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Store Norske, which is dismantling its two largest mines after laying off most of its employees the past few years after billion-kroner losses left it days from bankruptcy, earned a profit of 10 million kroner in 2018 and plans to continue its last remaining coal extraction at Mine 7 until 2040, according to its annual report.
“We are preparing to deliver coal from the mine for another 20 years, in line with the need from the Longyearbyen Energy Board,” according to the report, which was first summarized by Finansavisen on Monday.
Store Norske, at the orders of the Norwegian government which owns the company, is dismantling its mines at Svea and Lunckefjell during the next few years after it was determined in 2017 they could not expect to operate profitably. The decision followed a series of downsizings that began in 2013, when the company had about 400 employees, and accelerated after a coal price collapse in 2015 triggered record-setting losses.
At the same time, the decision was made to extract the remaining coal from Mine 7, then expected to take about ten years, since the city’s coal-fueled power plant would continue operating at least that long and is supplied by the mine.
The government initially kept operations going, and then funded putting Svea and Lunckefjell on hold for a few years, by spending more than a billion kroner in the form of loans, purchasing the company’s physical assets and acquiring the few privately-held shares. But it ultimately determined shutting down the two main mines would be less costly than trying to reopen them, a decision that has been increasingly controversially locally as the projected shutdown cost has skyrocketed to more than twice the 750 million kroner originally anticipated.
The government did approve extracting the remaining coal from Mine 7, then expected to take at least ten years, since the city’s coal-fueled power plant would continue operating at least that long and is supplied by the mine. There are currently fewer than 50 mining employees at the company, which also continues its property management, logistics transport and other operations.
Store Norske produced 142,500 tons of coal from Mine 7 in 2018, an increase from 133,600 tons in 2017, earning a gross income of 155 million kroner including sales of surplus coal to mainland Europe. By comparison, the company’s total production was about one million tons in 2016, its final year of full-fledged operations, and 1.14 million tons in 2015 and 1.73 million tons in 2014.
