Norðurál Aims for Full Production by July Following Transformer Failures in Iceland

Production Setback at Grundartangi Plant

The Norðurál aluminum plant in Grundartangi, Iceland, a subsidiary of Century Aluminum Company, is working towards restoring its full production capacity by July 2026. This follows a series of transformer failures that significantly impacted operations, leading to a temporary reduction of approximately two-thirds of its output. The plant, which has an operating license to manufacture up to 350,000 tons of aluminum annually, has been operating at one-third capacity since October 2025.

The initial transformer failures occurred in late November 2024 and again in late summer 2025, though these incidents were not publicly disclosed at the time. A more critical failure involving two power transformers in October 2025 forced the shutdown of one of the plant's two potlines, bringing the issues to light. The transformers, which were 20 years old, are suspected by some sources to have potential design flaws, and the original manufacturer is no longer in business.

Restoration Efforts Underway

Gunnar Guðlaugsson, CEO of Norðurál, has expressed optimism regarding the restoration timeline, noting that progress has been better than anticipated. The company has actively sought and secured new spare parts and transformers globally. Key components are expected to arrive as follows:

• Spare parts for damaged transformers: Early March 2026
• First new transformer: May 2026
• Additional transformers: By the end of summer 2026

Norðurál's strategy involves repairing some damaged transformers to accelerate recovery, reducing the projected downtime from an initial 11-12 months to approximately 6 months. The restart of operations for Line 2, which involves bringing 340 aluminum smelting cells back online, could commence as early as late April 2026. A long-term plan includes installing entirely new replacement transformers in Q4 2026 to enhance redundancy and reduce future reliance on repaired equipment.

Economic Impact and Ongoing Challenges

The prolonged reduction in production has had significant economic repercussions for Iceland. Norðurál is a substantial contributor to the national economy, with an export value of ISK 109 billion in 2024, accounting for over 11% of Iceland's total export value. The incident led to temporary staff reductions, revenue losses for shipping companies like Eimskip, and a projected contraction of billions for Orkuveitan (Reykjavík Energy), Norðurál's largest customer. Economists have warned that this single event could potentially halve Iceland's projected GDP growth.

Despite the operational challenges, no injuries were reported from the electrical equipment failures. Norðurál expects that losses incurred from the production stoppage will be covered by its property and business interruption insurance policies. However, the company is currently engaged in a dispute with Orkuveitan regarding electricity supply contracts and requests for payment cancellation due to the malfunction, with the matter potentially heading to court.