POINTS ON MINING

When discussing the mining case or evaluating the replies of the EXCOM, it is important to understand the nature of mining in Iceland. In this chapter, three important points will be discussed which are important to keep in mind when the mining case is evaluated. 

Firstly, the mining industry is developing rapidly. Mining twenty years ago is different from mining today – and in twenty years, mining will look different from what it is today. There are several reasons for this. Technology has advanced so present machinery cannot be compared to the machines that were used in 1960. The output has changed drastically. It is quite likely that this technology will continue to advance. Demand for minerals has also changed. Over the last few decades, it has continued to increase in Iceland. Mines close to the capital area have decreased because environmental regulation is stricter than it used to be a long time ago. This means that there are fewer mines – and they are therefore more valuable. 

The EXCOM has affirmed that it was not necessary for Session to vote about the contracts with Eden (2008, 2009, 2022) because this was not the policy with other previous mining contracts of the IC.[1] But the first point about mining in Iceland shows the fallacy of this affirmation because it is comparing apples and oranges: the earliest mining contracts of the IC concerned little mineral removal compared to the massive mineral removal of the most recent contracts. 

Secondly, when a property owner has a mine that he wants somebody to operate, he puts out a public call for bids. This ensures that he gets as many (and good) bids as possible, making it easier for him to make the most profitable contract.  

Thirdly, a reasonable contract period is relatively short, perhaps a decade.[2] Since mineral price has changed greatly in tandem with the rapid development of the mining business, it is in the interest of the property owner to make a contract for a relatively short period. This ensures that he can renegotiate after a short period and adjusted the contract to changed circumstances. To make a mining contract for a period of many decades is not in the interest of the property owner. However, the other principal party of the contract needs to be able to profit from its initial operational investment (purchase and maintenance of equipment, starting cost, etc.) and this means that the contracted period cannot be too short either. A decade should be a long enough period to make a simple mineral mining operation profitable.

When the EXCOM negotiated with Eden in 2008 and 2009, the EXCOM made no public call for bids. It is also unlikely that the EXCOM made any independent investigation into the nature of the mining business in Iceland. Why was there no call for bids to ensure that the IC would receive as many and good bids as possible? There are companies out there which would want to operate the Mt. Lambafell mine and pay the IC about and over 100 million ISK per year.[3] Why did the EXCOM not approach these companies? Again, why was there no call for bids? Since Eden had violated the old contracts (2008 and 2009), the EXCOM had the right to terminate the contracts with Eden and to make a new contract with another company.

The contract with Eden concerning Mt. Litla-Sandfell (2008) was valid for 20 years and potentially for 30 years, i.e., until 2028 or 2038. The contract with Eden concerning Mt. Lambafell (2009) was valid for 25 years, i.e., until 2034. These are long contract periods. The new contract with Eden (2022) is valid for 15 years, and given certain conditions, for 30 years, i.e., until 2037 or 2051. Once again, the contract period is long. Why did the EXCOM make the contract period so long? Was that in the best interest of the denomination?

[1] “We would also like to point out that agreeing such a contract is not required by the Conference constitution to be brought to a Conference Session. Only extraordinary buying or selling of properties are required to be voted by a Session.

 Since the mines opened many decades ago, we are not aware that any mining contracts have been voted by a Conference Session.” The EXCOM, open letter to the church boards, 16 March 2022, p. 6.

[2] Businessmen in the mining industry shared this point with the author.

[3] The author and Kristján Ari Sigurðsson have collected this information. But this information is easily available and should be known to the EXCOM since there is great demand for the few mineral mines that are on the Icelandic market.