Coal news and updates

As lawmakers in Oslo debate whether to ban their $840 billion sovereign wealth fund from investing in coal companies, the country has opened a new coal mine in the Arctic Svalbard archipelago.

 

Mining for coal in the northernmost reaches of the globe helps Western Europe’s biggest oil producer keep a presence in the fossil-fuel rich region as nations, including Russia and the U.S., jockey for power there. Norway is fighting for a claim to the Arctic as its North Sea oil and gas reserves start to run out after more than 40 years of production.

 

“It’s a very clear sign that coal mining in Svalbard is a desperate act to try to maintain Norwegian activity that they believe is necessary to maintain sovereignty over the island group,” said Truls Gulowsen, director for Greenpeace in Norway, by phone. “It’s not making money, it’s not necessary and it’s extremely bad for the climate.”

 

Store Norske Spitsbergen Kulkompani AS this week opened a new mine south of Longyearbyen, the main Norwegian town in the Svalbard archipelago. The mine is expected to produce about 2 million tons of coal a year until it’s depleted in about five years. That compares with global output that was almost 8 billion tons in 2012, BP Plc’s annual statistical review shows.

 

At the same time, lawmakers are pushing to ban the Government Pension Fund Global, the world’s largest wealth fund, from investing in coal stocks. The Center Party yesterday became the latest political group to advocate that the fund dump coal mining shares, creating a parliamentary majority.

 

Different Issues

 

The plan to crack down on investment in coal was proposed last year by the Labor Party, just months after they lost an election to the Conservative-led coalition of Prime Minister Erna Solberg.

 

Torstein Tvedt Solberg, a Labor member on the parliament’s finance committee, said banning the wealth fund from buying coal stocks shouldn’t be lumped together with mining in Svalbard .

 

“These are two different issues, at the current time there is no issue presented to parliament to debate if we’re going to change our policies in Svalbard,” he said. “The presence we have in Svalbard isn’t just for environmental reasons but also national security reasons.”

 

Norway has work to do to meet its climate targets. It had emissions of 52.7 million tons of carbon equivalents in 2012, about 6 million tons more than a goal for 2020, according to the Norwegian Statistics office.

 

Coal Jobs

 

Store Norske hopes to employ 200 people at the new mine when it reaches full production next year, said spokesman Terje Carlsen. The development also includes a road over the glacier to a harbor where the coal is exported. The miner is the main employer on the islands, which are home to about 2,200 people in the Norwegian settlements. Norway gained sovereignty over Svalbard in 1925.

 

About 40 kilometers southwest of Longyearbyen is Barentsburg, where a Russian state-owned company runs a mine. That settlement is home to about 400 people, mainly Russians according to the office of the Governor of Svalbard.

 

Store Norske had a 386.2 million kroner operating loss in 2012, compared with an operating profit of 55 million kroner a year earlier. A drop in coal production cut sales as its Svea Nord mine was depleted.

 

So far the Norwegian government has signaled it won't ban coal stocks for the wealth fund, which is built on oil and gas income. The fund takes into account ethical rules encompassing human rights, some weapons production, the environment and tobacco when deciding on investments.

 

Ethical Investment

 

The fund halved investments in coal producers over the past two years to about 2.5 billion kroner as of Dec. 31, Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, which manages the fund, said Jan. 28.

 

The government has also proposed boosting the fund’s focus on emerging markets and clean energy. It’s currently mandated to hold 60 percent in stocks, 35 percent in bonds and 5 percent in real estate.

 

“The foreign policy approach to a presence in the Arctic is decoupled from the climate realities,” said Gulowsen at Greenpeace. “It’s hypocrisy, it’s embarrassing for Norway, but at the same time the debate about divestment from coal mines and coal power in the oil fund is, of course, still very welcome and very necessary.”

 

 

Source: http://www.bloomberg.com/