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Foregrounder

Life on Svalbard?

Oslo is looking for ways to make sure that the collapse of the world coal market does not drag Longyearbyen down with it
Business
A ghost of Svalbard’s past (Photo: Store Norske)

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During her visit to Svalbard next week, Monica Mæland, Norway’s industry minister, is scheduled to drop by a mining museum housed in a former mine near Longyearbyen. Doing so will serve as a symbol of the dual purpose of her visit.

The first is to reassure the town that Oslo is working hard to prevent Norway’s remaining coal-mining activity in Svalbard from suffering the same fate.

This is not something she will need to work hard to do: ten days before announcing her visit on February 16, the government asked the Storting, the national assembly, to approve a three-year, 750 million kroner ($86 million) package of cash payments and loans to bail out Store Norske, the state-controlled firm that runs Norways’s coal mines in Svalbard. The request far exceeds the 95 million kroner annual payment Store Norske had asked the state to kick in. It also follows a 500 million kroner bailout approved by the Storting last April.

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Ironically, much of the money will not go towards keeping the mine open. Instead, it will help fund an indefinite halt in its activities until the market for coal rebounds. Oslo supports the hiatus, but without any income the Store Norske needs help paying and training its workforce, expected to shrink to 100 at the of this year, a quarter of the number people working for the firm in 2010.

The decline in Store Norske’s fortunes poses little risk for Oslo’s control over Svalbard, but it is inconvenient at a time when more countries – most recently North Korea – are considering staking an economic claim there.

Ms Mæland has reiterated that Oslo is committed to helping keep Longyearbyen a viable community. A willingness to keep sinking money into Store Norske shows how far it is prepared to go to ensure this. But Oslo, according to Ms Mæland, also accepts that coal’s days may have passed for good. This accounts for the second purpose of her visit.

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Should it turn out that coal has no place in Longyearbyen’s future, Oslo wants to make sure the town has something to fall back on. Mining for other something else may be a possibilty, but it is typically research and space technology, as well as fishing and other maritime activities, that are most often put forward as potential areas of growth.

Tourism is another, and during her trip Ms Mæland is due to call on representatives from the industry to discuss what can be done to improve the town’s outlook. They may be hoping that her visit to the mining museum will provide her with some inspiration.