Background Story

The combined projects represent the largest construction projects and private and public sector investments in Icelandic history. The smelter and hydroelectric projects are expected to cost over 2.5 billion dollars (U.S.) to construct. As would be expected for an infrastructure project of this magnitude, the projects have received a mixture of public support and scrutiny from domestic and international stakeholders. The environmental, social, and economic opportunities and challenges in building a new aluminum smelter and hydropower projects are significant. The findings of the Environmental Impact Assessments (EIAs), which have been conducted for each of the projects, have been controversial, specifically with respect to environmental issues. The EIA found that, while the projects impact the environment, those impacts could largely be mitigated through specific measures, as defined in the final authorization for the projects. The EIAs also recognized the predicted social and economic benefits of the projects. These EIA findings have ultimately been upheld by the Icelandic Supreme Court and the projects have been approved. Nevertheless, some groups remain concerned about the projects and their potential adverse environmental, social, and economic impacts.

Alcoa has publicly stated that the Fjardaal smelter is being designed to be one of the most environmentally friendly aluminum production facilities in the world. Similarly, Landsvirkjun's environmental policy for the Karahnjukar station is to develop a state-of-the-art hydroelectric facility while minimizing disturbance of the environment. In addition to these environmental standards, both companies are committed to ensuring that the projects provide social and economic benefits to local communities. Both companies want to demonstrate a long-term commitment to these objectives and to help fulfill that commitment have combined their efforts to establish this Sustainability Initiative.