Aluminium, Jobs and Environment

Alcoa is the name of the company, which now has signed a declaration of intent with the Icelandic government, and Landsvirkjun, Iceland’s national power company of building an aluminium plant in Reydarfjördur. Final decision on the matter will probably be taken in January 2003.

Meanwhile, preparations for the hydroelectric power plant at Kárahnjúkar, which will supply the electricity to the aluminium plant have already begun. Roads are been built in the highlands north of the glacier Vatnajökull.

Conservation groups strongly oppose all development of hydropower in the area and point out that with this project the second largest intact wilderness in Europe will be ruined by dams, reservoirs, roads, power lines and other structures.

A recent opinion poll shows that sixty-six percent of the Icelandic people think the area north of the glacier Vatnajökull should be a national park.

Thorsteinn Hilmarsson, the PR spokesman of Landsvirkjun, says that a hydroelectric power plant and an aluminium plant in eastern Iceland is in accordance with the policy of the government to strengthen the economy and to utilize the resources Iceland has in hydroelectric power. With this policy, the government sees an opportunity to attract foreign investors and to increase national income. Thorsteinn says that an aluminium plant creating 450-600 jobs will be a boost for a community of 10-15.000 inhabitants straining with a decrease in population and a great need for new opportunities. Thorsteinn also points out the spin off effect of the project as it is estimated that each job in the aluminium plant will create 2,5 new jobs in other sectors. These jobs will be created all over the country During the development of the hydroelectric facilities, it is estimated that the project will need a workforce of 600 to 700 people for activities in the highlands. This would be over a 4-year period at the height of the hydropower development project, which is estimated to take place in the years 2002-2007.

Alcoa and Landsvirkjun support the idea of a national park north of Vatnajökull and are willing to participate in the development of this park. The big companies both in the aluminium business and hydroelectric power developers are willing to take on social responsibility for the environment. Landsvirkjun will have people working on research and monitoring of the ecosystem while work on the hydroelectric project at Kárahnjúkar is underway. This is in accordance with the great weight the company puts on environmental issues.

Árni Finnsson, chairman of the Icelandic Nature Conservation Association, does not agree that Landvirkjun puts great weight on environmental issues. On the contrary he says the company is ruthless towards the environment. According to him, Landsvirkjun keeps up a steady stream of propaganda by giving support to projects and institutions to create an image of being an environmentally friendly. At the same time they are in steady warfare against every one who has opposed the planned hydroelectric development project, which is a threat to the environment of Iceland.

The value of intact areas, which are in the highlands of Iceland, is great as such areas are becoming very rare and only few of them are left in Europe. (The hydroelectric project at Kárahnjúkar will have a great impact on the environment north of Vatnajökull.) Árni considers the government of Iceland pushing too hard in respect to development of hydroelectric power. The government seems to be in a hurry to get approval for many hydroelectric projects all over the country in a very short span of time.

Árni says the statements of Alcoa and Landsvirkjun of supporting the foundation of a national park north of Vatnajökull is rather awkward because the Icelandic government did not have any plans of a national park in the area. In Iceland there are no plans of conserving anything except the glaciers, which are in no danger from the hydropower projects.

Árni also points out that it is unjustifiable that the government gives Landvirkjun a state guarantee for loans the company needs for the project. This in turn means that the company gets loans from abroad without requirements of profitability. In Europe the trend is towards prohibiting government subsidy in this form. Demands for conservation of the environment are also greater in many other countries.

Árni Finnsson says his organization has not been opposed to the aluminium plant, but it totally rejects the development of the Kárahnjúkar power plant because of the impact on the environment north of Vatnajökull. However he doubts very much that an aluminium plant will secure jobs in eastern Iceland. Such a big company will attract many people to the same place, which in turn means that local companies in small industries will loose their work force to the aluminium giant.Thus job diversity will be reduced and the increase of jobs in the aluminium plant will mean fewer jobs in other industries.

If all planned projects of aluminium and hydroelectric plants in Iceland are realized, the production of aluminium of the country will quadruple. When Alcoa’s plant is in full operation, 90% of all electrical power produced in Iceland will be used by large-scale industry.