A possible Smelter Project in North-Iceland

On May 17th, 2005, Alcoa sent a letter to Valgerdur Sverrisdóttir, Minister of Industry, in which the company expressed its interest in pursuing a proposed smelter development in Northern Iceland. Later the same day, the Minister introduced the letter to the Icelandic government, which has commissioned the Invest in Iceland agency to continue with discussions on the issue.


As a result of increased global demand for aluminium, Alcoa has in the past few years been reviewing some options on extensions of older smelters as well as new smelter projects. In accordance with Alcoa’s policy to establish an economical, safe and environmentally friendly aluminum production worldwide, the company is on the outlook for locations that offer environmentally friendly energy at competitive prices. With these aims in mind, Alcoa made the decision to negotiate with the government of Iceland on building the Fjardaál smelter in East-Iceland, which will start operations in April, 2007.
 
By sending the enquiry to the Minister of Industry, Alcoa is not making a commitment to build a smelter in North-Iceland, but expressing its interest in reviewing the possibilities available in the area. Before a decision can be made, a feasibility study must be conducted, to address power availability, energy transmission, economic, logistical, social and environmental issues. It is clear that the construction of a North-Iceland smelter would not be possible until 2008 at the earliest, due to the number of various ongoing projects in Iceland for the next 2-3 years, and a stable growth of the Icelandic economy is essential.
 
Alcoa’s policy is to work closely with the government, local authorities and stakeholder groups in order to examine in-depth the possibility of building a smelter in North-Iceland.