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Alvøen is one of the oldest industrial places in Norway. As early as the 1620s a gunpowder mill was built here. The place itself was well situated for industrial activity, lying only 100 m from the waterfall, which provided power for the mill, and a good harbour wherefrom the products were shipped. The success of the gun-powder mill varied in the 1600s and 1700s, but what made Alvøen best known was its paper production.
The first finds of pyrite at Litlabø in Stord came to light in 1864. Forty years later sulphuric ore was mined from an open mine. From 1874 to 1880 it was used for dynamite production. That came to a sudden end when the factory exploded and three people died.