Eastern Region
Eastern Region demonstrates phase transition: Alcoa's $2B Fjarðaál smelter (346K tons/year aluminum) and 690-MW Kárahnjúkar dam transformed this 15,706 km² region from fishing to industrial monoculture—now planning green energy diversification.
The Eastern Region exists because aluminum exists—and because glacial rivers generated the power to smelt it. Spanning 15,706 km² with just 11,085 residents (2024), Austurland's economic identity transformed in 2004-2007 when Alcoa built the Fjarðaál smelter in Reyðarfjörður, investing nearly $2 billion alongside the 690-MW Kárahnjúkar hydropower station—Iceland's largest construction project ever. The smelter produces 940 tons of aluminum daily (346,000 metric tons annually), employing 450 workers and making Reyðarfjörður 'one of the most affluent small villages in Iceland.' The transformation required importing thousands of Polish construction workers, permanently altering the region's demographics. Yet the aluminum monoculture replaced rather than supplemented the fishing economy: fish processing 'dwindled' as services clustered around the smelter. The region now plans a 'green energy park' producing renewable fuels for maritime transport, carbon-free fertilizers, and heat reuse for fish farming—attempting to diversify before the next energy transition reshapes global aluminum demand. By 2026, whether Austurland's aluminum bet proves transformative or creates new monoculture vulnerability depends on European decarbonization policy favoring renewable-powered smelting.