Panoramic. Iceland�s rugged vistas are backdrop for aluminum smelter powered by electricity from new hydroplant. (Photo by Peter Reina for ENR)

Converting “melting icebergs into pretty smart,” notes a manager on a vast integrated hydro and smelter project in Iceland. Energy, both hydro and geothermal, is the only significant natural resource Icelanders have to compensate for declining fisheries. The tiny subarctic nation, stranded between Greenland and Scotland, is determined to export as much as it can in energy-intensive products.

Iceland’s biggest electricity project ever, rated at 690 MW, is now being built solely to serve an emerging 322,000- tonne-per-year smelter on an eastern fjord at Fjardaál. For a country of about 300,000 people, the Kárahnjúkar hydro project is a huge undertaking, calling for one of the world’s biggest concrete-faced earth dams, at 8.5 million cu meters, and over 70 kilometers of tunnels.

Under a 40-year contract with U.S.-owned Alcoa Fjardaál, the National Power Company, Landsvirkjun, will supply about 4,500 MWh of power a year, with tariffs linked to aluminum prices. Even before construction ends, Landsvirkjun is exploring options for 400 MW of geothermal energy for another large smelter. More long-term aluminum plans are in development, and for current upgrades, utilities near Reykjavik are expanding geothermal capacity.

But the largest of all these investments is at Kárahnjúkar. Based on glacial rivers, the hydro project spreads across wilderness, providing a harsh construction backdrop while infuriating conservationists. It is being built in a nation devoid of all but the most basic construction products, and where the affluent labor force is busy with more comfortable pursuits. Chinese women driving earth compactors are among the hydro/smelter project’s large foreign work force.

The hydro builders live and work in exposed camps in view of the Vatnajökull glacier, which covers 8% of Iceland. Rivers fed by the glacier, Europe’s largest, are now being dammed, to create a 600-m generating head at an underground powerhouse in the Valjófsstadafjall escarpment, some 40 km to the east. Power will be sent from there 50 km to the Fjardaál aluminum plant along two transmission lines, each enough to ensure non-stop smelting.

With Iceland’s traditional exports dwindling, the national parliament approved Kárahnjúkar in 2002, despite local and international environmental unease. Some of the environmental sting had been drawn from the project in 2000 when plans for a second large reservoir were dropped. With a smaller dam on the Jökulsá í Fljótsdal River, southeast of the main complex, the once threatened wetlands will now provide about a quarter of the water needed.

Nevertheless, critics have not been appeased. International activists last summer invaded the hydro sites and project staff expect their return this year. At the powerhouse, “we had a couple of people wandering around,” says Lawrence Jackson, project manager with the construction joint venture Fosskraft. “When we asked them to go, they went.” The remote dam site also attracted protestors.

More recently, the environmental group WWF warned of the project’s threats to bird and deer populations, and of damage to downstream wetlands. And WWF accused Landsvirkjun of failing to meet criteria set by the World Commission on Dams. Landsvirkjun rebuts these allegations. And small communities around the smelter welcome job opportunities being created, says Björn Lárusson, spokesman for the plant’s turnkey contractor, Bechtel International Inc., San Francisco.

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  • Harsh Climate, Difficult Geology Temper Pace of Work
  • From 2008, the smelter and hydro plant will hum to the same beat. Until then, each project has its own construction tempo. While the largely prefabricated smelter is being pieced together calmly in the benign and easily accessible lowlands, hydro builders in the hills battle freezing conditions, howling winds and treacherous tunneling to fulfill their side of the bargain (see related story).


    “We’ve had last snows on the 22nd of  June and first snows on the 22nd of  August,” says Gianni Porta, project manager with the Italian contractor for the main Kárahnjúkastífla dam and tunnels, Impregilo S.p.A., Milan. Project contractors have to import just about everything, including workers. Unable to attract locals to “such a wild place,” Impregilo first recruited in Portugal, but the turnover “was impressive,” recalls Porta. Of his current 1,150 payroll from 45 countries, only 250 Portuguese remain.

    Porta reassembled crews from his former Chinese projects. First, he negotiated visas for veterans of a Yellow River dam to start earthmoving. Then, “we managed to convince the authorities that we needed Chinese workers also for other work,” says Porta. TBM specialists from a tunnel project in Inner Mongolia and concrete crews from Ertan Dam on the Yalong Riv-er in Sichuan province were lured by earnings over 20 times higher than at home.

    For the smelter, Bechtel “searched the world,” says site manager Andy Cameron. “We went to China, Thailand, the Philippines, several places in Europe, and India, and we ended up in Poland,” he says. “Because there is a minimum wage here, the cost was not an issue.” About 70% of the work force, due to peak at 1,600 this year, is Polish. “There is very low turnover,” he says.

    Working in extremely tough conditions, Impregilo is late. This September’s contractual deadline to start reservoir impounding was formally moved to next June. However, September remains the target that project staff believe is attainable. “We have to make sure there is sufficient water in the reservoir next year,” says Jonathan Parry, project manager on the Kárahnjúkar Construction Supervision joint venture, overseeing the dam and tunnels for Landsvirkjun.

    And completion of the main tailrace tunnel has been put back four months, from this December to next April, says Porta. That puts it tantalizingly close to when Bechtel needs power to start commissioning the smelter.

    Bechtel’s Cameron acknowledges that hydro delays could cause a “small hiccup.” But he feels enough electricity will be found, if only from other sources, “to get us on our start-up.” he says. “What really counts is the last hot October, November next year,” he adds.

    Under its $1.1-billion turnkey contract, begun in 2003, Bechtel completed erection of Chinese-supplied steelwork of the two 1-km-long, 25-m-wide buildings this spring. The contractor is now due to start lining the 336 “pots” in which powdered alumina will be dissolved in electrolyte and charged with electricity to separate aluminum.

    After starting site work in July 2004, Bechtel, supported by local design firm HRV Engineering group, is on schedule to hand over the facility at the end of next year. Cameron attributes that quick work to meticulous preparations. “We did one year’s worth of solid planning and basic engineering before commencing in the field in a very substantial way,” he says.

    Fjardaál is the latest of several Icelandic smelters, the first entering service in the 1960s at Straumsvik, west of Reykjavik. By last year, national aluminum output reached 270,000 tonnes. With expansion of existing capacity and Alcoa's Fjardaál plant, production will reach 780,000 tonnes in 2008, according to Landsvirkjun.

    Smelting could double early in the next decade if plans by Alcoa and two other producers materialize, says Landsvirkjun spokesman Sigurdur Arnalds. “All the three possibilities are looking roughly at the same time frame, but it is unlikely that they will all happen at the same time. Iceland could not handle it,” he says.

    Steep.  Kárahnjúkar hydro project is part of national plan to develop energy sources. (Photo courtesy of VIJV)

    Since it takes about 15 kWh of electricity to produce 1 kilogram of aluminum, even Iceland would struggle to supply all the planned production in time. So far, hydro has provided most of the industrial electricity and will account for about three-quarters of forecast total output of over 16 million MWh by 2010, according to Landsvirkjun. Geothermal is providing an increasing share. “We have already harnessed most of [Iceland’s] hydro power stations,” says Árni Gunnarsson, manager of Landsvirkjun-led investigations into a 400-MW geothermal project.

    Natural hot water began heating buildings in Reykjavik before World War II and now accounts for around 90% of the island nation’s space heating. In the city, wells that reach a few hundred meters deep produce hot water that can be used directly. In the 1970s, utilities began boring much deeper elsewhere, extracting geothermal water hotter than 250°C. With increasing temperatures and pressures, geothermal water also began being used to produce electricity.

    Landsvirkjun now has just 63 MW of geothermal capacity, mostly at its 29 year-old Krafla plant. The utility Reykjavik Energy has 120 MW of geothermal power Nesjavellir, which it started developing in 1991. Click here to view map

    The company is building a second unit of the same size, largely for increased production, at the Grundartangi smelter, some 50 km away. At the same time, neighboring utility Hitaveita Sudurnesja is commissioning a 100-MW geothermal plant, dedicated to the same smelter, says a utility spokeswoman. Hitaveita will also add a second 30-MW unit at its geothermal plant at nearby Svartsengi next year, she adds.

    But the biggest geothermal prospect is in the northeast, where Alcoa and the government this March agreed to study the feasibility of a 250,000-tonne smelter  near Husavik. Landsvirkjun is about to sink three deep wells to assess the resource, which would power the giant smelter directly. Landsvirkjun is investigating four sites and is planning to exploit two or three, leaving the remainder in reserve. The team will not have a clear view of the resource until its starts power production. Says Gunnarsson: “It’s always risky.”