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'The employees at Store Norske do not deserve this'

Per Andersson together with mayor of Longyearbyen, Christin Kristoffersen in the Lunckefjell mine. FOTO: Eirik Palm

'The employees at Store Norske do not deserve this'

With every kilogram of coal Store Norske produces, it is losing money. A solution must come quickly because in January its cash register will be nearly empty.

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20.11.2014 kl 17:07

The situation is therefore very dramatic for the coal company, which directly and indirectly provide 600 jobs in Svalbard. In reality, the company is entirely dependent on finding new capital.

On Tuesday, its proposed cuts became known. Of the 100 jobs that must go, 30 are temporary employees that began this summer. At the same time, many others are choosing to quit due to new rules effective Jan. 1 that will eliminate their eligibility for Svalbard's lower income tax rate, but it is unclear if that will be enough.

"I understand that many people are finding this very sad, but if it's any consolation there are many in the industry who are having major problems," said Administrative Director Per Andersson.

Store Norske had a deficit for the third quarter of 225 million kroner and will likely end 2014 with a deficit of nearly 400 million kroner.

The company is losing money on every kilogram of coal it produces and in January most of its cash reserves will have been spent. The coal company is therefore relying on a quick agreement with its bank and with the central government, which owns 99.9 percent of the company.

Operations are also now being reduced, including the ceasing of cutting any new panels for coal to be extracted from.

"Tunneling is very expensive and we can not continue with it because we have no money," said Andersson, adding he hopes the situation will stabilize within a few years.

At the same time, he praised employees for doing an excellent job during a period of falling coal prices, high stone content, and problems with equipment and the starting up of new mining facilities.

"The employees at Store Norske do not deserve this, but we are being swept off the pitch due to coal prices," Andersson said.

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