Magma confident HS Orka geothermal transaction is legal

Magma Energy strikes a diplomatic tone in responding to Icelandic government opposition to its acquisition of nearly all of HS Orka.

The uproar against the Canadian geothermal developer’s purchase of HS Orka gained momentum in recent weeks when Iceland’s top cultural export, Bjork, joined thousands of others in an online petition urging “the authorities to stop the sale of HS Orka and for Alþingi to hold a national referendum on the ownership and the utilisation of our energy resources”.

On Tuesday, Prime Minister Johanna Sigurdardottir voiced her support for that position, telling reporters, “It’s the intention of the government to wind down the privatization in the energy sector and ensure that energy companies are owned by public entities.

Our primary objective is to ensure public ownership in the energy sector.”

She is setting up an independent committee to investigate the matter, focusing specifically on ownership by companies from outside the European Economic Area.

Magma is acquiring HS Orka through a Swedish subsidiary, which appears to have been created solely for that purpose. The committee is to complete its evaluation of the Magma transaction by 15 August.

Magma responds Wednesday, stating that the government has yet to make a decision “on Magma’s purchase of further shares in HS Orka”.

The company has just completed a public share offering, raising a net C$43.3m ($41.8m) to complete the purchase of 98.5% of HS Orka. Over the last year, Magma has gradually bought up more than 46% of the Orka, which supplies some 9% of Iceland’s electricity.

“The transaction to acquire Geysir Green Energy’s remaining interest in HS Orka is the third in a series of transactions,” Magma says in its statement.

“The first two transactions which have closed were reviewed and approved by the Committee on Foreign Investment established by the government of Iceland. Magma is confident that the proposed transaction is in accordance with the laws of Iceland and intends to co-operate fully with the government.”

In June, Magma chief executive Ross Beaty described Icelandic opposition to his company’s purchase as “a minority - a small minority - who are card- carrying, kind of non-capitalist people, and those are the ones who are noisy about not wanting any foreign involvement in the energy business or, for that matter, any business in Iceland, especially now that they’ve been so badly dealt with under the capitalist system”.