Economic analysis: the future of Store Norske

Multiconsult Tromsø has completed an economic analysis commissioned by the Ministry of Trade, Industry and Fisheries. The project resulted in the reports “Economic consequences of various future scenarios for Store Norske Spitsbergen Kulkompani AS” and “Options and mitigation measures in the event of Store Norske’s coal mining operations closing down”.

06. May, 2015

Store Norske’s future

After Store Norske applied for a loan from the Ministry of Trade, Industry and Fisheries, the Ministry commissioned an analysis of the economic consequences of three different scenarios for Store Norske.

Store Norske has been mining coal for 99 years. Over that period there have been big fluctuations in the company’s number of employees, production volumes and profitability. Now the future of the company is in doubt due to the plentiful availability of coal in world markets. Prices have fallen as a result of low gas prices, competition from shale gas in the American market, possible import restrictions in China and low rates in the international freight market. The growing role of renewable electricity generation in Europe will also reduce demand for coal.

Potential alternative economic activities in Longyearbyen

The second part of the project looked at measures to mitigate the negative impacts on employment and population in Longyearbyen in the event of job cuts or the complete closure of the coal mines. The growth potential of new and existing industries was evaluated, to assess whether they could offer alternative economic activities and employment opportunities.

The work was led by the economist Hilde Grimstad at our Planning section in Tromsø. The project team also included Kaj W. Halvorsen at Analyse & Strategi, Professor Jan Yngve Sand and research fellow Sverre Braathen Thyholdt.

You can read more about the Ministry of Trade, Industry and Fisheries’ plan for Store Norske here and about the chosen solution here.