Golden opportunity or fool’s gold? Some want rejected ideas to be considered again as remedy to coal crisis

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While the government is taking longer than locals want to make a seemingly simple  yes/no decision about Store Norske’s mining future, some leaders are making late pushes for alternatives involving industries and projects previously considered undesirable or unworkable.

One is reviving gold exploration in Svalbard, which was suspended because of government concerns about the environmental impact.

Another by former Store Norske Administrative Director Robert Hermansen suggests coal mining could remain profitable by switching extraction methods, a proposal current company leaders dismiss.

And the local leader of the Green Party, which wants an end to mining in Svalbard, is suggesting the government provide about one billion kroner for things such as an “industrial fund,” harbor development, infrastructure maintenance and expanding The University Centre in Svalbard.

Store Norske says the government needs to make a decision by Nov. 23 or the company will be forced to make even more layoffs than the drastic downsizing already taking place. The company’s board of directors is recommending laying off all but 100 of the current 270 employees and halting nearly all mining operations for up to three years in the hope coal prices recover. It is requesting 95 million kroner a year from the government to maintain the mines at Svea and Lunckfjell during the interim.

But with many predicting coal prices are not likely to recover soon – and with the current $50 a ton price far below the $65 the company says it needs to break even – some are suggesting it’s time to look to alternatives beyond the current hope that tourism, education and research will fill the void in the future.

A lucrative possibility is resuming gold exploration in Svalbard, according to Morten Often, the company’s exploration manager and head of the subsidiary Store Norske Gold. In a column published in Svalbardposten, he argued the area’s gold content may be similar to a mine in Finland that has 410 employees and a life expectancy “of at least 30 to 40 years.”

Furthermore, he noted, Store Norske will lose its mineral rights to those areas if surveying is not completed within the next few years.

“Without a political change of attitude, an opening and a desire to look at these possibilities, it is almost inconceivable that someone would spend money on further investigation,” he wrote. “When that disappears so does the possibility of further, future, stable and long-lasting mining activity at Store Norske.”

A proposal contrary to the near-universal assumption can’t mine coal profitably at current prices is being advocated by Hermansen, who headed the company from 1999 to 2008 and is widely credited for ushering in an era of prosperity during that time.

In a seven-page memo submitted in October to Annette Malm Justad, chairwoman of the company’s board of directors, he argued it is possible to continue mining Lunckefjell profitably by purchasing a new longwall stope and extracting the coal using what’s known as a room-and-pillar method with self-functioning machinery, now being done at Mine 7.

“You have the equipment and this can be started with a few weeks’ notice,” he wrote. “But if people stop working it is difficult to get them back.”

Justad, in a reply, stated that possibility has already been considered and the company’s findings are “the opposite of what you claim.”

Hermansen told Svalbardposten he believes it is critical to keep Lunckefjell open because “once operations are closed down for a few years, there is little reason to believe that it will be possible to start up again.”

The local Conservative Party is also arguing the government provide enough money to continue mining for at least the short term to allow for a smoother transition. But there appears to be considerable opposition in Parliament to subsidizing mining since the prospects for future profit are dubious.

Espen Rotevatn, the local Green Party leader, is hoping to government will essentially provide a large subsidy – of industries he argues offer more future potential.

“The time for the phasing out of coal mining is overripe,” he wrote. “To pour hundreds of millions into this industry will be a complete miss of enormous proportions.”

Rotevatn suggests using the nearly 300 million kroner Store Norske wants to maintain the mines for “an industrial fund that local government disposes for stimulating growth and development,” plus 200 million during the next year to begin construction of the new habor, 200 million “to make up the backlog of infrastructure maintenance and buildings,” and 200 million during the coming year to expand The University Centre in Svalbard. He also suggests providing enough money to maintain Svea as a tourist and research facility, and funds to study a sustainable-resource power station in Longyearbyen.

 

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