Dead again: Store Norske, after getting ministry to say maybe, gives up on extracting coal at Svea while mines are dismantled

deadagain

OK, this time the hope of doing any more mining at Svea is truly dead. Honest.

Store Norske says it is giving up on the hoping of extracting coal from the mine while carrying out a government-ordered dismantling of the nearby Lunckefjell mine during the next few years. The decision is oddly timed, occurring shortly after the company finally persuaded skeptical government officials to be open to the possibility after months of effort.

But Administrative Director Jan Morten Ertsaas said the board of directors determined at its most recent meeting the economics and logistics simply weren’t going to work out.

“It would be too demanding, the upside would have become too small and it would probably also require a new parliamentary decision,” he told High North News.

Store Norske was hoping a temporary resumption of mining at Svea would offset some of the much higher than expected cost of dismantling all infrastructure at both sites, with significant short-term employment and preserving some of the company’s expertise during a major transition seen as additional benefits.

Operations were suspended at Svea in 2016 for what was supposed to be up to three years in the hope coal prices rose enough to allow profitable mining. But company officials said last year the suspension was proving economically and logistically unfeasible, and asked Norway’s government to either support a resumption of permanent shutdown of operations.

The government, which fully owns Store Norske since providing a bailout package a couple of years ago to stave off bankruptcy, ordered the dismantling late last year after determining there was no way to ensure profitable operations at the two mines. But the originally estimated 750-million-kroner cost of dismantling has doubled to 1.5 billion kroner – not including writing off the 1.2-billion-kroner cost of building Lunckefjell – prompting company officials to work on a proposal for temporary operations.

The suggestions were originally rebuffed, but after a shakeup among ministry officials State Secretary Daniel Bjarmann-Simonsen of the Ministry of Trade, Industry and Fisheries told High North News last month he was open to the idea if it would help offset the cost. But Ertsaas said the final decision not to do so was made by the board without pressure from the ministry.

“I can deny that the ministry told us that the company should not count on any profits from the sale of coal to finance any part of the eradication,” he said.

 

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