Alcoa Iceland hydroelectric aluminum smelter

Why you'd site an aluminum smelter on a remote island — to export hydroelectric power as canned electricity.

A couple of my associates just got back from Iceland, where Alcoa put in a great big aluminum plant. Why would you put a great big aluminum plant in Iceland? Because they have a lot of hydroelectric power, and you can't get it out of Iceland any other way. The whole aluminum industry had a tremendous problem 25 years ago because the former Soviet Union broke up. They were making a tremendous amount of aluminum, which they weren't really sharing with the rest of the world. They were making it in Siberia. They needed foreign exchange, so what was the way to get all their hydroelectric power out of Siberia? Make aluminum. So they flooded the world market, and all of a sudden Alcoa and Alcan and Péchiney — the French company, the big company started by the other founder of how to make aluminum cheaply back in the 1880s — and all the other aluminum companies started closing production facilities, because the Soviets flooded the market with cheap aluminum. Otherwise all that hydroelectric power was going to go down the river and into the ocean. There's an opportunity cost there. These are kind of externalities. But aluminum is a great material for storing things.