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OCTOBER 2017 • E&MJ; 33 www.e-mj.com NORDIC MINING 2017 before on the premise that Rio Tinto would invest in new capacity at the smelter. In the event, the full expansion did not materialize, although Landsvirk- jun built the 95-megawatt (MW) Búðar- háls hydro power plant to provide the additional capacity needed. The 2014 agreement involved Rio Tinto returning 35 MW of unused power to Landsvirk- jun for use in the wider Icelandic power market, but with an option to claw back this capacity if its needs changed. As the principal power producer in the country, Landsvirkjun is a major player in Iceland's aluminum industry. In May 2016, the company extended its supply agreement with Norðurál Grundartangi for a further four years from 2019 but with a significant amendment to the method used for electricity pricing. The renewed agreement is linked to the electricity mar- ket price of the Nord Pool spot trading platform, replacing ties to the LME alu- minum price in the previous agreement. Writing in Aluminium Insider earlier this year, Christopher Clemence noted that Iceland's three smelters paid an average of $24/MWh in 2014 — one- third less than the global average for the aluminum industry. However, he noted, Iceland's advantage in this respect may be slipping away as Landsvirkjun seeks a better return on its investments in new generating capacity. As a result, Clemence said, Rio Tinto's price for power doubled to $30/MWh under the new contract it signed in 2010, and is probably closer to $35/MWh now. Having extended its agreement with Landsvirkjun, Norðurál's supply contracts with two other genera- tors come up for renewal in the 2020s, with significant increases from the cur- rent $20/MWh expected. And to com- plete the roundup, Alcoa's power supply contracts for Fjarðaál are due for rene- gotiation within the next 10 years. The era of cheap Icelandic power for alumi- num smelting may be coming to end, Clemence predicted. And, of course, it is not just alumi- num smelting that takes advantage of Iceland's abundant power. Landsvirkjun is suppling 58 MW of geothermal-sourced electricity to the new PCC SE silicon met- al production plant at Bakki, which is scheduled to come on stream next year. Located near Húsavík on Iceland's north- east coast, the $300 million plant will process quartzite obtained from a PCC- owned quarry in Poland into 32,000 mt/y of silicon, most of which will be exported to German consumers. LKAB Holds Firm Having posted a substantial loss in 2015, Sweden's state-owned iron-ore produc- er, LKAB, came close to break-even last year, eventually showing a SEK1.7 billion ($200 million) operating loss after im- pairments. Increased delivery volumes, improved prices and the effects of its cost-cutting program made a positive contribution to the improved result, the company noted in its annual report. LKAB's output of 26.9 million mt of products during 2016 was up from 24.5 million mt the previous year, while its deliveries rose from 24.2 million to 27 million mt. It also reported that it had achieved a record 84% of its sales as pellets in 2016, reflecting its drive toward marketing higher-value products. In October, it carried out blast-furnace tests on 300,000 mt of a new pellet pro- duct for the European market that it had produced at Malmberget. Price hedging had a negative impact on the company's 2016 result, such that from early this year it has decided to amend its hedging policy. As LKAB CEO Jan Moström explained in the 2016 an- nual report, the main thrust of the revised policy means that LKAB will not now nor- mally hedge price risk in its forecast iron ore sales. At the end of the year, the company also announced that it has mothballed its Mertainen open pit — one of three in the Svappavaara district. The decision to develop the mine was taken in 2010 when the price for coarse iron ore fines was high, with Mertainen seen as a good source for this type of product. Ruby ore from the new Aappaluttoq mine in Greenland, which opened in May. (Photo: True North Gems) Loading bauxite ore at the Paragominas mine in Brazil, where Norway's Hydro now has full ownership. The mine and its associated Alunorte alumina refinery both broke production records last year. (Photo: Hydro)