From Iceland — Smelter In Helguvík Will Not Be Profitable

Smelter In Helguvík Will Not Be Profitable

Published June 20, 2013

Low aluminium prices make it impossible for Norðurál to run a profitable smelter in Helguvík, says CEO of energy provider HS Orka.

“The problem is that aluminium prices are only around 1800 – 1900 USD per ton. I can’t see how [Norðurál] can run a profitable aluminium smelter and how we can run profitable power plants at the same time,” said Júlíus Jónsson, CEO of HS Orka and HS Veitur to Viðskiptablaðið, reports.

Norðurál has been negotiating with HS Orka and HS Veitur about energy prices for the aluminium smelter that the company plans to build in Helguvík on Reykjanes peninsula. Júlíus says the negotiations are going slow because what Norðurál is willing to pay for the energy does not suffice what HS Orka needs to charge. He said they haven’t given up hope of reaching an agreement yet though.

“The harsh reality is that predictions of aluminium prices do not suggest that aluminium prices will rise in the nearest future,” Júlíus said.

He added that he agrees with what Davíð Þorláksson, chairman of the Youth Wing of the Independence Party, who has criticized the Icelandic government for its emphasis on heavy industry, providing the industry with cheap energy subsidized by tax payers.

“But if anyone wants to build an aluminium plant and pay full price for the energy, provided they fulfil all the conditions such as environmental assessment, then there’s no reason why that shouldn’t be possible,” Júlíus said.

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