You can see why RIO's ISAL Aluminium smelter is being ripped off in Iceland, when you compare the USD$ millions paid for the power purchase percentage.
RIO isn't the only company thats now having power cost problems in Iceland. Eskom the large alloy smelter has just had its power contract renewed and Unions are up in arms saying that the huge increases will put them out of work.
The chairman of the Akranes labor union fears about the safety of its members due to Landsvirkjun's agreements with Elkem Iceland on Grundartangi and Norðurál.
August 21, 2019
Vilhjálmur Birgisson, chairman of the Akranes labor union, believes Landsvirkjun's energy policy is based on greed and monopoly that threaten the livelihoods of people in the West, and especially in Akurnesingen and in local communities. From that, he posted in a status update on his Facebook page yesterday.
He says that with the increase in electricity prices and because of Landsvirkjun's new electricity contracts with Elkem Iceland on Grundartangi and Norðurál, the safety of his members is significantly threatened.
"It is clear to me in the morning that the job security of my members is significantly threatened, given that electricity is rising at both Elkem and Norðurál and at the same time that the prices of their products have fallen sharply, but now the plant, for example, is only just over 1700 dollars per ton which is historically low. A new contract came into force at Elkem on April 1, and electricity prices will rise to less than 1.3 billion at Elkem per year, which means the company will pay about 4.5 billion a year for electricity after the increase. It should be pointed out in particular that this increase of 1.3 billion is far more than the average profit of the company in recent years, which is about 500 million, ”writes Vilhjálmur. Fear of Elkem ceasing operations in this country
He also believes that the electricity contract with Elkem will, at best, result in large-scale cuts and the resulting layoffs and disasters for its members who work for the company. "In fact, I sincerely fear that in no time will the owners of Elkem decide to close and stop operations in this country. It is clear that this huge electricity increase of 1.3 billion a year will push all operating conditions away from the company. "
Vilhjálmur discusses Landsvirkjun's performance figures in its status update. "It is safe to say that Landsvirkjun's revenue figures for the first six months are impressive, but profits amounted to ISK 8.4 billion in the first 6 months of this year and at the same time Landsvirkjun has also repaid debt for just over ISK 15 billion. It is said that Landsvirkjun's annual profit will amount to ISK 17 billion and at the same time as this huge profit is taking place Landsvirkjun will also pay down debt for ISK 15 billion. " The companies at Grundartangi are alive and well with the West
Landsvirkjun and Norðurál Grundartangi ehf. reached an agreement to renew electricity companies contract for 161 MW in May 2016. The renewed agreement was linked to the market price of electricity in Nord Pool electricity market and are replaced by aluminum connections in the current contract.
The renewed contract is for four years and boasts 161 MW, as previously stated, which is close to one third of the Norðurál smelter's power needs in Grundartangi. The renewed agreement will take effect in November 2019 and will be valid until the end of 2023. The current agreement will remain in effect until the end of October.
It was reported in the news in 2016 that Landsvirkjun and Norðurál's share had been going on for some time. Hörður Arnarson, CEO of Landsvirkjun, strongly criticized Norðurál for trying to use all possible means to keep energy prices at its lowest.
Vilhjálmur discusses this electricity agreement between Norðurál and Landsvirkjun, in its status update, which will take effect on November 1. “According to my calculations, this only contract will increase the electricity price to Nordural by 4 billion a year, in addition to the 12 to 15 billion that the company is paying today. It is clear that a 4 billion increase in electricity prices per year will call for huge rationalization and cuts and I sincerely fear that it will affect the interests and livelihoods of my fellow members as well as the decline in trade and services here in the West, as the companies are in Grundartangi the livelihood and our fate of the West, "he writes.
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