Even before the crisis at Store Norske hit with full force last fall, the Norwegian Institute for Urban and Regional Research (NIBR) was working on a report offering a negative forecast for Longyearbyen.
"To compensate for the loss of Store Norske and coal mining on Svalbard, the other four basic industries must double their activity," said Steinar Johansen, a regional analyst for NIBR. "It must therefore be very much up to you to weigh the offsets for a halt in coal mining in Longyearbyen."
Johansen delivered his analysis Tuesday during a Svalbard Seminar at The University Centre in Svalbard, where the theme was the future of Longyearbyen without Store Norske.
The report, titled "Social and Commercial Analysis of Svalbard in 2014," was compiled by NIBR at the request of the Longyearbyen Community Council. The main focus of the analysis is the development of Longyearbyen and Svea. Based on the analysis of the results, as well as local industries in the future, projections were made for employment and population during the next five years, primarily based on the situation in 2013.
Work activity in Svalbard is categorized into basic industries (mining, research and teaching, students, public administration, and tourism) and derived activities (everything else). In the miscellaneous category of derived activities, employment has quadrupled since the beginning of the 1990s. Developments within derived activities are strongly linked to the development of basic industries and fluctuate with economic conditions in the basic industries.
Only Longyearbyen's municipal government has a higher "multiplier" than the mining community. That refers to how many jobs are generated by activities derived from the basic industry.
Although an escalation in mining operations was envisioned in 2013, NIBR is estimating there will be 130 fewer jobs in Longyearbyen and Svea by 2018.
In Svalbard, the number of inhabitants closely correlates with the number of FTEs in businesses. An average adult represents about one FTE, the highest ratio in the country. Therefore it is not surprising a dramatic reduction in mining activity will be reflected in the population.
NIBR calculates Longyearbyen's population will decline by about 240 inhabitants, or nearly eight percent, by 2018 if mining activity matches predictions made in 2013.
NIBR's report is based on forecasts provided two years ago and things have changed since then. The impact of the acute crisis at Store Norske, resulting in a larger reduction of manpower than projected, remains unclear. It is also impossible to predict what the government will do with a company it owns 99.9 percent of and is largely politically controlled.
Longyearbyen Mayor Christin Kristoffersen said she agrees a sharp reduction of the mining industry will have major negative consequences for Longyearbyen and Svea, but doesn't see the future as all gloom and doom.
"What has been interesting over time is that the projected figures in the NIBR reports to a small degree turn out to be a vote for Longyearbyen's role," she said. "It tells me how dynamic the society here is."
Can the negative forecasts be reversed?
"Yes, and we have done that before," Kristoffersen said. "In 2011 the projections were negative, but when the Lunckefjell decision came everything turned and optimism was back."