On August 7th Katrin Juliusdottir, Minister of Industry, and Ragnar Gudmundsson, Managing Director of Nordural, today signed an investment agreement regarding Nordural’s aluminum plant in Helguvik. The principal aim of the agreement is to secure certain stability within the legal and operational environment of the aluminum plant which is a prerequisite for completing the financing of the project. All the main issues of the agreement are comparable to the agreements that apply to the aluminum plants at Grundartangi and Reydarfjordur.
Last spring, Althing passed a law that authorized the Minister of Industry to make an investment agreement with Nordural, the legitimacy of which had to be confirmed by ESA, the EFTA Surveillance Authority. On July 23d,the Institute pronounced that the investment agreement met EEA regulations. Among the items that ESA looked at were Nordural’s power contracts with Orkuveita Reykjavíkur and HS Orka. The Authority specifically states that the power contracts do not involve State aid.
The Economic Forecasts of the Central Bank and the Ministry of Finance expect investments in power intensive industries in the next years and the National Economic Program expects that the construction projects at the aluminum plant of Nordural in Helguvik, in addition to related projects, will account for a considerable part of the industries’ investments in the years 2010 and 2011.
Ragnar Gudmundsson, Managing Director of Nordural, says that in the present circumstances it is of great importance that the project receive general accord. “It was immediately clear after the events in October that the reputation of Iceland had been greatly damaged and that new foundations of trust in the project would have to be made. The support of the government and Althingi, in addition to the backing of the industries, is an important aid to us in the negotiations with foreign parties.”
Part of Stability Pact
One of the bases of the stability pact between the parties of the labor market and the authorities is the emphasis on advancing the Helguvik project. Vilhjalmur Egilsson, CEO of SA-Confederation of Icelandic Employers, welcomes the signing of the investment agreement. “Foreign investment in new construction projects in the country is naturally very important in the present circumstances, it creates jobs for thousands of people and we don´t have to pay it back.” Mr. Egilsson says that the advent of the aluminum plant in Helguvik plays an important role in securing the increased creation of capital goods in the country, exports, economic growth and thereby an improved standard of living in the next years. ”The aluminum plant in Helguvik is simply in the forefront of investments within the Icelandic economy in the next years and by that I am referring both to the aluminum plant itself and related power projects. The project is extremely important for the resurrection of the economy and therefore I welcome the achievement of this phase.”
Kristjan Gunnarsson, Chairman of SGS (Federation of General and Special Workers in Iceland), is of the same opinion. He says that the Helguvik project comes at a convenient time for the economy as a part of getting the nation out of the economic recession. “The construction of the aluminum plant in Helguvik will be a veritable boon for the economy. We are talking about creating jobs for up to 1.500 people during the peak of the construction period and when there are thousands of people without employment, the importance of this project must be obvious to everyone. Now as ever before society is in need of powerful companies that create permanent jobs in the country and I trust that everyone join forces in facilitating this project.”
The redesign of the Helguvik project is in the process of being implemented. The aluminum plant is planned to be constructed in four 90,000 ton phases that will eventually yield an annual production capacity of 360,000 tons. The first phase of the aluminum plant is scheduled to start operations in the second half of 2011 with 210 employees but their number will have become 540 at the completion of the aluminum plant. At that point of time 1000 derived jobs are expected to be created additionally in society. In 2011 up to 1.500 people will be working on the Helguvik project construction and further 6.000 man-years will be created through related projects. All in all it is therefore estimated that approx.10.000 man-years will be created through the Helguvik project and that over two thousand jobs will have been made when the construction reaches its peak. It is estimated that annual taxes on the aluminum plant operations in Helguvik will amount to 4-5 billion Icelandic krónur in the long run.