Mar 03 2009

Draft of Law about Helguvík Approved

Iceland’s current government, formed by the Left-Green Party (Vinstri Grænir) and the Social Democratic Alliance (Samfylkingin), has approved draft of a law by Össur Skarphéðinsson, minister of industry. The draft permits the government’s contract with Century Aluminum and Norðurál Helguvík about the construction of an aluminium smelter in Helguvík.

The contract includes several versions of a “special treatment” that Norðurál will get from the government and has e.g. to do with the amount of taxes that the company will pay. The contract puts Norðurál in a different and higher position that other companies in Iceland, apart from Alcoa’s aluminium smelter in Reyðarfjörður and Century’s smelter in Grundartangi.

The construction in Helguvík has been going on for half a year but was slowed down in the autumn when the Icelandic banks collapsed. Then Norðurál had look in new places for the investment of both the smelter construction and the energy construction. Aluminium global price has lowered dramatically since last summer and Century has already closed one of its old smelters in the United States.

Hitaveita Suðurnesja (HS) is about to sign a new contract with Norðurál about the purchase of energy. The companies’ original plan was to renew an old contract in the beginning of this year but because of the financial crisis, a new contract has been made. According the director of HS the changes is the new contract have mostly to do with the amount of energy, but according to the old contract HS was supposed to supply 150 MW for the first part of the smelter in Helguvík. Icelandic environmentalists have raised concerns that by the creation of this much energy the geothermal zones in Reykjanes peninsula will completely dry up. 

Half of the Government Does Not Support the Draft

All of the Left Green Party’s MP’s, there of four ministers, did not support Skarphéðinsson draft of law. The current government includes ten ministers; four from the Social Democratic Alliance, four from the Left Green Party and two outside political parties.

Still, the Left Green Party did not vote against the draft, since it considers it to be the work of the old government, not to be changed from now on.

Mörður Árnason, a MP from the Social Democratic Alliance has spoken against this draft, saying thit it is “old style” and that he does not want the Icelandic government to continue making offers to foreign “money circles” who waste Icelandic energy on stubidity.