Magma Energy boosts its stake in HS Orka to 98.5% amid protests

Canadian geothermal developer Magma Energy has closed the final tranche of its acquisition of Iceland’s HS Orka, boosting its stake to 98.5%.

The final legs of the deal came amid growing opposition to privatisation of Iceland’s energy sector and a call from pop star Bjork to stop the acquisition.

The acquisition, officially made by Magma subsidiary Magma Energy Sweden, was completed with Magma assuming a municipal bond with a principal value of ISK 6.3bn ($53.4m) repayable in 2016 with interest at 3.5% per annum.

This was in exchange for 14.32% of HS Orka, one of Iceland’s largest electricity producers, from Geysir Green Energy.

For the first half of 2010, Orka, which primarily serve’s Iceland’s aluminum industry, had a net loss of $18.2m. The loss was mainly the result of declining aluminum prices, as about half of Orka’s power contracts are indexed to aluminum prices.

The acquisition delivers a major boost to Magma’s portfolio, rocketing it in the space of two years toward the top of the global geothermal ranks.

At the end of 2008, its founding year, Magma had 11MW of production capacity and in-ground resources and reserves of 199MW. After completion of the HS Orka deal, it will have 186MW of power production and 1.35GW of geothermal reserves and resources.