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Celebration at the mine entrance

Chair of the Board, Annette Malm Justad, celebrating with the mineworkers at the mine entrance at Lunckefjell. FOTO: Eirik Palm

Celebration at the mine entrance

The deficit was smaller in 2013 than the year before, but the chairman of Store Norske does not think there will be a surplus in 2014. Tuesday was a feast day, however, when the new Lunckefjell mine officially opened.



27.02.2014 kl 16:01

It was crowded at the mine entrance in the mountainside of Marthabreen before the solemn ceremony. It's been 14 years since the last time a mine opened in Svalbard, but the large mine Svea Nord is now in its final stage. On the square in front of the new mine's entrance there was a festive atmosphere. Beforehand the staff also clarified who would undertake the ritual act of cutting the ribbon.

Good workplace
"We had a raffle and I was the chosen one," said Terje Nylund, a miner for Store Norske. "It was a bit special. It's not every day you open mines in Svalbard. This is the first I've been at."

"It will be interesting to see," he added. "I hope it is a good workplace in the years ahead."

The first coal came out of the Lunkefjell mine already last Oct. 25, after tunnel drivers from Veidekke finished their job and the mine's workers took over. Deep in the mountains the mine's development is well underway and within the working face a continuous miner is eating – consuming inward meter by meter. It is becoming a longer distance to the mine's opening and one of Tuesday's tasks was to extend the conveyor bringing coal out of the mountain. During the first two months of the mine's development about 12,000 tons of coal was produced. Once the initial phase is over, a daily production of about 10,000 tons is expected.

"Of course it's a really nice day for the whole organization in that it has reached an important milestone within the cost frame and mostly well within the timeframe," said Per Andersson, CEO in Store Norske, while showing us around the mine. He isn't hiding that he has looked forward to this day.

"Yes, of course, and you see the people here have also. Remember, two years ago this was just theory."

Uncertainty ahead
The road to Lunckefjell goes through the Svea mine and over a glacier, which is in constant motion. During construction about 200 containers of equipment were transported – with only 10 meters of clearance.

"I don't think that people who have not been on Svalbard, and who have not been on the other side of Marthabreen, understand our challenges and the world we live in here," said Annette Malm Justad, chairman og the board (COB) of Store Norske, before the mine's official opening.

"Today is great fun – it really always is as the chair of Store Norske, but it is special day. It's so fun to come in here and see that what has been on the drawing board has become a reality. It's a great feeling."

Meanwhile, the coal market is tough. During the opening, Justad emphasized there is considerable uncertainty in coal prices ahead.

There are also uncertain indicators in currency exchange rates. A fall in the U.S. dollar of 10 cents, for example, means a 14-million-kroner decline in profits for Store Norske.

Barely better in 2014
On the same day as the official opening, Store Norske also presented figures for the last quarter of 2013. They show a total loss for the year of 75.2 million kroner. Although that is an improvement of about 200 million from the year before, Justad is not satisfied.

"We are not pleased that we failed to deliver a profit for 2013," she said. "On the other hand, with the production volume and prices, it was expected."

The chairperson points to the decline in coal prices, as well as the stone content of coal from Svea Nord, as key reasons for the deficit. The stone content of coal currently extracted by Svea Nord is about 35 percent. During the fall the company also had major problems with the concentrate plant that "washes" the coal.

Justad said she does not believe Store Norske will manage to come into balance in 2014.

"No, that won't happen with current coal prices," she said "We are also now in transition with Svea Nord. When we are producing almost 2.6 million tons gross this year, there will be 1.6 million tons net."

That means 2014 will be a challenge for Store Norse due to large production and small coal sales. With Lunckefjell in regular operation, the figures will probably be different. Meanwhile, Store Norske must deal with coal prices and operate smartly.

When will it profit?

"It is entirely dependent on coal prices, but we are aware that 2014 will be a tough year," Justad said.

Slaughter of Bellona
"This is a sad day for the climate and for Norway's climate credibility," said Silje Lundberg, advisor and former nature and youth leader for The Bellona Foundation, an international environmental NGO based in Oslo, in an interview with TV2.

The backdrop is coal has the largest CO2 emissions of any energy source and a majority in Parliament is seeking to rid Norway's oil wealth fund of coal investments. Brage Larsen Sollund, as the central board member of AUF, also rejects the idea that Norwegian sovereignty in Svalbard is a good enough argument for coal mining.

Annette Malm Justad, COB, said she will not comment on the debate about coal.

"I think I will leave that discussion to the politicians," she said. "Our owners have asked us to drive this, and we are doing that in the best possible way environmentally and with the best possible profit," she told Svalbardposten.


Se bildet større

"I hope it is a good workplace in the years ahead", says Terje Nylund after cutting the ribbon. FOTO: Eirik Palm

Se bildet større

Per Andersson, CEO at Store Norske, and Christin Kristoffersen, Major of Longyearbyen, is smiling to the photopgrapher.


Store Norske
2013 in numbers

Income: 1,32 mrd. kroner

Res. before taxes: - 75,3 mill. nkr
(- 276,2 mill nkr. i 2012)

Coalproduction: 1.855.000 tons net (1.229.000 tons in 2012)

Sales: 2.135.000 tons
(701.000 tons in 2012)

Average prices: 82 USD per ton

Cash equivalents: 719,5 mill.

Equity: 64,1 %

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