Norðurál – June 2017

Annual Production



Good Results Despite Difficult Market Conditions

In 2016, aluminum production in Grundartangi demanded 4,66 GWh of electricity, which is almost a quarter of all the electricity generated in Iceland. Norðurál produced a little more than 313 thousand tons of aluminum, which is an increase from previous year.

Despite losses in 2016, the business is going well and our operations are in balance. Production of alloy, which is used to manufacture various car parts, was successful and has increased the overall value of the products made at the plant.

World Demand


The Business and Key Figures

The Business in 2016

At the plant, the production of aluminum has gradually increased from the first year and is now approximately 313.000 tons per year. Lately, increased production has been made possible by more efficient electricity use. The importance of more valuable products has also grown. Such production involves mixing other materials with the aluminum in order to call forth different characteristics in accorance with the wishes and needs of our customers. The product development is especially focused on meeting the demands of vehicle and aircraft manufacturers for light but strong multi-purpose materials. The alloy is up to four times stronger then normal aluminum. In Norðurál’s aluminum plant in Grundartangi we produce aluminum that is used for manufacturing all over the globe.

0 2015 Revenues (m. USD) Despite increased production and overall value of the product, revenue decreased by over 11%, or 65 million dollars. 0 100 200 300 400 600 500 2016 2015 2014 Production (tons Al) The annual output of 313,050 tons is a Company record. 0 100.000 200.000 400.000 300.000 2016 2015 Profit (Loss) (m. USD) Net loss after taxes and interest amounted to USD 21 million. Lower market prices of aluminum are the principal cause. -30 -20 -10 0 10 50 20 30 40

Key Figures

Last year, Norðurál’s aluminum plant was run at a loss of 21 million dollars, which amounts to 2,6 billion ISK. In 2015, production and export of aluminum returned a profit of 46 million dollars and 83 million dollars on 2014.

Last year, profits before taxes and interest amounted to 23 million dollars compared to 62 million in 2015.

Revenues amounted to 516 million dollars, or 62 billion ISK. They decreased by eleven percent between years, or 65 million dollars. The expenses decreased from 477 million dollars on 2015 to 453 million dollars in 2016.

Norðurál’s equity was 357 million dollars by the end of the year, or 42 billion ISK, and the equity ratio 57%.

Key Figures

Operation 2016 2015
Revenues   516 581
Operation Costs   453 477
EBIDTA   63 104
  EBITDA Margin 12% 18%
Depreciation   (40) (42)
Net Financial Items   (39) (6)
(Loss) Profit before Tax   (16) 56
Income Tax   (5) (10)
(Loss) Profit   (21) 46
Cash Flow from Operations   53 70
Investments   11 13
Balance Sheet      
Fixed Assets 520 550
Funds from Operations (FFO) 138 133
Total Assets 658 683
Equity   375 397
Liabilities   152 160
Income Tax Liabilities   83 83
Short-term Liabilities   47 43
Assets   658 683
Equity Ratio   57% 58%
Operation   2016 2015
Revenues   62,266 76,606
Operation Costs   54,667 62,881
EBIDTA   7,598 13,725
  EBIDTA Margin 12% 18%
Depreciation   (4,859) (5,496)
Net Financial Items   (4,639) (863)
(Loss) Profit before Tax   (1,900) 7,365
Income Tax   (657) (1,329)
(Loss) Profit   (2,557) 6,036
Cash Flow from Operations   8,066 13,751
Investments   1,295 1,692
Balance Sheet      
Fixed Assets   58,674 71,251
Funds from Operations (FFO)   15,542 17,221
Total Assets   74,216 88,471
Equity   42,349 51,417
Liabilities   17,195 20,751
Income Tax Liabilities   9,371 10,693
Short-term Liabilities   5,302 5,610
Assets   74,216 88,471
Equity Ratio   57% 58%
Icelandic Aluminum

A Word from the CEO

Even though the demand for and importance of aluminum has been increasing, the world price of aluminum has been going down the past few years. In 2016, the price hadn’t been that low since 2003. This development can in many ways be traced to increased supply of subsidised aluminum from China, but it’s debatable whether subsidising the resources needed for the production there is legal or not. The average price of aluminum in European markets was 8,4% lower in 2016 than 2015. This development affected the operations of Norðurál and the business was run at a loss.

As applies to other export industries as well, the performance of Norðurál can also be traced to the influence of a stronger Icelandic króna. Wages have also been increasing way faster here than in our neighbouring countries and labor costs have grown as a result of this development.

However, the fact of the matter is that the aluminum industry is characterised by fluctuations in price in the long term. At the moment, there are clear indications that better times await us. Average price of aluminum in the first 5 months of 2017 is 17% higher than the price in 2016.

Icelandic aluminum has a special status when manufacturers choose a material that is produced in an environmentally friendly manner and seek to reduce their carbon footprint. Nowhere in the world is production of aluminum as environmentally friendly as here. True, Icelanders are a small nation population-wise but they significantly contribute to aluminum production. Almost 2% of all aluminum produced globally is made here.

Most of the energy used by aluminum companies globally is not renewable that leads to high emissions of greenhouse gases. Compared to aluminum production in Iceland, the difference can be up to ten times more emissions. By producing aluminum with renewable energy and state-of-the-art production methods Icelanders contribute greatly to the global fight against pollution.

There are clear opportunities for marketing and showing the quality of Icelandic products further in a positive light. Many opportunities could be created in Iceland if aluminum users globally see the advantage in using aluminum with little carbon footprint. Increased consumer awareness on the importance of reducing carbon footprints is a key factor in that development.

Ragnar Guðmundsson

The ISK Index January 2016 - December 2016

Norðurál's Tax Footprint

The Tax Footprint

The tax footprint refers to the taxes and fees that come into being through Norðurál’s operations.

In 2016, Norðurál’s tax footprint amounted to 4,9 billion ISK. Taxes amounted to 3,2 billion and taxes collected amounted to 1,7 billion.

Taxes Paid

3.160 m. kr.

Taxes Collected

1.746 m. kr.

Tax Footprint

4.906 m. kr.

The State Treasury Gets 61%

Norðurál pays an income tax from the company’s profits, almost 1,7 billion in 2016. Contributions to pension funds and payroll tax are the second larger cost factor. The State Treasury receives the largest share of all the taxes either paid or collected by Norðurál. Norðurál is and has been among the largest taxpayers in Iceland.

Local Taxes Paid (m. kr.)

Income tax 1.650
Misc. Employee taxes 1.060
Environmental tax 83
Harbour duties 185
Property tax 179
Other taxes 10
Employee income taxes 1.381
Employee retirement fund contribution 358
Total 4.906

Source: KPMG

Value Creation: 60 Billion

In 2016, Norðurál’s value creation amounted to 60 billion ISK. The operation revenues (only export revenues) are added to the financial revenues and the results for the year. The company’s contribution to the business environment mainly involves purchasing electricity, paying wages as well as purchasing good and services. On average, Norðurál employed 582 people in 2016 and payment of wages amounted to 5 billion ISK. Payments of taxes and other costs to the State, municipalities and pension funds due to the operations amounted to 3,2 billion in 2016. Thus, payments made to employees, the State, municipalities and pension funds amounted to 8,17 billion in total in 2016, which is 14% of the company’s value creation. The largest costs incurred apart from labor costs are purchasing raw materials and electricity.

Total Financial Contribution (m. kr.)

value 2016
Employees 2016 582
Wages (less fees) 5.009
Total wages
and taxes paid
8.169 / 13,7%
Our People

The Largest Workplace in West Iceland

Capital Area

Norðurál employs on average approximately 600 people and the company is the largest workplace in West Iceland. 80% of the staff lives in the neighbouring communities, Hvalfjarðarsveit district, Akranes or in Borgarbyggð. As well as varying in age, this group has a diverse background, education and experience. Diversity strengthens our operations and helps us reach outstanding results. We produce aluminum in Grundartangi using four pot rooms. The pots are closed and connected to an air purification system that cleans the exhaust that originates from the pots.

Safety measures are a priority at Norðurál and that emphasis is reflected in the whole of the company’s operations.

The Production Process at Grundartangi

The Production

Even though an aluminum plant is a large structure and handling a 950°C liquid metal is no child’s play, the production process of aluminum isn’t that complicated. Aluminum oxide is transported to Iceland in cargo ships (1) and moved to the pot rooms as needed in a closed system (2-3, 5). Almost a quarter of the electricity generated in Iceland is delivered to the plant via power lines where it’s converted to low voltage energy in the tranformer station (4). In the pot rooms aluminum is separated from oxygen through electrolysis and moulded into convenient units (6) and delivered to the international markets by sea (7).

Operating a leading aluminum plant requires highly trained employees, state of the art machinery and responsible management. In every step of the process, we strive to use raw materials more efficiently, reduce waste, increase recycling, produce a cleaner product and increase employee safety.

Norðurál 2016

The Year in Review

The demand for aluminum increased globally by 5,3% in the year 2016 but this has not resulted in higher prices. Increased use of aluminum in the car industry is the main factor driving this growing demand.

Export value from the Icelandic aluminum plants amounted to 181 billion ISK. The plants also purchased goods and services for 22,5 billion from hundreds of domestic companies. Energy purchases amounted to 36 billion, taking into account the combined electricity use of the aluminum plants and the average price of Landsvirkjun, the national power company, to big industry.

For the fourth year in a row, Norðurál has been certified by Creditinfo as one of Iceland’s Strongest Companies. The companies that receive this recognition have to meet many conditions related to performance and status. These companies are built on strong foundations and they create significant value for society as a whole.

The Norðurál Cup was held in Akranes in June. The tournament is the largest football tournament for 6-8 year old boys in Iceland. This year, 1,600 boys participated in the tournament.

Norðurmál entered into a sponsorship agreement with Valur Football Club in Reykjavik. The agreement focuses on the club’s youth program.

World Aluminum Demand 2016


Community Projects

The Biggest Tournament

The Norðurál Cup was held in Akranes in June. The tournament is the largest football tournament for 6-8 year old boys in Iceland. This year, 1.600 boys participated in the tournament.

Norðurmál entered into a sponsorship agreement with Valur Football Club in Reykjavik. The agreement focuses on the club’s youth program. Every year Norðurál supports various kinds of community projects, big and small, and the sponsorship agreement with Valur Football Club is in line with our policy of supporting projects related to sports, children’s and youth programs as well as preventive measures.

6-8 year olds at the Norðurál Tournament



Green Accounting

Green Accounting

Norðurál keeps green accounting and submits it to the Environmental Agency of Iceland before 1 May each year. Emissions accounting is also kept and every year we launch various kinds of initiatives in order to improve our performance in environmental matters, both big and small.

A wide area surrounding the plant is monitored by independent monitoring bodies that observe the state of vegetation, air quality, live stock and water in more than 80 different sites.

The Green Accounting is accessible here.

SO2 emissions as % of licence
( Kg / t Al )
Norðurál and its Parent Company

Century Aluminum

The headquarters of Century Aluminum, Norðurál’s parent company, are located in Chicago, Illanois. Along with the aluminum plant in Grundartangi, the company runs three more aluminum plants in the United States. The total production of Century Aluminum in 2016 was 738 thousand tons and the company is the largest aluminum producers in the United States.

  • - Norðurál, Grundartanga
  • - Hawesville, Kentucky
  • - Sebree, Kentucky
  • - Mt. Holly, South-Carolina

In addition to aluminum plants, the company owns electrode factories in the Netherlands and China. Century Vlissingen is located in an industrial area in the South Holland. Icelandic engineering firms and engineers have overseen design of and changes in equipment in Vlissingen. Approximately 50 employees work there and the production capacity is 145.000 tons per year.

Century Aluminum also holds a 40% share in the electrode factory Baise Haohai Carbon Co., Ltd. in Guangxi Zhuang in South China. The co-owner is Guagnxi Qiangqiang Carbon Co., Ltd. that also manages the operation. The production capacity is 180.000 tons per year.

Electrodes are used to produce aluminum and Norðurál in Grundartangi uses electrodes from both of the factories.

Total Al Production 2016



The CEO of Norðurál is Ragnar Guðmundsson, Gunnar Guðlaugsson serves as mananging director and is responsible for the daily operations of Norðurál in Grundartangi.

The board members of Norðurál Grundartangi ehf. are Ragnar Guðmundsson, Jesse Gary and Michelle Harrison.

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Norðurál’s quality management system is certified under the international ISO 9001 standard. The company’s environmental and safety management systems are certified under ISO 14001 and OHSAS 18001 standards.

Issued by Norðurál on June 2017.
The report is only available digitally.
Chief Editor: Sólveig Kr. Bergmann
Design: Jónsson & Le'macks
© Norðurál/Jónsson & Le'macks