Rio Tinto Aluminium Smelter Strike Postponed

ISAL aluminium smelter

The staff at the Rio Tinto aluminium smelter in Straumsvík have postponed a strike previously scheduled to begin at eight am tomorrow morning, RÚV reports. A meeting of negotiating committees from the five unions proposing the strike and SA Confederation of Icelandic Enterprise lasted late into the night yesterday, but the unions’ representative stated that the committees had reached an agreement that will be the basis for further negotiations.

The five unions encompass around 400 staff members, whose contracts have been up since early July. Initially, a guerrilla strike should have started last week to put pressure on the negotiations, but was postponed until tomorrow, Friday, after an agreement was reached with the smelter’s management.

“We sat in a meeting until almost 2 am,” Reinhold Richter, the head union representative for the smelter staff told RÚV. “We reached a certain agreement to continue the talks, which led to us postponing the strike scheduled for tomorrow, Friday. And our goal is to finish the talks soon.”

Reinhold stated that the next meeting will be with the State Conciliation and Mediation Officer (SCMO) next Thursday. According to Reinhold, the agreement can not be disclosed to the public at this stage, but he hopes it will lead to signed contracts.  “We have a foundation to build on. A binding agreement on certain things we like.”

Asked if he thinks the smelter staff will agree to a contract based on this agreement, he said it was likely. “Yes, I think so. I still have to introduce this to my people, and that’s my next step.”

Rio Tinto Strike Postponed One Week

Friday’s planned strike of 400 employees at the Rio Tinto aluminium smelter at Straumavík in the capital area has been postponed for a week.

A very concise announcement on the website of the Hlíf labour union confirmed this on Thursday evening, saying, “This is being done to give the contract committee more time to put together a new wage agreement.”

“If the contract isn’t obtained within that time period, strike actions will begin on October 23, in accordance with previous announcements.”

Strike at Rio Tinto Begins Tomorrow

ISAL aluminium smelter

A planned strike of 400 employees of the Rio Tinto aluminium smelter in Straumsvík, not far from the capital, will go ahead as planned tomorrow, Friday, October 16, RÚV reports. The chairman of the Hlífar labour union says that negotiations have not been productive and employees are tired of waiting of a promised cost of living increase.

Five of the six labour unions that represent Rio Tinto employees voted to strike last week. If nothing changes, the first strike action will take place tomorrow, followed by an indefinite general strike to begin on December 1. According to Reinhold Richter, a union representative, the striking workers are demanding the same wage hikes as are outlined in the “standard of living contract” signed by unions and the Icelandic Confederation of Enterprise (SA) in 2019.

Read More: Rio Tinto Considers Suspending Production at Iceland Aluminum Smelter

Rio Tinto’s employees have been without a contract since the beginning of July, although they were promised a wage increase in March, with the proviso that in order for the raise to go into effect, the company would first need to finalize new electricity agreements with Landsvirkjun, the National Power Company of Iceland. The smelter failed to come to an agreement with Landsvirkjun, their contract expired, and the dispute was referred to a state mediator. This means that the promise raise been on hold.

Rio Tinto is one of the largest metal and mining corporations in the world. Its executives have long expressed dissatisfaction with its electricity prices and even raised the idea of permanently closing the smelter. They say that that high power costs have contributed to the company’s losses and are preparing a lawsuit against Iceland’s National Power Company.

Aluminium Smelter Workers Vote to Strike

ISAL aluminium smelter

A majority of the workers at Straumsvík aluminium smelter, near Reykjavík, have voted to strike. Vísir reports that the strike actions begin on October 16 and involve daily strikes among certain professions within the smelter throughout November. A general strike is scheduled to begin on December 1 if an agreement is not reached by that date.

According to Reinhold Richter, a union representative, the striking workers belong to five different unions and are demanding the same wage hikes as are outlined in the “standard of living contract” signed by unions and the Icelandic Confederation of Enterprise (SA) in 2019.

Read More: Rio Tinto Considers Suspending Production at Iceland Aluminum Smelter

The smelter is owned by Rio Tinto, one of the largest metal and mining corporations in the world. Earlier this year, the company considered suspending production at Straumsvík to minimise losses. Rio Tinto executives have also complained that high power costs have contributed to the company’s losses and are preparing a lawsuit against Iceland’s National Power Company.

Aluminium Workers’ Contract Hinges on Price of Energy

ISAL aluminium smelter Straumsvík

Three hundred workers in Rio Tinto’s ISAL aluminium smelter could see their collective agreement nullified in June if the National Power Company and Rio Tinto do not reach an agreement about the cost of power supplied to the smelter, RÚV reports. The National Power Company’s CEO says it is “unreasonable” for the contract to hinge on that factor, but says the company will not let it impact their negotiations with Rio Tinto.

Rio Tinto says energy costs hamper competitiveness

The workers’ collective agreement, which was signed in March, is valid for two years. It contains a clause, however, that makes it invalid as of June 30 if an energy supply contract has not been renegotiated between Rio Tinto and the National Power Company. The ISAL smelter, located in Southwest Iceland, has been running at a loss for the past eight years, and its executives point to high energy costs as one of the reasons.

National Power Company CEO Hörður Arnarson says his company did not know about the contract clause until it was reported on yesterday by Morgunblaðið. “I find it a very unreasonable development, both in collective agreement negotiations and in negotiations of energy contracts, to connect two unrelated parties in this way,” Hörður stated. “The only reason I can see for doing this is that they believe it will put added pressure on the National Power Company, but it won’t have that effect.”

“These are difficult conditions. Markets are closing for them,” Hörður added. “We will look for ways to find a common solution but it’s completely unclear whether we will agree on one.”

Smelter may close for two years

Rio Tinto is considering suspending production at the ISAL plant for two years due to the downturn in the market caused by the coronavirus pandemic. The metal and mining company is also preparing a lawsuit against Iceland’s National Power Company intended to release Rio Tinto from a large part of the electricity purchase obligation to which it is subject.

The ISAL smelter is one of the largest employers in the town of Hafnarfjörður and according to its mayor, has a “synergistic effect on other companies in town.”

Rio Tinto Considers Suspending Production at Iceland Aluminium Smelter

ISAL aluminium smelter

Rio Tinto is considering suspending production at its Straumsvík smelter in Iceland for two years, Morgunblaðið reports. The company, which is one of the world’s largest metal and mining corporations, is considering various options to reduce its losses during the economic downturn due to the coronavirus pandemic. Rio Tinto executives have also complained that high power costs have contributed to the company’s losses and are preparing a lawsuit against Iceland’s National Power Company.

Rio Tinto’s ISAL aluminium smelter, located in Southwest Iceland, has been operating at a loss for eight years. Its losses in 2019 alone amounted to ISK 13 billion ($91 million/83.7 million). Rio Tinto Aluminium chief executive Alf Barrios stated earlier this year that the smelter’s performance “is currently unprofitable and cannot compete in the challenging market conditions due to its high power costs.”

Prepare to sue Iceland’s National Power Company

Morgunblaðið’s sources report that the metal corporation is preparing a lawsuit against Iceland’s National Power Company, which is intended to release Rio Tinto from a large part of the electricity purchase obligation to which it is subject. The lawsuit also addresses alleged “product fraud” on the part of the National Power Company, which Rio Tinto alleges has been selling the smelter energy produced by coal and nuclear power, while the company purchased the energy on the grounds that it was produced using hydropower.

Rio Tinto to Review Future of ISAL Smelter

ISAL aluminium smelter

According to a press release published this morning, Rio Tinto – one of the world’s largest metals and mining corporations – will conduct a strategic review of its ISAL smelter (situated just outside Hafnafjörður) to determine the operation’s “ongoing viability and explore options to improve its competitive position.”

500 Employees

Aluminium production at the ISAL (The Icelandic Aluminium Company) smelter began in 1969. The smelter currently employs roughly 500 people. Rio Tinto had previously reduced the smelter’s capacity to 85 per cent, owing to a lack of profitability.

In a press release this morning, Rio Tinto (which is the sole owner of ISAL) expects ISAL to remain, “unprofitable in the short to medium term in the challenging conditions facing the aluminium industry, due to the smelter’s uncompetitive energy costs and historically low aluminium prices.”

Rio Tinto will continue discussions with the Government of Iceland and the utility company Landsvirkjun (which provides power for the smelter) on how the smelter can return to profitability and become competitive in the global market. The corporation is considering all options in its strategic review (expected to be completed during the first half of 2020), “including curtailment and closure.”

The press release quotes Rio Tinto Aluminium chief executive Alf Barrios: “We have worked intensively to improve ISAL’s performance, however, it is currently unprofitable and cannot compete in the challenging market conditions due to its high power costs.”

Rio Tinto adds that it aims to work closely with stakeholders who have a shared interest in the smelter’s future, including the government, Landsvirkjun, employees, unions, and the local community.

Taken Aback by the News

In an interview earlier today, Reinhold Richter – principal union representative for ISAL employees – told Vísir that the news of the smelter’s possible closure had taken employees by surprise. The staff needs to “sleep on it,” Reinhold told Vísir.

A new wage agreement with ISAL has been drafted by the Confederation of Icelandic Enterprise (SA); however, SA and ISAL’s team of negotiators have not bee given permission to sign the agreement by Rio Tinto.

“Solemn News,” Says the Mayor

Vísir also spoke to Mayor of Hafnarfjörður Rósa Guðbjartsdóttir, who was apprehensive.

“[ISAL] is one of the largest employers in town. It has operated for decades and it means a lot to the entire community. It’s not only a large and pleasant place of work, but it has also had a synergistic effect on other companies in town.”