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 Must find more coal

Harry Higraff, project manager in Store Norske, by the CM inside the Lunckefjell mine. FOTO: Eirik Palm

Must find more coal

The coal in Lunckefjell may be worth more than four billion kroner, but it is urgent for Store Norske to find more.



27.02.2014 kl 15:42

Next year is when full-scale extraction of coal will begin at Lunckefjell. When production is going strongly, it will be 10,000 tons a day.

Managing obligations
Until 2020, Lunckefjell is expected to provide about 8.5 million tons of salable coal.

It is difficult to estimate the value of the coal, but given the current exchange rate and coal price of US$80 a ton, the total value of recoverable coal in Lunckefjell is at best slightly more than 4.1 million kroner. Nevertheless, the project is marginal.

The figures have not been verified by Store Norske, which has invested 1.2 billion kroner in the project. The money comes through equity and loans. Administrative Director Per Andersson said he is confident the mining company and banks will get the money back.

"There is no doubt Store Norske is challenged by coal prices in the market," he said. "The answer is that if such prices are to come, we shall be able to justify the investments and repay what we have borrowed."

Used in several mines
The diffuser in Lunckefjell was made several years ago and as the geologists began to look into the mountain it started core drilling. Harry Higraff has been the project's manager and attended the official opening.

"This has been a really fun day," he said. "A little special, to speak. You are certainly proud. There are a lot of people who have done a good job. There have been some problems, but such is life."

The investment in new structural equipment for Lunckefjell has been heavy, but when the mine is empty in 2020 structural work is scheduled to start at Ispallen on the other side of Braganzavågen. Then the equipment can be used at Bassen in Adventalen.

But the short life of the Lunckefjell mine makes it urgent for Store Norske to locate and map the new and known coal deposits.

After the Lunckefjell mine, the fringes of coal at Svea Nord will be extracted. When that work gets started the infrastructure of the mine will be destroyed. Ispallen is scheduled to start up in 2024 and in 2028 Operafjell (Bassen) is scheduled to start operating. However, there is much uncertainty about their profit potential, costs and – not least – about whether Store Norke will receive permission to operate. In 2013, it conducted core drilling in Ispallen, Gruvfonna Sjaktbreen, Ortbreen and Operafjell totaling between 15 and 32 holes.

The company was denied permission from Svalbard's governor to drill at Scheelefjell above Rindersbukta, a few kilometers from Ispallen. It is unknown if Store Norske will appeal the decision.


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