Foreign companies that were planning seven different projects in Iceland, two in relation to data storage and aluminum production, have halted their plans and funding after learning about the government’s plans for a new energy tax.
A power plant in Iceland. Photo by Páll Stefánsson.
The projects in question were being worked on by Icelandic engineering firm Mannvit and its subsidiary HRV. CEO of Mannvit Eyjólfur Árni Rafnsson told Morgunbladid that only a few hours had passed since news of the new energy tax got out when the first company announced that their plans for Iceland had been put on hold.
Rafnsson said all of the companies are now waiting for further news. “We are competing with other countries on funding and other locations in the world regarding some of these projects. The new tax will only make these companies reconsider their placements.”
Rafnsson explained that the companies have understanding for the current taxes. “But they’re taken aback when new taxes are suddenly being talked about, just like that. The ink on the agreements has hardly dried yet. People are asking what to expect. Investors are primarily looking for stability.”
The projects are at different stages; one has almost been completed. “It is about increased aluminum production in the smelter in Straumsvík. A letter on launching the work of contractors was about to be sent. It has been postponed and the execution put on hold although preparations will continue,” Rafnsson said.
The companies in questions are both from Europe and the US.
Norwegian company Elkem Solar has been looking for a fortunate location for their factory for over a year and Iceland is one of three remaining options.
“If the [energy tax] plans will be realized it will become almost impossible to locate the factory here. My personal estimation is that it rules us out,” commented Einar Thorsteinsson, CEO of Elkem Iceland.
Fréttabladid reported earlier this month on the concern of vegetable farmers in Iceland, who say the planned energy tax will make their already difficult situation worse.