What is mined in Iceland

Aluminum industry in Iceland

The energy-intensive industries primarily include companies that produce silicon metal and aluminum. Companies of this type have settled in Iceland because of the cheap production and low electricity prices, although the raw material bauxite, which is necessary for aluminum production, has to be brought to Iceland from Australia and Brazil. This logistical effort shows how attractive Iceland's cheap energy is for this industry.

Some failed projects at the beginning of the 1990s can be traced back to increases in exports of metals from the crumbling Soviet Union, which caused the world market prices for such products to drop sharply. After Iceland had its inflation under control and healthy economic growth in the mid-1990s, there were again interested parties in Iceland:

  • At the end of 1995 Allusuisse-Lonza expanded its existing aluminum smelter ÍSAL from 100,000 to 162,000 tons of annual capacity.

  • In 1997 the aluminum smelter Norðurál was founded as a subsidiary of the American Columbia Ventures Corporation. It achieves an annual production volume of 60,000 tons of aluminum.

  • At the end of the 90s, the already existing ferro-silicon smelter of Icelandic Alloys Ltd. expanded. As a result, the previous annual capacity of 70,000 tons has been increased by 40,000 tons.

Compared to the silicon smelter, the aluminum industry has a much more important position in the Icelandic economy with seven times more exports. It now generates around twelve percent of all Icelandic export revenues. Energy consumption has risen sharply due to the settlement of these companies in the 1990s. Today, industrial plants consume around 64 percent of Iceland's total electricity consumption.


This development is expected to intensify. It is planned to further promote aluminum production in the next few years. In July 2002 the Icelandic government, the Icelandic energy company Landsvirkjun and the Aluminum Company of America (Alcoa) signed an agreement to build a new aluminum smelter in eastern Iceland. The world's largest aluminum manufacturer, Alcoa, then built Europe's largest aluminum factory in the east of the country, which should create around 1,000 jobs and produce around 322,000 tons of aluminum annually. The capacity of the power plant should be around 500 megawatts. In order to be able to provide this service, however, an appropriate energy supply was necessary, which was ensured by the construction of a large dam in the eastern highlands of the island. The construction of this dam is controversial to this day, as large parts of the highlands were flooded and unique landscapes were lost. In the meantime, however, the dam has been completed and the aluminum smelter in the East Fjords has been put into operation. As a result, the share of energy consumption in the aluminum industry has increased significantly.