Arion Bank and PCC Conclude Talks Over Sale of Silicon Plant

Stakksberg Silicon Plant Helguvík.

Arion Bank and PCC BakkiSilicon have concluded their talks over the sale of the silicon plant in Helguvík.

The fate of the Reykjanes silicon plant has been up in the air since the 2018 bankruptcy of former owner United Silicon, with many local residents concerned about the environmental impact of the facility. In wake of the talks ending, Arion Bank has cancelled the utility contract with Landsvirkjun, most likely meaning that the plant is now slated to be repurposed or possibly relocated.

Since the bankruptcy, extensive renovations to the plant were planned, with increased sustainability a major priority. There has been some interest in investors acquiring the plant, and Arion Bank has looked for potential buyers with experience in the industry.

Since the beginning of this year, Arion Bank has been in talks with PCC, an international silicon manufacturer with a facility in Bakki, near Húsavík in North Iceland. The PCC facility is also notable for its use of green technologies and has existed alongside the Húsavík community without problems.

PCC is said to have presented ambitious renovation plans for the Helguvík plant, but despite this, talks have fallen through, and Arion is now looking to sell and repurpose the facility.

Benedikt Gíslason, director of Arion Bank, stated to Vísir: “The story of the Helguvík silicon plant is well-known. We consider it our duty to make the best use of the infrastructure and everything that has been invested into it. We’ve looked to all stakeholders, including the residents of Reyjanesbær, who were negatively impacted by its operation.”

Read the official statement from Arion Bank here.

Residents and Local Council Oppose Silicon Plant Reopening

Stakksberg Silicon Plant Helguvík.

Arion Bank has plans to sell the silicon plant in Helguvík, Southwest Iceland, to PCC BakkiSilicon. The two parties have signed a statement of intent for the sale. Kjarninn reports that both residents and municipal authorities oppose the reopening of the plant. The plant opened in 2016, but was quickly plagued by operational troubles and ultimately went bankrupt amidst widespread community outcry over the environmental and health impact it was having on the surrounding communities. 

“The Municipal Council of Reykjanesbær has repeatedly expressed its views on the operation of the silicon plant to Arion Bank,” local councillor Friðjón Einarsson stated, adding that there is opposition both among residents and local councillors to opening the plant. “We have formally requested to work with with the bank to dismantle the plant and start collaborating on developing employment in Helguvík. Unfortunately, that has not happened.”

Arion Bank has drawn up plans to renovate, reopen, and expand the plant. The Icelandic National Planning Agency (Skipulagsstofnun) released a report on those plans on December 31, 2021, which stated that the changes would likely reduce malfunctions at the plant, a repeated issue when the plant was still in operation. The report also stated that while the renovations would lessen the plant’s impact on air quality, the impact would still be negative in the first phase of operation and quite negative if all four ovens were to operate at once.

Read More: Emissions Will Increase by 10% if Plant Reopens

“We will try everything we can to stop the reopening and will continue to ask the bank to halt [its plans],” Friðjón stated. “In my opinion, the bank has no right to do this and it’s really unbelievable that the bank isn’t listening to the area’s residents.” He points out that it was Arion Bank that funded the plant, a project that “failed miserably and [the bank] thus holds a lot of responsibility for how it went.” Friðjón says Reykjanesbær authorities have heard there is interest from abroad in buying the plant, dismantling it and exporting its parts abroad. Friðjón says local authorities have told PCC BakkiSilicon that the local residents have no interest in their purchase and reopening of the plant and will fight against it.

Emissions Will Increase by 10% if Silicon Plant Reopens

Stakksberg Silicon Plant Helguvík.

Iceland’s greenhouse gas emissions will increase by over 10% if the silicon plant in Helguvík resumes its operations, RÚV reports. This data was provided by the Environment Agency of Iceland in response to a direct inquiry from the news agency. Stakksberg, a subsidiary of Arion Bank which took over the plant after it went bankrupt, is currently renovating it with plans to sell.

From the time of its opening, the Helguvík silicon plant, previously owned by United Silicon, was plagued by operational troubles and ultimately went bankrupt amidst widespread community outcry over the environmental and health impact it was having on the surrounding communities.

At maximum production – that is, 100,000 tonnes of silicon metal annually – Stakksberg’s newly refurbished plant in Helguvík would produce 550,000 tonnes of carbon dioxide per year. Based on figures from 2017, Iceland’s total overall greenhouse emissions would therefore increase by at least 10% if the plant goes back into production.

There’s also a chance that Stakksberg’s plant would be joined by yet another, even larger silicon plant owned by the company Thorsil. Thorsil was given an operational license in 2017 and, if its plant produces at its maximum capacity – 110,000 tonnes of silicon metal annually – it will generate 605,000 tons of CO2 per year. The Environment Agency said that these figures must be treated as theoretical at present, however, as neither factory is currently in production.

Under the terms of the Paris Agreement, as of 2030, European Union nations will reduce their carbon emissions by 40% (based on the levels they were in 1990). Although not part of the European Union, Iceland has ratified the agreement on the understanding that the country will reduce its emissions by a fiscally responsible and manageable percentage. It has now been determined that Iceland only needs to reduce emissions by 29% (based on 2005 levels) by 2030. Despite this, Iceland has approved a climate change strategy that still seeks to reduce emissions by the Paris Agreement levels of 40%. Prime Minister Katrín Jakóbsdóttir has taken this goal even further, setting a goal of making the country entirely carbon neutral by 2040.

Nevertheless, the government’s action plan on climate change does anticipate that up until 2030, emissions from heavy industry in Iceland will increase considerably. From 1990 until 2016, emissions increased 106%.

A silicon plant went into production at Bakki, near Húsavík in North Iceland in 2018. In addition to the two silicon plants that may be soon up and running in Helgúvík, a number of other plans for additional heavy industry projects are also in the works. but, in the words of the government’s action plan on climate change, “[s]ignificant reduction of carbon emissions in Iceland is unlikely to be possible in this sector without the emergence of new technologies, such as inert electrodes in the production of aluminum or the collection and injection of carbon dioxide.”

Locals Request Referendum on Big Industry

Stakksberg Silicon Plant Helguvík.

Thousands of residents in Reykjanesbær, Southwest Iceland, are petitioning local authorities to hold a binding referendum on the future of two silicon plants in the area, RÚV reports. One of the plants, formerly owned by United Silicon, has been plagued by operational troubles since its initial opening in 2016. It remains unclear whether such a referendum would be legal and if so, binding.

The municipal council of Reykjanesbær has decided to consult the Parliamentary Committee on Local Government on the legality of holding a referendum to determine the future of the two plants in Helguvík. Stakksberg, a subsidiary of Arionbanki bank which took over United Silicon’s plant when that company went bankrupt, has asserted that such a referendum would have no legal validity, as the company holds all the necessary licences for operation. The company says ceasing operations would make Stakksberg liable for damages.

Trausti Fannar Valsson, assistant professor in administrative law, says 20% support is needed to push through a local referendum like the one Reykjanesbær residents are hoping for. What happens next, however, is not so simple. The municipal council would have the authority to word the question and to decide whether the referendum is binding or simply advisory. He also adds that “it is not possible to conduct a referendum on something that would be against the law or lead to laws not being met by the municipality.” It is unclear whether a referendum on the two plants would constitute such a breach.