STOCKHOLM--The vote against Canadian aluminum maker Alcan Inc.'s (AL) plan to expand its Iceland aluminum smelter plant is binding and there won't be any new referenda for at least three years, said Ludvik Geirsson, mayor of the Icelandic town where the Alcan plant is located.
"The referendum is binding," Geirsson told Dow Jones Newswires Tuesday, and added, "There's no way there will be a new referendum for the rest of the term."
Geirsson was re-elected to a four-year term in May 2006.
Residents of Hafnarfjordur voted over the weekend against a $1.2 billion expansion of Alcan's plant that would have more than doubled capacity and added hundreds of jobs in the town of about 25,000 people. The Alcan plant currently has about 450 employees, of which about half live in Harnarfjordur, Alcan says.
Just 88 votes decided the outcome, according to the Hafnarfjordur government.
Arnar Thor Saevarsson, a spokesman for Iceland's Ministry of Industry and Commerce, told Dow Jones Newswires the vote was disappointing. He said Alcan, the world's second biggest aluminum producer behind U.S. Alcoa Inc. (AA), had been working for eight years on the expansion and that the referendum came "too late" in the process.
"The company does all the legal formalities, and then the people vote, and all efforts are gone," Saevarsson said.
Mayor Geirsson acknowledged that "it is surely eight years ago" that Alcan began its expansion plans, but said in 2002, when Geirsson started his first term as mayor, "it was clear in statements for the city that we would have a vote on projects like these." He added that the referendum was a key issue in the 2006 election.
An Alcan spokesman in Montreal Monday said opposition to the expansion centered on a plan to reroute a road rather than to the smelter itself.
Geirsson disagreed. "We will still move the road," said Geirsson. "So I don't think that was it."
Instead, the mayor felt general sentiment against further industrial development determined the referendum outcome.
"Just from what I hear around is that the development was going to be too much," said Geirsson.
On Monday, Alcan said it is "carefully analyzing" its options after the vote against the expansion, which would have boosted the company's total capacity by 8%.
Alcoa is also present in Iceland, along with U.S. Century Aluminum Co. (CENX).
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