LESS IS MORE IS LESS FOR FINAL SVEA SHUTDOWN CONTRACT: Early estimate of 684M kr. to dismantle mines ballooned to 2.5B kr., but now ‘only’ 1.7B kr. for cleanup expected by 2023

sveaHæhre

Depending on the spin, the final dismantling of the Svea and Lunckefjell mining communities will 1) cost 1 billion kroner more or 800 million kroner less than projected and 2) be completed three years later or two years earlier than expected.

A contract for the final stage of the project now scheduled for completion in mid-2023 was announced last week by Store Norske. Hæhre Entreprenør AS, which has been involved in the previous stages, will finish removing buildings, roads, tank farms, power stations, quays and the air strip.

What might be called the positive spin on the numbers was offered by Store Norske Administrative Director Jan Morten Ertsaas, who in a prepared statement noted 2.5 billion kroner had been set aside for the cleanup.

“With this contract, we are towards the end of a unique environmental project, which has been to remove all traces of industrial and human activity in the area Svea and Lunckefjell in Svalbard,” he said. “The work has been carried out in a demanding, Arctic climate, and we are poised to complete the project two years ahead of schedule, with a total cost of less than 1.7 billion kroner. This is significantly lower than the original cost framework for the project.”

But the price tag and schedule were considerably different in 2017, when the government decided to dismantle the mining settlements rather than resume operations that were put on hold due to a crash in coal prices that drove Store Norske to near bankruptcy. The government proposed the following year’s budget include 141 million kroner for cleanup activities at Svea and Lunckefjell, plus 43 million kroner to cover pensions costs – and authorizing up to 500 million kroner for subsequent environmental cleanup measures expected until about 2020.

That initial price tag was part of the government’s justification not to reopen the mines at an expected cost of 900 million kroner. The decision was heatedly protested by many politicians, business leaders and others in Longyearbyen who argued keeping the mines open would generate revenue and ensure the continued employment of hundreds of workers.