Delay in Icelandic power/ aluminum projects?
Construction for the planned aluminum plant at Helguvik in South-West Iceland has begun, but funding for it was supposed to come from the Icelandic banks Kaupthing and Landsbanki, as well as from Dutch bank Fortis. All of them have difficulties, so other sources of funding are being searched now overseas.
The world-wide credit crisis and the particular situation of Iceland at the moment don´t make it easy to go ahead with planned power and smelter projects in the country.
Given that Iceland’s economy depends a lot on the power/ aluminum sector, the difficulties in getting necessary financing to go ahead prove to be a huge problem. There are big hopes that this sector will play an important part in rebuilding the country and lead it out of the current troubles.
Construction for the planned aluminum plant at Helguvik in South-West Iceland has begun, but funding for it was supposed to come from the Icelandic banks Kaupthing and Landsbanki, as well as from Dutch bank Fortis. All of them have difficulties, so other sources of funding are being searched now overseas. There are also issues with the plans to extend the plant, which might require a new environmental assessment. Furthermore power was supposed to be provided by a new geothermal plant at Hverahlíðarvirkjun by Reykjavik Energy, which hasn´t commenced yet. Overseas funding was supposed to come from the European Investment Bank (for both the Hellisheiði and the Hverahlíð plant), but there have been delays because of the general uncertainty of the Icelandic economy.
Expansion of the Hellisheiði plant is scheduled to go ahead as planned and will be financed by a bond issuance of ISK 5 billion (~US$ 44 million) within the country, as overseas funding is currently unavailable.
There are conflicting messages regarding the planned extension of Rio Tinto Alcan’s smelter in Straumsvik, while the smelter is to be extended despite current troubles, the necessary power increase might prove another story. It was supposed to come from a new hydro-plant, which itself might be delayed.
The other project, which currently faces difficulties, is the proposed aluminum smelter in Húsavík in the North of Iceland. The smelter plans have been delayed and there are now talks on finding additional industries that could use the power of the planned Theistareykir geothermal power plant.
But there are also increasing discussions on how Iceland should use its abundant energy resources for rebuilding its economy while at the same time protecting the environment.
Sources: IPS “Iceland: Financial Crisis Hits New Development”, various Icelandic news sites.