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Enlargement Plans for East Iceland Alcoa Smelter

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Enlargement Plans for East Iceland Alcoa Smelter

Alcoa Iceland is looking into the possibility of enlarging the Alcoa Fjarðaál aluminum smelter in Reyðarfjörður, east Iceland, inviting representatives of pension funds to a meeting yesterday morning to see whether they might help fund the project.

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View of Reyðafjörður. Photo by Páll Stefánsson.

Alcoa is preparing to increase electricity capacity in the smelter, which would up its production capacity from 350,000 to 370,000 tons per year. The pot rooms must be modified and the project is estimated to cost more than ISK 12 billion (USD 96 million, EUR 73 million), Morgunblaðið reports.

Magnús Þór Ásmundsson, CEO of Alcoa Iceland, said the company is also prepared to launch constructions which would increase the smelter’s production capacity by 180,000 tons, provided agreements are reached on funding and electricity purchase. The smelter would then produce 550,000 tons annually.

The project could be launched next year—provided the conditions are fulfilled—with the enlarged smelter being fully operational by 2018.

“Fjarðaál has been successful and there is interest for increasing its efficiency even more,” Magnús reasoned.

The enlargement is estimated to cost ISK 90 billion (USD 724 million, EUR 551 million) and the addition would require 270 megawatts of energy.

Many jobs would be created during the construction phase and 120 future jobs once production starts, in addition to related jobs, Magnús said. Currently 480 people are employed by Alcoa Fjarðaál and 300 by subcontractors.

No formal discussions have taken place with Landsvirkjun, the national power company, but Magnús said they are aware of his company’s plans; among energy options are expanded operations of the Kárahnjúkar hydropower plant.

The enlargement plans for the smelter, for which there is room in its current location, have been presented informally to local authorities but Magnús pointed out they must undergo conventional urban planning procedures before anything is decided.

Click here to read about Alcoa dropping plans for a new smelter in north Iceland.

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