Order the autumn edition here

Black million hatch

Norway's only coal company loses millions of kroner, and quarrels about a stale billion.


[coal] While Norwegian politicians are becoming increasingly positive about coal power, Store Norske Spitsbergen Kulkompani is struggling with the economy. After several years without state support, Store Norske may now have to ask for NOK 250 million in help from the state. The company is suing the insurance companies after Norway's largest industrial fire – and there is almost a billion kroner in the pot.

CFO Sissel Danielsen tells Ny Tid that the operating profit will be between NOK 200 and 300 million worse than expected this year.

- Only in November we have lost over 60

million, due to production shutdowns and cargo ships waiting for coal, says Production Director Harry Higraff.

Store Norske turns 90 this autumn, Longyearbyen turned 100 this spring. For just as long, coal mining has been the basis and alibi for the settlement on Svalbard. Coal mining on Svalbard has never been environmentally friendly – nor profitable, if one disregards the last couple of years. Coal has been a political tool for maintaining a society in a major political focal point. Half of the man-years in Longyearbyen are still linked to Store Norske and derivative activities.

Early in the new millennium, however, the owners of the Ministry of Industry

the bag again, from 2002 Store Norske had to fend for itself. And they did, with brilliance – with

director Robert Hermansen on the throne. Not only did the company manage without the state, they also made money. In 2004, coal was sold for NOK 1,3 billion and the profit was NOK 216 million. Director Hermansen dreamed of being named so-called gazelle in Dagens Næringsliv, and coal prices rose. Then it started to burn.

On July 1, 2005, it took fire in the coal mine Svea Nord, six miles south of Longyearbyen. Norway's largest industrial fire lasted eight months, and ordinary production did not start again until April 22 this year. The company lost close to NOK 800 billion on the fire, and has been arguing with the insurance companies ever since. Recently, the local newspaper Svalbardposten wrote that Store Norske goes to trial with a claim of NOK XNUMX million.

- It is rare that there is a lawsuit in the insurance

cases. It says a bit about how big the disagreement is in this case, says lawyer Jan B. Jansen to Ny Tid.

On December 1, he will deliver a reply to Nord Troms District Court on behalf of the four insurance companies.

Ny Tid is informed that the difference between the parties is several hundred million kroner. Last year, the state failed to withdraw dividends and returned NOK 100 million to the company. Director of Store Norske, Robert Hermansen, tells Ny Tid that if the company does not win, it may be relevant to ask the owners, ie the state, for new equity of NOK 250 million.

- There may be talk of an investment in the company, we will not go back to the time with regular state support, says Hermansen.

In the 1980s and 1990s, Store Norske was dependent on large government transfers, up to NOK 100 million each year. Information adviser Arvid Samland at the Ministry of Trade and Industry confirms that they have regular contact with Store Norske, but will not specify what the talks are about. Lawyer Jansen believes the trial will come up no earlier than the summer of next year.

Store Norske had plans to produce three million tonnes of coal this year. Now CFO Sissel Danielsen tells Ny Tid that only between 2,4 and 2,5 million tonnes will be produced. Store Norske does not give up, however.

- Next year, we aim to produce 3 million tonnes, says an optimistic production

director Higraff. In that case, it will be 300.000 tonnes above the production record from 2003.

If the coal reserves are to last, however, the company must reduce its production in the long run.

- We plan to reduce to two tonnes annually in three years, says Higraff.

This summer, large-scale exploration activity took place for more coal, but it was difficult to find

worthy reserves near current production in Svea. According to Higraff, there are still coal

reserves for 20 years of operation on Svalbard.

You may also like