Alcoa Drops Plans for Smelter in North Iceland Skip to content

Alcoa Drops Plans for Smelter in North Iceland

Aluminum giant Alcoa announced yesterday that its plans for constructing a smelter with the production capacity of 250,000 tons per year at Bakki near Húsavík in northeast Iceland have been called off.


The construction of the Alcoa smelter in Reydarfjördur, east Iceland. Copyright: Icelandic Photo Agency.

CEO of Alcoa Iceland Tómas Már Sigurdsson told Morgunbladid that the decision is very disappointing but that it was unavoidable considering that sufficient energy could not be obtained—at least, not at an acceptable price, Fréttabladid added.

“Landsvirkjun [the national power company] has made a declaration of intent on selling the energy in the north to other projects and there hasn’t been a declaration of intent for our project for some time, neither from Landvirkjun nor the government,” Sigurdsson said.

“It is therefore clear that the conditions we laid out in the beginning are no longer at hand and therefore we don’t have any other option but to formally withdraw from this project,” he added.

Preparations for an aluminum smelter at Bakki began in 2005 and Alcoa has contributed more than ISK 1 billion (USD 8.6 million, EUR 6.3 million) to the project. Eventually they were offered half the energy they required for the smelter planned.

Bergur Elías Ágústsson, who chairs the local council of Nordurthing municipality, agrees that the decision is disappointing, adding that the majority of the municipality’s inhabitants supported it.

Ágústsson told Fréttabladid that their goal remains unchanged, to create 600-800 jobs in the region. They will continue to work towards the energy in the area being used for energy-intensive industries.

Minister of Industry Katrín Júlíusdóttir commented that Alcoa’s decision did not come as a surprise, to which CEO of Landsvirkjun Hördur Arnarson agreed.

Arnarson added that negotiations are taking place with five other companies on energy purchase but it has been clear for some time that Alcoa was no longer in the picture.

Click here to read more about the energy and potential energy-intensive projects at Bakki.


Sign up for our weekly newsletter

Get news from Iceland, photos, and in-depth stories delivered to your inbox every week!

* indicates required

Subscribe to Iceland Review

In-depth stories and high-quality photography showcasing life in Iceland!

Share article