If you read Andrew Ward’s news story and are interested in the full Q & A with Björk on her opposition to a controversial foreign investment in Iceland’s geothermal power industry, here it is:
A press conference about geothermal power would not usually create much excitement even in Iceland, a country with a disproportionate interest in the issue.
Yet, locals have been clamouring for access to an invitation-only event in Reykjavik on Monday when activists will launch a national petition to block a proposed foreign takeover of one of Iceland’s biggest geothermal power companies.
Why the buzz? Among those on the podium will be Björk, the quirky queen of Icelandic pop, who plans to perform three of her songs to mark the occasion.
Last week, she co-signed a formal protest to Iceland’s parliamentary ombudsman over the acquisition of HS Orka, which accounts for 9 per cent of the country’s electricity production, by Magma Energy of Canada.
The Vancouver-based geothermal power specialist has been building its stake in HS Orka for the past 12 months and agreed in May to increase its holding to 98.5 per cent, bringing the total acquisition value to $417m, including assumed debt.
With Magma planning a further $560m of investment to more than double HS Orka’s generating capacity over the next six years, the deal represents by far the biggest foreign investment in Iceland since the country’s 2008 banking crisis. But if the Canadian company was expecting gratitude, it must have been sorely disappointed.
In an email question and answer session ahead of Monday’s press conference, Björk explained to the Financial Times why she and many other Icelanders are fiercely opposed to the deal.
Until recently, she wrote, geothermal power was considered “the property of the nation” – a public good that helped offset the challenges of Iceland’s precarious location atop one of the world’s most active geological faults on the edge of the Arctic Circle.
In 2007, however, the Icelandic government – then controlled by the pro-market Independence party – decided to sell its stake in HS Orka to a private company with connections to some of the notorious “Icelandic oligarchs” behind the country’s ill-fated banks. After the financial sector crumbled, Magma swooped in to buy the company from its troubled owners.
“Most people feel this is something the nation should keep,” said Björk. “Especially after the bank crash, after witnessing all the criminal gambling with precious things… This deal smells like the leftovers from the corruption that brought us the bank crash.”
There is no suggestion that Magma has done anything illegal – although critics say its use of a Swedish shell company to overcome rules barring non-European companies from owning Icelandic energy assets violates the spirit, if not the letter, of the law.
Björk, arguably Iceland’s best-known cultural export, said the country should harness geothermal power to forge a new “relationship between nature and technology” rather than becoming “third world slaves” by selling it off to foreign predators.
Under the terms of the takeover, due for completion this month, Magma would have the right to exploit geothermal resources on the Reykjanes peninsula, south-west of Reykjavik, for the next 65 years, with the option of a further 65. The deal includes the Svartsengi power station next to the famous Blue Lagoon hot spring, one of Iceland’s most popular tourist attractions.
Magma told the FT it was keen to meet with Björk to address her concerns and, in an olive branch to critics, said it was willing to reduce the number of years covered by the agreement and to sell a stake of up to 25 per cent to Icelandic pension funds. “We intend to demonstrate to the Icelandic people that we will manage this business for the long-term benefit of all stakeholders,” said Ross Beaty, Magma chief executive.
Advocates of the deal say foreign capital is crucial to develop Iceland’s geothermal sector at a time when domestic funding is scarce. Iceland is hoping to drive economic recovery by attracting energy-intensive businesses such as aluminium smelters and data centres with the prospect of cheap geothermal power.
Björk said it would be a mistake to add to the three aluminium smelters already operational or under construction in Iceland, warning that the country risks damaging its environment by becoming the low-cost “aluminium smelter for the planet”.
The 44 year-old, known for her distinctive voice and eccentric costumes, is continuing a family tradition of political activism – her father is a union leader and her mother once went on hunger strike in protest against a hydro-electric project. “I’m hoping the nation and its government will decide to cancel this deal. Then I can hopefully go back to writing music,” she said.
Arnar Gudmundsson, political adviser to Iceland’s energy minister, told the FT there were no legal grounds for blocking the deal. He stressed the sale resulted from the privatisation of HS Orka by a previous government and insisted that no further energy assets were up for sale.
But the current government was open to further foreign investment in geothermal power through joint project financing with Icelandic companies, he added. “If you exclude [foreign investment], you are forcing local municipalities that have natural resources to take on foreign debt to build up their own companies.”
The dispute is threatening to destabilise Iceland’s fragile coalition government, which has so far waved through Magma’s takeover in spite of opposition from the Left-Green party, which shares power with the Social Democrats.
Björk said the issue was more important than party politics. “Iceland is at a crossroads. We need to get over the bank crash and pay the debts of the Icelandic venture capitalists. If we do deals like the one with Magma, we will only sink deeper down and it will take many generations to dig us out.”
Andrew Ward is the FT’s Nordic bureau chief