1.6 billion in lost earnings over electricity shortage
Reykjavík, Iceland, February 4 2022: The energy shortage means Alcoa Fjarðaál needs to cut production at its Reyðarfjörður smelter by one percent, or around 4,000 tonnes. The world aluminium price is currently high and the company expects to lose out on 1.6 billion krónur. The production cut has no direct effect on the company’s customers, however.
Landsvirkjun notified large industrial electricity consumers of the need to restrict supplies because hydro dam reservoirs are at an unusually low level for the time of year. The country’s flawed electricity grid is also partly responsible. If the transmission grid were more robust, it would have been possible to save water in the Þjórsá area and send more power from Kárahnjúkar to other regions as soon as the water level issue became clear.
Fishmeal factories are not receiving any electricity and are burning oil instead. The Eskja plant in Eskifjörður alone is currently burning 45 tonnes of fuel oil per day. Smelters are also restricted, and according to the Fjarðaál contract, ten percent of the supply to its Reyðarfjörður plant can be cut if conditions necessitate.
Fjarðaál confirmed to RÚV that its energy supply will be cut by six percent from the 10th February and could remain at that level until the end of April, depending on weather and when reservoirs start filling up again with the spring melt. This will mean a 4,000-tonne production cut, or one percent. At a current rate of over 3,000 dollars per tonne, that could mean 1.6 billion krónur.
The effect of Landsvirjun’s decision is lesser at Norðurál at Grundartangi, West Iceland, because that company buys two-thirds of its electricity from other suppliers. No information was forthcoming from Rio Tinto at Straumsvík, near Hafnarfjörður.
In December, the three aluminium smelters exported aluminium and aluminium products for nearly 34 billion krónur, according to Hagstofa Íslands (Statistics Iceland) data. It was the highest monthly value of aluminium exports from Iceland since data records began.
Text by Alexander Elliot. The original article can be found at the RÚV website.
