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 Predicts eternal rest for coal mine

Mining veteran Robert Hermansen do not think it will be the new operation in Lunckefjell if the mine will be laid to rest. FOTO: Christopher Engås

Predicts eternal rest for coal mine

The coal in Lunckefjell will never be extracted if operations are suspended. That's the belief of former Store Norske Administrative Director Robert Hermansen. Svalbard's Conservative Party is also advising against the suspension.

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13.11.2015 kl 14:29

"Once operations are closed down for a few years, there is little reason to believe that it will be possible to start up again," Hermansen said.

Store Norske is awaiting a recommendation from the Ministry of Trade, Industry and Fisheries regarding the proposal approved by the company's board of directors earlier this fall to put operations at the 1.2-billion-kroner mine on hold. The proposal submitted to Minister of Trade and Industry Monica Mæland, a Conservative Party member, states the company will perform only necessary maintenance of the mine and infrastructure up until 2019, at which time a decision will be made about resuming coal mining in the mountain. Store Norske states 95 million kroner is needed annually from the government, which owns the company, in order to perform the maintenance. If the government rejects the recommendation it is likely the company will have to lay off more than the 150 employees – about 60 percent of total workforce – the proposal already stipulates. 

Se bildet større

The Lunckefjell mine was opened by Chair Annette Malm Justad in February 2014. FOTO: Eirik Palm

'Close to impossible'

The case was still pending when Svalbardposten went to press Wednesday afternoon.
Hermansen, a longtime mining veteran who led Store Norske from to 1999 to 2008, said his warning is based on several factors.

"It will be close to impossible to get restarted because one must operate for a year without getting money in the till," he said. "There is a very short shipping season and to get restarted you have to have working capital for one year. And if one clearly cannot produce profits now, one can imagine that it will get harder in a few years when the most experienced people are gone."

Hermansen said there would also need to be a strong political will for such a reopening and that willingness today is already small. Furthermore, he said there would likely be increased pressure from opponents since it's easier for the international community to accept a coal mine already operating rather than reopening one in the High Arctic.
 

Alternative operation

The reason for the crisis and cutbacks is low coal prices, but Hermansen said he believes the premise is faulty and current prices are now rather normal. In a seven-page memo Hermansen gave to Store Norske Chairwoman Annette Malm Justad in October, he argued it is possible to operate Lunckefjell profitably, but it will require the purchase of the new longwall stope, and the coal will need to be extracted using the room-and-pillar method used in Mine 7. Also, unnecessary expenses must be cut and Store Norske must set aside everything not related to mining, he argued, calculating annual production at Lunckefjell at one million tons carried out by 100 employees.

"Room-and-pillar with self-moving pistons. You have the equipment and this can be started with a few weeks' notice. But if people stop working it is difficult to get them back. They are the more dependent people who have extensive experience and certification," said Hermansen, adding he isn't envisioning the end of coal mining in Svalbard.

"No, I do not see that," he told Svalbardposten." As long as the price is as high as now there will be stakeholders who will want to take it over."

The stakeholders include Henning Horns Austre Adventfjord AS, which sued the government in the summer of 2014 over its awarding of mineral rights. Others include Albert Hæhre and LNS. The latter has previously stated they intend to enter the mines.

Rejecting the inititative

Justad said she does not agree with Hermansen's proposals, submitting a written reply in late October stating Store Norske has already considered them.

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Annette Malm Justad. FOTO: Eirik Palm

"All the topics you address have been considered during the process the company is in," she wrote. "Therefore, it is encouraging that you are not pointing out items that have not been thought of."

"The conclusion of the company's treatment of these elements is not unexpectedly the opposite of what you claim. Profitable production in Svea/Lunckefjell with current coal price level is unfortunately not possible as we see it. "

Current Store Norske Administrative Director Wenche Ravlo sais she also believes Hermansen's proposal is unrealistic.

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Wenche Ravlo refutes the allegation of Hermansen, and says there is no problem to reopen the mine in 2019, or even later. FOTO: Eirik Palm

"We have made our assessment on the basis of what we know," she told Svalbardposten. "We also think it's realistic restarting in Lunckefjell in 2019 or even after that. The politics are obviously not something we control, but the operation is technically no problem."

'Do not do it, Mæland'

At the same time, there is both increasing unrest and fears the Lunckefjell mine will be put on hold for good. In a letter to Mæland, Svalbard's Conservative Party states halting operations will be "equivalent to an immediate liquidation of coal mining," and extraction at Lunckefjell and Svea should continue until the coal deposits are depleted. That will give the community predictability and time to adapt.

"We told her that suspending operations is synonymous with closure at a meeting on Oct. 29," said Kjetil Figenschou, head of the local party.

"They got the point," he added.

What will failure look like if operations are halted?

"I can't say that immediately because I don't know what steps they are going to take," said the Conservative leader, adding he is hoping for a response during November.

Terje Aunevik, director of the Svalbard Business Association, said he also believes a decision is needed quickly.

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Terje Aunevik is deeply worried about Longyearbyen. FOTO: Eirik Palm

"I think it's extremely critical," he said. "It doesn't need to be about what kind of response we get, but that we get an answer."

The association has been invited to provide input for the upcoming revision of the Svalbard "white paper" that outlines the government's policy objectives for the archipelago, but the association doesn't want to contribute until it knows Store Norske's fate.

"I have a very hard time envisioning a new restart in Lunckefjell," Aunevik said.
Store Norske has also asked for a decision by Nov. 23 to avoid more layoffs. In an e-mail last week, Mæland it's important for the community to have more economic legs to stand on.

"We are in close dialogue with Store Norske about the situation and the company's further development," she wrote. "That is an extensive and important issue and I will not now comment on when a clarification about Store Norske might be in place. The issue has high priority and we are working as quickly as possible."

Ravlo said the company has been in constant contact with the ministry and believes they are working toward a resolution by the hoped-for date.

One attends a political meeting

Meanwhile, downsizing is already underway at the coal company. Between 25 and 30 employees this month received notices of a so-called 51-1-meeting, known as a negotiation meeting.

Ravlo, despite being forced to make the cuts, said she doesn't consider the local Conservative Party's proposal feasible.

"That would be subsidizing the operation and I think that is impossible to achieve," she said.

What if that is the government's decision?

"If that is what they want to do and it's legal, then we would like that," Ravlo said.

"It is possible to start up again in 2019, but the cost will be somewhat formidable," said Torstein Nilsen, head of the Association of Management and Engineering (FLT).

Trade unions associated with Store Norske recently sought a meeting with members of Parliament's Industry Committee. Only one of the 15 members showed up: Conservative Gunnar Gundersen.


Translated by Mark Sabbatini

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