Mar 13 2007

Alcan taking heat over proposed Iceland smelter

Canada News
Tuesday March 13 2007

Margaret Munro
CanWest News Service

KEFLAVIK, Iceland – The Earth’s inner heat is so close to the surface on this windswept island that tourists bask in outdoor thermal pools even as the snow flies in late winter.

The heat attracts multinational companies, too, including Canadian-based Alcan. But they’re getting an increasingly chilly reception from the locals as they try to expand their business operations to take advantage of the abundant stores of inexpensive energy here.

“We don’t want to be the town with the biggest aluminum plant in all of Europe,” says Throstur Sverrisson, a longtime resident of the seaside community of Hafnarfjordur, where Alcan has run up against serious opposition.

The company plans to more that double the size of its existing smelter just outside Hafnarfjordur, one of four huge and controversial aluminum smelter projects. But a growing coalition of Icelanders is trying to halt the smelters, saying the government is sacrificing the island’s pristine environment to foreign companies.

They’re gearing up to make the smelters a major issue in the national election in May. And they’re taking aim at Alcan in a referendum March 31.

Alcan needs the community of Hafnarfjordur’s approval to move the highway and rezone land to make way for the expansion, which is expected to cost at least $1 billion.

“I think we can win,” says Sverrisson, pointing to recent polls suggesting more than 60 per cent of the community’s residents opposed Alcan’s expansion plans.

Iceland has huge stores of geothermal energy percolating through the volcanic rocks that blanket most of its treeless landscape. It also has enormous and largely untapped hydroelectric potential in the rivers that spill off Iceland’s glaciers and highlands.

Heat and hydroelectricity aren’t easily exported, so the Iceland government has encouraged companies to come and make use of its cheap power, ports and access to European markets. The aluminum industry took up the offer and four major smelter projects are now in the works.

The most contentious has been a smelter in eastern Iceland, built by U.S-based Alcoa, the world’s largest producer of aluminum.

The Alcoa smelter, called Fjardaal for “aluminum of the fjords,” is due to open later this year. It’s powered by the $3-billion Karahnjukar Hydropower project, a series of dams and tunnels that have flooded and transformed a huge tract of volcanic wilderness north of the massive Vatnajokull Glacier, which covers eight per cent of Iceland.

The protests grew with the power-and-smelter project. There have been angry marches, protest camps and banners hoisted up St. Paul’s Cathedral and the Tate Modern in London as part of a campaign to stop what protesters describe as the “destruction of the Icelandic highlands.”

The activists lost the battle over the Alcoa smelter and power project but say they are not about to give up. Plans call for as many as eight new dams and geothermal plants for the other smelter projects, which the environmentalists have vowed to bring to a halt.

“A summer of international dissent against heavy industry” starts in Iceland July 6, sponsored by Saving Iceland, a coalition of groups “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.”

Much attention — and protest — is now focused on the proposed Alcan expansion near Hafnarfjordur, a community of 24,000 about a 15-minute drive southwest of the capital Reykjavik.

“Since we are in the suburbs of Reykjavik, it is much easier to attract the media and discuss and talk about the aluminum industry or other players in the aluminum industry and do it at our doorstep,” says Erik Ryan, an Alcan spokesman at the company headquarters in Montreal.

He notes how protesters have waved placards denouncing other companies outside the smelter. There have also been plenty of placards with Alcan’s name on them.

Ryan stresses Alcan has operated in Iceland for years and has a good and long-standing relationship with the government and Icelanders.

The existing smelter near Hafnarfjordur is the oldest in Iceland, dating back to 1969. It produces 180,000 tonnes of aluminum a year, which is used in Europe to produce everything from Audi and Rover car parts to foil wrap.

Low-cost energy and a deep port makes the Iceland smelter ideal for expansion, says Ryan, noting 30 per cent of the cost of producing aluminum is for energy. Alcan plans to expand its Iceland operation to 460,000 tonnes a year, which would make it the largest smelter in Europe and Alcan’s third biggest. (Alcan’s new $1.4-billion smelter in Quebec produces 554,000 tonnes a year and a smelter planned for South Africa will produce 720,000 tonnes a year.)

Company officials are already musing about closing the existing plant, known as ISAL, if the expansion is not allowed to go ahead.

ISAL employs almost 500 people.

© The Edmonton Journal 2007