Down to 98…or 28: Minister says Svea and Lunckfjell will likely shut temporarily or permanently‚ Mine 7 will employ one or two shifts

mælandletter

It’s not exactly an answer, but anyone still clinging to the hope the government will help Store Norske be more than mere shadow of its former self should probably give up.

A best-case scenario of 98 remaining employees at the mining company and a worst-case of fewer than 30 now appears likely, based on statements by Minister of Trade and Industry Monica Mæland in a Dec. 6 letter to Longyearbyen Mayor Arild Olsen.

“The main alternatives being considered are: 1) liquidation of mining operations in Svea and Lunckefjell during 2016; 2) pausing operations at Svea and Lunckefjell for up to three years, with an eventual startup period if the conditions are right for it,” Måeland wrote. “In both cases, Mine 7 would continue to operate.”

“There will in the near future be a decision on the issue,” she noted.

The second alternative is essentially what Store Norske’s board of directors recommended in September, although the company says it needs 95 million kroner a year to maintain Svea and Lunckefjell during a suspension.

But the board also requested the government, which acquired full ownership of Store Norske this year as part of a 500-million-kroner bailout package that kept the company out of bankruptcy, employ two shifts instead of one at Mine 7. Mæland’s letter doesn’t specify if the ministry is inclined to support the extra shift.

Store Norske employed about 400 people as recently as 2012, but is now down to slightly more than half of that and will downsize the majority of its remaining workforce by next June.

A total of 98 employees would remain if the government supports a double shift at Mine 7 and a suspension, rather than termination, of activity at Svea and Lunckefjell, according to an analysis by High North News. A total of 52 would perform maintenance work at the two large mines, 23 would work one shift in Mine 7, another 18 the second shift and the company would retain five administrative employees.

But if the two large mines are shut down completely and only 23 employees remain for a single shift at Mine 7, the company “hardly needs five in the administration” the newspaper stated.

Olsen, in a response letter dated Dec. 7, reiterated the position of city leaders since the crisis began more than a year ago that “generally it is such that economic activity in Longyearbyen is interrelated with the activity level at Store Norske.”

“Members of the Administration Committee (consisting of the Labor Party, Liberal Party, Green Party and Conservative Party) consider the activity at Svea as important,” he wrote. “It is therefore positive for the local community that this level of activity is predictable and that the value creation accrues to Longyearbyen. That is especially important during a demanding restructuring period for the local community.”

Olsen’s letter isn’t as adamant about double shifts at Mine 7, noting “if the owners of Store Norske want a higher activity level in Mine 7, the Longyearbyen Community Council is positive about that.”

But he stated the government also needs to consider the burden a partial or total shutdown of mining will place on those who remain in the city.

“Generally, it is believed that there will be increased burden on infrastructure and nearby activity/settlements, and that the owners regard that in its dialogue with the council,” he wrote.

Finally, “the Longyearbyen community  would welcome a speedy ruling in the case,” Olsen wrote. Local government and businesses leaders, miners at Store Norske, and numerous other locals have been increasingly critical about what they call a slow response by the ministry – and that the delay itself is causing additional adverse impacts.

Olsen, who has consistently stated previously he believes the government will endorse the recommendation by Store Norske’s board, was less optimistic in an interview with High North News after receiving Mæeland’s letter, although he said it “nonetheless is good news for Longyearbyen.”

“I interpret the letter to mean that Mine 7 will remain and that it will be operative whatever the ministry gives in its response to Store Norske about further mining in Svalbard,” he said. “And that is very positive. For we did not take it for granted that Mine 7 would remain, and this is about a lot of jobs.”