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.

After many years of preparations the Greenlandic government say the final decision on Alcoa’s proposed smelter will be taken at the spring 2012 of the parliament. It is more likely, as the global history of the industry and the evidence in Greenland tells us, that the decision has in fact already been made undemocratically behind closed doors, despite the decreasing support of the Greenlandic people. In fact Alcoa and the Greenland government are so keen on passing the project that they have just hired an eighth employee at their national company Greenland Development- formed to enable the industry to go ahead. Juaaka Lyberth’s explicit remit is to influence public opinion on the smelter through the media. Greenland Development paints a rosy picture of an aluminium future for Greenland, but will their promises of prosperity come true? A comparison to Alcoa’s Fjardaal project in East Iceland suggests that many will not.

Local employment?

“The aluminum project is a major project that will offer a large number of stable and lasting jobs.” says Minister for Industry and Mineral Resources, Ove Karl Berthelsen.[1]

Despite this claim Alcoa recently asked the Greenlandic government’s permission to use Chinese contractors to build the two hydro dams and smelter. Chinese workers would be paid half the salary of members of the Greenland Workers Union. They claim this will be necessary to make the project competitive and that the Greenlandic labour force will not be sufficient[2].

Greenland Development responded immediately to this unpopular news by sending out a press release explaining why competitiveness was so important. The release explained that since the financial crisis China has increasingly dominated the market for aluminium smelting due to their low cost of construction and production. Building a smelter in China costs $3000/ton of production capacity compared to $4500 – £5000/ton in Iceland or Saudi Arabia. Greenland is in direct competition with these prices and will have to provide very good terms for the company if they want the project to go forwards[3]. ‘Good terms’ means cheap labour and foreign workers over Greenlandic contracts.

The labour question has dominated debate on the smelter in Greenland recently. Bjarne Lyberth, Head of the organisation Against Aluminium Smelter in Greenland is concerned that other important issues are being sidelined:

“In my view the issue on cheap foreign labour is just one of many problems. There is a risk that this becomes perceived as the main hurdle to the project and other serious cultural, social, health, environmental and, economic impacts just become “minor issues” to deal with later.”

However, the promise of jobs is usually cited as the biggest rationale for building such huge industrial constructions, and it is a very tempting one in economically deprived rural areas where smelters are often built. When the decision on the Fjardaal aluminium smelter and associated Karahnjukar dams was pending, the Iceland government made similar claims. They promised the Confederation of Icelandic Labour that the ratio of Icelanders to foreign workers at the dam construction site would be about 8:20, amounting to 3000-5000 jobs for Icelanders[4]. In reality the construction company Impregilo only employed around 100 Icelandic workers out of 1100 employees at the site. Many of these workers were Chinese, Portuguese and other non EU nationalities. Impregilo claimed that Icelanders didn’t want the work as it was not as highly paid as they had hoped, and there was a high turnover. In contrast the Chinese workers were very stable despite tough conditions[5]. Increasing company profit by using temporary low paid foreign labour is known as ‘social dumping’.

The construction of the dams was plagued with controversy as it was revealed that foreign workers were being paid less than Icelanders and made to work in unsafe conditions without proper equipment[6]. 1700 work related injuries were reported during the dam’s construction, 120 resulting in long term or permanent inability to work. Four workers are known to have died from injuries on the site[7] [8]. There is evidence that when the Icelandic coalition of unions became vocal about the treatment of workers in the press they were silenced by bribes from Impregilo who promised to pay into the union’s pension funds. A few years later it was revealed that the payments had not been made and the union (ASI) raised rights of foreign labourers again. Shortly after the funds were finally paid and ASI’s complaints ceased.

National income from aluminium export?

Greenland Development‘s recent news release explains;

‘The project economy of each individual project is decisive. The competition is as such between countries that it among other issues hinges on the terms a host country will provide for a new project. Countries in Asia, the Middle East and Latin America are all trying to develop smelter projects. Only projects that are competitive on a global scale will have a chance to become real projects and be implemented[9].’

In reality, being ‘competitive on a global scale’ with countries such as China means selling energy and labour as cheaply as possible and providing tax breaks that make the project attractive to the company – minimising benefit to the host country. National unions of workers the Greenland Employers? Association and the Organisation of Greenlandic Employers have warned that the only income from the project in its first few years will be tax paid by its employees, and with much workforce coming from abroad on low wages this is likely to be very little[10]. The government has also said that company tax should not be counted on for the first fifteen years, suggesting that large tax breaks have been given[11].

In Iceland predictions that the smelters could be an economic drain and not a boost are increasingly being proven. Energy prices paid by the smelter operators were kept from the Icelandic public until very recently following a scandal when it was revealed that  Century Aluminium had been paying a fifth of domestic prices – the cheapest energy for aluminium production in Europe[12]. Prices for Alcoa’s Fjardaal smelter were accidentally revealed by then company Chairman Alain Belda when he claimed that Iceland was charging some of the lowest rates in the world, just $15 per MWh (megawatt hour)[13]. The deals they made link energy prices to the cost of aluminium so when the market drops the taxpayer can end up subsidising the companies rather than profiting from them.

In the run up to Iceland’s dramatic financial crash in 2008 the OECD concluded their country report by warning Iceland that ‘large scale public investments are inherently risky’ and strongly advised them not to approve further aluminium developments until it was clear whether they would get a long term profit from existing ones:

‘No major investments in energy-intensive projects, including those already in the planning phase, should proceed without prior evaluation within a transparent and comprehensive cost-benefit framework (including environmental impacts and inter-generational effects).[14]’

Two years earlier a report by Icelandic bank Glitnir warned that any benefit from large scale aluminium developments “is probably outweighed by the developments’ indirect impact on demand, inflation, interest rates and the ISK exchange rate”. Similarly economist Thorsteinn Siglaugsson claimed that “Kárahnjúkar will never make a profit, and the Icelandic taxpayer may well end up subsidising Alcoa”[15]. A 2009 report by Economist Indriði H. Þorláksson concluded that the industry would have negligible benefits on the Icelandic economy, possibly causing long term damage, and should not be considered a way out of the financial crisis[16].

Despite all of this evidence Greenland Development have dedicated another recent news article on their website to trying to disprove that Iceland’s crash had anything to do with the smelters. Though they admit that ‘high investment in construction also played a role which put pressure on the economy’, this was ‘hardly significant‘. Instead they claim that aluminium industry ‘has been crucial in earning foreign currency for Iceland during the crisis‘[17].

In another article Greenland Development’s website enthusiastically claims that the aluminium price is likely to rise in the coming years due to demand for ‘green’ cars and solar panels and economic growth in Asia[18]. Though this would somewhat increase Greenland’s chances of making a profit there is no guarantee of market stability, which has been very volatile in recent years. A critique of the concept of ‘green aluminium’ can be found here[19].

Already there seems to be some degree of caution in Greenland about taking too much of the burden of construction costs and loans which caused so many problems in Iceland. The Greenlandic government is considering bringing in a third party to ownership of the project instead of taking the whole of the 50% stake they were offered by Alcoa.

Public more sceptical now

Despite Greenland Development’s expensive propaganda war, public support for the Alcoa smelter has been steadily decreasing. People’s organisations Avataq and the newly formed Against Aluminium Smelter in Greenland have worked hard to discover the truth about the environmental and social impacts of the smelter and the ethical track record of the company abroad. As a result Greenland Development reported that their own October/November 2010 survey of public opinion revealed rapidly changing attitudes:

‘there is a very low degree of knowledge, as well as a less positive attitude towards the project than in previous years. Of the citizens that have expressed either a positive or negative attitude towards the aluminium project, there is thus now only a small majority (54 percent) who are positive.[20]’

The main reason for the ‘increased scepticism‘ towards the project was ‘concern about the possible environmental consequences‘ with 20% of those interviewed believing that the project ‘can have a markedly negative impact on nature and the environment‘ compared to only 7% the previous year[21]. This was identified to be mainly due to critical media coverage and Greenland Development’s ‘information manager’ was hired shortly afterwards to address this. Environmental protection group, Avataq, says Greenland Development has deliberately tried to distort public opinion about the aluminum industry. Their head Mikkel Myrup explains:

“Greenland Development has assumed a role as an aluminium industry propagandist, and do that rather primitively. But this wouldn’t be possible without strong support from the civil servants in the central administration and the smelter municipality administration. The civil servant’s pro industry influence on the cabinet members and the parliament is a massive democratic problem, because they suppress and/or ignore information that would equip the politicians with a wider, and more realistic knowledge base from which to make enlightened decisions.”

With three operating smelters Icelanders have had a good opportunity to assess the benefits of the industry which has been promoted as their economic saviour. A recent online poll by news outlet Visir revealed that only 13% of participants thought heavy industry was the most important area to focus on. Despite high level promotion of the industry’s benefits by certain sectors of the national leadership evidence shows that tourism and fishing are still the most important and growing industries for the Icelandic people[22].

Last spring ALCOA released the first draft of the joint environmental impact assessment for the proposed Bakki smelter and power plants at Krafla and Theistareykir. Recently Iceland’s National Planning Agency commented on the draft assessment in a damning commentary.

The agency stated that the environmental impacts of the project are high and cannot be mitigated. 17,000 ha of untouched wilderness will be affected. Greenhouse gas emissions of the project would constitute 14% of Iceland’s total. There is a great deal of uncertainty on the full impact of the planned power plants and particularly on how much geothermal energy can be sustainably produced. Finally, the assessed energy projects will not be able to fully power the smelter, with 140 MW of capacity missing.

This confirms three key points of critique on the smelter that we have been voicing for several years now.

Firstly, the environmental impact of the geothermal plants and drilling in the north is much greater than Alcoa has claimed.

Secondly, we have said that carbon emissions from the projects would be so high that Iceland would find it extremely difficult to meet its international obligations. If Iceland wishes to become an EU member, then this impact assessment will surely be the kiss of death for the Bakki project.

Thirdly, when the joint impact assessment was announced we insisted that possible dams in Skjalfandafljót, Jökulsá Eystri, Jökulsá Vestri and Jökulsá á Fjöllum (a 72 km2 reservoir is on the drawing boards!) should be assessed for environmental impact, because one or more of them would be needed for a 346.000-ton smelter.

Now our calculations, that the northern geothermal fields will not produce enough energy for the smelter, have been proven correct. The original proposal for the smelter was for 250.000 tons, but ALCOA have stated in international media that they intend to extend the Bakki smelter to 500.000. Whether or not this will happen, new dams need to be built if the smelter is pushed through. This will lead to a large amount of borrowing and capital inflow that will again destabilise the Icelandic economy, which is too small to deal with projects this size.

Saving Iceland’s energy calculations were published in Morgunblaðið (22 August 2008), and greenhouse gas calculations were published in an international book publication on green energy and on savingiceland.org. Other environmentalists in Iceland have also raised these issues.

However, Alcoa and the consecutive Icelandic governments have thus far ignored them.

They refuse to comment on where the required energy is going to come from.

They refuse to think about how the economy will respond to more huge projects.

They refuse to comment on how Iceland can keep its green and unspoiled reputation if so much of its landscape and rivers will be ruined and if greenhouse gas emissions sky-rocket.

They now even refuse to respond to the national planning agency, except that they have said they will simply ignore the environmental impact.

We hoped that this kind of arrogance had been gotten rid of by the fall of the government in 2009 but apparently it is still there.

Clarity and transparency is for a start needed now on this simple question: if there is going to be a 346.000-ton or more smelter at Bakki, where will the new dams be built?

References:

Development of Iceland’s Geothermal Energy Potential for Aluminium Production – A Critical Analysis

Sparking a World-wide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World. Editor: K. Abrahamsky. AK Press, 2010.

Jaap Krater is an ecological economist and a spokesperson of Saving Iceland

This article was first published in Morgunblaðið March 5 2011.

A delegation committee from Alcoa, including John Thurstadt, the head of the company’s aluminium production worldwide, and Marcos Ramos, president of Alcoa in Europe, were in Iceland over the weekend to meet with the government and Landsvirkjun, Iceland’s national energy company. During the meetings, the committee stated that Alcoa is not withdrawing from the project and wants to go ahead with the project.

Less then three weeks ago, on January 20th, business newspaper Viðskiptablaðið, stated that Alcoa would soon announce the company’s withdrawal. The reason, according to the paper, was the obstacles that the current government has put in the way of the project, reaching its climax in September 2009 when Katrín Júlíusdóttir, Minister of Industry, refused to renew a memorandum of understanding between Alcoa, the council of Húsavík and the government at that time. The memorandum was originally signed in March 2006 and had repeatedly been renewed as the speed of the project slowed down. By refusing to renew it, Júlíusdóttir did however not rule out the smelter but most significantly disagreed with Alcoa about its planned size.

After this weekend’s meetings, Tómas Már Sigurðsson, CEO of Alcoa in Iceland, said in the media that the company’s has not changed at all and that the government had sent good messages about the future of the project. Asked about the frequently asked questions about the energy that the smelter is supposed to be run on, Sigurðasson said that he believed there is enough energy for the project: “A permit exists for more then 500 MW of power plants on the north-east corner [of Iceland].”

In the summer of 2008, Þórunn Sveinbjarnardóttir, Minister of Environment at that time, ruled that a joint Environmental Impact Assessment (EIA) had to be made, including the planned smelter, geothermal power plants and energy transportation. Whereas the decision was met with anger by the smelters proponents – some of them calling it a trick to actually stop the smelter from being built – others critisized the minister for not including in the EIA, possible hydro dams in several rivers in north Iceland that would be needed to produce enough energy to run a smelter of this size: at least 346 thousand tons per year (tpy) but maybe even 500 tpy according to the words of Alcoa’s Vice-President Bernt Reitan.

In an article published in the newspaper Morgunblaðið in August 2008, Jaap Krater, an ecological economist and a spokesperson of Saving Iceland, stated:

“A 250,000 ton smelter would require 400 MW of electricity. The energy would be coming from the geothermal fields in North Iceland. If the optimistic estimate of 370 MW for Krafla 2 (drilling into the Viti volcano), Þeistareykir and Bjarnarflag would be realised, which is uncertain, there would still be a deficiency, so 30 MW would be taken from the yet unspoiled and unexplored Gjástykki area, at a huge environmental cost . For a medium sized smelter the deficiency would rise to at least 150 MW and for a large smelter it would be at least 400 MW.”

“Thus, if the Bakki project is pushed through, it is almost inevitable that this will lead to construction of more large dams.”

The joint EIA was published in 2010 and in November that same year the National Planning Agency published its comment on the report. The agency’s conclusion was damning and proved three key points of Saving Iceland’s critique: Firstly, the environmental impacts of the drilling in the north will be far more then claimed by Alcoa. Secondly, not enough geothermal energy can be harnessed in the north to run the smelter. Thirdly, the project will highly increase Iceland’s emissions of greenhouse-gases and constitute 14% of the country’s total emission (which is already high above international agreements).

The questions about how Alcoa and Landsvirkjun are going to get enough energy for the smelter and if new dams have to be built, where they will be located, have still not been answered. Both parties are allowed to boldly talk about the project without being faced with these fundamental questions, which were highlighted in a press release from Saving Iceland on November 25th 2010 but ignored by the media, apart from the Reykjavik Grapevine, who’s report can be read here.

It states that:

– Environmental impacts of the project are high and cannot be mitigated.
– 17,000 ha of untouched wilderness will be affected
– Greenhouse gas emissions of the project would constitute 14% of Iceland’s total.
– There is a high amount of uncertainty regarding the full impact of the planned geothermal power plants and particularly their impact of the geothermal energy resource base.
– The assessed energy projects are not sufficient to power the smelter, with 140 MW of capacity missing.

“These reports confirms three key elements of critique that Saving Iceland voiced now several years ago,” says Jaap Krater, a spokesperson for Saving Iceland.

“The first is that the environmental impact of the drilling in the north would be much greater than Alcoa claimed.”

“Secondly, when the joint impact assessment was announced we insisted that possible dams in Skjalfandafljot, Jökulsá Eystri, Jökulsá Vestri (both in the Skagafjörður region) and Jökulsá á Fjöllum should be assessed for environmental impact. Now our calculations that the northern geothermal fields will not produce enough energy for the smelter are proving correct.”

“Thirdly, we have said that carbon emissions from the projects would be extremely high and would make it very difficult for Iceland to meet its international obligations. This is also confirmed,” explains Krater.

“If Iceland wishes to become an EU member, then this impact assessment will surely be the kiss of death for the Alcoa Bakki project.

Saving Iceland’s energy calculations were reported in Morgunblaðið in August 2008 (1), while the greenhouse gas issues were published in a recent international book publication (2).

References

(1) Bakki Impact Assessment Should Include Dams, by Jaap Krater, Morgunbladid, August 22nd 2008, in Icelandic here and English here.

(2) Development of Iceland’s geothermal energy potential for aluminium production – a critical analysis, by Jaap Krater and Miriam Rose, In: Abrahamsky, K. (ed.) (2010) Sparking a World-wide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World. AK Press, Edinburgh. p. 319-333. Also published on Saving Iceland’s website here.

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.

Perkins used to work for the U.S. National Security Agency and his job included “to convince poor countries to accept enormous development loans – and to make sure that such projects were contracted to U.S. companies,” as says on the back cover of his book. Perkins states that Iceland is the first ‘developed’ country in the world to be hit by the ‘Economic Hitmen’, referring to the invasion of the aluminium industry in Iceland.

In the TV interview, Perkins spoke about Landsvirkjun’s (Iceland’s national energy company) worsening financial situation and made the connection between that and the possibility of the selling of Icelandic natural resources. He talked about how sad this development is but at the same time should have been easy to see beforehand. Natural resources are the greatest resources of Iceland and big aluminium companies have come here to exploit them. With Landsvirkjun’s losses, Icelanders are not only giving away their resources but as well loosing big amounts of money. The situation will only get worse if IMF gets full control.

Even though Perkins is no specialist, his input into the current discussion about IMF, heavy industry and Iceland’s natural resources, is very important. Saving Iceland and other environmental organizations in Iceland have for years campaigned against the invasion of the aluminium industry in to Iceland, not only because of the environmental consequences but also the economical one as well as the negative effects on the democracy. These warnings have been backed up by economists but were until now been talked down by the government as well as aluminium and energy companies, said to be nothing but pure “political propaganda”.

Yesterday, Perkins gave a talk at the University of Iceland, in a crowded lecture hall. A panel discussion took place after the talk, including the current minister of environment, Kolbrún Halldórsdóttir. She was met with heavy anger, especially because of the secrecy concerning IMF’s demands. People asked why the current left wing government has not already put all information on the table. Halldórsdóttir could not give any proper answers apart from the fact that IMF demands complete secrecy. Only a couple of days after the forming of the current government, Steingrímur J. Sigfússon, the head of Vinstri Grænir (the Left Greens) promised in an interview with the leftist news web page Nei., that the government would make IMF’s demands visible as soon as possible.

It emerged from the panel discussion that the people present overwhelmingly agreed on kicking IMF out of the country. And since the Left Greens don’t seem to be about to take on that task, it will be interesting to see what kind of actions the grassroots here in Iceland will be taking in the nearest future.

— — — —

Read also: More Power Plants May Cause More Economic Instability by Jaap Krater.

The interview with John Perkins can be watched here:

The construction of Búðarhálsvirkjun is expected to be around 25 billion ISK and the 85 MW dam is supposed to power R.T. Alcan’s increased production in Straumsvík, Hafnarfjörður. R.T. Alcan hopes to increase its production by 40 thousand tons per year without enlarging the smelter. But the company also hopes to enlarge the smelter further, though the people of Hafnarfjörður voted against it in a 2007 referendum, or to construct a new smelter i Thorlakshofn. The dam is also meant to create power for Verne Holdin’s data center to be built in Reykjanesbær.
Asked about this in parliament, the minister of industry Össur Skarphéðinsson, said that he would like to ascertain the possibility that RT-Alcan itself or Icelandic pension funds would be interested in financing the project. He also expressed his opinion that the pension funds should in general take part in energy development in Iceland as well as possibly owning shares in aluminium smelters. Skarphéðinsson stated that the development of the aluminium industry would probably be a necessary tool to help solving the economic crisis.

However, construction of large dams and an aluminium smelter has played a significant role in the current economic crisis. They provide a short-term boost to the Icelandic economy but cause a fall in the longer term. Also ,,Local communities where large projects such as Fjardaal get constructed become completely dependent on foreign investment, an undesired and unsustainable condition that destroys local resilience” says Jaap Krater, Saving Iceland’s spokesperson in an article in Morgunblaðið about the current crisis.*

Friðrik Sophusson, Landsvirkjun’s director, said the company has had informal discussions with the pension funds about financing the dam project. Sophusson also declared his disapointment that the project could not be financed with foreign loans because of the financial situation.

One of the main reason for Landsvirkjun’s plans for damming Tungnaá, is the company’s problem to push through its plans for three dams in Þjórsá river, in the same area as Tungnaá. Local resistance and a legal case about the water rights in Þjórsá have delayed Landsvirkjun’s plans.

• Jaap Krater, More power plants may cause more economic instability, Morgunblaðið, Oct. 26. 2008

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

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

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

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

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

How did the Fjardaal smelter contribute to Iceland’s economic crisis? The two billion dollars for the construction of the country’s largest dam had to be borrowed by the state. That led to a more than significant increase in the current account deficit, which is now felt in increased inflation and depreciation of the currency. The economic cost now needs to be coughed up.

Note that any schemes that demand new power plants associated with a significant amount of borrowed capital will have this effect, whether an expensive dam or power plant is meant for aluminium, a silicon refinery, data centre or some other purpose.

It is quite simple. If you borrow money, you will have to pay back in one-way or the other.

Of course, once they are built, smelters bring in some degree of income to the country and, so it is argued, there are local economic benefits from a new smelter. Smelters provide jobs. What has hardly been researched in Iceland, though, is how much these new jobs displace jobs in existing local industries.

All local industries such as the fish processing industry in Reyðarfjörður have had to shut down as a consequence of employment competition from the smelter. Many new houses that were built are empty. Between 2002-2008, on average 73 more people moved each year from the Eastfjords to the southwest than the other way round. The smelter still depends on many foreign workers.

Local communities where large projects such as Fjardaal get constructed become completely dependent on foreign investment, an undesired and unsustainable condition that destroys local resilience.

There is another reason not to construct more smelters in Iceland. The price that the aluminium giants pay for energy to Landsvirkjun is linked to the world price of aluminium. If supply is increased this will lower the price of aluminium, decreasing 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.

Demand for aluminium is already slumping in the US and Europe. It will too in China when growth slows down there, which is likely to happen before Alcoa’s and Century’s planned new smelters could come online, considering the world economic outlook.

The metal corporations compete between themselves. Because of this is not just the global price that determines their profitability. The bottom line is eventually determined by how cheaply they can produce. For aluminium, profitability is fundamentally determined by one thing: energy costs. In Iceland, energy prices are rock bottom – the lowest in the world. It is not a coincidence that as Alcoa’s Fjardaal smelter went online, 400 workers in Rockdale, Texas were laid off as smelter operations there closed down. In the US, Alcoa pays much more for power.

This is why Alcoa, Century, Rio Tinto and Norsk Hydro all want new smelters in Iceland and in third world countries with cheap energy such as Trinidad and the Congo. When demand slumps, expensive plants can then be shut down in favour of cheap ones such as the proposed smelters at Husavik and Bakki. As inflation stays high and energy revenues low, the Icelandic taxpayer pays the price.

Construction of new power plants, smelters or other large scale projects will have some short term economic benefit as funds are infused into the economy.

But, as Geir Haarde recently confirmed, after execution comes the economic backlash. These megaprojects 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 overheated the Icelandic economy. What was called the ‘Kárahnjúkar problem’ led to an all time high in the value of the Krona, hurting export and the fish industry in particular. With the all-powerful currency, banks overplayed their hand and went into a spending spree. Drugs make you lose sight of reality.

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 a cold turkey?

Jaap Krater is a spokesperson of Saving Iceland

English version of article also available on Iceland Review.

“In the current environment, we have ceased making any new capital commitments and are reducing project spending. We believe the potential exists for a prudent way forward over time, but will soberly evaluate the feasibility of all elements of the project during the near term,” (1) said Logan Kruger, Century’s CEO.

While Century Aluminum’s revenue for the third quarter of 2008 rose due to an increase in aluminium shipments (2), prospects were deemed less rosy. Merrill Lynch downgraded Century Aluminum’s investment rating to ‘underperform’. It said aluminium pricing is weak, inventories of the metal are high and there are little catalysts to drive the price up.

“Some might think this is bad news for Iceland and that a new smelter could help with the economic crisis. But when we looked at what happened with Alcoa Fjardaal and Karahnjukar, a cancellation of Helguvik may be a blessing in disguise,” says Saving Iceland’s Jaap Krater.

“New big projects may appear to help in the short term but will make things worse in the long term, it would be like trying to pay off your debt with borrowed money. 360 million dollar of capital was actually borrowed by Icelandic investors including Kaupthing and Landsbanki to fund the first stage of the Helguvik project. That has contributed to the to the current crisis.”

“Geir Haarde noted recently that one of the main reasons for the free fall of the Krona was the execution of heavy industry projects (4). This had been predicted by various economists. David Oddsson, Valgerdur Sverrisdottir and others in power at the time refused to listen. If the current government does not want to make the same mistakes, it is better to cancel Bakki as well as Helguvik,” says Krater.

References
1. http://investor.shareholder.com/cenx/releases.cfm
2. http://www.reuters.com/article/marketsNews/idUSN2130255620081021?pageNumber=2&virtualBrandChannel=0&sp=true
3. http://investor.shareholder.com/cenx/releasedetail.cfm?ReleaseID=248119
4. http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=312850

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

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

To supply energy for Alcoa’s 346 thousand tons smelter in Húsavík, a reservoir bigger than the infamous Hálslón in Kárahnjúkar will be needed; 72 km2 (1).

There is no reason for feeding companies like Alcoa with more cheap energy. Alcoa is a arms producer, directly working with the American army, the weapon producer Lockheed Martin and other mean companies (2).

Alcoa is also well known for it’s human right crimes in the company’s factories in Honduras and Guatemala. In Honduras workers often have to urinate and defecate in their clothes because they are not allowed to go to the toilet more than two times a day; women have to take down their pants to prove they are having period; and workers who plan to form unions get fired. These are just few examples (3).

Icelandic nature and society are in danger!

No more Dams! No more Smelters!

Resources:

(1) Jaap Krater, Morgunblaðið, Bakki Impact Assessment Should Include Dams, 22. Ágúst 2008.

(2) Snorri Páll Jónsson Úlfhildarson, Morgunblaðið, Lygar og Útúrsnúningar, 24. Júní 2008.

(3) National Labor Committee with Community Comunication Honduras (2007). The Walmart-ization of Alcoa. http://www.nlcnet.org/article.php?id=447.

“Many decision makers in Iceland have a rather outdated, extreme utilitarian view of the natural environment. They have a view on their natural surrounding that is comparable to the American colonists in the wild west. But we need to move to a worldview that sees the ecosphere as inherently valuable and where the ecosystems have an inherent interest,” says Jaap Krater of Saving Iceland.

“Sustainability is not going to happen unless we realise that we are not separate from our natural surroundings and are infinitely entwined with it. Of course this view is not just lacking in Iceland, it is a global issue and I believe the way we see and think about nature is a major reason for the global environmental crisis we are in. Sveinbjarnardóttir’s rejects the 18th century colonial view on nature in this report, and that is quite exciting. I hope she takes further steps and more people start to take these steps. However, words are not enough and we need action to halt the heavy industry agenda,” said Krater.

Aarhus
The report discusses the possibility of Iceland joining the Aarhus convention. The Aarhus Convention grants the public rights regarding access to information, public participation and access to justice, in governmental decision-making processes on matters concerning the local, national and transboundary environment. It focuses on interactions between the public and public authorities.

“Iceland is the only country within the EEA that has not ratified this agreement,” said Árni Finnsson of INCA, an Icelandic nature conservation NGO.
“The convention is in many ways valid in Iceland but lacks one important point: access to legal justice for environmental protection associations. “And that is because of Landsvirkjun, because of fear that legal processes will delay power plant operations,” Finnsson says.

Smelter size
Originally the Bakki smelter was said to be planned for 250,000 metric tons per year. However, Alcoa has said before it deems smelters under 360,000 tons ‘unsustainable’ (2). Now the American corporation has said it would like at least a 346,000 tons smelter (3) near Husavík. Alcoa has been steering towards a smelter of this size from the start. Their initial study for the area aimed at a smelter of this size (4), although the environmental impact assessment and energy generating plans under discussion now would be for a smaller smelter. For a smelter above 250,000 tons, the whole energy grid of the north would need to be rebuilt (5). In the end, expansion to 500,000 tons would be possible. “The bigger the better,” says Bernt Reitan, Alcoa’s Vice-President (6).

Energy requirements
A 250,000 ton smelter would require 400 MW of electricity. The energy would be coming from the geothermal fields in North Iceland. If the optimistic estimate of 370 MW for Krafla 2 (drilling into the Viti volcano), Þeistareykir and Bjarnarflag (7,8) would be realised, which is uncertain, there would still be a deficiency, so 30 MW would be taken from the yet unspoiled and unexplored Gjástykki area, at a huge environmental cost (9). For a medium sized smelter the deficiency would rise to at least 150 MW and for a large smelter it would be at least 400 MW.

Possible dams
Thus, if the Bakki project is pushed through, it is almost inevitable that this will lead to construction of more large dams. A company named Hrafnabjargavirkjun Hf is already set up to prepare construction of a new 90 MW plant with three dams in Skjalfandafljot. Fljotshnjuksvirkjun (two dams) in the same river would produce another 58 MW. The corporation is owned for 60% by Orkuveita Reykjavikur. Other shareholders include Norðurorka and Orkuveita Húsavíkur (10). The proposed Skatastaðavirkjun power plant dams on Jökulsá Eystri, Jökulsá-Vestri, Fossá , Giljá, Lambá and Hölkná and on Lake Orravatn and Reyðarvatn (north of Hofsjokull), may produce 184 MW. Villinganesvirkjun, which would dam both Jökulsá-Vestri and Jökulsá-Eystri in the Skagafjörður region, could produce another 33 MW.
A 72 km2 reservoir in Jökulsá á Fjöllum in the Eastern Highlands (Arnardalsvirkjun) could produce 570 MW.
So it would seem that new dams would need to be built in either Skjalfandafljot, Jökulsá Eystri and Jökulsá-Vestri, or in Jökulsá á Fjöllum, just to build a medium sized smelter at Bakki. Further options are more dams at Laxá í Aðaldal or Eyabakka (11).

Risks from geothermal plants
An added factor why an aluminium smelter in the north would need to rely on hydro rather than geothermal is the risks associated with power plants in highly active geological areas. Geological assessment has indicated definitite risks of geothermal boreholes being destroyed by geologic activity. In 1975, at Bjarnarflag, one of the areas that is supposed to power the Bakki smelter, four out of six boreholes were destroyed due to volcanic activity (12). For aluminium smelting, a prolonged electricity cut-off can destroy part of a smelter, which depends on continuous electric supply. A base level of supply from a second source is desirable. On top of that, geothermal energy production is more expensive than hydro.

For Alcoa, it would be neither desirable nor feasible to construct an aluminium smelter near Husavík that would be solely dependent on geothermal areas. A number of dams would need to be constructed. The environmental impact would be high.
At the same time, the damage from drilling into the Viti volcano and at Gjástykki will be considerable and at Þeistareykir a large pollution lagoon has already been formed by test drilling (13), for which no impact assessment was thought necessary.
It is thus not surprising that the pro-aluminium lobby is resisting a joint impact assessment. It would be much more convenient to have smaller half-hearted assessments when the smelter is already half built.
If the environmental impact of the Bakki smelter is to be considered seriously, then the impact of a medium to large smelter and potential new dams need to be taken into account as well as the damage from drilling around Lake Myvatn.

Jaap Krater is a spokesperson of Saving Iceland.

• 1 Iceland Review (2008). North Iceland Smelter Project up for Joint Assessment. http://www.icelandreview.com/icelandrevi… [Accessed August 4th, 2008]
• 2 Wilson, A. (2006). Alcoa clears the air. Interview with Bernt Reitan and Wade Hughes. Trinidad Guardian, Dec 7th 2006. http://www.guardian.co.tt/archives/2006-… [Accessed August 4th, 2008]
• 3 Alcoa (2008). Alcoa presents revised draft EIA proposal for an aluminum smelter at Bakki by Husavik. http://www.alcoa.com/iceland/en/news/wha… [Accessed August 4th, 2008]
• 4 HRV/Honnun (2005). Primary aluminium plant located near Husavik. Site study. http://www.hrv.is/media/files/Husavik_si… [Accessed August 4th, 2008]
• 5 Ibidem 4.
• 6 Saving Iceland (2008). Húsavík contract signed behind closed doors. http://www.savingiceland.org/?p=2500 [Accessed August 4th, 2008]
• 7 Ministry of Industry, Iceland (2002). Master Plan for Hydro and
• Geothermal Energy Resources in Iceland. http://www.landvernd.is/natturuafl/index… [Accessed August 4th, 2008]
• 8 Pallson, B. (2007). Geothermal Power in Iceland. Nordnet.
• 9 Iceland Review (2008). Power Company Accused of Prioritizing South Iceland. http://www.icelandreview.com/icelandrevi… [Accessed August 5th, 2008]
• 10 Alþingi (2008). 135. löggjafarþingi 2007–2008. Þskj. 688 — 432. mál. http://www.althingi.is/altext/135/s/0688… [Accessed August 4th, 2008]
• 11 Ibidem 7.
• 12 Sæmundsson, K. (2006). Assessing Volcanic risk in north Iceland. ISOR – Icelandic Geosurvey. http://www.hrv.is/media/files/Volcanic%2… [Accessed August 4th, 2008]
• 13 Saving Iceland (2008). Energy companies destroying Þeistareykir. http://www.savingiceland.org/?p=1317 [Accessed August 5th, 2008]

We have heard from workers what kind of cirumstances they are in (2):

• The pipe wielders work 72 hour weeks in up to 17 hour long shifts, even in the winter.
• They work there for 3-6 months on end and then have a three-week holiday before they return to this project or a similar project in Iceland or elsewhere.
• They are not paid to Icelandic standards but to Romanian standards, with a monthly salary approximating 2300 Euros at current exchange rates (for a 72 hour work week).
• They are however paid in Icelandic Krona, rather than Euros. Due to devaluation of the Krona they have seen a quarter of their income disappear without compensation.
• They are forced to stay in the camp, with one night out in Reykjavik per month.
• The camp is worse than a prison – there are no recreational facilities and no gymnastic / sports facilities. Even their televisions do not work because the location hampers reception.
• Requests for simple facilities such as a football pitch or even a table tennis table are turned down.
• Those who complain too much are threatened with loss of their jobs.
• Workers have been told the expansion of the power plant is meant to provide energy for the city of Reykjavik. However, the plant is being expanded to provide energy to Century Aluminum’s smelter at Grundartangi, north of the city.

“It is not surprising that deadly accidents happen to workers who have to work 17 hour pipe wielding shifts. It is ironic that a public owned company such as Reykjavik Energy, who credits itself with being clean and green, constructs its facilities by exploiting foreign workers in this fashion. No Icelander would work in these circumstances. The only people willing to do this work are those that have very little opportunities and have no choice but to do this, to support their families back home” says Jaap Krater, a spokesperson of Saving Iceland.

“We have brought this issue up at previous actions that we have done at Hellisheidi (3, 4), but Reykjavik Energy has taken no action to improve the worker’s lot. Now that a number of workers have suffered a horrible and tragic death by suffocating in the pipes they were wielding, action has to be taken now to stop this scandalous behaviour by a company that is owned by the city of Reykjavik,” says Krater.

About Saving Iceland

Saving Iceland was started by Icelandic environmentalists asking for help to protect the Icelandic wilderness, the largest remaining in Europe, from heavy industry. Aluminium corporations Alcoa, Century Aluminum and Rio Tinto-Alcan want to construct a number of new smelters in Iceland. This would require exploitation of all the geothermal areas in the country, as well as damming most major glacial rivers (see http://www.savingiceland.org/sos).

References

• 1. Iceland Review (2008). Two Immigrant Workers Die in Work Related Accident. http://www.savingiceland.org/?p=2425&amp… and 

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Worker’s accomodation

They might have thought Karahnjukar was a shame, or even a necessary sacrifice, but that it would be limited to just that.

Two years after the flooding in the east, what is happening now? The Century smelter at Hvalfjordur has just been expanded, without anyone really noticing. A huge part of the Hengill area is being blown up right now with explosives to make the ground level enough for the geothermal boreholes and pipes constructed by low-paid Eastern Europeans working 72 hours a week, living in something that makes the newly opened Akureyri Prison look like Hotel Nordica.

Work has been started to build a smelter in Helguvik for which the same will happen to all the geothermal areas in Reykjanes. Never mind the environmental impact (which hasn’t even been assessed yet).

At Krafla, Alcoa and Landsvirkjun are drilling boreholes right into one of the top 10 tourist attractions of Iceland, the Viti volcano crater. At Theistareykir the deep drilling testing has accidentally created a new arsenic-sulphur lake. Oops.

Apparently most Reykjavik journalists are too bored with the issue to go and take a few pictures up north, no one has written anything about it.

In the mean time, everyone who can calculate that one plus one is two can figure out that there won’t be enough geothermal energy in the north to power a second Alcoa smelter. If the smelter plans aren’t stopped now it is inevitable that Skjalfandafljot and the Skagafjördur rivers or Jökulsá á Fjöllum will be dammed. But apparently most journalists have forgotten their basic maths and choose to ignore the obvious.

Last year, before the Saving Iceland protest camp began, we had a two-day conference where we browsed through every little detail of the aluminium industry. We had people over from Africa, Trinidad and Brazil telling their stories. The whole conference was completely ignored by Icelandic media.

They are mostly not interested in that kind of thing. It’s boring.

When we chain ourselves to something, they always phone up asking for injuries, arrests, whether things are damaged or stolen and if anyone ever uses drugs or has ever flown in an aluminium plane.

The papers don’t show photos of pollution lakes or blown up mountains but what they do print is a giant close-up of our camp toilet. We just hope people have a look at our website or find some other way to inform themselves and then decide to take whatever kind of action they feel is appropriate.

I find it quite amusing to have the weirdest questions being asked, such as “do you use cutlery to eat?” but it also makes me incredibly sad. James, you are right, but tell me, what should we do? Maybe I will start working on my giant pink footed goose costume!

Apparently four years of climbing cranes has not motivated many people to actually do something about making sure there will not be any new dams. Everyone is just bored and apathetic about it.

Write something, make a complaint, get angry at politicians for breaking election promises, phone people up, whatever it is you can do, if you oppose these projects, no one will stop them if no one does anything. Please!

Jaap Krater

Saving Iceland’s Attention

James Weston, Iceland Review – The television is on in the corner of the room showing the evening news bulletin. A young protester is chained to a fence with a few police officers trying to pull her away. A crowd of onlookers is standing with their mouth’s agape, a few still waving their own protest banners.

Now this may seem like exciting television, but for some, it’s quite the opposite. During the piece I found my own attention wandering from the television towards the conversation that has just started between two friends. It doesn’t appear they’re listening either.

This is a piece regarding the latest protest by Saving Iceland, “who do not intend to stand by passively and watch the Icelandic government in league with foreign corporations slowly kill the natural beauty of Iceland.”

Everyone seems to have an opinion on the aluminum smelting issue facing Iceland. I’ve previously presented my outlook on the situation. That’s not to say that all of my friends and new Icelandic family agrees with me. On the contrary, there are quite a few that strongly disagree! The issue is a debate starter, but for both sides, the debate is entered with a sigh. A “here we go again…”

I keep some of my fears hidden just to grease the wheels of friendly, social conversation. Some situations do not welcome the discussion, of course. It’s tantamount to announcing that you were a card-holding communist at dinner with Joe McCarthy! I will say at this point, I am not and never have been a member of Saving Iceland. In fact I don’t know anyone that is.

With the frequent media coverage, “Saving Iceland” seems to have become a by-word for someone who posses a little environmental awareness. The mention of those two words seems to conjure up images of hand holding, banner waving lunatics .The woman from Saving Iceland interviewed after the news piece does much to uphold the viewpoint. A well-spoken Brit, earthen clothing, complete with big red dreadlocks. You really don’t get more new-age hippy than this!

There are many of my friends who are fiercely against the smelting program. When I ask them about Saving Iceland, the responses are all very similar. The overriding issue being that they are simply bored of it all. They have been seeing this for ages and find themselves switching off when any news item is raised about the group. “It’s always in the news and I kind of switch off” is a common reaction. They’re aware of the issue, but seeing it almost every day pushes it into the background for them.

It’s an age-old problem for any issue worldwide. Prolonged attention in the public eye will lead to a stagnation of reaction. Saving Iceland have done a fantastic job in keeping their cause in the public psyche. It’s a grand project and the commitment admirable. As always though, people will be looking for something new. Being told the same thing again and again does become, well, boring.

Maybe the fact that people are bored of the issue is signs of a job truly well done for Saving Iceland. They’ve almost become ubiquitous, part of the news briefings almost as much as Sports & Weather. Not everyone is going to grow dreadlocks and get out the padlocks and chains; but they are constantly aware of the situation whether it bores them or not.

JW

HELLISHEIDI (ICELAND) – This morning the direct action campaign Saving Iceland has occupied one of the main geothermal drill sites in Hengill where the Hellisheidi power plant is being expanded by Reykjavik Energy. 20 activists have chained themselves to machinery and have climbed the drill to hang up a banner saying “Reykjavik Energy out of Hellisheidi and Yemen”. They have also occupied the power control room of the drill site. The power to the drill was shut off and drilling was stopped for the rest of the day. Seven people got arrested. The protest was aimed at Reykjavik Energy supplying electricity to aluminium smelters in Iceland, destruction and pollution of the Hengill area and RE’s sponsoring of severe human rights abuse in Yemen.

In the last week, Saving Iceland took action at the Glencore and ALCOA headquarters in Switzerland as well as all Swiss Icelandic consulates, the Icelandic embassy in Rome, Icelandic consulate in Milan and also the headquarters of Impregilo. In Iceland Century Aluminum and Landsvirkjun both saw two actions against them and now Reykjavik Energy was targeted.

Click Images to Enlarge

“We have been camping at Hellisheidi for two weeks now and we are witnessing the scale of destruction, most of which is not very visible to the public. People should really come and have a look what is happening here. What used to be a beautiful natural area is now full of tarmac and pollution. It used to be full of tourists. Now the hiker huts are abandoned while mountains are being blown up to power the Century smelters,” says Saving Iceland’s Jaap Krater.

Most of the work is being done by Eastern Europeans who are living in a work camp, in similar conditions to the Karahnjukar construction.

Reykjavik Energy Invest in Yemen
Saving Iceland also criticises Reykjavik Energy for it’s investments in Yemen (1,2), a country with a Shari’a regime, where there is no free press and security services are routinely involved in torture and even extrajudicial executions (3,4).

“RE say that geothermal investments will benefit the poor in the country. The reality is that the energy will not go to the poor. The regime is very corrupt and Yemen is even advertising for aluminium smelters to come there. If someone would have said ten years ago: I’m making a deal with Sadam Hussein to help the poor, would you believe them?”
“RE should not make deals with anyone involved in serious human rights violations, whether it’s a fundamentalist state or heavy industry corporations,” says Krater.

A factsheet on the REI deal with the Yemen regime is attached as a pdf file.

Impact of Hellisheidi extension
The environmental impact asessment for Hellisheidarvrikjun says explicitly that the only purpose is to supply energy for the Century expansion at Grundartangi and possible new ALCAN and Century plants at Straumsvik and Helguvik (5). At the same time, farmers pay twice as much for electricity as these corporations (6).
Saving Iceland has published reports documenting a long list of human rights violations of these companies (7, 8).

Saving Iceland spokespeople Miriam Rose and Jaap Krater have documented the effects of the geothermal power in Hengill in the journal the Ecologist (9):

“Laced with various and sometimes toxic compounds from deep within the bedrock, the [geothermal borehole] water is either pumped back into the borehole – which can lead to geological instability – or is pumped untreated into streams and lakes. This particular technique has already created a huge dead zone in lake Thingvallavatn.”

Pictures of the physical impact of the drilling can be seen on the Saving Iceland website (10 / see below) and in the attached pdf file.

Download MBL.is – Report

About Saving Iceland
In the last two weeks, Saving Iceland stopped work at the construction site of Century Aluminum’s planned new smelter in Helguvík, they blockaded the existing Century smelter on Hvalfjordur, and took a number of actions against Landsvirkjun, Iceland’s national power company. This is part of their fourth summer of direct action against heavy industry in Iceland.
Saving Iceland was started by Icelandic environmentalists asking for help to protest the Icelandic wilderness, the largest remaining in Europe, from heavy industry. Aluminium corporations Alcoa, Century Aluminum and Rio Tinto-Alcan want to construct new smelters. This would require exploitation of all the geothermal areas in the country, as well as damming all major glacial rivers (see http://www.savingiceland.org/sos).
This year, the fourth action camp to protect Icelandic nature has been set up near the Hellisheidi geothermal plant.

More information
 http://www.savingiceland.org
 savingiceland at riseup.net

References

1. Yemen News Agency (2008). Yemen, Icelandic REI sign document to invest in generating electricity by geothermal. http://www.sabanews.net/en/news151190.ht… [Accessed July 27th, 2008]
I2. ceNews (208). Electricity agreement signed between Yemen and Iceland. http://www.icenews.is/index.php/2008/04/… [Accessed July 27th, 2008]
3. BBC News (2008). Country Profile: Yemen. http://news.bbc.co.uk/1/hi/world/middle_… [Accessed July 17th, 2008]
4. Embassy of Yemen in the US (2008). http://www.yemenembassy.org/economic/ind…. [Accessed July 17th, 2008]
5. VGK (2006). Environmental Impact Assesment fot Helisheidarvirkjun. VGK, Reykjavik.
6. Iceland Review (2007). Century Smelter to Pay Less for Energy than Farmers. June 7th 2007. Also available at http://www.savingiceland.org/?p=821. [Accessed July 27th, 2008]
7. Saving Iceland (2007). Alcan’s Links to the Arms Industry. http://www.savingiceland.org/?p=882 [Accessed July 27th, 2008]
8. Saving Iceland Press Release (2007). Saving Iceland Blockades Century and ELKEM. http://www.savingiceland.org/?p=841 [Accessed July 27th, 2008]
9. Krater, J., Rose, M., Anslow, M. (2007). Aluminium Tyrants. The Ecologist 2007 (10). Also available at http://www.savingiceland.org/?p=1021 [Accessed July 27th, 2008]
10. Saving Iceland (2008). Destruction of Hengill. http://www.savingiceland.org/?page_id=23… [Accessed July 27th, 2008]

Images of destruction at Hengill

REYKJAVÍK  – Today 30 activists from the international campaign Saving Iceland have invaded the Landsvirkjun (national power company) building (Háaleitisbraut 68) to disrupt work. Earlier this morning Saving Iceland activists dammed the house of Landsvirkjun director Friðrik Sophusson and nailed an eviction notice to his door.

“We oppose Landsvirkjun’s intentions to build the four Þjórsá and Tungnaá dams for Rio Tinto at Straumsvik (1,2), despite the referendum. They are also negotiating to dam Skjálfandafljót and Jökuslá á Fjöllum for ALCOA’s planned Bakki smelter (3,4). This is on top of the mess they are making of Þeistareykir (5) and the deep drilling into Mount Krafla, right next to the tourist attraction. LV are doing this for a company that is a self-admitted arms dealer (6) and has been in the news again and again for it’s gross abuse of human rights. (7) This company should not be welcomed by Landsvirkjun,” says Jaap Krater from Saving Iceland.

Extreme abuse of workers’ rights
ALCOA claims to be an excellent employer, taking good care of their workers. But the reality is different:

“Often workers have to urinate, or even defecate, in their clothing after repeatedly being denied permission to use the bathroom. The bathrooms are also dirty, lacking lights and toilet paper. Workers who take “too long” may be pulled from the toilet by guards. There have even been cases of women being made to disrobe and lower their underpants to prove they were having their period so they could use the bathroom more than twice a day,” says a recent report about Alcoa’s treatment of workers in Honduras (7).

“With as little as ten minutes notice, workers on the night shift can be ordered to remain working for another six hours, keeping them at the factory from 4:15 p.m. to 6:00 a.m. – nearly 14 hours. All overtime is obligatory and those who object can be fired.”

“The base wage of 74 cents an hour at Alcoa’s plants meets just 37 percent of a small family’s most basic survival needs.”

Workers have protested, but Alcoa does not encourage unionising. “Alcoa will use slightly veiled death threats, mass illegal firings, blacklists and threats to close the plant to block workers daring to exercise their legal right to organize,” says the report.

In Mexican factories, a range of human rights and worker abuse has also been reported (8). Ironically, Alcoa are now laying off 1240 workers in Honduras and Mexico as a response to decreased demand for aluminium for large cars due to high fuel prices (9).

ALCOA and the Arms Industry
Alcoa actively supports the US military ventures, such as the war in Iraq. “Alcoa Defense is proud to be a trusted partner for the U.S. military and defense industry.” said Dave Dobson, president, Alcoa Defense. “We look forward to protecting soldiers with our armor plate, while making vehicles lighter, faster and stronger.” (10).

“All Alcoans are working hard to ensure that these orders move quickly through the plant in order to support our troops,” said Mark Vrablec, director of manufacturing at Alcoa Davenport Works (11).

Other recent examples of Alcoa products for the US military include combat ships (12) and light tactical armed vehicles (13).

“Basically, electricity from the power plants Landsvirkjun is intending to build, will be exported straight to Iraq and Afghanistan in the form of Alcoa weaponry,” says Saving Iceland’s Jaap Krater.

About Saving Iceland
Last Saturday, Saving Iceland stopped work at the construction site of Century Aluminum’s planned new smelter in Helguvík while on Monday they blockaded the existing Century smelter on Hvalfjordur. This is part of their fourth summer of direct action against heavy industry in Iceland.

Saving Iceland was started by Icelandic environmentalists asking for help to protect the Icelandic wilderness, the largest remaining in Europe, from heavy industry. Aluminium corporations Alcoa, Century Aluminum and Rio Tinto-Alcan want to construct new smelters. This would require exploitation of all the geothermal areas in the country, as well as damming all major glacial rivers (see http://www.savingiceland.org/sos).

This year, the fourth action camp to protect Icelandic nature has been set up near the Hellisheidi geothermal plant east of Reykjavik. That power plant is currently being expanded to produce electricity for Century Aluminum.

More information
http://www.savingiceland.org
 savingiceland at riseup.net

References

(1) Landsvirkjun (2008). Alcan and Landsvirkjun reach agreement on electricity price. http://www.landsvirkjun.com/EN/article.a…
(2) Iceland Review (2008). Trial Delays Hydropower Projects in Iceland. http://www.icelandreview.com/icelandrevi…
(3) Visir.is (2008). Ný virkjun á stærð við Kárahnjúkavirkjun. http://visir.is/article/20080718/FRETTIR…
(4) Visir.is (2008). Enn stærra álver á Bakka hugnast Ingibjörgu ekki. http://visir.is/article/20080722/FRETTIR…
(5) Saving Iceland (2008). Energy companies destroying Þeistareykir. http://www.savingiceland.org/?p=1317
(6) ALCOA Defense website. http://www.alcoa.com/defense/en/capabili…
(7) National Labor Committee with Community Comunication Honduras (2007). The Walmart-ization of Alcoa. http://www.nlcnet.org/article.php?id=447.
(8) Comité Fronterizo de Obreras (2008). Alcoa in México. http://www.cfomaquiladoras.org/english%2…
(9) Reuters (2008). Alcoa Inc.’s Alcoa Electrical And Electronic Systems To Restructure Honduran And Mexican Operations. http://www.reuters.com/finance/industrie…
(10) Alunet International (2008). Alcoa to Supply Armor Plate for New Army Vehicle http://www.alunet.net/shownews.asp?ID=23…
(11) ALCOA (2008). Alcoa Provides Aluminum for Humvees Used In Iraq. http://www.alcoa.com/defense/en/news/rel…
(12) Cavas, C. (2007). Alcoa Joins U.S. Navy LCS Program. Defense News 10/10/2007. Cfr. http://www.alcoa.com/defense/en/news/rel…
(13) ALCOA (2008). Lockheed Martin Announces Alcoa As Principal Team Member To Compete For Joint Light Tactical Vehicle Program.http://www.alcoa.com/global/en/news/whats_new/2007/jltv_program.asp.

UPDATE: The blockade went on for three hours. Nobody was arrested.

Videos 
• Century & Elkem / Icelandic Alloys blockade July 21st 2008.
• Century Helguvík smelter construction site occupation July 19th 2008
  

Century in West-Congo: opencast bauxite mining
In 2007 Century Aluminum Company signed a memorandum of understanding (MOU) with the Republic of the Congo (ROC) for the exclusive right to develop an aluminium smelter, alumina refinery and a bauxite mine (2). It specifies a minimum commitment of 500 megawatts of gas-generated electrical energy. Century is surveying where to mine the bauxite and will start building the smelter as soon as possible (3).

“We believe that the Republic of the Congo has all of the ingredients necessary to sustain a profitable aluminum industry,” said Century CEO Logan W. Kruger (2).

“Kruger is right,” says Snorri Páll Jónsson Úlfhildarson of Saving Iceland. “Transparency International rated the ROC as one of the most corrupt regimes in the world. Exactly the kind of regimes aluminium corporations like to deal with…” (4)

“It’s very unlikely the poor will have any benefit from this development but they will pay the price of the environmental impact. Oil revenue in the country has never reached them, why would it be different for bauxite?” Úlfhildarson continues.

“Considering the bauxite reserves in West Congo, it is clear that Century is planning large scale open cast mining there, in the same way other corporations are attempting in Orissa and what has also happened in Jamaica, Guyana and Guinea,” says Indian aluminium expert and author Samarendra Das who will be talking on this topic at Reykjavik Academia on Wednesday (see note a.).

“All over the world, where bauxite is mined the environment is being destroyed and people’s livelihoods and health taken away from them. People in Iceland need to know where the bauxite that is refined and then smelted into aluminium comes from,” says Das.

Century in Jamaica: environmental and health hazards
Century-owned St Ann Bauxite, it’s predecessor Kaiser as well as the ALCOA, RioTinto-Alcan and Rusal (which owns 1/3 of Century), are also active in Jamaica, have been held responsible for rainforest being destroyed and toxic pollution of drinking water (5,6,7). Century want to open up a second mine and refinery in a joint venture with Chinese Minmetals. That company is associated with prison labour factories and gross human rights abuses in China and elsewhere (see note b.).

Elkem – Icelandic Alloys: pollution accidents every week
Elkem – Icelandic Alloys wants to expand its facility at Grundartangi on Hvalfjordur for producing ferrosilicon for the steel industry. It is already one of Iceland’s largest contributors to greenhouse gases and other pollutants; expansion of the smelter would lead to a significant increase in Iceland’s carbon emissions (1).

In July 2007 it was reported (8) that Elkem ‘accidentally’ released a huge cloud of pollution from their plant. Apparently the accident was due to human error. Thordur Magnusson, an Elkem spokesman, then said that this human error “recurs several times a week.” Sigurbjorn Hjaltason, chairman of Kjosarhreppur parish, said that Elkem usually produced the emissions at night throughout the year.

About Saving Iceland
Last Friday, Saving Iceland stopped work at the construction site of Century Aluminum’s planned new smelter in Helguvík. This is part of their fourth summer of direct action against heavy industry in Iceland. In July 2007 activists also blockaded the smelter and steel factory.

Saving Iceland was started by Icelandic environmentalists asking for help to protest the Icelandic wilderness, the largest remaining in Europe, from heavy industry. As well as Century, other aluminium corporations ALCOA and Rio Tinto-Alcan want to construct new smelters. This would require exploitation of all the geothermal areas in the country, as well as damming all major glacial rivers (see note c.).

This year, the fourth action camp to protect Icelandic nature has been set up near the Hellisheidi geothermal plant east of Reykjavik, which is currently being expanded to produce electricity for Century Aluminum.

More information
 http://www.savingiceland.org
 savingiceland at riseup.net

Miriam Rose (+354 869 3782)
Snorri Páll Jónsson Úlfhildarson (+354 857 3521)
Jaap Krater (+354 867 1493)

Notes
A.) On Wednesday July 23, 19.30 h. Saving Iceland and Futureland will hold a conference with the Indian writer, scientist and aluminium expert Samarendra Das and ‘Dreamland’ author Andri Snær Magnusson, on the influence of the aluminium industry in the third world. Also, the concept of aluminium as a ‘green’ product will be examined. It will take place at Reykjavik Academia, Hringbraut 121. Mr Das is available for interviews; please contact one of the Saving Iceland contacts above.

B.) In 2004 Minmetals attempted a takeover of Canadian mining company Noranda but were declined in 2005 due to serious concerns over human rights abuses by the Chinese company. This report details Minmetal’s association to forced labour:

Dhir, Aaron A. (2006). ’Of Takeovers, Foreign Investment and Human Rights: Unpacking the Noranda-Minmetals Conundrum’, Banking and Finance Law Review, 22, 77-104.

C.) For more details and an overview of projects in Iceland, see: http://www.savingiceland.org/sos

References
(1) Icelandic Ministry of the Environment (2006). Iceland’s fourth national communication on climate change, report to the UNFCCC. http://unfccc.int/resource/docs/natc/isl… [Accessed 20-6-08]
(2) AZ Materials News (2007). Century Aluminium to Build Aluminium Smelter in Republic of Congo. http://www.azom.com/News.asp?NewsID=7734 [Accessed 20-6-08]
(3) Afrique en Ligne (2008). Congo to build aluminium smelter in Pointe-Noire. http://www.afriquenligne.fr/news/africa-… [Accessed 20-6-08]
(4) Transparency International (2006). Corruption Perceptions Index 2006. Transparency International, Berlin.
(5) Zadie Neufville, April 6, 2001, ’Bauxite Mining Blamed for Deforestation’. See http://forests.org/archive/samerica/baux…. [Accessed 20-6-08]

(6) Mines and Communities report,’Bauxite Mine Fight Looms in Jamaica’s Cockpit Country’, 24th October 2006. http://www.minesandcommunities.org/artic…. [Accessed 20-6-08]

(7) Al Jazeera (2008). Environmental damage from mining in Jamaica, June 11, 2008 News. Available through http://www.youtube.com/watch?v=vJa2ftQwf…. [Accessed 20-6-08]
(8) MBL.is (2007). Reykur frá járnblendiverksmiðjunni Grundartanga. http://mbl.is/mm/frettir/innlent/2007/07… [Accessed 20-6-08]

As inflation rates in Iceland soared to 8.7% and the Icelandic krona lost a third of it’s value, US-based Century Aluminum started construction of a much disputed aluminium smelter at Helguvik, southwest of the capital Reykjavik. The Icelandic economy is suffering from overheating as billions are spent on construction of new power plants and heavy industry projects. The central bank raised the overnight interest rate to a whopping 15% to control further price increases as Icelanders see their money’s value disappearing like snow. It would seem that the last thing the tiny Icelandic economy needs is further capital injections.

But Icelandic investors are making record profits from the new projects. The value of shares sold to them by Century less than a year ago to finance the Helguvik smelter has increased by 33%, though the company has not made a profit in years.

Environmentalists contend the legality of the project. No environmental impact assessment has been made for the smelter port, power lines or geothermal drilling that threatens large tracts of wilderness. The company has also not secured greenhouse gas emissions quota.

“In essence, Century is running very tough brinkmanship and may end up dictating Iceland’s climate policy as if Iceland were a banana-democracy,” says Arni Finsson from the Iceland Nature Conservation Association.

The issue has become an embarrassing affair for the Icelandic government. Thorunn Sveinbjarnardottir, Minister for the Environment, says she opposes the new Century smelter and other projects. At the same time, Prime Minister Geir Harde is doing his best to negotiate new emission rights for them with the UN. Minister of Industry Ossur Skarphedinsson then commented that the Icelandic government has no control over the development or expansion of aluminum smelters in Iceland anyway.

This is the second time when the government has allowed for a smelter to be built without proper permits. The previous case, ALCOA Fjardaal, has raised Iceland’s per capita emissions from 12 to 18 tons. The European average is 11.

The government still says it aims for a reduction by 50-75 percent from those of 1990, by 2050. “No final decisions have been made on how to accomplish this,” says Anna Kristin Olafsdottir, political adviser to the environment minister, “but a scientific committee is working very hard on a plan.”

International activists from Saving Iceland have decided not to wait while the largest wilderness of Europe is being ruined, and have announced a direct action camp starting July 12th.

River water contains sediment in suspension and various substances in solution; glacial rivers, especially, carry a large amount of sediment which increases as the atmosphere grows warmer.

Rivers of Life

Glacial rivers carry the sediment out to sea, where it takes on a new and important role in binding the greenhouse gas carbon dioxide (CO2) with calcium (Ca) and converting it into calcite and other carbonate minerals, immensely important in the ocean ecosystems of the world. Thus glacial rivers reduce pollution on Earth. This effect is greatest in recently formed volcanic territory such as Iceland, and the binding effect increases with rising atmospheric temperature.

Glacial rivers bind this gas which, along with some other gases, causes global warming and threatens the future of life of Earth.

When a glacial river is harnessed to generate electricity, this important function, and the binding of the greenhouse gas CO2, is diminished. What they generate is not GREEN ENERGY, as the advocates of hydro-power plants and heavy industry maintain, but BLACK ENERGY.

Dams and reservoirs hinder the function of glacial sediment in the oceans, and hence hydro-electric power plants that harness glacial rivers are far more harmful than has hitherto been believed.

In addition, it is probable that the reduced volume of sediment and the disruption of the flow of the rivers will affect the population of diatoms and calcareous algae. This could lead to falling catches of fish off Iceland’s coast, fewer jobs in the fishing industry, and lower export revenues.

It would make sense to prohibit the harnessing of any glacial rivers, and other rivers carrying large amounts of sediment, anywhere in the world, for it is in the interests of all Earth dwellers that they should continue to function – just as the preservation of Amazonian rain forest is in all our interests.

When advocates of hydro-electric power and heavy industry boast of the pure power yielded by Icelandic rivers for aluminium production, they are deceiving themselves, and deceiving the people of Iceland. Damage from hydro-power plants in Iceland with their dams and reservoirs has already resulted in destruction of geological diversity as well as the diversity of life, and ecosystems. They are not only destroyers of beautiful life and landscape, they are contributing to the greenhouse effect.

Glacial rivers are the lifeblood of the Earth, and create resources at land and sea in many ways – they are the lifeblood of the fish in the sea, the birds of the air, and of all mankind.

That is how all glacial rivers are already utilised – utilised for life, and for the future.

Gudmundur Páll Ólafsson
Natural scientist
3 January 2006

See also:

The whole article ‘Role of river-suspended material in the global carbon cycle’ is here in pdf

‘Hydropower Disaster for Global Warming’ by Jaap Krater

Hydroelectric Power’s Dirty Secret Revealed – New Scientist

‘Kárahnjúkavirkjun, sýnd veiði en ekki gefin’ eftir Grím Björnsson jarðeðlisfræðing

Virkjanir í jökulám óhagstæðar fyrir loftslagsvernd, eftir Hjörleif Guttormsson
– Enn ein falsrökin fyrir Kárahnjúkavirkjun hrakin

‘Stóra samhengið’ eftir Guðmund Pál Ólafsson náttúrufræðing – Virkjanaæði stjórnvalda stefnir fiskimiðum landsins í voða