Iceland’s aluminum smelters are doing just fine even as the deepest market plunge in about seven years pressures production across the world.
That’s because most of them tap cheap power from the north Atlantic island’s vast stores of geothermal and hydro-power in contracts that are linked to the price of the metal. The island’s three smelters, run by Rio Tinto, Century Aluminum and Alcoa, last year contributed 38 percent of the $15.6 billion economy’s total exports.
“There are about 300 aluminum smelters in the world and there are probably fewer than five smelters anywhere that are paying less for power than Alcoa and Century pay in Iceland,” Ketill Sigurjonsson, chief executive officer of consultant Askja Energy Partners, said in an interview.
The power link is vital for operations, according to Ragnar Gudmundsson, the CEO of Century’s local Nordural unit.
“We have the tools needed to deal with downturns without cutting down production or laying off employees or something of that kind,” he said in an interview in Reykjavik.
“There are a number of aluminum plants that are said to have a difficult time operating under the current market conditions, but the market seems to be turning a corner after having hit around $1,400 per ton.”
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