Chinese to Fund New Smelter in Northwest Iceland Skip to content

Chinese to Fund New Smelter in Northwest Iceland

Icelandic company Klappir Development and China Nonferrous Metal Industry’s Foreign Engineering and Construction (NFC) signed a declaration of intent on the building of an aluminum smelter in a planned industrial area at Hafursstaðir in Skagabyggð, Northwest Iceland, in Reykjavík on Tuesday.

The signing took place at reception house Ráðherrabústaðurinn on Tjarnargata with Prime Minister of Iceland Sigmundur Davíð Gunnlaugsson in attendance.

In the declaration, NFC guarantees funding for at least 70 percent of the cost of the smelter’s construction and establishment of new infrastructure, as well as the cost of the construction of connected buildings and the smelter’s initial operations, Vísir reports.

The estimated total cost of the project is ISK 100 billion (USD 780 million). It is assumed that 240 permanent jobs will be created and up to 800 jobs during the construction period, a press release from Klappir and NFC reads. The energy supply will determine when the smelter’s operations can begin. points out that it is unclear where the energy will come from. The closest options for power plants apart from in glacial river Blanda (where a hydropower plant has been in operation since 1991) would be the other glacial rivers in the region, but they have not been greenlighted by authorities.

In addition to energy from Blanda, a wind farm has been suggested at Kolkuhóll. National power company Landsvirkjun has not yet commented on the project.

The smelter is to produce 120,000 tons of aluminum per year and would be the smallest in Iceland. Currently, the Rio Tinto Alcan smelter in Hafnarfjörður is the smallest, producing 205,000 tons of aluminum per year.

The declaration of intent is, among other items, based on an agreement on the cooperation between the municipalities in Northwest Iceland (Skagafjörður, Húnaþing vestra, Blönduósbær, Húnavatnshreppur, Skagaströnd and Skagabyggð) and Klappir Development on the development and operation of an aluminum smelter at Hafursstaðir.

NFC was founded in 1983 and is owned by the Chinese state. It operates mines and mine-related projects in 20 countries, primarily in Asia and Africa.

In an article by Human Rights Brief published at the American University in Washington in 2010, NFC was criticized for its operation of a copper mine in Zambia, especially for the treatment of workers, writes.

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