Source: International Rivers Network
Date: 3/10/2003

The Icelandic government plans to construct a large hydropower project in Iceland's Eastern Highlands, one of Europe's largest remaining wilderness areas, in order to supply power to a US aluminum smelter owned by Alcoa. The "Kahranjukar Project" involves building miles of roads, boring a series of tunnels, diverting dozens of rivers to create 3 reservoirs and erect nine dams, including one that is 630 feet -- Europe's highest. The level of the immense reservoir will fluctuate seasonally, from 170 to 250 feet.

The Karahnjukar Project would supply power to a planned Alcoa aluminum smelter. US-based Alcoa is the world's largest aluminum producer and is moving to Iceland not to expand production, but to cut costs. It is closing smelters in the US and moving to Iceland where the government is offering dirt-cheap electricity.

The aluminum plant will get a subsidized rate, thought to be about 1.5 cents/kWh. The price will rise and fall with the price of aluminum (which is currently quite low, due to a glut on the market). The utility has yet to release the price at which it will sell Alcoa its hydropower.
It's not just cheap power that draws Alcoa to Iceland: Iceland's reliance on geothermal power has given it an exemption from the Kyoto Protocol's fossil fuel emissions, which would allow Alcoa's smelter to operate without having to pay penalties for any carbon dioxide emissions.

What is at Stake

If Karahnjukar goes forward, a large wilderness area will be sacrificed so that the world can consume cheaper aluminum. The massive project will be built on the north side of Europe's greatest glacier, Vatnajokull, a vast ice field beneath which lie several active volcanoes. The project will drown 22 square miles of tundra, presently the grazing grounds for more than 2,000 reindeer and the nesting ground for the pink-footed goose, and affect the flows of close to 60 waterfalls. In early summer, silt from the exposed banks will blow off all over the countryside.

Iceland's equivalent of America's Grand Canyon, Dimmugljufur, or Dark Canyon, is a deep cleft carved out by the region's most powerful glacial river, the Jokulsa a Bru. The part of the canyon between the edge of the glacier and the dam will be submerged; on the far side of the dam, it will become a dry gulch, the impounded water diverted through a 25-mile-long tunnel to the power station that will generate the electricity needed for Alcoa's smelter.
The Karahnjukar Project officials claim that it will create close to 750 jobs in Eastern Iceland, an economically disadvantaged region. Yet the economics of the project are questionable. According to an independent analysis commissioned by Iceland's Nature Conservation Agency, it will likely produce annual losses of $36 million. These funds could be spent for creating other jobs that don't destroy a major wilderness area.

Take Action!
The Iceland Nature Conservation Association (INCA) has led a strong campaign against Karahnjukar for several years. So far it has included regular large demonstrations, daily protests at the parliament building, a hunger strike and a court case against the environment minister. The environmental activists want to turn the area into a National Park of "Fire and Ice." For more information, please visit: www.inca.is

But time is running out. The Icelandic government plans to sign the agreements for the project to go ahead before the national elections of May 2003. At this critical hour, Iceland's campaign against Karahnjukar needs your support. Please go to : http://www.corpwatch.org/action/PAA.jsp?articleid=5828 to send a free fax to Alcoa telling them to withdraw from their destructive project in Iceland immediately.

Thank you for your support.

corpwatch@corpwatch.org
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