# CE2004088EN.01049801.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/498 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/498

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(2004/C 88 E/0510)

WRITTEN QUESTION E-0403/04

by Erik Meijer (GUE/NGL) to the Commission

(16 February 2004)

Subject:   Distortion of competition to the detriment of the environment and of working conditions in the cheap production of the semi-finished product primary aluminium in Iceland

Subject:

| 1. | Is the Commission aware that in Iceland, a country associated with the EU, in addition to the two current aluminium smelters belonging to the Canadian firm Alcan at Hafnarfjordur (annual production: 173 000 tonnes) and to the American firm Norderal to the north of Reykjavik (annual production: 90 000 tonnes), a third aluminium smelter is to be built from 2005 in Reydarfjordur by the large American firm Alcoa and with a planned annual production from 2007 of 295 000 tonnes of the semi-finished product primary aluminium? |
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1.

Is the Commission aware that in Iceland, a country associated with the EU, in addition to the two current aluminium smelters belonging to the Canadian firm Alcan at Hafnarfjordur (annual production: 173 000 tonnes) and to the American firm Norderal to the north of Reykjavik (annual production: 90 000 tonnes), a third aluminium smelter is to be built from 2005 in Reydarfjordur by the large American firm Alcoa and with a planned annual production from 2007 of 295 000 tonnes of the semi-finished product primary aluminium?

| 2. | Is the Commission aware that Alcoa's choice of location is dependent on the completion of the Karahnjukar project by the Icelandic national energy company Landsvirkjun which will create a 57 km2 reservoir several tens of metres deep and a series of dams, the largest being 750 m long and 190 m high, as a result of which the unique Hafrahvammergjufur Gorge will disappear and, with it, habitats of underwater animals? |
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2.

Is the Commission aware that Alcoa's choice of location is dependent on the completion of the Karahnjukar project by the Icelandic national energy company Landsvirkjun which will create a 57 km2 reservoir several tens of metres deep and a series of dams, the largest being 750 m long and 190 m high, as a result of which the unique Hafrahvammergjufur Gorge will disappear and, with it, habitats of underwater animals?

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| 3. | Is the Commission aware that the Italian construction company Impregilo, which submitted a much cheaper bid than its Danish, British and German competitors, employs workers from Romania and Portugal through an agreement with another Italian company, on much lower wages and subject to poor conditions, in breach of the provisions of its contract to observe all Icelandic rules? |
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3.

Is the Commission aware that the Italian construction company Impregilo, which submitted a much cheaper bid than its Danish, British and German competitors, employs workers from Romania and Portugal through an agreement with another Italian company, on much lower wages and subject to poor conditions, in breach of the provisions of its contract to observe all Icelandic rules?

| 4. | Does the price for the energy that will be supplied to Alcoa from the hydroelectric power plant cover costs? Or is it impossible to establish this, as the price is being kept secret? |
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4.

Does the price for the energy that will be supplied to Alcoa from the hydroelectric power plant cover costs? Or is it impossible to establish this, as the price is being kept secret?

| 5. | Does such conduct mean that failure to respect the environment and working conditions is a factor that may influence the decisions of other companies when deciding where to locate? |
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5.

Does such conduct mean that failure to respect the environment and working conditions is a factor that may influence the decisions of other companies when deciding where to locate?

| 6. | Have this project and its consequences in terms of the environmental destruction and distortion of competition been discussed within the European Economic Area? Does the Commission intend to bring the above to the attention of the Icelandic Government? |
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6.

Have this project and its consequences in terms of the environmental destruction and distortion of competition been discussed within the European Economic Area? Does the Commission intend to bring the above to the attention of the Icelandic Government?

Source: the Dutch newspaper ‘NRC-Handelsblad’, 29.1.2004.

Answer given by Mr Patten on behalf of the Commission

(23 March 2004)

(23 March 2004)

| 1. | The Commission is aware that an aluminium smelter is going to be built in the eastern part of Iceland. This project is tied to the power plant investment in Karahnjukar and also a harbour facility which is going to be built in Reydarfjordur. |
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1.

The Commission is aware that an aluminium smelter is going to be built in the eastern part of Iceland. This project is tied to the power plant investment in Karahnjukar and also a harbour facility which is going to be built in Reydarfjordur.

| 2. | Both the Ministry of Industry and the respective energy company (Landsvirkjun) have provided reassurance that the dam was going to be built on lava field with only musk and no other life. On 24 January 2004, the Icelandic Supreme Court came out with a ruling on the power plant environmental impact where the court confirmed all the arguments presented by the national energy company (Landsvirkjun) in its Environmental Impact Assessment and stated that the Environmental Impact Statement was conducted in a professional and lawful manner. |
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2.

Both the Ministry of Industry and the respective energy company (Landsvirkjun) have provided reassurance that the dam was going to be built on lava field with only musk and no other life. On 24 January 2004, the Icelandic Supreme Court came out with a ruling on the power plant environmental impact where the court confirmed all the arguments presented by the national energy company (Landsvirkjun) in its Environmental Impact Assessment and stated that the Environmental Impact Statement was conducted in a professional and lawful manner.

| 3. | The Commission would like to underline that Annex XVIII to the European Economic Area (EEA) Agreement, as amended by the decision of the EEA Joint Committee No 37/89 of 30 April 1998, extends the geographical scope of Directive 96/71/EC of the Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (1) to the non-EU Member States of the European Economic Area. It follows that undertakings have to guarantee that workers posted to the territory of Iceland enjoy, whatever the law applicable to their employment relationship, the terms and conditions of employment in force in Iceland and covering the following matters: maximum work periods and minimum rest periods, minimum paid annual holidays, minimum rates of pay (including overtime rates), conditions for hiring out of workers, health, safety and hygiene at work, protective measures with regard to the terms and conditions of employment of children and young people, equality of treatment between men and women and other provisions of non-discrimination. The monitoring of compliance with these rules by individual employers is observed by the national authorities of the EEA-Member State concerned.
  According to existing information, the Commission is aware that Impregilo employs workers from Portugal and Romania, among other nationalities. Although the Confederation of Icelandic Labour Union has expressed general concerns about conditions and salaries of workers under the Italian contractor, no formal complaints have been put to Icelandic authorities or labour unions regarding violations of Icelandic law. Icelandic national legislation contains provisions on minimum rights and wages for workers of all nationalities working in the country (2). A dispute between Icelandic authorities and Impregilo on wages and working conditions has recently been settled (October 2003). According to the Icelandic Confederation of Labour, some few outstanding disagreements of working conditions are being negotiated and salaries too are in compliance with the Icelandic law. |
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3.

The Commission would like to underline that Annex XVIII to the European Economic Area (EEA) Agreement, as amended by the decision of the EEA Joint Committee No 37/89 of 30 April 1998, extends the geographical scope of Directive 96/71/EC of the Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (1) to the non-EU Member States of the European Economic Area. It follows that undertakings have to guarantee that workers posted to the territory of Iceland enjoy, whatever the law applicable to their employment relationship, the terms and conditions of employment in force in Iceland and covering the following matters: maximum work periods and minimum rest periods, minimum paid annual holidays, minimum rates of pay (including overtime rates), conditions for hiring out of workers, health, safety and hygiene at work, protective measures with regard to the terms and conditions of employment of children and young people, equality of treatment between men and women and other provisions of non-discrimination. The monitoring of compliance with these rules by individual employers is observed by the national authorities of the EEA-Member State concerned.

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According to existing information, the Commission is aware that Impregilo employs workers from Portugal and Romania, among other nationalities. Although the Confederation of Icelandic Labour Union has expressed general concerns about conditions and salaries of workers under the Italian contractor, no formal complaints have been put to Icelandic authorities or labour unions regarding violations of Icelandic law. Icelandic national legislation contains provisions on minimum rights and wages for workers of all nationalities working in the country (2). A dispute between Icelandic authorities and Impregilo on wages and working conditions has recently been settled (October 2003). According to the Icelandic Confederation of Labour, some few outstanding disagreements of working conditions are being negotiated and salaries too are in compliance with the Icelandic law.

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| 4. | A contract has been signed between Landsvirkjun and Fjardaal (fully owned by Alcoa). The term of the contract is for 40 years and the energy price will be renegotiated in the middle of the term for the latter 20 years. The parent company Alcoa signed the contract with respect to guaranteeing purchase of the electricity and being responsible for completion of building the aluminium plant. The schedule is to deliver electricity from 1 April 2004. Fjardaal is obligated to pay the full price for 85 % of the contracted energy, regardless of use. |
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4.

A contract has been signed between Landsvirkjun and Fjardaal (fully owned by Alcoa). The term of the contract is for 40 years and the energy price will be renegotiated in the middle of the term for the latter 20 years. The parent company Alcoa signed the contract with respect to guaranteeing purchase of the electricity and being responsible for completion of building the aluminium plant. The schedule is to deliver electricity from 1 April 2004. Fjardaal is obligated to pay the full price for 85 % of the contracted energy, regardless of use.

| 5. | According to the Commission's information, environment provisions and working conditions are in compliance with Icelandic law. |
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5.

According to the Commission's information, environment provisions and working conditions are in compliance with Icelandic law.

| 6. | With regard to measures relating to competition, the European Free Trade Association (EFTA) Surveillance Authority has approved measures taken by the Icelandic authorities to apply state aid for the project as of March 2003. A smaller case concerning state aid is still pending at EFTA Surveillance Authority (ESA), which according to the EEA Agreement has the task to control the observance of internal market rules in the EEA/EFTA countries. |
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6.

With regard to measures relating to competition, the European Free Trade Association (EFTA) Surveillance Authority has approved measures taken by the Icelandic authorities to apply state aid for the project as of March 2003. A smaller case concerning state aid is still pending at EFTA Surveillance Authority (ESA), which according to the EEA Agreement has the task to control the observance of internal market rules in the EEA/EFTA countries.

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(1)  OJ L 18, 21.1.1997.

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(2)  Icelandic law on the legal status of foreign employees include Act no 55/1980 on Worker's Wages and Terms of Employment and Obligatory Insurance of Pension Rights where Article 1 includes rights to mininum wages, overtime payments, vacation entitlement, maximum working hours and rest time; Act No 46/1980 on Working Environment, Health and Safety in Workplace; Act No 95/2000 on Maternity/Paternity leave and Parental Leave; Act No 30/1987 on Vacation Pay.

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