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Giant dam and smelter boost economy and raise tensions in Iceland

Harnessing the rivers streaming from the glacier Vatnajökull aggravates some, as untouched highlands disappear

Giant dam and smelter boost economy and raise tensions in Iceland
Giant dam and smelter boost economy and raise tensions in Iceland
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By Mari Manninen in Iceland
      It is an impressive sight. An enormous wall rises up from a deep valley in the wilderness on eastern Iceland. Dozens of oversized trucks look like a child's toys as they ascend along the winding road toward the top of the dam under construction.
The dam of Karahnjukar is approaching its maximum height of 190 metres, but debate surrounding the gigantic energy and industrial project continues.
      The national energy company Landsvirkjun will harness two rivers flowing from Europe's largest glacier Vatnajökull to produce electricity for a new aluminium smelter.
      The controversy follows a familiar pattern: How much can the untouched landscape be changed in the name of employment and economic growth?
      Damming the glaciers has been planned for decades, and the project was nearly cancelled several times. Those opposing the project rejoiced as Norwegian energy and aluminium company Norsk Hydro pulled out. The government found new builders to replace Norsk Hydro.
      Officials rejected the project in an environmental impact review, but the Minister for the Environment approved the project after additional demands had been met.
      Today the project is in full swing: dams, long pipelines to the power plant, the plant itself, and the smelter a few dozen kilometres away. The factory, owned by the American aluminium giant Alcoa, should start running in two years' time.
A large part of formerly sleepy, rustic Icelandic countryside has sprung to life. Trucks rumble along tens of kilometres of new, paved road across the unpopulated, wind-ravaged highlands to reach the construction site. Many new houses are being built in the town next to the smelter.
      Chinese and Italian migrant workers visit the shops and restaurants in nearby towns. Curious tourists come to watch the controversial project, which even caused singer Björk's mother to go on a brief hunger strike.
The project is the largest in Iceland's history. The power plant will increase the country's energy output by 60%, although all of its energy will be sold to the new factory. The factory will double Iceland's aluminium production, which is already one of Iceland's most important export industries.
      It is profitable for American aluminiun giant Alcoa to build a factory in Iceland and to ship the produce around the world from there, since Iceland offers hydroelectric power, which the smelter needs plenty of, at a very competitive price. A renewable source of energy is an advantage, as pollution controls are becoming more stringent around the world.
The most intense debate has been raised over the damming of the highland rivers. The highlands of Iceland are among Europe's largest areas of untouched nature. "The area is valuable already in itself," says Arni Finnsson, head of the Icelandic Nature Conservation Association.
      The paths of rivers will change, valleys will be flooded by artificial lakes, the landscape will be altered and a vast network of tunnels will be dug in the ground. According to Arni Finnsson's calculations, the project will directly impact an area of 1,000 square kilometres, and will indirectly affect in a much wider area.
      Geese nest and wild reindeer graze in the vicinity of the dam. The biggest fears Arni Finnsson has are of erosion and the fate of the delicate flora.
      Mud will gather in the artificial lakes, and when the water is low, the dust from the mud may cover nearby vegetation as it is blown about by the wind. The fine dust from the glacial rivers may in turn be blown all the way into settled areas. The wind in the highlands is known to be fierce.
Solutions to the erosion issue, such as fencing off the lake or watering the shores during droughts, are being examined. Dust storms rise from the banks of natural rivers as well, says project information officer Sigurdur Arnalds.
      He claims that the dam's effect on the geese and reindeer is only slight. "The number of short-billed geese has grown considerably, and only one percent of their nests will be destroyed. The reindeer population is being controlled by hunting even now. When snow has prevented the reindeer from calving in the area, they have calved elsewhere. The reindeer must get accustomed to heavier traffic, though," Sigurdur Arnalds admits.
      On the way back from the dam a herd of about 100 reindeer keeps foraging for food under the snow as cars drive past close by along the road built for the construction of the plant.
      "We are not destroying Europe's largest wilderness, we are only slightly reducing its size," says Sigurdur Arnalds. The construction workers are happy to show a map where the dam site is a tiny speck on the edge of the vast wilderness.
      They also point out that contrary to many dam projects around the world, no settlements or people need to be moved out of the way of the reservoirs. Although the project is colossal in Icelandic terms, the power output is only a fraction of that of the three-gorge dam in China.
Opponents of the aluminium project also have arguments based on economics. In their opinion Iceland is relying too heavily on one product. Governments have been running an industrial policy that attracts energy-hungry aluminium manufacturers.
      "We think Iceland already refines enough aluminium, and electricity has been sold at a sufficiently low cost," summarises Left-green MP Thurdur Backman.
      He is afraid that the large construction site is too large, as Iceland has only 300,000 inhabitants. The effects of the construction work can be seen as strong growth figures in Iceland's economy.
      The Parliament and most of the people living near the dam site agree that the aluminium factory will save eastern Iceland. The smelter directly creates 450 new jobs, and almost as many indirectly.
      Housing for 1 200 new inhabitants will be built in the centre of eastern Iceland, Egilstadir, population 3 500. In the nearby smelter town of Fjardabyggd the growth is equally fast.
      "People have been moving away from here for years. Unemployment used to be five to seven percent, now it is one percent. People are moving here", explains Eikur Björn Björngivsson, mayor of Egilsstadir
In the building stage of the project, there are over 2,000 construction workers in eastern Iceland, but MP Thurdur Bacman, who is native to the region, points out that most of the labour force for the project comes from abroad.
      Those in favour of the project claim that Iceland would not have enough workers otherwise.
      Opponents claim that the Italian company Impergilo is offering the foreign workers inferior salaries and poor living conditions.
      Supporters state that the dispute over salaries has been resolved and that the leaking roofs of the workers' lodgings have been fixed.
      Supporters and opponents of the project also fail to agree on whether the electricity for the smelter is being sold at a profitable price.
      Many Icelanders are already hoping that the aluminium smelter can begin production upon being finished.
      Environmentalists also have a reason to celebrate, as the Parliament decided in January to grant national park status to a vast area bordering on the dam site. The zone covers one-tenth of Iceland's surface area.
Helsingin Sanomat / First published in print 28.5.2005

MARI MANNINEN / Helsingin Sanomat

  31.5.2005 - THIS WEEK
 Giant dam and smelter boost economy and raise tensions in Iceland

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