Alcoa inks smelter deal

Alcoa has signed a 40-year agreement with Landsvirkjun, Iceland’s national power company, to build a $1.1-billion aluminum smelter.

The plant, which has a planned capacity of 322,000 metric tons per year, would start up in 2007 and create 450 jobs. Construction would begin in early 2005.

In the past, at other locations, Alcoa has curtailed operations when production, energy and labour costs rose to uncompetitive levels.

Iceland’s environmental agency has issued an operating permit that establishes operating conditions and emission limits for the smelter.

Alcoa says the new plant will have significantly less impact on the environment than an earlier design, resulting in less consumption of electricity, fuel and water.

However, the project has aroused opposition from local environmentalists, including pop singer Bjrk. They are critical of Landsvirkjun’s plans to divert two major glacial rivers into a valley in the Icelandic highlands, creating a large reservoir to power Alcoa’s smelter.

Supporters say the plant will fuel the small nation’s economy and create jobs, and Iceland’s parliament has already given its approval.