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Locomotive of the Reykjavik Harbour Railway
Locomotive Minør of the former Reykjavik Harbour Railway on static display at Geirsgata ovelooking the harbour.

The first railway in Iceland was a 900mm gauge system some 12km in extent, used for harbour construction and maintenance in and around the capital, Reykjavik. The first section opened in 1913 and the line continued in operation until 1928. The two steam locomotives are preserved as static exhibits in Reykjavik, one in a museum and one in the open air.

In the 1920s a modern dairy farm was opened at Korpúlfsstaðir about 10km from Reykjavik. It had a 600mm gauge railway network, with cars being propelled by hand. The farm survived, along with the railway, until the 1990s. The site is now an arts centre and golf course.

In 2003, construction work started on the Kárahnjúkar hydroelectric project on the Jökulsá á Dal and Jökulsá í Fljótsdal rivers in East Iceland, near Mount Kárahnjúkar. Workers and construction materials were carried by a narrow gauge railway with three diesel locomotives. Construction was completed in 2008 and the railway dismantled.

There are no active railways in Iceland today. Over the years there have been various proposals for introducing an urban transit system (metro or tram) in Reykjavik, but none have yet come to fruition. Studies have taken place for a possible 47km rail link between Reykjavik and the international airport at Keflavik.

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Photo image by Timothy Titus from Wikimedia Commons