Business / Economy

FTA with China makes Iceland more attractive for foreign investments

(Xinhua) Updated: 2014-07-11 10:15

REYKJAVIK - More international companies have expressed their interest in launching new plants in Iceland following the Free Trade Agreement (FTA) between China and Iceland, which came into force earlier this month.

"There won't be any tariff on products that previously had tariff. This makes Iceland suddenly attractive for new plants and manufacturing goods for China," said Ossur Skarphedinsson, the Icelandic former foreign minister who signed the FTA with China on behalf of the Icelandic government.

Mining companies in nearby Greenland should be interested in exporting metal to China through Iceland, according to Efla, an Iceland-based engineering consulting company which serves international companies interested in investing in Iceland.

More infrastructures

Bremen Ports is already developing a harbor in Finnafjordur in the northeastern part of Iceland in cooperation with local municipalities.

Four companies, including United Silicon Carbide, Silicor Materials, Thorsil and PCC Silicon Metal Production Plant, are planning to build silicon plants in Iceland.

United Silicon has signed a power purchase agreement with the Icelandic National Power Company Landsvirkjun. The plant will be located in Helguvik, the same location as Thorsil's Silicon Metal Plant.

The German industrial group PCC Silicon will construct a new metallurgical grade silicon metal production plant in Husavik in northern Iceland. The US firm Silicor Materials will start building a plant in Grundartangi in western Iceland later this year.

Better with the FTA

Terry Jester, the CEO of Silicor Materials, told Xinhua that the FTA with China is one of the three reasons the company decided to come to Iceland.

She mentioned the knowledge of metals work within the aluminum industry in Iceland as a second reason. "Then the power price is also very attractive," Jester said.

"The FTA just makes it that much more important and that much better," Jester said.

Silicor Materials will be producing and selling high-quality solar silicon to China. The plan is to start building the plant at the end of this year and have solar silicon for sale by the end of 2016, she said.

The first large-scale plant of Silicor Materials will cost $619 million with an annual production capacity of 16-19 metric tons, about 3 percent of the total solar market.

Carbon fiber plant in Iceland?

Skarphedinsson believed the export of oil, gases and carbon fibers through Iceland could become attractive to China in the future, adding the FTA might increase the interest in opening a carbon fiber plant in Iceland.

"According to forecasts, China needs a lot of carbon fiber in the future. The world needs more high-quality carbon fiber. It's possible to produce it in Iceland as it's even more environmentally-friendly than solar silicon production," Skarphedinsson said.

He pointed out a carbon fiber plant doesn't need too much electricity, and can use geothermal hot water for heating.

FTA with China makes Iceland more attractive for foreign investments

FTA with China makes Iceland more attractive for foreign investments

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