A two front war for Alcan?

The folks at Alcan must be wondering what's in the water these days.

Hot off recent their troubles in Kitimat, where the local government has been an outspoken critic of the company, comes word that the Aluminum giant isn't particularly wanted in Iceland either.

Alcan Icleand is finding that it's plans for a smelter expansion is receiving as much positive news as their efforts in Kitimat garnered over the last few months.

Take note of the comments from Alcan regarding the Icelandic showdown, you could almost insert Kitimat in the text and the message wouldn't really change a lick!

For Alcan, it's apparently getting harder and harder to find a little love these days.


Iceland municipality votes against $1.2B expansion of Alcan plant
Last Updated: Monday, April 2, 2007 3:52 PM ET
The Associated Press

People in a small Icelandic municipality have voted against a planned $1.2-billion-US aluminum smelter plant expansion by Canadian aluminum maker Alcan Inc.

The Montreal-based company said it is reviewing the results of the vote, noting the initiative was defeated by a very slim majority.

The residents in Hafnarfjordur, a municipality of 25,000 people just south of Iceland's capital, Reykjavik, voted 50.3 per cent against the proposed expansion.

The ISAL smelter employs 450 people, and has a current capacity of 180,000 tonnes per year. The planned expansion would have more than doubled capacity to 460,000 tonnes per year.
The defeat for Alcan carries broad implications for both Iceland's economy and for the company, the world's second-largest aluminum maker, which has signalled it might leave the plant.

"If the expansion won't go through, we see that as the beginning of the end of the plant," Hrannar Petursson, the plant information director for Alcan Iceland, said Thursday.

"Alcan has noted the results of the public consultation, and will now carefully review all available options," Michel Jacques, the president and CEO of Alcan Primary Metal Group, said in a statement.

"A large proportion of the citizens of Hafnarfjordur support our project and I would like to thank them, as well as all of our ISAL employees, for their invaluable contribution in advancing the development of this project that we believe is beneficial to all stakeholders," Jacques added.
Iceland is just coming through a period of high growth, boosted by recent aluminum plant investment.

The Alcan project "would have changed the economy dramatically," said Ingolfur Bender, a Reykjavik-based economist at Glitnir Bank. "The result means that the economy will cool down more rapidly than otherwise."

Economic growth jumped to 7.2 per cent in 2005 from 2.7 per cent in 2003 largely as a result of aluminum investment, prompting 18 interest rate hikes since May 2004 by Iceland's central bank to the current record high of 14.25 per cent.

But growth slowed to 2.6 per cent in 2006 as the projects concluded. Inflation has slowed to 5.9 per cent in March from 8.6 per cent in August and is expected to continue slowing.
Iceland is an attractive location for aluminum smelting plants because of cheap electricity from hydropower plants.