a critical mass of their important males starts adhering to revolutionary and completely reckless ideas, adopting a blind belief in them. This group is not fit for governing anything while the situation lasts, and it is therefore no coincidence that the city of Reykjavík is now governed by the punkers and surrealists of the Best Party. A moderate mixture of surrealism and punk rock is a down to Earth, conservative and responsible policy when compared to the delusions and anarchy of the crazed men. They have proved very moderate and responsible, and have now moved the policy of Reykjavík Energy, Reykjavík’s energy company, into a more sustainable and modest direction. And the Left Green Social Democrat government did the same with Landsvirkjun, the national energy company.

Those that are worst off in this group of mad men share a mutual admiration for Einar Benediktsson (1863-1945). The Icelandic National Myth is perhaps best embodied in the figure Einar Ben, our poet of progress. His most recent biography gives a good picture of the kind of man he was and the impulses that motivated his actions:

What drives Einar Benediktsson on to undertake this long journey […] is his unshakeable belief in his own abilities to be of use to his impoverished fatherland in countries abroad. His dream is to furnish the money that will transform Iceland into a modern country, with towns, factories, railways, roads, harbours and large-scale farms. He carries nothing with him except his belief in himself…

Einar Benediktsson had great dreams for the future of Iceland, replete with hydroelectric dams, factories and railways. While his generation on both sides of the Atlantic saw their dreams become a reality, and sometimes a nightmare, Einar was to be disappointed in all his great hopes and ambitions. Henry Ford was born a year before Einar Benediktsson, and Sam Eyde, the founder of Norway’s Norsk Hydro was born three years after him. But Iceland failed to industrialize in the way Einar envisaged. Whether Iceland was fortunate or unfortunate to have missed out on the Industrial Revolution is something we can argue over. But the failure of Einar’s dreams left an unfilled space in the Icelandic soul. Iceland’s wealth came from fishing, but Einar’s ideas still hovered in the air, leaving a sense of a task left unfulfilled—the unfinished Icelandic dream. The Americans could move on from Ford to Gates. The Icelanders were still lacking a Ford.

One of the first bubbles in Iceland happened when businesspeople travelled the country buying rights to harness waterfalls in the beginning of the 20th century. Einar Ben had the Norwegian engineer Sætersemoen draw up a row of power plants spanning the entirety of Þjórsá. The drawings of the proposed power plants look magnificent and enticing and would without doubt be considered among Iceland’s most beautiful buildings had they been constructed. But how realistic were the plans? They had planned for harnessing Þjórsá to produce 600–800 MW—in 1918, nota bene. This does not include the rest of the water rights these men had secured for themselves, including Dettifoss and Gullfoss. In comparison one could note that today, one hundred years later, the City of Reykjavík uses 200 MW—on Christmas Eve, with every electric appliance running at full steam.

What did Einar plan on doing with all this energy in 1918? Aluminium production was barely on the horizon as a feasible industry, and televisions and freezers were but distant dreams. What were they planning to do with all the power? Produce fertiliser? The Gufunes fertiliser plant used around 20 MW when it was running at its peak. Who was to use all the energy and pay for the series of power plants? The answer is likely simple: No one. No one in the world could have found use for this energy.

Of course Einar could easily have harnessed a small stream to light up a small village, maybe even a cowshed or two. But there is no glory in that. The act would not appease the deranged men’s need for conquest and magnitude. There’s much more spunk, gusto and vigour in lining all of Þjórsá with power plants, even if the energy produced is way beyond what the nation can use one hundred years later. To this day, a lot of people think that Iceland’s government at that time was backwards, afraid of foreigners and somehow prevented the founding of a great and profitable company and “foreign investment.” But it’s enough to look at the numbers to see that the whole thing was a sham.

It’s so weird to think that, ever since, a certain group of Icelandic males have harboured a strange sort of national grief. It’s as if Einar’s unrealistic ideas have been haunting later generations of Icelanders. Not as fantasy, but as real, attainable goals or lost opportunities: “The dreams of our turn of the century poets have finally come true.” Remarked former PM Geir Haarde as he signed a deal with Alcoa in 2002. Yes, finally, the nation was dragged into a century old illusion.

THE MAD MEN VS. THE WISE GIRLS

The mob seems tolerate nothing worse than young, educated women who that use words like “professional” or “process.” Even if aluminium production in Iceland has been tripled over the last ten years, a lot of the crazy guys think that Iceland’s economic problems stem first and foremost from a lack of aluminium smelters.

Supporters of a new Century Aluminium smelter in Helguvík spent millions in advertisements campaigning against departing Minister for the Environment Svandís Svavarsdóttir, who delayed the building process with demands of a sober overview of the energy demand and environmental impact. The blogosphere went wild when Left-Green MP Kolbrún Halldórsdóttir spoke up against deep-sea oil drilling in Icelandic waters. One sensed a lynch mob in the making as former-Minister for the Environment Þórunn Sveinbjarnardóttir met with locals in Húsavík advocating for a full environmental impact assessment for a new Alcoa smelter—the audience was only lacking the pitchforks. The decline of The Independence Party is very evident in the fact that Katrín Fjeldsted lost her seat in parliament. She is a well-educated, intelligent and logical doctor and the only party MP who questioned the insanity. Every obstacle shall be pushed out of the way.

Icelanders harvest 1% of the world’s fish. We receive more tourists per capita than most nations. Iceland has harnessed five times the amount of energy that the nation needs to function, and we currently operate three aluminium smelters. But we have ALREADY harnessed five times more energy than our neighbouring countries. We are already an energy superpower—if everything were normal, such an investment should yield a fair bit of profit to the nation, if we don’t blow the proceeds and resources in another round of debt. But the discourse is so crazy. People act as if “NOTHING IS PERMITTED” when the energy production is already five times more than the nation can consume. Of the energy we produce, 90% already goes to smelters.

We already have everything a modern society needs. We just need to tend to what we have already built, to reap some profit from the power plants we have already constructed and take better care of what we’re currently fishing. People get insecure when interest groups moan: “Who will support us in the future?!?” as if Iceland is a country without foundations. The fear that is purposely spread is resulting in Iceland acting like a man that demands radiotherapy, chemotherapy and surgery to fix his headache. The truth is that the treatment will never cure him—but it might kill him. He will in the best-case scenario grow addicted to the drugs.

THEY TRIED TO BREAK US…

We are a small community and we need peace and room to work. That Björk should need to take time off work to fight the insanity is just a small example of the disturbance that thousands of Icelanders suffer every day because of this crazy nonsense. Living here will become unbearable if something like the reckless policy from 2006 goes full speed again. It is maddening that we cannot seem to leave our most beautiful areas alone. We are a small community where co-dependency is the norm and people are polite.

The new leaders are young and nice guys; Sigmundur Davíð loves old buildings and has good ideas for city planning. But behind them is a crowd of mad men, “fallen far from glory, reckless and so hungered.” Were four years from power enough to sober up the mentality in terms of the energy policy? What will come out of the “rethinking” of the Energy Master Plan? Will we be strapped up into another rollercoaster, just to take another ride of boom and bust? “They tried to break us. Will they try again?”

Treated as the Master Plan’s trash can, the unique geothermal areas on the Reykjanes peninsula get a particularly harsh deal. Out of the peninsula’s nineteen energy potential areas, only three are listed for protection while seven are set for exploitation in addition to the four that have already been harnessed. Five additional areas are kept pending, more likely than not to be set for exploitation later. Existing plans for energy production outline how the peninsula is set to be turned into a single and continuous industrial zone, and the power companies seem to be simply waiting for a further green light to exploit the area. All this in order to further feed the aluminium industry.

In this overview we take a look at nine of these nineteen areas — those from the west of Gráuhnúkar — of which only one is to be protected according to the Master Plan. We look at the plans on the drawing board, their current status, the key companies involved, the already existing power plants, the threatened areas, and at last but not least: possible targets for direct action. On the map below, these areas are marked from number one to nine. Obviously the map only shows the areas at stake and the reader has to use her or his imagination to fill in power lines and the rest of the necessary infrastructure. Most of the following photos are taken by Ellert Grétarsson — click here and here for more of his photos.

Unmasking the Geothermal Myth

In a world increasingly concerned about carbon emissions,” Jaap Krater and Miriam Rose state, “the clean image of hydroelectric and geothermal energy is appealing.” This has certainly been the case in Iceland, where the highly polluting aluminium industry has attempted to re-model their dirty image by powering their production with so-called ‘green energy’. However, this greenwashing has not entirely worked as the eastern highland’s Kárahnjúkar dams — fully built in 2007 to power an Alcoa aluminium smelter in Reyðarfjörður — have proven to be as ecologically and economically disastrous as environmentalists warned. As a result the aluminium companies have now mostly moved from hydro and instead are increasingly focussing on geothermal energy.

One of the companies is Norðurál, subsidiary of Century Aluminum, who claim that their planned 360 thousand ton aluminium smelter in Helguvík will be one the world’s most environmentally friendly smelters. Why so? Because according to the company, the 625 MW of electricity required to run a smelter of this size is supposed to come only from the peninsula’s geothermal energy sources. However, environmentalists and scientists consider the estimation of geothermal energy believed to be extractable from the peninsula to be highly over-estimated, and claim that additional hydro power plants would be needed to power the smelter. This would most likely come from the much-debated and now temporarily halted dams in the river of lower Þjórsá.

Last year, unable to access the necessary geothermal energy in north Iceland, aluminium company Alcoa was forced to withdraw their six years long plan to build a geothermal powered smelter at Bakki, Húsavík. We predict that if Century cannot force through the damming of lower Þjórsá a similar situation awaits Helguvík. But that has not stopped the project’s interested parties, who still state confidently that the smelter will be built, and powered with geothermal energy.

Regardless of the need for additional hydro power, the exploitation of the Reykjanes peninsula’s geothermal areas spells the end of this magnificent nature of the peninsula as we know it. Test drilling and boreholes, endless roads and power lines, power plants and other infrastructure; all this would turn the Reykjanes peninsula — this unique land of natural volcanic wonders, which many scientists and environmentalists believe to be one of the world’s best options for creating a giant volcano park with educational and tourism-related opportunities — into a large industrial zone.

But these are only the very visible impacts of the planned large-scale exploitation. Other environmental catastrophes are in fact inevitable with large scale geothermal industry, becoming increasingly visible to the public as the green reputation of geothermal energy slowly decreases.

Two of Saving Iceland’s spokespersons — ecological economist Jaap Krater and geologist Miriam Rose — have thoroughly analysed the development of Iceland’s geothermal potential in a chapter, written on behalf of Saving Iceland, and recently published in a book on the current energy crisis. While we strongly recommend the piece for further reading about the geothermal myths, a few of their points will be addressed here, with relevance to recent events in Iceland.

Firstly, geothermal gases are rich in a variety of harmful elements and chemical compounds such as sulphur dioxide, whose impacts are systematically underestimated according the Public Health Authority of Reykjavík. Since production began at the Hellisheiði geothermal power plant — often claimed to be the biggest of its kind in the world — in 2006, a 140 percent increase of sulphur pollution has been measured in the capital area of Reykjavík, only 30 kilometres away. Recent studies, conducted by the University of Iceland, suggest a direct link between increased sulphur pollution on the one hand, and increased use of medicine for asthma and heart disease ‘angina pectoris’ on the other hand. However, engineering firms such as Mannvit, authors of many of the Environmental Impacts Assessments for geothermal power-plants, have so far ignored these studies and instead based their assessments on so-called prediction models. (Read more about the sulphur pollution here and here.)

Secondly, at the end of last year it was revealed that for two years energy company Reykjavík Energy — who own and operate the Hellisheiði plant — had on occasions been pumping waste water containing hydrogen sulphide into drinking water aquifers. Sulphides are far from being the plants’ only damaging effluents entering our water system; Krater and Rose mention that “geothermal fluids contain high concentrations of heavy metals and other toxic elements, including radon, arsenic, mercury, ammonia, and boron.”

Thirdly, it is suggested that depletion of one geothermal reservoir can result in the drying up of surrounding hot spring areas. While large-scale exploitation in Iceland is probably too young to witness these effects, environmentalists and geologists have warned that exactly this will happen in the Reykjanes peninsula if the existing plans go ahead.

The Key Companies Involved

HS Orka

HS Orka is an energy company that owns and operates two geothermal power plants on the peninsula — Reykjanesvirkjun and Svartsengi — the majority of who’s energy goes to Norðurál’s aluminium smelter in Grundartangi, Hvalfjörður. HS Orka’s majority shareholder is Magma Energy Sweden A.B., a puppet company of the Canadian firm Magma Energy, which was established to get around laws that prevent non-Europeans from buying Icelandic companies. After Magma’s 66,6% share, the remaining 33,4% is owned by Icelandic pension funds.

Before privatisation HS Orka (then called Hitaveita Suðurnesja) was owned fifty-fifty by the Icelandic state and several municipalities on the country’s south-west coast, but in 2007 the state’s share was sold to a private company named Geysir Green Energy (GGE). Following laws passed in 2008, regarding the separation of private energy production from competitive operations, the company became two different firms — HS Veitur and HS Orka — of which the latter takes care of energy production and sales. Bit by bit, GGE bought up two thirds of HS Orka’s shares. In 2009, GGE sold extra 10% to Magma Energy, which at the same time bought 32% from another energy company, Reykjavík Energy, and the nearby municipality of Hafnarfjörður. At this point GGE owned 55% of HS Orka and Magma owned 43%.

Harsh criticism arose over these deals which were effectively privatisation of Iceland’s natural resources, including a campaign led by pop-singer Björk and Eva Joly, the recent French Green Party presidential candidate, who at that point served as the Icelandic center-left government’s special financial advisor, following the general elections in 2009. Asked if the company was considering majority stake in HS Orka, Magma’s CEO Ross Beaty replied with a straight “no”. He then emphasised that the company would not buy more than 50% of the shares, as had officially been accepted by Iceland’s government, calling this “a rather awkward business position but certainly something that we feel can be workable.”

However, in 2010 Geysir Green Energy sold all their shares to Magma, which now owned 98.5% of HS Orka. A year later Magma sold 25% to Jarðvarmi slhf, a company owned by fourteen Icelandic pension funds, which a little later bought additional 8.4%. At last, Magma bought the 1.5% still owned by four different municipalities. Thus Magma holds 66.6% of the shares today, while Jarðvarmi owns 33.4%. The land use rights held by Magma allow for 65 years exploitation with an option to extend this for another 65 years.

Alterra Power

Just as the name could not have been coloured with more controversy and scepticism, Magma Energy merged with Plutonic Power and became Alterra Power, a company traded on the Toronto Stock Exchange. The new company’s Executive Chairman Ross Beaty, said that the merger would “strengthen both companies and […] create a larger, more diversified renewable energy company.” He further stated: “Geothermal will remain a core focus of the new company, but hydro, wind and solar assets will be solid business platforms for future growth. In the renewable energy business, bigger is better and this combination will achieve that while enhancing returns to each company’s shareholders.”

Alterra Power already operates geothermal, hydro and wind power plants in Nevada and British Columbia, which together with the Iceland plants have the energy capacity of 570 MW. In the company’s own words, they have a “strong financial capacity to support [their] aggressive growth plans,” which include geothermal plants in Chile and Peru. Such Latin-American adventures are certainly not new to the company’s key people, as Ross Beaty founded and currently serves as Chairman of one of the world’s largest silver producers, Pan American Silver, with some of its mines in Peru.

For the last three decades in fact Beaty has founded and divested a series of mineral resource companies, but has now shifted his focus to the ever-enlarging economy of ‘green energy’. As he explained himself: “This time around I wanted to build something green, so I looked at geothermal and it was just perfect, it just fit”. When confronted with the possibility that he and his company were taking advantage of Iceland’s economic collapse — a theory supported by the words of John Perkins, the author of ‘Confessions of an Economic Hitman’ — he called such ideas “ignorance and complete nonsense.” Only a few months later, he nevertheless said to Hera Research Monthly, an online investment newsletter, that “going into Iceland was strictly something that could only have happened because Iceland had a calamitous financial meltdown in 2008.”

Norðurál

Norðurál is a subsidiary of North-American aluminium producer Century Aluminum, whose largest shareholder is commodity broker Glencore International, a company that controls almost 40% of the global aluminium market. Glencore is mostly known for its many tentacles of corruption and worldwide human rights and environmental violations — most recently manifested in the exposure of child-labour in the company’s copper mines in the Democratic Republic of Congo, as well as the dumping of acid into a river at another site in the same country.

Norðurál currently operates an aluminium smelter in Hvalfjörður, which was fully built in 1998 despite harsh opposition by the fjord’s inhabitants. The smelter has been enlarged in a few phases, seeing the production capacity going from the original 60 thousand tons per year, to the current 278 thousand tons. Since 2004, the company has invested 20 billion ISK into building another Iceland smelter, in Helguvík on the north-west tip of the Reykjanes peninsula. According to the project’s Environmental Impact Assessment (EIA), the smelter is supposed to be powered solely by the peninsula’s geothermal energy — a claim that environmentalists and geologists have seriously questioned.

In April 2007, HS Orka signed a contract with Norðurál, promising the latter company 150 MW of energy for the Helguvík smelter’s first phase, supposed to be extracted by the planned expansion of the Reykjanesvirkjun geothermal power plant. Three years later, when no energy had been made available, the aluminium company filed charges against HS Orka for non-compliance. The conflict ended up in an arbitration court in Sweden, the registered home country of HS Orka’s owner, Magma Energy Sweden. Officially the conflict was presented to the public as a matter of energy prices but in late 2011 the court ruled that HS Orka is obliged to provide Norðurál the originally agreed-upon energy, suggesting that the conflict had to do with more than prices.

Already Existing Power Plants

Reykjanes

Reykjanesvirkjun is a 100 MW plant, owned by Alterra Power, whose energy partly powers Norðurál’s smelter in Hvalfjörður. It is located on 410 hectares of land located at the south-west tip of the peninsula. The company has plans for at least an 80 MW expansion of the plant, which is supposed to take place in two 50 and 30 MW phases, that according to HS Orka should both be completed in 2013.

However, following conditions set by Iceland’s National Energy Authority (NEA) last year, the expansion plans have become a bit more complicated. In order for it to happen, at least 30 out of the 50 MW included in the first phase have to come from another area than currently planned. Further extraction in the already exploited area would simply be unsustainable and decrease the area’s capacity. Geologist Sigmundur Einarsson actually believes that the field is already over-exploited. His claim is based on studies from 2009, by the very same NEA, which state that the area’s long-term sustainable production capacity is hardly more than 25 MW.

Svartsengi

The Svartsengi plant is operated by HS Orka and is located on 150 hectares of land owned partly by the municipality of Grindavík and partly privately. Next to it stands the Blue Lagoon, a tourist attraction created by the brine pollution from the power plant. The plant is a combined electricity and heat plant with a current electric power capacity of 75 MW, of which most goes to Norðurál’s smelter in Hvalfjörður.

The Threatened Areas

Eldvörp

The Master Plan gives a green light for the exploitation of Eldvörp, a 15 km long row of craters, located four km south-west of Svartsengi. Svartsengi and Eldvörp are thought to share a geothermal aquifer, which many claim to be fully exploited already. Thus even the smallest energy production would be unsustainable. Alterra Power still has plans to build a 50 MW power plant in Eldvörp, for which both research and utilization leaves have been granted. The planned plant is on land owned by the municipality of Grindavík, which apparently is about to finish the required land use plan enabling the project to take place.

The geothermal field is situated at the heart of the row of craters. There are only a few signs of geothermal activity on the actual surface, only fumaroles the lavafield and steam wisps when the weather is mild. One single borehole has already been constructed close to one of the craters at the centre of Eldvörp. It’s environmental impact is very limited compared with the impacts of the planned over-all drilling and the appendant pipelines, power lines, roads, powerhouse separator building. Such construction will have enormously destructive impacts on both natural and cultural relics in the area, including the row of craters and the Sundvörðuhraun lavafield.

Stóra-Sandvík

Stóra-Sandvík is a unique geothermal field in a coastal area close to the municipalities of Grindavík and Hafnir, as well as to the Reykjanesvirkjun plant, which in itself should be reason enough to move it from the exploitation category and instead to protection.

Krýsuvík

This geothermal area consists of four subfields — Sandfell, Trölladyngja, Sveifluháls and Austurengjar — which all connect to the same volcanic system, usually just named Krýsuvík. The geothermal activity is located at the margins of the system’s fissure swarms, while the Núpshliðarháls tuff ridge lies closer to its centre, with thousands of years old lava flats and eruptive fissures on both sides. Where the tuff has tightened due to geothermal transformations, small streams flow on to the lavafields and have thus created vegetated areas such as Höskuldsvellir, Selsvellir, Vigdísarvellir and Tjarnarvellir. As from the west of Hellisheiði, hardly any water runs on the surface of the whole Reykjanes mountain range, save the above-mentioned areas of Krýsuvík.

Interestingly, Krýsuvík is directly linked to what many consider to be the origins of environmentalism in Iceland. A geologist and environmentalist named Sigurður Þórarinsson, who had often voiced his concerns regarding Icelanders’ treatment of the country’s natural environment, had become seriously alarmed by what he witnessed by the Grænavatn maar in Krýsvík. It was, Sigurður said, used as a trash can for construction projects in the nearby area. At a meeting at the Icelandic Ecological Society in 1949, Sigurður suggested the creation of a legislation regarding nature conservation. Shortly afterwards, he was asked to take part in designing the legislation, which was passed in 1956 — the first in Iceland’s history. (Read about Sigurður Þórarinsson here.)

Out of the four Krýsuvík areas, the Energy Master Plan allows for the exploitation of Sandfell and Sveifluháls, while Trölladyngja and Austurengjar are supposed to be pending until the results of drilling in the two former areas are known. The National Energy Authority claims that these combined 89 km² of land should have the production capacity of 445 MW of energy for 50 years, and as such be Iceland’s third most powerful geothermal field after the Hengill and Törfajökull areas. However, independent scientists and environmentalists have seriously questioned these figures, believing the area’s maximum possible production capacity to be 120 MW for 50 years.

Sandfell

Sandfell area is a semi-unspoiled volcanic area of lavafields and tuff mountains, large vegetated flatlands, and beautifully formed craters. It is a uniquely colourful area, which will be permanently altered if HS Orka’s planned 50 MW power plant will be built. The company has already been granted permission for test drilling and one borehole has been test-drilled, but no results have yet been published.

Sveifluháls (Krýsuvík)

Sveifluháls is a 20 km broad and 150 to 200 meter high compounded and mostly non-vegetated tuff ridge. The 2-3 km long geothermal area of fumaroles, mud springs and muddy hot springs — usually referred to as simply ‘the Krýsuvík geothermal area’ — lies a little east of the Krýsuvík fissure swarm. Despite drilling done in the second half of the 20th century, the area is relatively unspoiled and could easily be brought back close to its natural state. Due to the tuff transformation, the area is especially rich in colour and contains unusual geothermal salt deposits and gypsum. The area is unique due to its many maars, for instance Arnarvatn and Grænavatn (pictured above), of which some show signs of Holocene volcanic activity. Sveifluháls is a popular stopover as well as an outside school-room for geology. It also contains historical relics of human residence, as far back as Iceland’s original settlement.

There are plans to operate a 50-100 MW power plant in the area — a construction that would include somewhere between 10 and 20 boreholes, road construction, pipelines and power lines to connect the plant to the national energy grid. HS Orka has a research leave in the area but has not been able to guarantee the utilization rights, which are owned by the municipality of Hafnarfjörður.

Austurengjar

The geothermal area of Austurengjar is about 1.5 km east of lake Grænavatn — a relatively flat and mostly unspoiled area of mud pots, hot springs and dolerite ridges, which slopes north to lake Kleifarvatn. As a result of earthquakes in 1924, the geyser activity increased dramatically and since then, Austurengjahver has been the area’s most powerful spring. This colourful geothermal area is special as it lies completely outside of Krýsuvík’s volcanic system and shows no signs of Holocene volcanic activity. The plans for a 50 MW power plant at Austurengjar, including 10 to 15 boreholes and a whole lot of power lines, would directly impact the whole area and change the face of lake Kleifarvatn, which is today a wild and unspoilt lake, surrounded by mountains.

Trölladyngja

Trölladyngja is one of the three mountains (the other two being Grænadyngja and Fífavallafjall) that together make up the north-east end of a 13 km long tuff ridge called Núpshlíðarháls, which lies within Krýsuvík’s volcanic system. The geothermal area is about three km long and seems to be partly connected to extension fractures in the system. South of the mountains, a small stream called Sogalækur has shovelled out a considerable amount of clay and thus formed a colourful canyon called Sogin. The stream deposited the clay into the lava below and formed the vegetated field Höskuldarvellir. HS Orka has for many years had plans to build a power plant in Trölladyngja and three holes have been drilled already, resulting in very limited success but a lot of disruption. The Trölladyngja area is partly included in the Natural Heritage Register.

Protected Area(s)

Brennisteinsfjöll

Only one out of the peninsula’s nine potential energy generating areas will be protected if the Master Plan goes through parliament unaltered. Brennisteinsfjöll are a row of mountains, considered an impenetrable part of the Krýsuvík area, and do in fact constitute the largest untouched wilderness around the capital area of Reykjavík. As highlighted by Krater and Rose: “Wilderness areas are becoming rare globally, with over 83 percent of the earth’s landmass directly affected by humans, and the Icelandic wilderness is one of the largest left in Europe.”

Possible Targets for Protests and Direct Actions

The Ministry of Environment
Skuggasund 1
150 Reykjavík

The Ministry of Industry
Arnarhváll by Lindargata
150 Reykjavík

HS Orka
Brekkustígur 36
260 Reykjanesbæ

Jarðvarmi slhf
Stórhöfða 31
110 Reykjavík

Norðurál Grundartangi ehf (smelter and offices)
Grundartangi
301 Akranes

Norðurál Helguvík ehf (only offices)
Stakksbraut 1
Garður
232 Reykjanesbæ

Helguvík Smelter
See location on map here.

Century Aluminum Company (Corporate Headquarters)
2511 Garden Road
Building A, Suite 200
Monterey,
CA 93940
USA

For a list of more offices and smelter click here.

Alterra Power Corp. (Corporate Offices)
600-888 Dunsmuir Street
Vancouver, BC
Canada V6C 3K4

For a list of more Alterra Power offices click here.

Glencore International

Registered Office
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES

Headquarters
Baarermattstrasse 3
P.O. Box 777
CH 6341 Baar
Switzerland

_______________________________________________________

Main Sources

Áhugahópur um verndun Jökulsánna í Skagafirði, Eldvötn – samtök um náttúruvernd í Skaftárhreppi, Félag um verndun hálendis Austurlands, Framtíðarlandið, Fuglavernd, Landvernd, Náttúruvaktin, Náttúruverndarsamtök Austurlands (NAUST), Náttúruverndarsamtök Íslands, Náttúruverndarsamtök Suðurlands, Náttúruverndarsamtök Suðvesturlands, Samtök um náttúruvernd á Norðurlandi (SUNN), Sól á Suðurlandi. Umsögn um drög að tillögu til þingsályktunar um áætlun um vernd og orkunýtingu landsvæða. 11. nóvember 2011. (Download PDF here.)

Krater and Miriam Rose on behalf of Saving Iceland, “Development of Iceland’s Geothermal Energy Potential for Aluminum Production — A Critical Analysis”. In: Abrahamsky, K. (ed.) Sparking a World-wide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World. 2010, AK Press, Edinburgh. p. 319-333. (Download PDF here.)

Various information from Náttúrukortið (The Nature Map) on the website of environmentalist NGO Framtíðarlandið (The Future Land).

Sigmundur Einarsson, Hinar miklu orkulindir Íslands, Smugan.is, October 2009.

Sigmundur Einarsson, Er HS Orka í krísu í Krýsuvík?, Smugan.is, November 2009.

Sigmundur Einarsson, Ómerkilegur útúrsnúningur iðnaðarráðherra, Smugan.is, November 2011.

Sigmundur Einarsson, Er HS Orka á heljarþröm?, Smugan.is, December 2011.

Catharine Fulton, Blame Canada? Geothermal energy, Swedish shelf companies and the privatisation of Iceland, The Reykjavík Grapevine, October 2009.

Catharine Fulton, Magma Energy Lied to Us, The Reykjavík Grapevine, May 2010.

Volcano Park to Open in Iceland? Iceland Review, July 2007.

Various information from the websites of Alterra Power, HS Orka and Norðurál.

In one of Saving Iceland’s articles from last year, in response to the publication of a proposition for a parliamentary resolution regarding the Energy Master Plan, we mentioned environmentalists “clear opposition to the planned exploitation of certain wonders of nature, one example being the geothermal areas on the Reykjanes peninsula.”

Ellert Grétarsson, a photographer who has documented these areas extensively, fears that the drilling in Krýsuvík – covering between five and eight thousand square meters of land – will simply kill the area. And as a matter of fact, Ellert says, the whole Reykjanes peninsula will be riddled with energy construction. Hjörleifur Guttormsson, former Left Green MP and a genuine environmentalists, shares Ellert’s worries and has asked for an integral study of Reykjanes before any decisions are made.

In order to highlight the uniqueness of those magnificent areas, the recently established Nature Conservation Association of South-West Iceland has now published a web book with photos of the Reykjanes peninsula’s threatened geothermal areas. The photos in the book, titled The Reykjanes Peninsula: The Energy Master Plan’s Trash Can, are by aforementioned Ellert Grétarsson, whose photos decorate many of the articles published here on Saving Iceland’s website. The book can be viewed here:

Read more about the Energy Master Plan by following the Master Plan tag.

Since the publication of the long-awaited Energy Master Plan’s second phase in July last year, a good part of the discussion regarding the plan has been centred around the Þjórsá river, especially as the two concerned ministers — Minister of Environment Svandís Svavarsdóttir and Minister of Industry Katrín Júlíusdóttir — presented their proposition for a parliamentary resolution for the Master Plan, wherein the three Þjórsá dams were included. Following a three months long public commentary process — including 225 commentaries by individuals, organizations and companies, of which more than 70 had specifically to do with Þjórsá — the above-mentioned ministers have been working on amending their proposal in order for it to go through parliamentary discussion before the end of parliament sessions this spring.

The Energy Master Plan, which is supposed to lay the foundation for a long-term settlement upon the future exploitation and protection of Iceland natural resources, is split into three categories, of which two are quite clear, titled “exploitation” and “protection”, but the third one, titled “in waiting”, has pretty much been the bone of contention. On the one hand those in favour of extreme energy extraction believe that too many exploitable areas are being kept in waiting, while on the other hand environmentalists think that many of the areas categorized as in waiting should rather be moved straight into the protection category.

As frequently highlighted by Saving Iceland, the Þjórsá conflict splits the government, manifested in the Left Green’s focus on nature conservation versus the social democratic People’s Alliance’s (Samfylkingin) focus on so-called job creation. According to the above-mentioned news an additional inside split has occurred within the latter party, wherein a part wants to follow the Left Green line while others would rather give the go ahead for the three dams in lower Þjórsá.

During a radio interview this morning, Össur Skarphéðinsson, Minister for Foreign Affairs and MP for the People’s Alliance, pointed out that according to laws regarding the Energy Master Plan, environmentalist organizations should be asked to comment on energy options, and more importantly, their comments should be taken into account when final decisions are made. Considering the high quantity of negative remarks about the Þjórsá dams, in addition to the fact that the Environmental Impact Assessment (EIA) for one of the three dams, Urriðafoss dam, will expire next year, Skarphéðinsson claimed it sensible to move Þjórsá to the waiting category until further researches and a new EIA have been made.

However, by moving the project from exploitation to waiting, but not straight to protection, it is not unlikely that the final decision about the Þjórsá dams will be in the hands of a different government. Recent polls suggest that the current government will not stand after parliamentary elections next year and that the right wing conservative party, Sjálfstæðisflokkurinn (e. Independence Party), might end up as the biggest party. The Independence Party has repeatedly pushed for the damming of Þjórsá, most recently in December last year when 10 of the party’s MPs proposed a bill in parliament, suggesting an interim provision allowing the Minister of Industry, rather than Iceland’s Energy Authority, to grant the National Power Company (Landsvirkjun) permission to start building the three proposed dams.

Landsvirkjun has repeatedly stated that no contracts exist concerning the possible energy from lower Þjórsá and that the company will not enter any negotiations regarding Þjórsá until the Master Plan is ready, given that the river will be included in the exploitation category. However both environmentalists and heavy-industrialists believe that the Þjórsá dams are in fact crucial for the continued construction of Century Aluminum’s planned but currently on-hold aluminium smelter in Helguvík. Parliamentarians as well as local politicians in Reykjanesbær, the municipality of where Helguvík is located, have recently mentioned the delay of the Þjórsá dams as one of the main reasons for the standstill situation of the Helguvík project, whereas environmentalists have pointed out that at least the planned Urriðafoss dam is needed for the Helguvík smelter to operate.
_________________________________________

To read more in-depth and detailed articles regarding the Þjórsá conflict and the Energy Master Plan, follow the Þjórsá tag and the Energy Master Plan tag.

These news echo the many warnings made by the opponents of the cluster of five dams at Kárahnjúkar and nearby Eyjabakkar, who repeatedly stated that the project’s alleged profitability was nothing but an illusion, but were systematically silenced by Iceland’s authorities.

Now, as these facts finally become established in the media—this time straight from the horse’s mouth—similarly bad news has arrived regarding another big Icelandic energy company. Reykjavík Energy has failed to make a profit from their 2007 and 2008 investments, effectively making them lose money. At the same time, new research shows that the environmental impacts of the Kárahnjúkar dams are exactly as vast and serious as environmentalists and scientists feared.

And yet, more dams, geothermal power-plants and aluminium smelters are on the drawing table—presented as the only viable way out of the current economic crisis.

Dividend: Close to Zero

During the last half century, Landsvirkjun has paid its owner—the Icelandic nation—only 7,8 billion Icelandic Krónur (66 million USD at present value) as dividend, which according to Hörður Arnarson is way too low and in fact almost equivalent to zero. While it would be fair to expect around eleven percent dividend from the company’s own equity, it has been at an average of two percent since Landsvirkjun was founded. The income from the Kárahnjúkar plant has been about 6 percent of its book value, which again is too low, as according to normal standards the income should be 9 percent of the book value.

At present, Landvirkjun’s total earnings have been 73 million US dollars at most, whereas it should be closer to 180 million USD, considering the owner’s 1,6 billion USD equity. It was made clear by Arnarson that the price of energy purchased by large-scale energy consumers plays a major role herein—a price that obviously has been far below any rational logic and standards.

Same Old, Same Old

In 2003, British newspaper The Guardian published “Power Driven”, Susan De Muth’s exclusive report about the Kárahnjúkar power plant, which at that point was already under construction. Among many critiques made in the article, De Muth questioned Kárahnjúkar’s allegeded profitability. She wrote:

Thorsteinn Siglaugsson, a risk specialist, prepared a recent independent economic report on Karahnjukar for the Icelandic Nature Conservation Association. “Landsvirkjun’s figures do not comprise adequate cost and risk analysis,” he says, “nor realistic contingencies for overruns.” Had the state not guaranteed the loans for the project, Siglaugsson adds, it would never have attracted private finance. “Karahnjukar will never make a profit, and the Icelandic taxpayer may well end up subsidising Alcoa.”

Siglaugsson is just one of many who critically analysed the economics of the Kárahnjúkar project, concluding that its contribution to Iceland’s economy would be about none—or in fact negative. But just as many geologists who cautioned against the risks of locating the dams in a highly geologically seismic area were dismissed by Valgerður Sverrisdóttir, then Minister of Industry, as “politically motivated and not to be listened to”, so were the skeptical economists.

De Muth’s article caused a real stir in Iceland, manifest for instance in the fact that Landsvirkjun and Iceland’s Embassy in London contacted The Guardian in a complaint about “so much space […] used for promoting factual errors and misconceptions of the project and Icelandic society as a whole.” Friðrik Sophusson, Landsvirkjun’s director at that time—who in the article is quoted calling all of Kárahnjúkar’s opponents “romantics”—actually offered The Guardian to send another journalist over to Iceland in order to do “a proper report on issues in Iceland”, this time with his “assistance.” ALCOA also sent a barrage of objections to the Guardian. All the facts presented in the article were double checked by the Guardian’s legal team and confirmed to be accurate.

This volatile response from the authorities and corporates only strengthened the article’s points on the Icelandic tradition of suppressing criticism. This was confirmed in a letter to The Guardian by Icelandic environmentalist and commentator Lára Hanna Einarsdóttir, who suggested that “an Icelandic journalist would have lost [his or her] job if he or she had been so outspoken.”

The Coming Recession

And no wonder, as the article pinpointed serious flaws in the whole rhetoric surrounding the plans to heavily industrialize Iceland, plans that would be nothing without the construction of a series of mega hydro dams and geothermal power plants. Whereas these plans were presented as a path to an increased economical prosperity, De Muth quoted aforementioned economist Siglaugsson, who voiced his fear “that a boom during the construction period, with attendant high interest rates, will be followed by a recession.”

And as time told, this was indeed what happened. In an article published in the early days of Iceland’s current financial crisis, Jaap Krater, ecological economist and spokesperson of Saving Iceland, gave it a thorough explanation:

These mega-projects in a small economy have been compared to a ‘heroin addiction’. Short-term ‘shots’ lead to a long-term collapse. The choice is between a short-term infuse or long-term sustainable economic development. The ‘shot’ of Fjardaal [Alcoa’s aluminium smelter in Iceland, powered by the Kárahnjúkar power plant] overheated the Icelandic economy.

Recognizing the dangers of overheating the economy—a point also made clear in Charles Ferguson’s recent documentary, Inside Job—leaves us with two options. As Krater pointed out:

There has been a lot of critique on the proposed plans to develop Iceland’s unique energy resources. Those in favour of it have generally argued that it is good for the economy. Anyone who gives it a moment of thought can conclude that that is a myth. Supposed economic benefits from new power plants and industrial plants need to be assessed and discussed critically and realistically. Iceland is coming down from a high. Will it have another shot, or go cold turkey?

Another Shot, Please

This spring, Landsvirkjun stated that if the company was to start its operations from scratch the aluminium industry would be its prime costumer. This particular paradox—as the aluminium industry is already its biggest energy purchaser—was just one of Landsvirkjun’s many. Another one is their suggestion that Icelanders should “settle upon” plans to build 14 new power plants in the next 15 years. And the third one is the company’s plans to sell more energy to aluminium companies—costumers who, in Landsvirkjun’s own words, do not pay a fair amount for what they get.

But Arnarson has said that the future looks better, referring for instance to the fact that the price for Kárahnjúkar’s energy is directly connected to world-wide aluminium prices, which Arnarson says are getting higher. Herein is the fourth paradox, as linking energy prices with aluminium prices has so far been disastrous for Iceland’s economy—most recently acknowledged in an official report regarding the profitability of selling energy to heavy industry. According to the report, commissioned by the Ministry of Finance and published last Friday, December 2nd, the total profitability has been an average 5% from 1990 until today, which is far below the profitability of other industries in Iceland, and much lower than the profitability of similar industries in Iceland’s neighbouring countries. The year 1990 is crucial here, as since then, Landsvirkjun’s energy prices to heavy industry have been directly linked to global aluminium prices.

It is worth quoting Jaap Krater again here, where he explains the dangers of interlinking these two prices, and describes how increased aluminium supply will lower the price of aluminium and decrease revenue for Iceland:

One might think that a few hundred thousand tons of aluminium more or less will not impact the global market. The reality is that it is not the sum of production that determines the price but rather the friction between supply and demand. A small amount of difference can have a significant effect in terms of pricing.

High Costs, Low Production

On top of this, recent calculations revealed in newspaper Fréttablaðið, show that Kárahnjúkar is Landsvirkjun’s proportionally most expensive construction. When the production of each of the company’s power plants is compared with the production of Landsvirkjun’s property as a whole, as a proportion of their construction costs, it becomes clear that Kárahnjúkar—with its 2.3 billion USD initial cost—is the most economically unviable plant.

Another Energy Company in Crisis

At the same time that Icelanders face Landsvirkjun’s confession to it’s virtually zero profitability, a damning report on another big energy company, Reykjavík Energy (OR), has been made public. It was originally published at the beginning of this year but wasn’t supposed to enter the public sphere, which it indeed didn’t until in late November. Reykjavík Energy’s biggest shareholder is the city of Reykjavík, meaning the inhabitants of Reykjavík.

As already documented thoroughly, the company—which operates several geothermal power plants, including Hellisheiðarvirkjun, largely built to fuel Century Aluminum’s production—is in pretty deep water. But the newly leaked report proves that it has sunk even deeper than generally considered. The report is a literal condemnation of the company, its board and its highest ranking managers, who get a grade F for their job. A good part of Reykjavík Energy’s investments from 2007 and 2008 are now considered as lost money.

The report also reveals that when energy contracts between OR and Norðurál (Century Aluminum) were made, for the latter’s planned fantasy-of-a-smelter in Helguvík, Reykjavík Energy’s directors completely ignored the very visible economic collapse confronting them.

Recently it has been reported that Reykjavík Energy owes 200 billion Icelandic ISK in foreign currency, which is two thirds of all foreign debts owed by Icelandic companies, whose income is not in foreign currency.

What we see here are two of Iceland’s largest energy companies, both of them public property, both having spent hugely excessive amounts of money—or more precisely, collected gigantic debts—struggling to continue to build power plants in order to feed the highly energy intensive aluminium industry with dirt cheap and allegedly “green” energy. As a result, they have ended up without profit and in a deep pool of debt.

And who is to pay for their gambling risks? As Thorsteinn Siglaugsson stated in 2003: the Icelandic taxpayer.

“No Impacts” Become Huge Impacts

To make bad news even worse, the irreversibly destructive ecological impacts of the Kárahnjúkar dams have, in the last months, become more and more visible. To quote “Power Driven” once again (as simply one of a good number of warnings on the dams’ environmental impacts):

The hydro-project will also divert Jokulsa a Dal at the main dam, hurtling the river through tunnels into the slow-moving Jokulsa i Fljotsdal, which feeds Iceland’s longest lake, Lagarfljot. The calm, silver surface of this tourist attraction will become muddy, turbulent and unnavigable.

This was written in 2003. Today, this is what is happening: because of the river’s glacial turbidity Lagarfljót has changed colour, which according to Guðni Guðbergsson, ichthyologist at the Institute of Freshwater Fisheries (IFF), means that light doesn’t reach as deep into the water as before (see photos aside and below). Photosynthesis, which is the fundamental basis for organic production, decreases due to limited light, its domino effects being the constant reduction of food for the fish. IFF’s researches show that near Egilsstaðir, where visibility in Lagarfljót was 60 cm before the dams were built, it is now only 17 cm. They also show that there are not only less fish in the river, but that the fish are much smaller than before.

In addition to this, residents by Lagarfljót have faced serious land erosion due to the river’s increased water content and strength.

This effect was warned of in an Environmental Impact Assessment (EIA) for the project by the Iceland National Planning Agency (INPA), purposely ignored and overruled by Siv Friðleifsdóttir, then Minister of Environment. Landsvirkjun had complained to the Ministry of the Environment, and the EIA ended up on Friðleifsdóttir’s table, who nevertheless issued a permit for the construction, stating that the dams would have no significant impact on Lagarfljót.

In response of the news on Lagarfljót’s current condition, Svandís Svavarsdóttir, Minister of the Environment, said during parliamentary discussion last September, that her Ministry’s over-all administration regarding the Kárahnjúkar decision-process will be examined in detail. She should demand a similar investigation into the decision making of the Ministry of Industry, whose Minister, Valgerður Sverissdóttir has, along with Landsvirkjun’s Friðrik Sophusson, openly admitted while joking on film with the US ambassador in Iceland, how they enjoyed “bending all the rules, just for Alcoa.”

All the Old Dogs

Despite all of this, Iceland’s energy companies, hand in hand with the aluminium industry, some of the biggest labour unions and industry-related associations—not to mention a majority of parliamentarians, including those of government-member social-democratic Samfylkingin—are still in heavy industry mode, campaigning for the construction of more dams, geothermal power plants and aluminium smelters. Ironically, but still deadly serious, smelter projects such as Century Alumium’s Helguvík, which is at a standstill, unable to guarantee both necessary energy and financing, continue to be presented as profitable solutions to the current crisis.

Met with little resistance in parliament, most of these plans are still considered to be on the drawing table, though most of them seem to be on hold when looked at closely. The latter is mostly thanks to grassroots activists, bloggers and commentators who have systematically reminded the public of the reality, while the bulk of journalists seem to be unable to stick to facts—being extraordinarily co-dependent with those in favour of further heavy-industrialization.

Under the banner of “solving the crisis”, “creating jobs”, and most recently “getting the wheels of work to spin again”, the heavy industry-favoured parties seem to simply refuse to listen to hard facts, even their very own. This attitude is probably best summed up in the recent words of Valgerður Sverrisdóttir, responsible as Minister of Industry, for the building of the dams at Kárahnjúkar, who in response to the news about the power plant’s close-to-zero profitability, said that she wouldn’t want to imagine how the current financial situation would be, if the dams hadn’t been built.

It is said that an old dog will not learn new tricks. And to be honest, ‘old dogs’ pretty accurately describes those making decisions on Iceland’s energy and industry affairs. In order to learn from mistakes and prevent even bigger catastrophes, it wouldn’t be unfair to ask for a new generation—would it?
_____________________________________________________

More photos of Lagarfljót’s turbid condition

These photos are from 2008, which suggests that the current condition is even worse.

During a recent meeting of chairmen from all the member unions of the Icelandic Confederation of Labour (ASÍ), Hörður Arnarson, the director of the national energy company, Landsvirkjun, said that due to the current situation on international markets it would be enormously difficult for Norðurál to finance the 250 billion ISK smelter project. According to Vilhjálmur Birgisson, who attended the meeting, chairman of the Labor Union of Akranes (near to Grundartangi, where Century’s currently operating smelter is located),  Hörður spoke of the Helguvík project’s likelihood as very negligible. Another representative at the meeting, Kristján Gunnarsson, chairman of the Labour and Fishermen Union of Keflavík, stated that when asked about the possibility of Landsvirkjun selling energy to Norðurál, Hörður answered saying that no energy is really available for the project.

While it certainly is true that Landsvirkjun has, especially in the nearest past, had problems with financing, due to the international financial crisis as well as the Icelandic economy’s instability, the latter point – that no energy is actually available for Helguvík – is of more importance here. Environmentalists have, from the beginning of the Helguvík project, stated that the plans to harness energy for the smelter in geothermal areas on the Reykjanes peninsula, are not sufficient, for two reasons. Firstly, as the alleged size of the energy extraction is not sustainable and is more than likely to drain these unique natural areas for good. Secondly, because even if fully exploited, the geothermal areas would not produce enough energy for the smelter. Another energy source will be essential in order for the smelter to operate and even though Reykjavík Energy (OR) has promised Century some energy from a planned enlargement of their power plant in Hellisheiði, the aluminium producer still faces a serious lack of electricity for Helguvík.

It is here that Lower Þjórsá enters the picture. In November 2007 Landsvirkjun announced that the company would not supply any further energy to aluminium smelting in the South-West of Iceland, meaning Rio Tinto Alcan’s smelter Straumsvík, Century’s smelter in Grundartangi and the one planned in Helguvík. But many have doubted the truth behind this statement. In early June of 2008, when Saving Iceland activists gate-crashed Century Aluminum’s lack-of-permission-party in Helguvík, Saving Iceland highlighted the obvious lack of energy and asked if the planned damming of the river was meant for the smelter. Though Landsvirkjun has always denied those suggestions, several different signs have suggested the opposite.

Geologist Sigmundur Einarsson has  for the last couple of years repeatedly called attention to the inaccuracy concerning geothermal energy’s alleged sustainability and efficiency. In a new article about Reykjanes’ energy resources, Sigmundur once again points out the real energy figures and reveals that even if H.S. Orka is able to go ahead with its energy plans for Reykjanes – as mentioned above currently on hold due to an arbitration conflict between H.S. Orka and Century regarding energy prices – the Helguvík smelter will still lack between 310 and 390 MW. Sigmundur theorises that Century has from the beginning been aware of its slack energy situation, but used the cheap trick to simply start construction and thereby create expectations among the inhabitants of the Reykjanes peninsula. “Shallow-minded Icelandic politicians,” says Sigmundur, “were then supposed to bite the bait and sort out the energy by ordering Landsvirkjun to dam Lower Þjórsá (c.a. 200 MW) and sell it to Norðurál [Century] for a price accepted by the aluminium company.”

Not only does this theory full confirm Saving Iceland’s and other environmentalists’ repeated warnings not to let Century start construction of the Helguvík smelter, but now it also seems that at least a few high ranking officials have come to the same conclusion. Following Alcoa’s recent announcement about the company’s withdrawal from its years long planned Húsavík smelter, both Katrín Júlíusdóttir, minister of industry, and Hörður Arnarson, Landsvirkjun’s director, stated that Alcoa and other interested parties had created unrealistic expectations way ahead the establishing of the project’s key foundations. Thus it should not take them long to put two and two together, realizing that the same story applies to Helguvík – something that neither of them has been willing to seriously address until now.

To officially state the dead end of Century’s Helguvík dreams, Landsvirkjun would have to confirm that the planned Þjórsá dams are not meant for the smelter but for quite a while the company has been unwilling to openly discuss the Þjórsá project. The Þjórsá conflict actually splits the sitting government: While favored by the social-democrats of Samfylking, of which the minister of industry is a member, it is opposed by the Left Greens (VG). When asked about Þjórsá, Landsvirkjun now cites the Master Plan for the exploitation and protection of Iceland’s natural resources, currently in making, of which conclusions the company will wait for before any further comments. In a draft for a parliamentary solution regarding the Master Plan, the three planned Þjórsá dams are given a green light for construction. But this might change due to strong local opposition to the dams as well as the comments of a considerable number of people who protested against the project during a three months long open reviewing process, which was a part of the Master Plan’s making.

Albeit not necessary being the project’s one and only fundamental foundation, the protection of Lower Þjórsá would almost certainly mark the end of Century’s fantasies of a smelter in Helguvík. Until then the myth might live a bit longer.
_______________________________________________________

For more information about Century Aluminum, its operations in Iceland and the Helguvík crisis, see:

Century Aluminum Energy Questions

From Siberia to Iceland: Century Aluminum, Glencore and the Incestuous World of Mining

Believes Aluminium Plant Is Poisoning Sheep

National Energy Authority Fears Overexploitation of Geothermal Areas in Reykjanes

Preface

Glencore are the majority shareholder of Century, the owner of one operational and one half-built smelter in Iceland, it’s key operations for aluminium smelting. But who are Glencore and what are the implications for Iceland? This comprehensive article profiles the world’s biggest commodity broker, who’s only comparable predecessor was Enron. The profile covers the reach and grip of Glencore’s domination of metal, grain, coal and bio-oils markets, allowing it to set prices which profit very few and are detrimental to many. It shows the tight web of connections between the major mining companies and Glencore through shared board history and shared ownership of assets, cataloguing key shareholders (and board members) who’s stakes make them larger shareholders than institutional investors in ownership of Glencore. These connections include Rusal’s co chair Nathaniel Rothschild, a financier with a $40m investment in Glencore, and a personal friend of Peter Mandelson (former EU trade commissioner and British politician) and George Osborne (UK Chancellor).

The article details the human rights and environmental abuses of Glencore at it’s many operations, including the 2009 killing of Mayan indigenous leader Adolfo Ich Chamán who spoke out about Century’s activities in Guatemala under CEO-ship of Peter Jones (still a Century board member). It claims that Glencore is higher than most in the running for most abusive and environmentally detrimental mining company, going where lesser devils fear to tread – trading with Congo, Central Asia and embargoed countries such as Saddam Hussein’s Iraq and apartheid South Africa. Glencore founder Marc Rich was involved in trading embargoed Iranian oil, and fled the United States in 1983 accused of insider dealing and tax dodging over Iranian deals, becoming one of the 10 fugitives most wanted by the FBI, until he was pardoned by Bill Clinton. Glencore is still run by two of his main men.

Introduction

From Kazakhstan to Australia, taking in the views of Zambia, war-stricken Congo and Angola, cutting across from Siberia to Iceland is a network of mining and metals companies with a catalogue of environmental and community abuse in their wake. In Iceland its  face is Century Aluminum, but behind them, at the heart of this web lies the secretive commodity broker Glencore International of Switzerland. Glencore is about to launch one of the biggest placement of shares, raising $10 Billion, making a lot of people very rich and valuing itself as a company worth $60Bn. In this article we start to throw a spotlight on just how Glencore makes its money and how Iceland is just one of many victims of a company built on ruthless exploitation.

On the surface, Glencore’s wealth comes from the buying and selling of the world’s commodities (see below for more detail), specialising in grain and metal markets. However, what is unusual for a commodity broker is that it invests heavily in the very companies whose produce it is trading. Its interests are global, from the breadbaskets of Russia, to zinc mines in Kazakhstan, copper and cobalt interests in Congo and Angola, and aluminium in Iceland.

It is the latter that ties Glencore into the Icelandic economy through its 44% ownership of Century, as well as membership of the board of directors. Century is the owner of the Grundartangi smelter and is behind the building of another plant at Helguvik, for which a number of controversial new geothermal and hydro power plants would need to be built. There is also a doubt if enough energy to run a smelter in Helguvík actually exists. Glencore controls 38% of the global trading market in aluminium. Of this, 50% of this comes from Century and UC Rusal, the Russian Aluminium giant (of which Glencore owns 8.8%).

The result is a private network of personal ties and business relationships so tight that what matters to Century also matters to Glencore. The Icelandic government may be doing deals with Century, but Glencore is always present in the background, bringing unsavoury alliances to this particular bed. There are a lot of unanswered questions over how and with whom Glencore chooses to invest. One only has to look at its principle partners and deals to see it does not shy away from exploitation of war torn countries or making alliances with men whose fortunes carry with them heavy taints of corruption. Despite all the exuberance in financial circles at the profits to be made by the Glencore share offering, a few more level-headed traders and journalist are wondering if there should be more caution, especially given how little is known about the inner workings of the company and just how manages to pull off so many exceptionally profitable deals.

It is also worth noting that the last time the world saw such a commodity broker dominate a market to this extent ended up going very sour – that commodity broker being Enron.

Who are Century Aluminum?

Century is a company that specialises in smelting aluminium. It was founded in 1995 when various interests controlled by Glencore were brought together. In 1996 it was spun off as a public company^.1 As well as its Icelandic sites, which it owns outright, it owns or has a share in aluminium plants at Ravenswood, West Virginia, at Hawesville (100%), Kentucky (80% owned with the rest owned by Glencore), and at Mt. Holly, South Carolina (50%, the other half owned by Alcoa Inc). In the past it has had interests in the Congo. As a global player it is the 10th largest producer.

Its ownership remains dominated by Glencore at 44%, with the majority of the other shareholders being held in relatively small amounts by US institutional investors (hedge funds etc.).² It is clear from Century’s website that Iceland is a major part of their business and strategy and three executives of its Icelandic operations are listed as key management.

Key People

Gunnar Gudlaugsson, Plant Manager of Nordural Grundartangi

Joined Nordural in 2008, from Straumsvik, the Rio Tinto Alcan smelter, where he had served for over ten years.

Ragnar Gudmundsson, Managing Director of Nordural

Nordural is the holding company for the Icelandic interests of Century. Previously Chief Financial Officer of Basafell, prior to which he was a senior manager at Samskip, both leading companies in Iceland.

Wayne R. Hale, Chief Operating Officer

Joined Century in 2007, having previously been with Sual in Russia (it was Sual, Rusal and Glencore’s Russian aluminium interests which merged to form UC Rusal). Has also worked for Kaiser and Rio Tinto.

Peter Jones, Director

2001-2006 was President & Chief Operating Officer of Inco Ltd. Former President & CEO of Hudson Bay Mining & Smelting Co (retired at the end of 2009).

David J. Kjos, Vice President of Operations in Iceland

Former manager of Cygnus Inc, an aerospace manufacturing company; prior to that was with the United Development Co & Kaiser Aluminium & Chemical Co.

Logan W. Kruger, CEO, President

Joined November 2005. Before Century, from 2003 he had been a leading executive at Inco, the large nickel mining company where he over saw operations in the Asia / Pacific region, including the Goro Nickel operation in New Caledonia and other projects in Indonesia, remaining as a director of the Indonesian subsidiary P.T. Inco (Inco has since been acquired by the Brazilian nickel miner Vale). He has also served as head of Anglo American’s operations in Chile (2002-03) and as CEO of the Hudson Bay Mining & Smelting Co in Canada (1998-2002).³ He is also a director of Amcoal which over sees the South African coal interests of the mining giant Anglo-American.

Andrew Michelmore, Director

From 2009 CEO of Minerals and Metals Group; former CEO & Managing Director of OZ Minerals. Both firms are leading Australian mining companies. Minerals & Metals Group is a subsidiary of Minmetals Resources Ltd, a Hong Kong based company with significant aluminium interests in China.

John P. O’Brien, Chairman of the Board

Chairman since January 2008. His background is in business management and restructuring.

Willy R. Strothotte, Director

Chairman of Glencore and of Xstrata (see below under Glencore).

Jack E. Thompson, Director

Also serves a director for a number of other mining companies including Anglo-American and Centerra Gold (largest Western-based gold producer in Central Asia), among others.

Though there are 4 other directors who appear to represent general institutional investors, it is clear from the above that the board is dominated by mining executives who share considerable common history. There is much more that is not obvious just from this board of directors. For example, Century and Noranda purchased from Kaiser Aluminium the bauxite mine at St. Anns, Jamaica and factory at Gramercy, Louisiana, though Noranda has since bought out Century. Noranda is a spin off from Xstrata who originally purchased it in 2006 when it took over the Falconbridge mining company.

Other links of note are:

Xstrata and Anglo-American Chile are joint owners of the Collahuasi copper mine, the world’s third biggest such mine and which in 2010 saw violent action against striking miners.⁴

Hudson Bay (of which Logan Kruger, now Century CEO, was CEO until 2002) is now the subject of a lawsuit over the murder of Mayan indigenous leader Adolfo Ich Chamán who spoke out over the company’s activities in Guatamala – he was hacked to death by security personnel in 2009.⁵ This took place while Century board member Peter Jones was CEO of the company.

Centerra Gold has acquired the Kumtor mine in Kyrgyzstan from the government there. Given that the deal saw little benefit to the people of that country, it has, as a result, played an important political role there.⁶ Jack Thompson, board member of Century and of Anglo-American sits on Centerra’s board also.

In 2006, indigenous tribes people stormed the Inco mine at Goro, New Caledonia due to environmental concerns.⁷ Inco’s CEO of the time was Peter Jones, while Logan Kruger oversaw operations at this mine from 2003-2005, and remains a director of its parent company P.T. Inco of Indonesia.

UC Rusal, the world’s single largest aluminium producer is controlled by Russian oligarch Oleg Deripaska through his En+ Group which he chairs. En+ is the controlling interest in a large number of other extractive and power generation businesses, mostly based in Siberia.⁸

His co-chairman is the financier Nathaniel Rothschild who runs the mining investment company Vallar, has a $40m investment in Glencore and is on record as being keen to support a Glencore takeover of Xstrata.^9,10 Rothschild is also a personal friend of both Peter Mandelson, the former EU Trade Commissioner, and of George Osborne, current UK Chancellor.

Xstrata has large interests in Australia where it has been criticised for sharp business practices¹¹, run roughshod over indigenous people at the McArthur River site¹² and is subject of a campaign due to its environmental destruction at it Mangoola opencast mine.¹³

It is hard to single out any firm within the incestuous world of mining conglomerates as being better than the other. All have issues with relationships with indigenous people, suppression of union activity and environmental damage, however the ease at which these accounts can be found in the collective past and present of Century’s key people and directors is telling.

Glencore International AG

Marc Rich & Co

The origins of Glencore are in the trading firm controlled by commodities baron Marc Rich, a controversial figure over the last few decades. Rich built up a commodities trading empire by making deals with the likes of Ayatollah Khomeini to trade Iranian oil while a US embargo was in place. At the same time he was linking himself to Mossad, the Israeli secret service.

In 1983, he and his partner Pincus Green were accused of insider dealing, dodging tax and illegal dealings with Iran when that country was under US sanctions. As a result they both fled the United States and Rich was named among the top ten most wanted fugatives by the FBI until he was controversially pardoned by Bill Clinton on the latter’s last day in the White House. Interestingly, his representative in Washington for 15 years (1985-2000) was Lewis ‘Scooter’ Libby, the subsequently disgraced Chief of Staff to Dick Cheney.

Rich settled in Switzerland where he founded Marc Rich & Co, continuing his commodities dealing, specialising in oil, gas and metals. In 1993/4 he failed in an attempt to corner the world zinc market, which lead to the loss of control of his company, though he remains a comfortably well off billionaire.

At the same time part of the company was spun off to become the equally controversial Trafigura. This is another commodity broker who entered the news when it brought out a ‘super-injunction’ to stop reporting of its role in illegal dumping of toxic waste in Côte d’Ivoire, though it has other scandals to its name as well.

Glencore

Marc Rich & Co was taken over by Rich’s inner circle and renamed Glencore. Many of its partners, of whom there are 485, will become very wealthy men following the listing of the shares. Day-to-day control remains principally with two of Rich’s former lieutenants, the highly seclusive and media-shy Ivan Glasenberg (current CEO) & Willy Strothotte (founding CEO and Chairman). Under these two, Glencore has continued to grow and dominate many of the markets it is involved in. It developed the tactic of investing in producers of raw materials, then striking deals that gave it exclusive access to their products which it would then trade on the market. The result is a global empire with its fingers in many pies, particularly metals, oil and grain. The ruthless and aggressive dealings methods developed under Marc Rich continued to shape the culture of the company, though it remains mired in considerable secrecy.

A large part of Glencore’s success is its willingness to do deals in places and with people were the more respectable sides of capitalism are wary to tread, doing deals in Congo and central Asia. It has also never been afraid to make deals that breached embargoes, including Saddam Hussein or South Africa during the apartheid era. Large-scale deals are being done in Central Asia with the numerous mining barons which emerged there after the collapse of the USSR, and who have strong links to corruption in those states. To this day many of its subsidiaries continue to be accused of human rights and environmental abuses.

The networks of control associated with Glencore are vast. In terms of its position in the world, it controls huge amounts of the addressable global market in copper (50%), zinc (60%), aluminium (38%), lead (45%), cobalt (23%), ferrochrome (16%), thermal coal (28%), wheat (10%), and one quarter of the worlds barley, sunflower and rape seed.^14,15 What this means is that it can effectively set prices for these commodities.

Addressable: the amount of a commodity accessible to a market. For example, many mines are owned by larger concerns who have acquired them entirely for their own use rather than for trading the ore/products on the open market. Thus the percentages quoted are for the volume of the global market rather than the total amount if all production is taken into account.

Leading Business Interests¹⁶

Glencore has a vast number of interests around the globe. The following is a brief on some of its leading assets and their problems, and it is certainly not exclusive. Many of the other mines it has a controlling interest in are open cast, with all the attendant problems, such as habitat destruction and pollution of the environment.

Argentina

The AR Zinc Group, acquired in 2005 operates the Aguilar mine, the Palpala smelter and a sulphuric acid producer, Sulfacid S.A. in the heavily mined north-western state of Jujuy, Argentina. These operations are part of a group of mines and related industries that have caused significant environmental damage and health problems to the various indigenous peoples of the region – demonstrations and protests against the presence of the mining companies have been held, including AR Zinc.^{17, 18, 19}

Australia

Glencore have a 40% stake in Minara Resources (formerly Anaconda), which runs the Murrin Murrin mine. Willy Strothotte, Ivan Glasenberg and others connected with Glencore sit on Minara’s board.²⁰ Both Murrin Murrin and Mt Isa Mines, which is controlled by Xstrata, were cited in 2009 as among the worst polluters in Australia.²¹

Bolivia

Glencore owns the Sinchi Wayra mining company that operates five mines. There has been an ongoing dispute with workers over attempts to increase working hours and on pay. The workers have called on the government to nationalise the company.²² In the past it has been criticized for mass lay-offs as a cost cutting tactic.²³

Columbia

The El Cerrejon Norte mine, jointly owned with Anglo American & BHP Billiton has been described as “a continuing horror story of forced relocations of indigenous people, human rights violations, environmental destruction and other assorted injustices”, in particular against the Wayuu people. Union organisers have received death threats from paramilitaries.²⁴ Similar allegations are made in relation to its coal mine at La Jagua, which Glencore’s subsidiary Prodeco purchased from Xstrata.^25,26,27 Prodeco also operates an open cast coal mine at Calenturitas, La Loma.

Congo

Glencore acquired control in 2008 of the financially troubled Katanga Mining²⁸, one of Africa’s biggest copper and cobalt producers. It is situated in a highly troubled region where militias have funded their struggles by selling off resource rich land. There are reports of water contamination and poor working conditions at its mines.²⁹ Swiss NGOs have been highly critical of Katanga Mines, with Bread For All and The Swiss Catholic Lenten Fund publishing a report accusing Glencore of involvement with of human rights abuses, child labour, pollution and tax evasion in the region³⁰, which has lead to a campaign against the company. ³¹ Glencore also owns the new mine at Mutanda, also in Katanga province. Glencore’s minority partner in Katanga is the Israeli magnate Dan Getler who specialises in investments in the Congo and who has links to blood diamonds and to right-wing Israeli politicians, in particular Avigdor Lieberman.³²

Kazakhstan

Glencore has partnered with Kazakhstan private investment company Verny Capital to take control of the Kazzinc, which has extensive mining and smelting interests throughout that country. Currently 51% owned by Glencore, that stake is expected to rise to 93% following Glencore’s floatation. Verny is controlled by the controversial Utemuratov family, which is close to President Nazarbayev, who is also believed to have a stake.³³ Under Nazarbayev there has been large-scale transfer of the nation’s mineral wealth into private hands and Glencore has been integral to that process.

Peru

Glencore owns the Iscaycruz & Yauliyacu mines (Los Quenualos), which have been accused of unsafe working conditions and subsequent anti-union activities.³⁴

Philippines

Xstrata’s proposed Sagittarius mine at Tampakan, Mindanao threatens indigenous peoples and important rainforests. On 9th March, 2009 a leading opponent of the project, Eliezer “Boy” Billanes, was assassinated.³⁵ Mines in Philippines, such as this one, have also been linked with threats to food security, partly due to the particular nature of the ecology they work in.³⁶

Russia

UC Rusal³⁷, the Russian aluminium giant; controls the world’s largest deposits of bauxite (the ore from which aluminium is obtained) and is the second biggest producer of global alumina (aluminium refined from bauxite) with a 14% of global production. Controlled by oligarch Oleg Deripaska, the firm was created by a merger of Rusal with the smaller SUAL and Glencore aluminium interests. There remain strong links between Glencore and UC Rusal with Glencore owning 8.7% of UC Rusal, and a friendship between Deripaska and Glasenberg.³⁸

As well as UC Rusal, Glencore has numerous other business interests in mineral wealthy Russia. Some of these date back to when Glencore was swift to do deals to take control of Russian state assets following the collapse of the USSR. Though it has been edged out of some of these companies who prefer to sell direct to consumers in China, etc, it does have deals with Russian producers of coal, oil and grain, in part through EN+, Deripaska’s company. There are rumours that it is trying to exploit links into the zinc, nickel and lead producers. Other deals and their relations to Glencore remain murky³⁹, but another major partner is the independent oil refiner Russneft.⁴⁰

Zambia

Glencore has control of Mopani Mines, which has come under environmental scrutiny, being believed to be the source of acid rain due to sulphur dioxide emissions.⁴¹ In 2005, 20 miners died in different accidents at the mine, blamed in part on cut backs in training.⁴² A Daily Mail investigation has claimed that Glencore is engaged in exploitation tax evasion through sharp pricing techniques, so depriving the country of much needed revenue.⁴³

Zimbabwe

In 2011 Glencore signed an agreement with Mwana Africa to acquire nickel from the Trojan mine at Bindura in Zimbabwe – notable for its links with Morgan Tsvangirai. Mwana’s is a South African based miner with copper operations at Katanga in the Congo and gold mines in Ghana.

Other global interests

Glencore owns the PASAR copper smelter in the Philippines, the Sherwin Alumina smelter in Texas (cited for hazardous chemical releases^44,45) and the Portovesme lead and zinc smelter on Sardinia. It also owns 70% of the South African coal miner Shanduka. As owner of the Moreno sunflower oil company, one of the biggest in the world’s largest suppliers of sunflower oil, Glencore is heavily involved in the producing and selling of genetically modified products.⁴⁶ It controls 270,000 hectares of agricultural land and has various grain processing sites around the world which aid its interests in these markets.

The Energy Master Plan is a framework programme, meant to result in a long term agreement upon the exploitation and protection of Iceland’s glacial rivers and geothermal areas. Its making, which since 1999 has been in the hands of special steering committiees, established by the two above-mentioned ministries, reached a critical status in July this year when its second phase was finished and presented to the ministers who in mid August presented their proposition for a parliamentary resolution. Before it will be discussed in parliament the proposition will be open to comments and criticism from the public, as well as interested parties, energy and aluminium companies on the one hand, environmentalists on the other.

Twenty-Seven Energy Options Put on Hold

The proposition lists natural areas into three categories; protection, exploitation and hold. The last-mentioned includes areas that, according to the steering groups and ministers, have not undergone enough research for a decision to be made upon weather to protect or exploit them. Included in this category are, among other, the glacial rivers in fjord Skagafjörður as well as other rivers such as Skjálfandafljót, Hvítá, Hólmsá and Farið by lake Hagavatn in the south-west highlands. Also geothermal areas such as Trölladyngja and Austurengjar in Krýsuvík and certain areas around mount Hengill where the heavily indebted Reykjavík Energy (OR) already operates Hellisheiðarvirkjun, a sulphur polluting geothermal power plant. The 27 areas of the waiting category will be revised in five years, given that satisfactory studies have been made at that time.

Þjórsárver Wetlands to be Saved

Delightfully, the protection category features the uppermost part of river Þjórsá where Landsvirkjun wants to construct Norðlingaölduveita, a dam that would destroy the Ramsar listed Þjórsárver wetlands. River Jökulsá á Fjöllum, which has been seen as an energy potential for a new Alcoa aluminium smelter in Bakki, is also listed protected. The same applies for certain parts of river Tungná, in which Landsvirkjun is already building the Búðarháls dam that will provide energy for increased production in Rio Tinto Alcan’s aluminium smelter in Straumsvík.

The protection category also features geothermal areas such as the ones around Brennisteinsfjöll mountains on the Reykjanes peninsula, as well as Gjástykki, close to volcano Krafla and lake Mývatn. The same goes for the Grændalur valley and Bitra, which are located close to the small town of Hveragerði and have been particularily desirable in the eyes of energy companies. Bitra was saved by a local campaign in 2008 whereas Grændalur was recently threatened when Iceland’s National Energy Authority allowed a company called RARIK to operate test drilling in the valley, in complete contravention of previous rulings by the Ministries of Industry and of Environment.

Krýsuvík, Þeistareykir and Þjórsá to be Destroyed

The exploitation list features geothermal areas Þeystareykir, Bjarnarflag and Krafla in the north of Iceland, as well as Hágöngur in the mid-highlands west to glacier Vatnajökull. Also certain parts of the area around mount Hengill and finally geothermal spots in Reykjanes, Krýsuvík and Svartsengi, all three on the Reykjanes peninsula. Rivers Hvalá, Blanda and Köldukvísl are then all categorised as exploitable. And most critically the Energy Master Plan proposition allows for Landsvirkjun’s construction of three dams in the lower part of river Þjórsá.

Environmentalists Threefold Response

The most common response from environmentalist so far has been threefold. Firstly there generally satisfied by the protection of areas such as the Gjástykki, Jökulsá á Fjöllum and Grændalur, let alone the Þjórsárver wetlands. Shortly after the publication’s release, Iceland Nature Conservation Association (INCA) stated that, if approved by parliament, the Master Plan will mark the end of environmentalists’ forty years long struggle to save Þjórsárver from destruction. Though listed by the international Ramsar Convention on Wetlands due to its unique ecosystem, the wetlands have been on Landsvirkjun’s drawing table as a potential for construct a large reservoir, meant to produce energy for a planned expansion of Rio Tinto Alcan’s aluminium smelter in Hafnarfjörður, which was later thrown off in a local referendum. The plan has always been met with fierce opposition, no matter of Landsvirkjun’s repeated attempts to get it through by proposing a smaller dam and reservoir.

Secondly environmentalists are critical of the fact how many invaluable areas, such river Skjálfandafljót, are kept on hold instead of simply been categorised protected. Thirdly there is a clear opposition to the planned exploitation of certain wonders of nature, one example being the geothermal areas on the Reykjanes peninsula. Ellert Grétarsson, a photographer who has documented these areas extensively (his photos are here aside), fears that the drilling in Krýsuvík – covering between five and eight thousand square meters of land – will simply kill the area. And as a matter, says Ellert, the whole Reykjanes peninsula will be riddled with energy construction. Hjörleifur Guttormsson, former Left Green MP and a genuine environmentalists, shares Ellert’s worries and has asked for an integral study of Reykjanes before any decisions are made.

Þjórsá, the Bone of Contention

As as mentioned before the biggest concern regards Þjórsá, which has for a long time been the bone of contention between the two clashing arrays fighting for or against nature conservation. The struggle over Þjórsá has been especially tough, actually to such an extent that the government can be reputed to stand or fall with that conflict in particular. Guðfríður Lilja Grétarsdóttir, MP for the Left Greens, demonstrated, during parliamentary debate last April, her full opposition to the construction of dams in Þjórsá. At that point, three Left Green MPs, who up until then had been increasingly critical of the government and its lack of left-leaning policies, had just recently departed from the party, leaving the government with only one person’s majority in parliament. And as most members of the social-democratic People’s Alliance (Samfylkingin), which makes up the government along with the Left Greens, have not shown a sign of objection to the damming of Þjórsá, it wouldn’t be surprising if the river will be up for a heavy debate in parliament.

In fact it is more than sure that Þjórsá will be among the main matters of argument in parliament. The right wing Independence Party, which was in in power from and is largely responsible for the neo-liberalisation and heavy-industrialisation of Iceland, has always been one of the driving motors behind Landsvirkjun’s plans to dam Þjórsá. When the Master Plan’s proposition was presented in August, Ragnheiður Elín Árnadóttir, a MP of the party, called for the immediate starting of construction in Þjórsá. She also said she grieved the long period of which the project has been stuck within bureaucracy, referring to the attempts of Svandís Svavarsdóttir, current Minister of Environment, to halt the construction of one of the three proposed dams by refusing to include the dam, Urriðafossvirkjun, in a land-use plans for the parishes of Flóahreppur and Skeiða- and Gnúpverjahreppur (rural districts along Þjórsá) made by them at the request of Landsvirkjun.

Three Dams: Threat to Society and Ecology

The conflict in parliament mirrors the actual conflict in the Þjórsá region where locals have for a long time fought over the river’s fate. There Landsvirkjun hasn’t only used bribes in its attempt to get its plans through local administration, but also threatened farmers whose lands are at stake will the dams be built, by stating that if the farmers do not negotiate with the Landsvirkjun, the company will attempt for a land expropriation. This conduct has created a complete split within the local community, clearly demonstrated in last March when young locals from the region published a statement, in which they demanded a permanent halt to all plans of damming Þjórsá – thereby an end to the social conflict associated.

As a matter of fact two members of the Master Plan’s steering committee recently stated, when interviewed on state radio station RÚV, that due to the serious lack of studies regarding the social impacts of the planned Þjórsá dams, those plans should without any doubt have been put on hold. This is exactly what Guðmundur Hörður Guðmundsson, chairman of environmentalist organization Landvernd, said in last July following the publication of the Energy Master Plan’s second phase report.

Þjórsá’s position in the Master Plan proposition, yet shouldn’t be of any surprise. In the second phase report the three planned dams are not considered to be a great threat to the ecology of Þjórsá and its surroundings – contrary to the opinion of environmentalists who have voiced their worries concerning the dams’ impacts, for instance on the river’s salmon stock. Orri Vigfússon, chairman of the North Atlantic Salmon Fund (NASF), recently stated that “never before in the history of Iceland has there occurred such an attack on a sensitive area of wild salmon.” As is considered that the salmon’s spawning and breeding grounds are mosty located above waterfall Urriðafoss, where one of the three dams is planned to be built, Orri believes that the stock of salmon and salmon trout are likely to vanish.

Energy Companies Unsatisfied as Expected

As one could have imagined, Icelandic energy companies and other adherents of large-scale power production for heavy industry, are everything else than happy about the Master Plan’s proposition. Following its release Eiríkur Hjálmarsson, Public Relation manager of Reykjavík Energy, opposed the protection of Bitra on the ground that the company has already harmed the area with three examination boreholes, roads and electricity lines – but most importantly, spent 785 million ISK on the project. As reported earlier this year by Anna Andersen, journalist at the Reykjavík Grapevine, the foolhardy business operations of Reykavík Energy during the last decade or so – including large-scale geothermal projects associated with heavy industry – have brought the publicly owned company a debt of 233 billion ISK (2 billion USD or 1.4 billion Euros). Despite this financial collapse the company still advocates for the continuation of the agenda that brought it down.

Other energy companies have responded similarly, mostly complaining about the amount of areas listed as protected or on hold. Landsvikjun’s director Hörður Árnason has said that compared to the second phase report, the parliament proposition suggest that way too many energy options are put on hold. Another company, Suðurorka, owned by Alterra Power (former Magma Energy) and Íslensk Orkuvirkjun, had planned to construct a dam, called Búlandsvirkjun, in river Skaftá – a plan that the proposition puts on hold. The company argues that few energy options have been studied as thoroughly and while the studies might have been done – and might be thorough – not everybody agrees with the company on the impacts. Farmers in the area have opposed the project as some of their most important grasslands will be drowned under the dam’s reservoir.

Energy company RARIK will, due to the Master Plan, loose its grip on geothermal areas in Grændalur valley, as well as rivers in Skagafjörður and Hólmsá river – projects that the company claims to have invested in with 300 million ISK. Using the same monetary argument, HS Orka, also owned by Alterra Power, has been vocal about its 700 million ISK investment into their proposed, but now delayed if not entirely halted, geothermal plants in Trölladyngja. Finally representatives from Reykjahlíð, a small town that holds the good part of Gjástykki’s property rights, have stated that if the area will be protected, billions of ISK will be demanded as compensation.

The Predominant Strategy

Those arguments do in fact manifest the predominant strategy of those involved in the heavy industrialization of Iceland. Instead of waiting for all necessary contracts to been signed, all needed permissions to be granted, and all required energy to be ensured, the energy and aluminium companies have simply started major construction immediately when only one or a few permissions have been granted. And when criticised, not to mention when forced to stop, they have stated that because these projects have been announced and vast amounts of money put into them, they should be allowed to continue. If needed, they have also pointed out that because the natural areas at stake have already been harmed (by themselves), there is “no point” in preserving them.

One example would be Helguvík, where a framework for a proposed Century Aluminum smelter has already been built but hardly any construction has taken place there for two year. With every day that passes it becomes clear that not only has the company failed to ensure the energy needed to operate the smelter, but also that the energy simply doesn’t exist.

Geologist Sigmundur Einarsson has, for the last years, pointed this out and stated that the amount of energy needed for the Helguvík smelter cannot be found and harnessed on Reykjanes, like stated by the parties involved. For instance he believes that no more than 120 MWe can be harnessed in Krýsuvík, contrary to the official numbers of 480 MWe, and has repeatedly demanded answers from the authorities about where from the rest of the energy is supposed to come. Just as Saving Iceland’s questions about the whereabouts of energy for Alcoa’s planned smelter in Bakki, Sigmundur’s questions have never been answered, but he claims the Energy Master Plan proofs his theory.

Yet Another Three Kárahnjúkar Dams!

Environmentalists have reacted to the energy companies’ complaints and asked how on earth the companies can still pretended to be unsatisfied. As pointed out by Landvernd, these company’s are about be granted permission to harness energy equivalent of three Kárahnjúkar dams. From 2004 to 2009, Iceland’s energy production duplicated, largely with the construction of Kárahnjúkar dam, and is currently 16,900 gigawatt-hours. If the Energy Master Plan will be accepted as proposed, the energy companies will be able to duplicate the production again in few years, says Guðmundur Hörður, chairman of Landvernd, and continues:

The increase of public electricity usage is about 50 gigawatt-hours per year. The expansion entailed in the proposition would thus sustain that particular public increase for the next 265 years! If this will be the conclusion, the energy companies can be very satisfied. Still they send their agents onto the media, in order to cry and complain. That doesn’t give a good hint for a settlement.

Other environmentalists, Ómar Ragnarsson for instance, have mentioned that the whole discourse surrounding the Energy Master Plan portrays a false image. While the plan regards Iceland’s each and every hydro and geothermal area, potential for exploitation, the areas that have already been harnessed are kept outside of the discourse. Ómar says that it is simply false to state that “only twenty-two areas” have been categorised exploitable, as twenty-eight large power plants have already been built in Iceland. That means that out of the ninety-seven considered in the Master Plan, fifty have already been or will be utilised. In addition to the twenty-seven areas put on hold, another thirty-two have yet not been categorised by the steering committees, which makes the current proportion of protected areas even lower.

Ómar has also pointed out mismatches within the proposition. One example regards geothermal area Gjástykki that is listed as protected, as it is “a part of Krafla’s volcanic system, which has a protection value on a worldwide scale,” like stated in the proposition. But according to Ómar this will depend entirely on definitions. As an energy option, Vítismór, which is a part of Krafla’s volcanic system and is an inseparable part of the Gjástykki-Leirhnjúkur area, is currently listed as an addition to the Krafla power plant and would thus, regardless of its position within the Master Plan, be available for exploitation.

Limnology (or freshwater science) professor Gísli Már Gíslason upholds Ómar’s argument and has stated that half of Iceland’s “profitable hydro power” has already been utilised. One of those rivers is Jökulsá á Dal, harmed by the infamous Kárahnjúkar dam, which in order to be built required disallowing the protection of Kringilsárrani, an extremely important grassland for reindeer. This is not a unique incident as, for instance, the three dams in river Láxá are also manifestations of hydro power plants built in protected areas.

The Coming Struggle

Notably by the above-listed contradictions, which though demonstrate only a small part of the debate about the Energy Master Plan so far, the coming struggle about the fate of Iceland’s nature is going to be harsh and heavy. Armed with the rhetoric of economic crisis, unemployment etc., those in favour of heavy industry – in other words a big part of parliament, the energy companies, the Associations of Industry and Employers, the country’s biggest trade unions, and most recently Samál, a joint association of aluminium producers in Iceland – use literally every opportunity to push for the further development of industry, especially aluminium. In order for that development to occur, the country’s glacial rivers and geothermal areas have to be exploited on a mass scale.

Environmentalists, on the other hand, need to sharpen their knives and both ask and answer a great amount of questions. What, if any, are the actual benefits of heavy industry and its parallel large-scale energy production? And what are its impacts on Iceland’s society and ecosystems? No less importantly, what are its global impacts such as on the atmosphere or bauxite communities in India, Guinea, Hungary and Jamaica? How has it affected the economy and what are its contributions to the current economic situation? What are the impacts of the building of big dams and geothermal power-plants, fuelled by extremely high loans, bringing a temporary pump into the economy that inevitably leads to the demand for another shot? And what is the value of nature per se?

Only by answering all of these and many more questions, one can honestly try to answer the one fundamental question regarding the Energy Master Plan: What actual need is there for yet another three Kárahnjúkar dams, or in fact just a single more power plant?

The companies behind the co-operating forum include energy companies Landsvirkjun, Reykjavík Energy, HS Orka and its owning company Alterra Power Corporation (former Magma Energy), as well as aluminium companies ALCOA and Norðurál, owned by Century Aluminum. Banks Íslandsbanki, Landsbanki and Arion banki are also all involved, the last-mentioned being the forum’s main sponsor. Amongst other parties involved are the Universities of Reykjavík and the University of Iceland, the Federation of Icelandic Industries (SI) and the Confederation of Icelandic Employees (SA), the ministries of environment, of industry, of trade and of foreign affairs, and Mannvit, Iceland’s biggest engineering firm, responsible for both the design and the making of Environmental Impact Assessments for most of the country’s biggest heavy-industry and large-scale energy projects.

To recap, the newly formed co-operating forum manifests that all major parties with direct links and financial interests in the further heavy-industrialization of Iceland and its parallel destruction of the country’s wilderness, have joined forces. And the aim: To increase the competitiveness of Iceland’s geothermal energy industry and its making of capital goods, facilitate the capitalization of geothermal projects, contribute to technological advances and reinforce Iceland’s image.

A Follow-Up of the Plan to Heavy-Industrialize Iceland

During the forum’s establishing meeting, which took place in the headquarters of Arion bank, a new report, titled “The Icelandic Geothermal Cluster – Mapping and Mobilization”, was published, covering “the analysis and the collaboration-formation of the the Icelandic geothermal cluster.” The term business cluster was originally introduced and popularised by the aforementioned Michael Porter, and is, to quote Porter’s own words, a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. According to the idea, the formation of a cluster creates a certain entity, which is supposed to be much stronger than many individual parties each operating separately.

The report – starting with the words of Henry Ford: “Coming together is a beginning, staying together is progress, working together is success” – lays out what it calls “three big growth opportunities”, as the results of the analysis of Iceland’s geothermal cluster. To nobody’s surprise these so-called opportunities consist of bringing energy-intensive industries to Iceland, exporting geothermal energy to Europe through a marine cable, and exporting Iceland’s geothermal expertise. These suggestions are of course no novelty in Iceland but rather a predictable follow-up of the plan to heavy-industrialize Iceland and fully exploit the country’s natural resources – a plan that was well documented in an infamous booklet, titled “Lowest Energy Prices!!”, which was made in 1995 by Landsvirkjun and the ministry of industry, and sent to international energy-intensive heavy industries, offering them cheap energy and “minimum environmental red tape”.

Carefully Chosen Rhetoric and a Private Speech on State Television

Michael Porter has carefully adapted his rhetoric to the current political atmosphere, obviously aware of many Icelanders’ increased doubt and decreased trust towards corporations due to the 2008 economic collapse and many of its following exposures of corruption, as well as the enhanced discussion about the importance of keeping the ownership of natural resources away from private parties. In his forewords to the aforementioned report, he and his co-author, Dr. Christian Ketels, also from Harvard Business School, state that though the “economy has [since the collapse] stabilized at a lower level, and the government has gotten its budget balance so much under control that it is expected to return to the global financial markets later this year […] stabilization is necessary and not sufficient.” And they continue:

Iceland needs to lay the foundations for a new, more sustainable economic growth path. In February 2009, we published an article in the Icelandic press that set out an action agenda for the country. One of its key elements was cluster mobilization as a critical step to build on Iceland’s unique assets and capabilities. We stressed that Iceland had to move beyond a backward looking debate about who was to blame for the crisis to a forward-looking collaboration to improve competitiveness. Clusters are a powerful vehicle to mobilize the private sector and guide the policy choices of government.

The Icelandic geothermal cluster program puts this vision into practice. It builds on Iceland’s unique assets and capabilities in geothermal energy with a clear focus on creating greater value for the Icelandic economy, rather than simply selling power. The geothermal program is grounded in the realization that progress towards this goal will only materialize through collaboration.

Interviewed in Kastljós, a daily news-report show on state-owned TV station RÚV, last night, Porter spoke in a similar way, reminiscent of a memorable Kastljós interview with Ross Beaty, the CEO of Magma Energy (now Alterra Power Corporation), in August 2009. When asked if he understood the public opposition towards privatization after the economic collapse, Beaty said, as reported by Saving Iceland, that he was aware of this but added that Icelanders would have to understand what kind of company he was leading. “We are not a scary company, we want to work with H.S. Orka in building up a stronger company, for the good of Icelanders, ourselves, and actually the whole world,” said Beaty to newspaper Fréttablaðið that same day.

During the TV interview last night, Michael Porter said that he finds Icelanders are “too cautious” when it comes to “using the opportunities that consist in geothermal energy,” and added that there is need for more innovating spirit, aggressiveness and risk-taking. Asked the same the question as Ross Beaty was, a little less than two years ago, Porter answered that the country’s natural resources could still be “owned by the nation” while the utilization rights could be lent to private companies. He also said that though he preferred a mixture of privately and state run businesses, the state-owned energy companies would still have to be run like private companies. This idealisation of privatizing energy companies perfectly resonates a recent encouragement from the Organisation for Economic Co-operation and Development (OECD), set fourth in the institution’s 2011 Economic Survey of Iceland. The interview would better be described as a speech-like monologue as the questioner mostly nodded and occasionally said things like “yes”, “absolutely” and “indeed”. After Porter had described his utopian corporate vision for large-scale geothermal energy production in Iceland, he ended the interview by saying: “Let’s do it!” – followed with an end-note from the presenter: “Let’s hope!”

Fearing Overexploitation of Geothermal Resources

Contrary to the statements about the need for large-scale exploitation of geothermal energy, as mentioned by Porter and the parties of the co-operating forum, environmentalists and Iceland’s National Energy Authority (INEA) fear overexploitation of the geothermal areas that are planned to be exploited to produce energy for aluminium smelter, which in fact constitute all major geothermal areas in Iceland. Recently INEA decided that HS Orka/Alterra Power would have to widen its planned drilling area for the planned enlargement of Reykjanes geothermal power plant and that they would have to supply proof that enough energy can be found on a larger area than already arranged for. The enlargement is meant to provide energy for a planned aluminium smelter in Helguvík, owned by Norðurál/Century Aluminum.

“It is possible to get all this energy on the current construction area, there is no doubt about that,” said energy director Guðni Jóhannesson to newspaper Morgunblaðið in March 2011. But he continued: “But we know it from geothermal areas abroad that if too much construction has taken place in too short time, the capacity of the area can decrease, resulting in the need for reducing the production again.”

Hence, we have it from the horse’s mouth that geothermal energy on a large-scale industrial level is not sustainable.

Since October 2006 Orkuveita Reykjavíkur (Reykjavík Energy) has produced geothermal energy on Hellisheiði, predominantly for the Norðurál/Century aluminium smelter in Grundartangi, Hvalfjörður. Since then increased sulphur pollution in the power plant’s surrounding area, as well as in the area around Reykjavík, has regularly become a topic of discussion and Sigurðardóttir says that the pollution’s impacts are systematically underestimated. Instead of using recent researches into the issue, Mannvit bases the EIA on prediction-models, but new studies by the University of Reykjavík indicate that the increased use of medicine for asthma and heart disease angina pectoris is directly linked to increased sulphur pollution.

Sigurðardóttir pointed out that according to an assessment made by the Public Health Authority (PHA) the construction at Gráuhnjúkar could increase the amount of sulphur in air by 40 percent. Since the energy production at Hellisheiði started in 2006, increase by 140 percent has already been measured at Hvaleyrarholt, close to Hafnarfjörður. The PHA’s concerns are the exact same as those from the PHA of Hafnarfjörður and Kópavogur. In the preliminary EIA there is no mention of climate and the fact that due to easterly winds the pollution from the power plant travels regularly to Reykjavík.

The impacts of hydrogen sulphide are well known but there is lack of knowledge about the long term impacts of low sulphur valency on people’s health. Sigurðardóttir said that nothing is known about the results of Reykjavík Energy’s experiments with refinery equipment. “Suitable equipment already exists but it is expensive and there is a question how much will there is to put it up” she said.

Mannvit, the engineering firm that made the preliminary EIA, is directly connected with the construction of Hellisheiði power plant and the planned expansion at Gráuhnjúkar. The company, which according to its website states to be “dedicated to the development of green energy”, is the result of the merger of Iceland’s three major engineering firms: Hönnun hf., VGK hf. and Rafhönnun hf. Due to the 2008 merger, Mannvit is linked to all major energy and heavy industry projects in Iceland, as the three merged companies “have played significant roles in Iceland’s development into a modern, industrialized nation,” like it says on their website. The list of Mannvit’s projects includes the three aluminium smelters in Reyðafjörður, Grundartangi and Straumsvík, as well as the Kárahnjúkar dam.

See also this analysis from Saving Iceland on the harmful effects of geothermal energy on an industrial scale: Development of Iceland’s Geothermal Energy Potential for Aluminium Production – A Critical Analysis PDF

Since the current government was formed – first as a minority government after the protests that lead to the government collapse in January 2009; then as a majority government following parliamentary elections in the spring same year – a certain leftist core of the Left Greens has repeatedly weakened its position, claiming that it lacks real left policies concerning the banks, the situation of Iceland’s homes and the International Monetary Fund to name a few examples. Two MP’s from this core recently decided to leave the party group due to these reason and last week the third one followed. A rumor says that these three are about to start a new political party, presumably more to the left.

Environmental issues also play a big role in the instability of the government, which is made of the Left Greens and Samfylkingin, a social-democratic party that was also in government with the conservatives from 2007 until its toppling in January 2009. Samfylkingin has played friendly with the aluminium industry and addressed what its members claim to be the need for at least one more aluminium smelter to “rebuild” Iceland’s economy. This one smelter has up until now been supposed to be built in Helguvík, on the country’s south west corner, but that project has been on hold for years due to energy dilemma (read about it here).

During the parliament discussion on Wednesday, the above-mention Left Green MP Grétarsdóttir, stated her full opposition towards Landsvirkjun’s plans to build three dams in lower Þjórsá river – a statement that clearly can be understood as a threat: The government stands and falls with the outcome of the Þjórsá conflict (read about the conflict and its connection with Helguvík here). Bjarni Benediktsson, the head of Sjálfstæðisflokkurinn, said that this clearly shows that not only is the government’s position very weak but is also based on one MP’s opinions on the dams. This must be a worry to all players of the economy, said Benediktsson.

Iceland’s energy director, Guðni A. Jóhannesson, recently stated 30 out of 50 MW that H.S. Orka plans to produce with the enlargement of the power plant, will have to come from another area then already planned. H.S. Orka’s permission to enlarge the plant is dependent on this, which according to the company makes the investment much more complicated.

In an interview with newspaper Morgunblaðið, energy director Jóhannesson said that he does not doubt the company’s worries about more complicated investment, but that NEA does not give permissions based on the premises of energy companies –rather on the long-term protection of natural resources. “It is possible to get all this energy on the current construction area, there is no doubt about that,” said Jóhannesson. “But we know it from geothermal areas abroad that if too much construction has taken place in too short time, the capacity of the area can decrease, resulting in the need for reducing the production again.”

The enlargement of Reykjanes power plant is meant to provide energy for Century Aluminum/Norðurál’s aluminium smelter in Helguvík, on the Reykjanes peninsula, which has been in construction for a few years now but has been on hold for a while due to financial- and energy-based problems. NEA’s above-mentioned demands to H.S. Orka, strengthen the worries of environmentalists who fear that the geothermal areas on Reykjanes will dry up quickly if the area is overexploited for aluminium production.

Read two recent articles about Helguvík’s energy problems here:

Century Aluminum Energy Questions
The Þjórsá Farce Continues – Are the Dams Planned for Aluminium Production?

In early 2010 Svavarsdóttir rejected land-use plans, made by the parishes of Flóahreppur and Skeiða- and Gnúpverjahreppur (rural districts along Þjórsá) at the request of Landsvirkjun, which had also paid for the preparations to the changes in the plans. A contract about Landsvirkjun’s financial involvement in the land-use plan was signed in July 2007, and included e.g. that the company would pay for the making of the plan. In addition, Landsvirkjun was to pay for road and water supply construction in the area, as well as improved mobile phone connections – all constructions that the state is already legally bound to take care of.

Landowners by Þjórsá relegated the contract to the Ministry of Transport, which ruled it illegal since only the municipality could pay for the making of the plan. In September 2009, the National Broadcaster, RÚV, reported that the municipality would most likely repay the 6.5 million Icelandic krónur that Landsvirkjun had already paid the council.

Legal uncertainty about Landsvirkjun’s financial involvement
The Minister’s decision to reject a part of the plan was made on the grounds that according to Icelandic law, such plan changes are to be paid for by the communities themselves, and any third-party involvement in the costs is illegal. The rejection was sued by the council of Flóahreppur and ruled illegal by the District Court. The Minister appealed to the Supreme Court, which on last Thursday, February 10th, confirmed the District Court’s decision, stating that Landvirkjun’s involvement was not illegal.

At the time the contract was made, nothing in the Icelandic law said that an outside party could not become financially involved in such a project. Nevertheless the law said that land-use plans should be paid by municipalities or particular planning funds. In the beginning of 2011 a law amendment went through parliament, making it clear who is allowed to pay for plan making and who not.

Financial Minister Steingrímur J. Sigfússon, who is also the chairman of the Left Green party, said in parliament yesterday (February 14th) that the Court’s ruling is not a condemnation of the administration of the Ministry of Environment. Those who read the judgement see that an uncertainty had arisen about the legality of an outside party paying for a part of the plan making; two ministries came to the conclusion that it is not legal but the court came to another decision, said Sigfússon.

Rejection of the dam only
According to a recent announcement from the Ministry of Environment, the rejection had only to do with a particular part of the land-use plan, i.e. the Urriðafoss dam. The Ministry also claims that it was ready to validate all other parts of the plan when ready without the dam. But instead the council decided to start a whole new process and make a new land-use plan from the scratch – work that is still not finished.

Director of the local council lied about construction delay
Shortly after Supreme Court’s decision, Margrét Sigurðardóttir, the director of Flóahreppur council, lied when interviewed by the state-owned radio RUV, stating that Svavarsdóttir’s decisions had stopped all detailed land-use plan from taking place. People living in the region have proven this wrong and pointed out that all kinds of construction has taken place during the last year, some of it on behalf of the local council, e.g. school buildings, residential houses and stables.

Leftist news website Smugan spoke to local people who said Svavarsdóttir’s decision did even not delay the construction of the dams themselves, since landowners by Þjórsá have still not signed any contracts about the use of their lands. Therefore no dams can be built, regardless of the minister’s decisions. In 2008, Friðrik Sophusson, director of Landsvirkjun at that time, said that if meetings with local farmers would not go as expected – meetings that the farmers just announced would never take place – expropriations might be used.

According to Smugan, members from both of today’s government parties have promised farmers by Þjórsá that no expropriations will take place, which fits well to Þórunn Sveinbjardóttir’s (then Minister of Environment) reaction to Sophusson’s statement in 2008. Today, Landsvirkjun though still claims that the company will continue its preparations for three dams in lower Þjórsá but wait for the results of a framework programme – currently in the making, about the use and protection of natural resources – before final decisions are made. Prime Minister Jóhanna Sigurðardóttir recently said that the current government opposes the planned damming of Þjórsá.

Sól á Suðurlandi, a local organization fighting against the Þjórsá Dams, has now officially demanded detailed answers from the district council, about what exact plans, others than Urriðafoss dam, have been delayed because of the Minister’s rejection. The organization also says that the delay of the planned dams can be explained by many other different factors, e.g. the fact that Landsvirkjun  generally lacks access to money, manifested in the fact that the company still has not found enough money to fund Búðarháls Dam in Tungná river (north-east of Þjórsá). Nevertheless the company has received all necessary permissions for that projects, which is obviously completely different then the situation with Þjórsá.

Accusations back and fourth
Since the Supreme Court ruling, accusations have been thrown back and fro between the two opposing parties; environmentalists on the one hand and heavy industry proponents on the other. MP’s from the opposition have demanded that Svavarsdóttir resigns from her position and the Confederation of Icelandic Employers (SA) – one of the most dedicated pro-heavy industry lobbyist organizations in Iceland – said the Minister’s aim was only to “please narrow political interest in the Left Green party.”

Members of the Left Greens have responded to this critique in defence of Svavarsdóttir, saying that a Minister of Environment should always allow nature the benefit of doubt and people should be happy to finally have an Environment Minister of that actually does so. Svavarsdóttir herself has said that she has no reason to resign from her position, a statement supported by Prime Minister Sigurðardóttir.

In a weekly discussion show on state TV station RÚV, Mörður Árnason, MP from Samfylkingin (the social-democratic People’s Alliance) accused Landsvirkjun of bribery and referred to the above-mentioned promises Landsvirkjun gave the municipality before the contracts were made in 2007. Árnason’s statement has been highly criticized by the heavy industry lobby and particularly by Landvirkjun, which in a press release refused the accusations and said that the company had only worked closely with the municipality like it always does. However, the press release does not mention the different parts of Landsvirkjun’s financial involvement, apart from the payment for the plan making itself.

What is all this energy for?
During the whole media frenzy following the Supreme Court’s decision, neither Landvirkjun nor Flóahreppur council nor the parliament opposition have been asked the simple question: Why are three dams to be built in lower Þjórsá; Urriðafoss (130 MW), Hvammur (82 MW) and Holt (53 MW)?

In November 2007, Landsvirkjun announced that the company would not sell any more energy to companies planning to build aluminium smelters in the south-west part of Iceland, but rather to data centres, silicon factories and other such production, which is low-impact compared to aluminium production. But due to older contractual obligations the power company is bound to provide energy to Rio Tinto-Alcan’s planned expansion of its aluminium smelter in Straumsvík, Hafnarfjörður. Also there is an existing contract about energy for Verne Holding’s planned data centre in Reykjanes. Landsvirkjun obviously needs more power plants.

However, the data centre needs only 25 MW, which is about 10% of the planned energy production in Þjórsá, and Rio Tinto-Alcan needs about 75 MW, which leaves Landvirkjun with 165 MW from the Þjórsá Dams, not to mention the energy that is supposed to be produced with Búðarháls Dam in Tungnaá River (80 MW), making the total sum 245 MW. So what is all this energy for?

Like repeatedly mentioned by Saving Iceland and other environmentalists, both Norðurál (Century Aluminum) and Alcoa are faced with a lack of energy: Norðurál for its smelter in Helguvík, currently in the making, and Alcoa for its planned smelter in Bakki. Environmentalists have pointed out that at least eight power-plants are needed for the Helguvík smelter and while the majority of them will be geothermal plants, environmentalists have made a guess that Urriðafoss Dam will be the last of the eight needed. Similarly, Alcoa states that the Bakki smelter will be run only on geothermal energy, whereas environmentalists – especially Saving Iceland – have made it clear that hydro dams will have to be built if the smelter is supposed to run at all.

This leads inevitably to a simple question: Are the Þjórsá Dams planned for more aluminium smelters?

Sigmundur Einarsson, a geologist at the Icelandic Institute of Natural History, has written some articles on this matter (in Icelandic). He has tried, amongst a number of other environmental scientists,  to warn the Icelandic government about a new kind of collapse, an energy collapse due to following far too optimistic speculation of irresponsible people.

Einarsson’s first article was named: Iceland’s great energy sources. After the Icelandic economic collapse in 2008 politicians have constantly claimed that the future strength of the country lies in its wealth of power stored within rivers and geothermal areas. Einarsson has pointed out that all available geothermal power in Iceland would not be enough to power two big aluminium smelters proposed at Helguvík in SW Iceland and at Bakki in NE Iceland.

The only answer to Einarsson’s first article appeared in Century Aluminum´s homepage saying that about 1500 MW of energy is available from SW Iceland’s geothermal fields and rivers and that the Helguvík smelter needed only 625 MW. The company´s numbers on energy include all already harnessed geothermal fields along with highly optimistic numbers on areas not yet investigated.

Einarsson who has long experience working on geothermal activity in Iceland answered with more arguments titled Century Aluminum´s dreams of energy . The following table from his article includes every geothermal field in SW Iceland.

The following table shows the amount of technically exploitable power (TEP), already utilized power (AUP) and non-utilized power (NUP) in the geothermal fields of SW-Iceland. The numbers for TEP are Einarsson’s estimates and the numbers in brackets come from a paper by S. Björnsson, a geophysicist at the Icelandic Energy Authority.

Geothermal field             TEP (MW_e)            AUP (MW_e)            NUP (MW_e)

Reykjanes 100 (200)             100             0

Eldvörp/Svartsengi 100 (120)             75             25

Krýsuvík (Trölladyngja,             100 (480)             0            100

Sandfell, Seltún,

Austurengjar)

Brennisteinsfjöll (40)             –             –

Hengill (Hellisheiði,             600 (600)             333            267

Hverahlíð, Bitra, Nesjavellir)

Total            900 (1440)             508             392

Reykjanes geothermal field A 100 MW_e power station is already running in the area. The power company HS Orka has requested permission from the authorities (Icelandic Energy Authority) to the enlarge the station to 200 MW_e. The permission has not been granted since the power company has not been able to proof further exploitation to be sustainable (showing that Einarsson’s estimate for TEP might even be too high). In 2006 HS Orka signed a contract with Century Aluminum about 150 MW_e of energy for the Helguvík smelter, partly from this source. This delay is already under jurisdiction in Sweden, home country of  Magma Sweden, the owners of HS Orka.

Eldvörp/Svartsengi geothermal field Preparation for extended exploitation of the geothermal field has not started. The pressure within the reservoir has recently become steady after 28 years of constant draw down so increased exploitation is not likely to be allowed in the near future. Energy for the Helguvík smelter can not be expected from this source.

Krýsuvík geothermal fields This geothermal area which consists of 4 subfields has never bee harnessed. HS Orka has license for research in the total area but has only made agreement for future production with the landowners of the two smaller Trölladyngja and Sandfell subfields. Two deep drill holes in Trölladyngja subfield have proved negative and research has not started in the other three subfields. Scientific views on power potential of the total area are controversial, partly due to lack of data. Energy from these fields seems unlikely.

Brennisteinsfjöll geothermal field is quite small and lies in the mountains south of Reykjavík. This area is not likely to be harnessed in the future.

Hengill geothermal field with the subfields Hellisheiði, Hverahlíð, Bitra, Nesjavellir lies SE of Reykjavík. The area has been harnessed by the power company OR, owned by the Reykjavík municipality. This power company almost vent bankrupt after Icelands financial  collapse. The companies financial plans do not assume any new power stations in the next five years. So energy for the Helguvík smelter from this source can hardly be expected until at least 8 years from now. OR has secured energy for one 90 MW_e power station, but further plans have not been confirmed.

The above mentioned potential origins of power for the aluminium smelter are specified in the EIA report and nothing else.  Einarsson has in his articles repeatedly pointed out that it will never be possible to feed the smelter with energy from these geothermal areas. No answers have ever come from the authorities, neither local or governmental.

The third power company, Landsvirkjun, has prepared three water power stations in the river Thjórsá (Þjórsá) in South Iceland, producing about 230 MW. Landsvirkjun has repeatedly argued that the electricity from these power stations will not go to aluminium smelters. Other power potentials are not in sight in southern Iceland.

See also:

Threatened Areas

Development of Iceland’s geothermal energy potential for aluminium production – a critical analysis

The Struggle So Far
The campaign to defend Europe’s greatest remaining wilderness continues. For the past five years summer direct action camps in Iceland have targeted aluminium smelters, mega-dams and geothermal power plants.

After the terrible destruction as a result of building Europe’s largest dam at Kárahnjúkar and massive geothermal plants at Hengill, there is still time to crush the ‘master plan’ that would have each major glacial river dammed, every substantial geothermal field exploited and the construction of aluminium smelters, an oil refinery, data farms and silicon factories. This would not only destroy unique landscapes and ecosystems but also lead to a massive increase in Iceland’s greenhouse gas emissions.

Political Landscape
Saving Iceland has reintroduced civil disobedience and anarchist ideas into Icelandic grassroots and demonstrated numerous methods of direct action, many of which were utilized in a highly successful manner in the ‘Kitchen Utensils Uprising´ of last year, where experienced Saving Iceland activists constantly stood in the forefront pushing boundaries. Saving Iceland and our work throughout the years was a major catalyst in toppling the corrupt pro-heavy industry ‘Alcoa government’.

However, last year´s general elections were a major blow for the environmental movement in Iceland, with the ‘Left Greens’ booting their own minister of the environment out for being genuinely concerned about environmental values. The leader of the party denounced their own environmental policies for being too ‘puritanical’ to be applicable in such times of financial crisis. With this and the continuing of the People’s Alliance in government we are still looking at a heavily fortified pro-heavy industry government, doing away with any pretence of being green or even remotely progressive. On top of this, corrupt labour unions are firmly in the grip of the aluminium lobby calling for job growth regardless of the environmental costs.

The Situation Now
The deep financial and ethical crisis that hit Iceland in the autumn of 2008 caused the energy companies temporary difficulties in obtaining foreign loans for their projects, but the aluminium lobbyists are more bloody minded than ever. Now their argument is that with the economic collapse, Iceland can simply not afford to take note of environmental concerns. This actually exposes the underlying truth that the aluminium lobby have always been aware of the validity of the environmentalists point of view. The aluminium lobby want to further their horrors, on grounds of a crisis which they are largely responsible for having created.

The banking side of the crash tends to be overemphasized while other major drivers of the crash are often ignored. The report of the Special Investigation Commission (SIC), which looked into the events leading up to and causing the financial crash, has however focused on the effects of heavy industry in a key chapter of their report. The expansion of Iceland’s financial system beyond the country’s sustainable limits, is unequivocally traced back to the enormous projects of the heavy industry build-up. This chapter has been ignored by the media, and so has another chapter that stated the media’s own culpability as unquestioning servants of the bank and industrial establishments.

A fundamental problem with the SIC report and the general atmosphere of denial that greeted it is that the report comes from within the very heart of the rotten State of Iceland. As such its real function is to keep all the options for dealing with the huge amount of corruption and democracy deficit safely within the sphere of the courts and parliamentary politics: Firmly under the control of the very establishment that created all this power abuse in the first place.

In case of the financial frauds this will mean years of long, drawn-out court cases which will gradually loose all meaning to the public, which have been left to pay the massive debts generated by the frauds.

In case of the deep rooted culture of corruption and the climate of fear which the aluminium corporations and power companies so thrive in, the promises of transparency and democracy are nothing but a smokescreen for an even greater corporate plunder of the countries’ energy resources. This plunder, supported by restructuring obligations in loan agreements with the IMF, is a continuation of a deeply corrupt policy of privatisation and ruthless industrialisation, the very same policies that created the crisis.

Current action targets
The Century aluminium smelter in Helguvík, targeted by Saving Iceland last two summers, is still slowly being built. Where the electricity for the plant is to come from is still uncertain, but it will require up to eight new power plants, at least seven of which will be geothermal on the Reykjanes Peninsula (HS/MAGMA) and Hellisheiði (OR – Reykjavik Energy). One of the geothermal plants powering Century’s smelter could be in Bitra, close to Hengill, and the eighth power plant will probably be a large dam on the beautiful Þjórsá River that Landsvirkjun (National Power Company) is eager to build as soon as they can. Norðurþing is in negotiations with Alcoa about an aluminium smelter in Bakki/Húsavík with energy coming from fragile wilderness areas in the north. Platina Resources want to do gold and other mining research in the Eastfjords.

Take action!
This year, instead of organizing a summer protest camp, we call for resistance throughout the seasons. We especially call for Icelanders to take action all year round but also environmentalists worldwide to come to Iceland, where we will warmly welcome any kind of individual actions against the aluminium corporations and the energy companies active in destroying the environment.

Symbolic actions have turned out not to be enough to stop the forces of destruction. The aim of actions should be to prevent any further rape of the land. Saving Iceland gives its wholehearted solidarity to any actions that hit the aluminium industry and the power companies where its most effective.

Even if you can not come to Iceland to do direct actions your help to our struggle with solidarity actions, donations, translations and by spreading the word will be invaluable.

For information on targets read:

The Nature Killers

The Saving Iceland European Target Brochure

S.I. European Target Brochure Update

This ruling caused uproar amongst pro-indistrialists, who went so far as to claiming that Svandís Svavarsdóttir, the minister of environment, was guilty of both treason and terrorism against the people og Reykjanes, especially all the unemployed. All the medias jumped on the wagon with the industrialists, citing union bosses worrying about the unemployment rate, economists painting a bleak picture of a bankrupt future and interviews with unemplyed people worrying about their mortages. And all of it was Svandís’s fault.

Yesterday the Ministry of Environment confirmed the Planning Agency’s second verdict. The verdict’s the same, no joint EIA is needed for the projects on the SW peninsular. This means that all the balls are in the industrialists court now and the media is backing them up with quotes and interviews with indistrial workers and union bosses dreaming of a better future now that the way has been paved for projects like the enlargement of the Reykjanes Power Plant, Bitra Power Plant, Hverahlíða Power Plant, various data storages and an aluminium smelter and a silicon factory in Helguvík.

Environmentalists claims, that the governmental administration is entierly against environmental views, go unheard as the mayor of Reykjanes proudly announces that this means work can go ahead at full speed to build the Century Aluminum smelter in Helguvík this spring, creating many jobs for locals.

But as this goes on, no one has answered the question about where the energy for a smelter of the size CA are plannig to build is to come from. Saving Iceland has from the start pointed out that damning Þjórsá river would be the only way to provide sufficent energy for such a project, and currently various calculations and studies done by various groups and individuals are painting that same picture, not matter how optimistically they play with the numbers for all other harnessing capabilities in the area. And that means drilling every warm puddle in the SW peninsula, which would be an environmental disaster.

The industrialists are exploiting the financial collapse and people’s fear of uncertanity and unemployment to wipe all other options than these heavy industry schemes as they way out of the national debts, and with all the major medias behind them, Iceland’s pristine wilderness seems to be more threatened than ever before.

At the same opportunity, Sigurðardóttir announced her hopes for that Landsvirkjun (Iceland’s national energy company) could start construction of Búðarhálsvirkjun hydro-dam in Tungná river, early next spring. The energy from there is supposed to run increased aluminium production in Rio Tinto-Alcan’s smelter in Hafnarfjörður. Sigurðardóttir said that employment affairs must be the biggest issue for social democtrats in the upcoming regional elections that will take place in the spring of 2010. She raised her voice for the necessity of increased development with the help of “eco-friendly” energy sources.

Few weeks ago, Svandís Svavarsdóttir, the minster of environment (from Vinstri Græn, the left green party) decided to rejecte the decision of Iceland’s National Planning Agency, which stated that Suðvesturlínur would not have to go through a joint environmental impact assessment (EIA) with other projects that concern the construction of the Helguvík smelter. She did not decide that the projects would have to go through a joint EIA, but sent the case back to the Planning Agency, which shortly later announced the same decision as before. It is uncertain what Svavarsdóttir will do now, since it is obvious that with her words, prime minister Sigurðardóttir is putting pressure on Svavarsdóttir not to change the Planning Agency’s decission. Svavarsdóttir said she is surprised by the words of the prime minister since the issue has not been discussed in government.

INCA (Iceland’s Nature Conservation Agency) is preparing to sue the Planning Agency’s deceision. INCA and environmentalists ask where the energy for the Helguvík smelter is going to come from. Even from the beginning of the discussion about a smelter a 360 ton smelter in Helguvík – which now is supposed to be built in four 90 ton parts, the first one to be ready in 2012 – environmentalists and other aware people have pointed out the uncertainity concerning energy for the smelter. Century Aluminum keeps to its words, stating that the smelter will be run on geothermal energy only, which means that the geothermal areas in the whole Reykjanes peninsula will dry up. The expansion of Hellisheiði power plant – followed with even more destruction of the geothermal areas there – is then supposed to supply what is needed.

This will though not be enough. The Helguvík smelter therefor relies on the building of hydro-dams, most likely in the lower Thjórsá river in the south of Iceland, where Landsvirkjun plans to build three large dams. But still, this is not enough either. Recently, Ólafur G. Flóvenz, the director of Iceland’s Energy Researches, said that it will not be possible to harness enough energy for the Helguvík smelter in the upcoming years, at least according to what energy projects are on the table at the moment.

Adding to this, Alcoa still plans to build a smelter in Bakki, in the north of Iceland, run on geothermal energy only. That propaganda is of course complete nonsence, since the energy capacity simply is not enough. So in addition to destroying the geothermal areas around lake Myvatn and volcano Krafla, hydro-dams have to be built in one of the glacial rivers of the north – Skjalfandafljot being the most likely target.

It is not hard to understand what this means. If the construction of the Helguvík smelter goes on as planned, including the energy production required, we will see the complete destruction of the wilderness of southwest Iceland. The execution of the energy master plan of Iceland’s government, which now consists of political parties that were not in government when the plan was designed – is being continued as this is written.

In the area of the lower Thjórsá river, there is a fierce opposition to Landsvirkjun’s plans, even though the company has tried what ever they can to convince people to let go of their resistance against the projects – even threatening land expropriation. The same story is to tell in Hafnarfjörður, where Rio Tinto-Alcan’s plans for enlarging the smelter were voted down in a local referendum in the spring of 2007. But the city authorities, with the majority of the social democrats, have completely ignored the decission and officially supported the enlargment. Now, smelter supporters have collected enough signatures to demand another refendum about the same issue, which is likely to take place parallel to the regional elections next spring. This is how it is going to be: referendum after a referendum until enough people have been convinced to vote for the enlargement. And then, the possibility of voting the plans down is out of the picture. This is what democracy looks like!

Although we are witnessing increased environmental awareness, due to the heavy critique and direct resistance against the energy master plan, which has taken place in the last years – Landsvirkjun, the aluminium companies and the government have a strong support team, consisting of different associations who have waged a war against Iceland’s wilderness in the name of development and the reconstruction of the Icelandic economy. The Associations of Industry and Economy have for the last six month constantly pushed on the government to remove all possible hindrances from “necessary” energy projects that according to them, will bring life into the economy again. In the name of stability, these associations, among many other parties, demand the complete harnessing of all possible energy sources in the country. Their aggressive campaign against Iceland’s wilderness has to be replied to in at least as aggressive manners.

Iceland is developing its hydro and geothermal resources in the context of an energy master plan, mainly to provide power for expansion of the aluminium industry. This paper tests perceptions of geothermal energy as low-carbon, renewable and environmentally benign, using Icelandic geothermal industry as a case study.
The application of geothermal energy for aluminium smelting is discussed as well as environmental and human rights record of the aluminium industry in general. Despite application of renewable energy technologies, emission of greenhouse gases by aluminium production is set to increase.
Our analysis further shows that carbon emissions of geothermal installations can approximate those of gas-powered plants. In intensely exploited reservoirs, life of boreholes is limited and reservoirs need extensive recovery time after exploitation, making geothermal exploitation at these sites not renewable in the short to medium term. Pollution and landscape impacts are extensive when geothermal technology is applied on a large scale.

Krater and Rose – Development of Iceland’s Geothermal Energy – Download as PDF
The full publication will be available from Jan. 15, 2010. ISBN 9781849350051.

In the middle of August, Orkuveita Reykjavíkur (O.R. – e. Reykjavík Energy) decided to start discussion with Magma Energy about the latter’s purchase of O.R.’s share in H.S. Orka, which is 32% and would therefor give Magma 43% share in the company and the possibility of increasing it 5%. Magma has bought the very small shares of the communities of Sandgerði and Hafnarfjörður, and has been discussing with communities like Vogar and Grindavík about buying their shares as well. If everything goes like planned, H.S. Orka, which e.g. is the biggest energy provider for the Century Aluminum’s planned smelter in Helguvík, will mostly be owned by to private companies; Magma and GGE, which will own c.a. half of the shares each.

Magma Energy was established in 2008 by Ross Beaty, an geologist and businessman. For decades, Beaty has been building up and operating mining companies, e.g. Pan American Silver Corp, a silver mining company that owns eight silver mines in Central and South America. Magma Energy has since its foundation bought 21 geothermal energy projects and over 200 hectares of lands in the U.S. and in Latin America, and officially plans to be the biggest and the best geothermal energy companies world wide

Critique and opposition – No unity in government
Many critical voices have been raised in consideration of this issue. More then 100 people showed up to a public meeting in Grindavík last Tuesday evening, where the possible purchase was discussed. An unanimous assumption was sent out after the meeting, encouraging the state and municipalities to prevent the purchase from taking place. The government is adjured to mount guard around the country’s common resources, bearing in mind the long term benefits of people living here. The assumption also includes worries about GGE’s financial ability to take part in such a big commerce, since the company is heavily indebted and some of its major owners are on the tables of the former privatized banks’ resolution committees.

Steingrímur J. Sigfússon, minister of finance and the head of the Left Green party, agreed on meeting up with the public meeting’s representatives the day after. Sigfússon said that his opinions fit to the meeting’s assumption and that he would do what ever he can to stop the complete privatization of H.S. Orka from taking place. There is a huge opposition amongst Left Greens towards the privatization and members of the party have proposed that the state buys the share of Reykjavík Energy. Magma Energy’s director, Ross Beaty, has been meeting with Sigfússon to try to get him to relinquish that idea.

But there is not a united opinion about this between the two parties of the government; the Left Greens and Samfylkingin, the social democratic alliance. Many members of the latter one believe that the state is not capable of buying O.R.’s share in H.S. Orka, and the same opinion goes in the majority of Reykjavík City Council. According to the newspaper Fréttablaðið, there is a widespread opinion inside Samfylkingin about this impossibility, as well as worries about the International Monetary Fund (IMF) remarking on the idea of the state’s possible purchase

Who will be responsible?
In a commentary on Smugan, a left wing newspaper on the web, Björg Eva Erlendsdóttir, the page’s former editor, criticizes the privatization of Iceland’s natural resources. She says:

Despite the privatization of the energy company it is pointed out that the resource is still the property of the public. Still, that does not concern the public at all if the right of utilization has been endorsed like was done with the fish in the ocean. Moreover, the fee for the utilization right is so low that revenues from the resource do not concern the public at all. The resource rent will go to the owner of H.S. Orka but not the public. The question about what it changes to keep the resource in the hands of the official has not been answered. Is it possible that the Icelandic nation will have to be responsible for the resource, just like it was for the privatized banks? If the resource will be overused or destroyed, who is then responsible for that? An energy company in public interest can obviously not become broke. It will be the Icelandic states role to take on the slam if things go badly.

And she continues, now comparing the situation to what Naomi Klein talks about in her book, The Shock Doctrine:

Klein sets out a theory about that when societies come across huge shocks, big corporations and other power blocks use the opportunity to put into practice a systematic strategy where the property of the public is given to private parties on a silver plate for a embarrassing price. Much indicates that just now, the energy companies’ bad position after the economic collapse is being used and outsmarted in the shadow of the attention that has been put on the Icesave-contracts alone, to quickly finish the precess of privatizing H.S. Orka.

IMF’s leash on Iceland
Shortly after the collapse of the Icelandic economy in October/November last year, some people started to announce the death of capitalism; the theory and the practice. Others, e.g. local anarchists, pointed out the opposite: Now capitalism is developing and the best possible position for unchecked capitalism is being created. On a flier distributed by anarchists in one of the big weekly demonstrations against the government, the 1. of November 2008, this was e.g. stated

Iceland is a paradise for the International Monetary Fund. Here are unharnessed natural resources and a weak and imptent government on crutches – a puppet government for other governments. In addition to that, Icelandic resistance has always been little and attended by few. IMF’s menu for Iceland includes ungovernable destruction of glacial rivers and geothermal areas, and the privatization of social service and natural resources, including energy and drinking water.

Many others warned about IMF’s intervention here in Iceland. Many articles were written, telling the bloody story of IMF around the globe but the common idea here seemed to be that since Iceland did not count as a third world country, IMF’s behavior would be different here then elsewhere. The recent news about the privatization of H.S. Orka and the IMF’s intervention with the idea of the state’s purchase, are most likely only the first proves for these worries.

Incorporation and PR stunt
The most recent news are that the incorporation of Magma and GGE is likely to take place, which means that one foreign private company would own H.S. Orka completely. The companies’ representatives say that this idea has been lying on the table since the beginning of the two companies’ discussion. Riss Beaty says that he does not rule out the possibility of Magma owning a minority share in H.S. Orka if official parties would own the majority. But he says that it is far from being a preferable outcome; if Magma is not a majority owner, there would be a lack of interest and energy inside the company.

Beaty was interviewed in Kastljós, a news report show on the national TV station, yesterday night. He talked about how much of an “environmentalist” he is, how clean and renewable Iceland’s energy is, how he admired the Icelandic nation and that he would even want to learn Icelandic. What a stunt! When asked if he understood the publics mis-trustfulness towards privatization after the collapse of the banks, he said he did but mentioned that the Icelandic people would have to understand what kind of company Magma is.

He repeated himself in an interview with Fréttablaðið, where he said: “We are not a scary company, we want to work with H.S. Orka in building up a stronger company, for the good of Icelanders, ourselves, and actually the whole world.” And he denied that Magma is getting itself into a group of companies who see an opportunity for an easy and shortly gotten growth by buying the ruins of Icelandic companies after the collapse.

Well, we have heard this kind of nonsense before, especially when it comes to the energy and aluminium industries. One can only hope that after the bank collapse and the parallel political, economical and media scandals that were discovered, people do not believe a single word from a rotten CEO like Ross Beaty.

More information about the issue later.