The majority of funds that went to build the Karahnjukar hydroelectric dam in East Iceland have not found their way back to the Icelandic state and last year more than half of Alcoa’s export revenues were sent overseas.
A new report into the effects of heavy industry on eastern Iceland has just been released. One of the conclusions of the report is that the foreign labour force used to build Karahnjukar was far bigger than predicted – at around 80 percent of all workers. The huge size of the project, the then-low unemployment and the then-high value of the krona are named as reasons.
The report also says that only a portion of the damming costs stayed in the country. Of the ISK 140 billion invested, only a third actually went into the Icelandic economy. The report says that the Alcoa aluminium smelter in Reydarfjordur (which the Karahnjukar dam was built to power) cost ISK 126 billion overall; but of that figure, only ISK 36 billion stayed in Iceland. There is no way of knowing what percentage of the money stayed in the east of Iceland, RUV reports.
On the positive side, the smelter continues to return funds to the economy. Last year it exported ISK 74 billion worth of aluminium and bought electricity from Landsvirkjun for at least eleven billion. The report calculates that ISK 28 billion (or around 40 percent of the export value) remained in the Icelandic economy. That is somewhat higher than previously estimated – partly because tax has been added to the purchase of electricity since the plant opened, thereby increasing tax payments to the treasury.
If this sounds like news, you been living the movie!!
Please wake up people! Of course the money was never going to stay in / or return to Iceland. Alcoa don’t really care at all about Iceland.. as long as they get ‘Mugs’ of politicians to hoodwink into thinking Alcoa is going to save their careers, provide jobs etc. The Alcoa and the others like them, just come and rape your resources, cover up their behaviour as long as possible, stir up confusion within the community, give donations where they think it will benefit the company either now or in the future and talk green.
HA, its laughable how many people fall for Alcoa’s well practised methods around the world and nobody goes checking on past history on Alcoa anywhere. Fools!
Fantasy-money – please tell your readers what ” ISK 140 billion ” really is. USD 5000? Or…?
Alcoa’s investment, its their right to profit from it. Iceland still gains far more than the electricity supplied. If you want more profit, invest your own money its as simple as that.
“please tell your readers what ” ISK 140 billion”
It was something like a billion dollars, now its 149 ISK billion which isn’t worth anything is USD as its un-convertible. Alcoa must be rejoicing at the fact that their billion++ dollar investment is effectively worthless.
Well, Martin, the readers here know pretty well what 140 bill. kr are:-) And it is a bit more than $5000:-) Maybe you know the rate? To the Euroit is about 150 kr so you do the maths…
“Alcoa must be rejoicing at the fact that their billion++ dollar investment is effectively worthless.”
How is it worthless ?
Peter, were is this wisdom coming from that the 140 billion ISK are not convertible?
“Peter, were is this wisdom coming from that the 140 billion ISK are not convertible?”
ISK is listed at the ECB as as invalid. Try change 140billion anywhere in the world to another currency and they would laugh at you. Its not accepted as money anywhere except Iceland and there the capital control means you cannot convert and remove it from the country.
So yes, the ISK is worthless, unless you want to live in Iceland I suppose.
Peter – London/Krakow says:
October 13, 2010 at 7:23 am
“Alcoa’s investment, its their right to profit from it. Iceland still gains far more than the electricity supplied. If you want more profit, invest your own money its as simple as that.”
You are confused.
The Kr140bn was provided by Landsvirkjun, an Iceland State owned company.
“please tell your readers what ” ISK 140 billion”
at the time it was spent by Landsvirkjun, it bought USD 1.3bn
“It was something like a billion dollars, now its 149 ISK billion which isn’t worth anything is USD as its un-convertible. Alcoa must be rejoicing at the fact that their billion++ dollar investment is effectively worthless.”
Eh ?? Alcoa did not invest the USD 1.3bn. Where did you get that idea from? The article does not mention this
Landsvirkjun did invest the money.
I said this long long time ago. Karanjuka provides great energy, but again, very bad done to put the energy on the hands of Alcoa and then real profits stay abroad. Aluminum is sent abroad and Alcoa gets paid there. Then they send some money to pay for the cheap energy at the rate of 110isk per dollar. That could help for the icelandic government to gasoline and diesel, medicines, sugar, tobacco and olive oil for the country.
Iceland has a huge debt now and is country virtually depending on developing-like countries economy of heavy industry ( production of aluminum) and fishing. Apart of that lives on an IMF subsidiary loan…
The worst is that the Icelandic Krona has no value at all in the international market. Iceland is in worse position than any eastern european country. You can use Polish, Russian, whatever money from those countries, even from ex-soviet republic, and they accept that money at international banks. But the icelandic krona is not money anymore, everyone knows that.
Still, Icelanders romantically holds to it, no matter what. And that is when proud turns into ignorance. Iceland needs to take up the US dollar, or get into the EU. Getting into the EU is not viable now since the country cannot afford to fulfill the requirements. The country will not start to recover until they drop the krona and accept another currency. Everyone knows that.
Other solution would be to ask the Crown of Denmark to take sovereignty over the island back. Some sort of protectorate or something like that. Iceland would then enter the EU through the backdoor. Iceland could also be under a tripartite protectorate under Norway, Sweden and Denmark.
But the real problem is that the local mafia wont allow anyone else to take the power from them. They are getting rich, they will always get rich. THIS IS A BANANA REPUBLIC…
@Euro – I understand you hope for some kind of mental punishment to the Icelanders. In such way I think you will be extreemly dissapointed from a Nordic view.
>Eh ?? Alcoa did not invest the USD 1.3bn.
Someone paid for the smelter. It’s not entirely clear from the above, but there’s a figure of ISK 140bn that seems likely to relate to the dam. It then immediately mentions an amount ISK 126bn – “Alcoa aluminium smelter . . . cost ISK 126 billion overall”
Clearly the 140bn cannot be a part of the 126bn :) . So, in the absence of any other info, it has to be assumed that the dam cost 140bn (paid for by the power company) and the smelter cost 126bn (paid for by Alcoa). Loose support for that figure (although this is dated at the start of the works):
http://www.thefreelibrary.com/Alcoa+Breaks+Ground+on+$1.1+Billion+Iceland+Smelter%3B+Fjardaal+Smelter…-a0119057923