A Difficult Year for Iceland's Aluminum Smelters

Alcoa Fjarðarál is the only aluminum smelter that returned a profit last year, although profits decreased by more than ISK 5 billion year-on-year.

The operation of the country’s aluminum smelters was marked by various challenges in 2025. Alcoa Fjarðarál was the only aluminum smelter that returned a profit, while both Rio Tinto in Iceland, which operates the aluminum smelter in Straumsvík, and Norðurál Grundartangi operated at a loss.

Alcoa Fjarðarál made a profit of $17.9 million, equivalent to about ISK 2.3 billion, compared to a profit of $53.9 million the previous year, or about ISK 7.4 billion.

The company’s operating income amounted to ISK 124 billion last year, down ISK 2.7 billion year-on-year. Financial income less financial expenses decreased by ISK 1.1 billion year-on-year, and operating expenses increased by ISK 1.3 billion.

The board of directors’ report states that the aluminum market continues to experience uncertainty due to fluctuations in energy markets, regulatory changes, and geopolitical tensions. However, the long-term outlook is good as there is growing demand for aluminum with a low carbon footprint.

Norðurál reported a loss of $50.5 million, or about ISK 6.5 billion, after a profit of $17.5 million in 2024. The company’s operations were affected by a temporary shutdown of the plant’s larger potline after two transformers in its power supply failed in the fall of 2025. Production decreased by 16% year-on-year. The company expects production at the potline to resume in the second quarter of this year.

Rio Tinto’s loss in Iceland amounted to $104.8 million, or about ISK 13.5 billion, compared with a profit of $8.6 million the previous year. The largest change in a single cost item year-on-year was negative fair value changes of embedded derivatives amounting to ISK 12.1 billion in 2025. The company says higher aluminum prices have offset lower production and that the outlook is generally good.

Source: VB (in Icelandic)