Industrial Location as a Bargain: Iceland and the Aluminium Multinationals 1962–1994

This paper conceptualizes industrial location, specifically in the form of foreign investment, as a bargaining process to provide a framework within which to examine Iceland's deals with aluminium multinationals between 1961 and 1994. These deals involve one actual and one planned investment in aluminium smelters. Conceptually, it is argued that the interpretation of industrial location as a bargaining process can be readily incorporated within the geography of enterprise tradition by explicitly recognizing that location factors are not given datum but are created by negotiations among parties whose interests may overlap but do not coincide. In this paper, the main parties are the Icelandic government and aluminium multinationals. While both parties were interested in investments in smelters which would ultilize Iceland's power resources, the initial agreement in the 1960s depended on Iceland's acceptance of foreign investment as an appropriate vehicle of development and the ability of the parties to agree on power supply, power rates and taxation, location, and some jurisdictional issues that had not been anticipated. This deal has since been revised although the impact of the obsolescing bargain is not noticeably evident. The Iceland government has brokered another deal with other multinationals although this project has been put on hold due primarily to unforeseen events in the global economy. Still controversial, the actual and potential structure of Iceland's aluminium industry results directly from these bargains.