Aluminium Prospects 20062015
The construction of the hydropower project at Kárahnjúkar in the eastern part of the country began in 2003 and is expected to continue until 2009. The total cost of the project is estimated at ISK 110 billion, including transmission lines. However, the total cost for the taxpayers for all the constructiosn in the eastern part of the country is estimated at ISK 200 billion (20% of GDP).
During the period from 2008 to 2013, the investment in aluminium plants should amount to ISK 60 billion per year.
Two aluminium plants are already operating in Iceland, with a total production capacity of 270,000 per year, which is about 1.2% of the worlds total aluminium production, (World Aluminium Org, WAI).
Icelands aluminium production will increase and reach 786,000 tons from 2008 on. Thus Iceland will become one of the worlds main aluminium production countries, accounting for close to 4% of the worlds total aluminium production.
The construction of three new aluminium plants is now being prepared. These will bring the total production to 770,000 tons. By 2015, Iceland could thus produce about 6-8% of the worlds total aluminium production. It takes about 15 Mw/hrs to produce one ton of aluminium. The three new plants would thus need around 11,400 Gw/hrs for their production.
The total costs of operations needed to reach the 516,000 tons goal, i.e. until 2007, amounts to an investment of nearly ISK 250-300 billions. The costs of the new aluminium plants is estimated at ISK 400 billions. There is a lot of work ahead.
The project that seems closest to completion is the modification of the Straumsvík aluminium plant, so that its production capacity will be increased by 280 thousand tons, and if everything goes as planned, it will be able to produce 460 thousand tons per year. However, there are discussions in the neighboring municipality of Hafnarfjörður as to whether the plant should be given the go-ahead for the projects implementation. The completed plant would be inaugurated in 2010. The investment, about ISK 150 billion, would be divided between the years 2007 to 2010. However, this project was cancelled at least for the moment!
Century Aluminium intends to build an aluminium plant in Helguvík, on the Reykjanes peninsula, not far from Reykjavík. The expected aluminium production will amount to 250 thousand tons per year. The first half of the project would be completed in 2010 and the second in 2015.
Total investment: ISK 140 billion, over the years from 2008 to 2015.
Alcoa and the Ministry of Industry have signed a letter of intent concerning a project for a new aluminium plant in Húsavík, on the northern coast, with a production capacity of 250 thousand tons per year. The first half of the project would be completed in 20212 and the second in 2015.
Total investment: ISK 120 billion, over the years from 2009 to 2015.
At this point, it is useful to point out that what is being sold is the electricity. If Icelanders do not get a fair price for their electricity, the point of all this investment is doubtful. As things stand, the electricity price to aluminium plants is kept secret! Two other points worth mentioning, the electricity productions companies do not pay for the land they use, and the aluminium companies do not pay for the pollution the make! One wonders what Kyoto was about...
Throughout the 20th century, fisheries were the backbone of Icelandic economy. This branch of activities boosted employment, similarly to the car industry in some countries. The Icelandic government (the cabinets of Davíð Oddsson and Halldór Ásgrímsson) still seems stuck in the 20th century, putting the main emphasis on employment for unqualified laborers. The construction of aluminum plants around the country has been the silver bullet of the government economic policy in the 21st century! However, a shift may be ahead, as the new Prime Minister, Geir Haarde, an economist, has presented some ambitious suggestions that would amount to a revolution in Iceland, no less, if they are implemented. These must be consistent with the EEA-Agreement. Some excerpts of the incentives proposed: