Report No. 9 to the Storting

Svalbard

7 Industrial, mining and commercial activities

7.1 Introduction

Norwegian coal mining operations were previously the main measure for maintaining the Norwegian presence on Svalbard, but now the private sector of the economy also plays a major part in relation to settlement in Longyearbyen. During the last five to ten years there has been substantial growth in private sector activities, which has been accompanied by a reduction in coal mining operations. Today there is considerable Norwegian economic activity on Svalbard.

Encouraging the establishment and maintenance of Norwegian enterprises and activities is one of the ways in which the overriding objectives of Norwegian Svalbard policy are fulfilled. A well-developed economic sector is an important basis for a viable local community, and the services industry is of particular importance for other activities on the archipelago. The presence of a diversified and modern economic sector will make it attractive to live on Svalbard. Together with a well-developed infrastructure this will also help to make the archipelago an attractive place for research, both nationally and internationally. Profitable economic activity is also essential if state transfers to Svalbard are to be scaled down. Further development of economic activities on Svalbard must be kept within the steering parameters set by theGovernment's ambitious environmental goals forSvalbard.

7.2 Industrial development

Towards the end of the 1980s, employment in Longyearbyen was dominated by the largest employer, Store Norske Spitsbergen Kulkompani AS (Store Norske), with approximately 355 man-years. In addition, the state sector was responsible for approximately 115 man-years. During this period activities in the private sector of the economy were limited.

In Report No. 50 (1990-1991) to the Storting on industrial measures for Svalbard, the Government undertook to facilitate more diversified and profitable economic activities and a more varied community, particularly in Longyearbyen, through organizational and industrial policy measures. Reductions in the number of Store Norske employees and the large operating grants for coal production underscored the need to develop more diversified and profitable economic activities. The Report pointed out that that the development of Norwegian economic activities on Svalbard is important for the exercise of sovereignty over the archipelago. The aim was to create new workplaces that would be stable, profitable and in operation year round. Emphasis was placed on adapting industrial development to the overriding environmental steering parameters that apply to Svalbard. Svalbard Næringsutvikling AS was given responsibility for encouraging the establishment of new enterprises and economic activities. Industrial development in Longyearbyen was given priority.

Part of the Government's strategy was restructuring the Store Norske group. For example, a sharper distinction was made between the operation of the infrastructure of Longyearbyen and economic interests. The coal mining company was to focus its activities on coal mining and related operations. Svalbard Samfunnsdrift AS was separated from Store Norske and given the main responsibility for community services in Longyearbyen. Svalbard Næringsutvikling was also separated from Store Norske, becoming a wholly-owned subsidiary of Svalbard Samfunnsdrift. Svalbard Samfunnsdrift has since been restructured, cf. section 7.3.1 Svalbard Samfunnsdrift AS and its subsidiaries.

The Norwegian Regional and Industrial Development Fund has contributed to the development of the private sector of the economy on Svalbard. In the period 1990-1998 loans and grants totalling NOK 39 million were awarded to 62 companies, NOK 26 million of which was allocated to tourism. The amount has been adjusted for projects that did not materialize. During the first six months of 1999, five companies were given commitments for loans and grants amounting to NOK 0.78 million. The bulk of the Development Fund's allocations to ventures on Svalbard is given in the form of grants.

During the 1990s Longyearbyen has developed into a community with far greater industrial diversity than what had been the case just a few years earlier. The inter-ministerial working group that assessed state support for Norwegian activities on Svalbard in 1998 concluded that it would not be necessary to continue coal mining operations in order to maintain settlement and retain important community services in Longyearbyen.

The tourist industry has grown substantially during the 1990s. It is being expanded even further and there are plans for new ventures. However, the figures for industrial development on Svalbard in 1989-1998 presented in a report from Svalbard Næringsutvikling indicate that the growth in tourism has levelled out in recent years The 1999 figures so far show a decline. For more details see section 7.4.4 Travel and tourism.

Research and higher education constitute an important part of economic activity in Longyearbyen. This type of activity attracts a number of courses, conventions and guests to Svalbard.

In recent years there has also been substantial growth in space-related activities. The Norwegian Space Centre has established the Svalbard satellite station (SvalSat) in the vicinity of Longyearbyen. This satellite station downloads data for civilian purposes from satellites in polar orbits, and also controls these satellites. A launch service for scientific probe rockets (SvalRak) has been established at Ny-Ålesund, and is operated by Andøya Rakettskytefelt AS. For more details see section 7.4.5 Space-related activities.

In the private sector, shops representing a variety of retailers have been opened, for example Svalbardbutikken and the recently opened Lompen shopping mall. Longyearbyen also has a number of restaurants and cafés. Construction companies have been established, as well as a number of consulting firms and other small companies.

The increase in the number of private enterprises in Longyearbyen led to the establishment of Svalbard Næringsforening in 1993 as an umbrella organization for commerce and industry; it has 41 members.

Table 7.1 Employment trends in Longyearbyen including Svea and Isfjord Radio 1989-1998 (man-years)
  1989 1991 1993 1995 1996 1997 1998
Store Norske 356 370 285 265 264 233 216
SSD/SNU/SNB 115 120 116 115 681) 71 76
State activities 117 115 115 120 130 135 1362)
Research/education     20 50 50 56 59
Other industries 128 150 220 313 410 465 470
TOTAL 716 755 756 863 922 960 957

1) In 1996 Svalbard Samfunnsdrift AS implemented a clearer division between administrative tasks and economic activities. Svalbard Service Senter AS was established as a separate economic entity and is included in the statistics under "other industries".

2) In order to have comparable figures, employees of Norway Post and Telenor are included.

Source: Svalbard Næringsutvikling AS - 1998

Table 7.1 shows employment trends in Longyearbyen during the period 1989-1998. The figures have been obtained from the enterprises in Longyearbyen. As the table shows, the Store Norske coal mining operations have been gradually downsized. From 1989 until the end of 1998 employment in the company has been reduced by approximately 140 man-years. Coal mining operations are dealt with in section 7.4.1 Norwegian coal mining operations.

In the period 1989-1998, employment has increased in the private sector by approximately 340 man-years, primarily in the tourist industry and in retailing. During the same period, the number of jobs created in the private sector has offset the decline in jobs in coal mining and has also created new jobs. Developments have generally remained within the limits envisaged in Report No. 50 (1990-1991) to the Storting. However, it was not foreseen that the growth in the private sector would be as rapid as shown in Table 7.1.

In connection with the report " Industrial development on Svalbard 1989-1996", presented by Svalbard Næringsutvikling (1997), a forecast was made of the employment trend in Longyearbyen up to 2001, on the assumption that current policies are continued. Based on the enterprises' own assessments of future trends, the forecast indicates approximately 950 man-years worked in Longyearbyen in 2001. In 1998, the total number of man-years worked already amounted to approximately 960, illustrating the rapid pace of developments in Longyearbyen.

In connection with the study of industrial development on Svalbard in 1989-1996, a separate analysis of the profitability of private enterprises in Longyearbyen was carried out. The study shows that private enterprise profitability is on a par with or slightly higher than in enterprises elsewhere in Norway within the steering parameters that apply to Svalbard (including low personal and company taxation, tax exemptions and a subsidized infrastructure). Accounts show that owners on average take out modest dividends and that surpluses are largely reinvested in the enterprises.

Table 7.2 The number of employees in Longyearbyen in 1996 and 1998 according to gender and type of position
  Men Women Total
1996 1998 1996 1998 1996 1998
Permanent full-time positions 491 532 233 242 724 774
Permanent part-time positions 38 58 88 100 126 158
Seasonal employment 1) 487 550 212 237 699 787
Total 1016 1140 533 579 1549 1719

1) Includes persons in permanent positions working on Svalbard during parts of the year, for example lecturers at UNIS.

Source: Industrial development on Svalbard 1989-1998. Svalbard Næringsutvikling AS (1999).

The Government considers that the jobs created should be stable. Table 7.2 is based on a study undertaken by Svalbard Næringsutvikling and shows the number of employed persons in 1996 and 1998, according to gender and type of position.

The table shows that seasonal employment is high.

The report from Svalbard Næringsutvikling nevertheless indicates that the proportion of man-years in permanent full-time positions in coal mining and public administration is high, 94 per cent and 87 per cent respectively. The corresponding figure for research and education is 81 per cent, and for the tourist industry 79 per cent. Overall, 81 per cent of the man-years were worked by persons in full-time positions.

There have been few voluntary or compulsory liquidations among the enterprises that have been established on Svalbard since the beginning of the 1990s, suggesting that the new commercial ventures are generally quite stable

7.3 Companies with state ownership interests

7.3.1 Svalbard Samfunnsdrift AS and its subsidiaries

Svalbard Samfunnsdrift AS was separated from Store Norske Spitsbergen Kulkompani AS and established as a wholly-owned subsidiary on 1 January 1989. In 1993 the state purchased all the shares in Svalbard Samfunnsdrift from Store Norske. Since then, Svalbard Samfunnsdrift has been a public corporation under the Ministry of Trade and Industry.

Svalbard Samfunnsdrift has three wholly-owned subsidiaries, Svalbard Næringsutvikling AS, Svalbard Næringsbygg AS and Svalbard Ser-vice Senter AS. Share capital amounts to NOK 10 million. As of 31 December 1998, the group had 141 employees.

Svalbard Samfunnsdrift is responsible for a number of tasks that are the responsibility of the local authorities on the mainland. The company provides public services and is in charge of the development and operation of the infrastructure. This includes the production and distribution of electricity and district heating, water supplies, sewage management, refuse collection, land-use planning, surveying, waste management, fire services, and the running of daycare facilities, the youth club, the cinema, the library, the gallery and Svalbardhallen sports hall. Other responsibilities include maintenance of the roads in Longyearbyen, management of the town quay, and management of housing let to its own employees and other priority groups in Longyearbyen.

The total operating and financial expenses of the parent company amounted to NOK 85 million in 1998. NOK 47 million of this was financed by the company's own revenues, while the remainder was covered by the government budget. At the end of the year the parent company had 75 employees.

Svalbard Samfunnsdrift sells some services without covering all costs. Up to the present, Svalbard Samfunnsdrift has not been allowed to finance investments through loans, and the company has thus generally been reliant on state support . The difference between revenues and expenses has been covered by state operating grants. It is estimated that an average of 50 to 70 per cent of investments are financed by connection fees for power and water supply and sewage.

Up to the present, the Government has considered it important that Svalbard Samfunnsdrift should give priority to pricing company services to cover costs. So far the goal has been to cover as high a portion as possible of the company's investment costs. Consequently, state grants for company services in Longyearbyen have gradually been reduced so that users are now paying more of the costs for the services they receive. When the Longyearbyen Community Council assumes ownership of Svalbard Samfunnsdrift, it will be up to the Council to continue this practice.

Svalbard Næringsutvikling AS

Svalbard Næringsutvikling was founded on 14 October 1988, and since 1 January 1993 has been a wholly-owned subsidiary of Svalbard Samfunnsdrift. The company is responsible for stimulating more varied economic activities on Svalbard which will provide lasting, profitable, year-round jobs. It also provides advice to local enterprises.

Info-Svalbard is a department under Svalbard Næringsutvikling which provides year-round tourist information and is responsible for the coordination and provision of joint services for the tourist industry, e.g. it serves as secretariat for Svalbard Reiselivsråd (the Svalbard tourist council). At the end of 1998 Svalbard Næringsutvikling had a staff of four.

The number of newly established enterprises has grown considerably in recent years, and the need to implement measures to facilitate new start-ups has diminished, cf. Proposition No. 1 (1998-1999) to the Storting on the Ministry of Trade and Industry. The goals established by the authorities for developing the economic sector in Longyearbyen in the early 1990s have largely been reached.

However, it is important that some of the functions now carried out by Svalbard Næringsutvikling are continued, for example compiling statistics, facilitating an environmentally friendly tourist industry and serving as host in the tourist industry, a function that is currently carried out by Info-Svalbard. Efforts are now being made to transfer the responsibility for industrial statistics to Statistics Norway, which will help to ensure high data standards. The Ministry of Trade and Industry is collaborating with the Svalbard tourist council on a scheme for the tourist industry whereby more responsibility for development will be assigned to the industry itself. For further details see section 7.4.4 Travel and tourism.

Thus, it will no longer be necessary to maintain Svalbard Næringsutvikling as a separate company. The remainder of Svalbard Næringsutvikling's duties will, for the time being, be assumed by the parent company Svalbard Samfunnsdrift.

Svalbard Næringsbygg AS

Svalbard Næringsbygg AS was founded on 15 November 1989 to own and rent out commercial property on Svalbard. In connection with the restructuring of Svalbard Samfunnsdrift in 1995, some commercial buildings were transferred from Svalbard Samfunnsdrift to its subsidiary Svalbard Næringsbygg as of 1 January 1996. These premises included Lompensenteret, Nærings-bygget, Nybyen Forlegningene, Nybyen Stormessa, Nybyen Gammelbutikken, Forsamlingshuset (Huset) and the service building on the quay (Bykaia). In 1997 Svalbard Samfunnsdrift purchased the shares held by Svalbard Nærings-utvikling in Svalbard Næringsbygg, thereby assuming 100 per cent ownership of the company. Svalbard Samfunnsdrift has decided to transfer the company's buildings to Svalbard Næringsbygg. The company had a staff of one in 1998.

Svalbard ServiceSenter AS

The subsidiary Svalbard ServiceSenter AS was founded on 13 December 1995 in connection with the process implemented by Svalbard Samfunnsdrift AS whereby a clearer distinction was made between administrative tasks and economic activities. The company is wholly-owned by Svalbard Samfunnsdrift. The company assumed responsibility for business-related activities such as electrical installations, water, sewage, heating, construction, maintenance services and cleaning. The company is to operate on commercial principles and compete with private enterprises. The share capital amounts to NOK 7 million. At the end of 1998 the company had 61 employees. In 1998 Svalbard Service Senter AS purchased 100 per cent of the shares in Longyearbyen Byggservice AS and 50 per cent of the shares in the newly established company Miljøservice AS. In November 1998 an external consultant undertook a valuation of Svalbard ServiceSenter. The net asset value was estimated at approximately NOK 15 million.

In 1999 the company found itself in a difficult financial situation, and was forced to dismiss some employees, sell assets and close the cleaning and construction department.

7.3.2 Store Norske Spitsbergen Kulkompani AS

Store Norske Spitsbergen Kulkompani AS (Store Norske) was founded in 1916. In 1973 the state took over one third of the shares. Since 1976 the State has owned 99.9 per cent of the company's shares. The share capital amounts to NOK 14.4 million.

Store Norske is engaged in coal production on Svalbard. The company is the largest claim-holder on the archipelago. During the 1990s coal mining operations have been carried out in two mines near Longyearbyen - Mine 3 and Mine 7. There have also been limited survey and exploratory operations in Svea. In keeping with the operating plan approved by the Storting in 1995, operations in Mine 3 were closed down in November 1996 and in January 1997 the Svea Mine was put into regular production.

During the restructuring of Store Norske in 1989 activities related to social services and tourism were spun off as wholly-owned subsidiaries, cf. section 7.3.1 Svalbard Samfunnsdrift AS and its subsidiaries. Other activities were also transferred to private business operators. In its recommendation in connection with the Budget Proposition for 1995, the Standing Committee on Business and Industry stated that it was important that the company should focus on its primary task, coal mining operations, and that it should as far as possible avoid activities that could be better carried out by other enterprises.

In addition to mining operations, the company today provides community services that take advantage of the construction machinery generally used for mining operations. The services comprise renting out transport and construction equipment and also vacant land. These activities are currently being assessed with a view to discontinuing these services when satisfactory services can be provided by others in the local community.

Store Norske is operating at a loss, and its activity is being maintained by means of state support. Due to changes in the operating plan, losses, and hence the need for grants, have been substantially reduced since 1996. In 1998 Store Norske had operating revenues amounting to approximately NOK 144 million, and a loss before state grants amounting to approximately NOK 52 million. The corresponding figures for 1997 were NOK 132 million and NOK 61 million. State grants for these years came to NOK 62 million in 1998 and NOK 63 million in 1997. Grants for investments in Svea Nord are not included in these figures.

At the end of 1998 the company had 201 employees. In recent years Store Norske has undergone considerable downsizing, with a reduction of approximately 150 permanent employees since 1990. This downsizing, carried out in close cooperation with the employees, has primarily been accomplished through natural wastage, early retirement, a limited hiring freeze and the use of short-term contracts.

A more detailed account of Store Norske's coal mining operations can be found in section 7.4.1. Norwegian coal mining operations.

7.3.3 Kings Bay AS

Kings Bay Kull Compani AS was founded in 1916 as a mining company. The company was privately owned up to 1933, when the state acquired all the shares. Since 1963, when mining operations ceased, the company's mining rights have been transferred to Store Norske Spitsbergen Kulkompani AS. Commencing new mining operations in the mine is not a viable option.

Kings Bay AS owns the land and most buildings and facilities at Ny-Ålesund on Svalbard.

Report No. 42 (1992-1993) to the Storting stated that the future organization of and operations at Ny-Ålesund should be assessed in connection with the aim of facilitating the development of Ny-Ålesund as an international research station.

In May 1996 the objects clause for Kings Bay Kull Compani AS was amended, and now reads as follows:

“The objective of Kings Bay Kull Compani AS is to operate and utilize company properties on Svalbard and other activities related to this. The company's operations shall particularly aim to provide services to and promote research and scientific activity, and to develop Ny-Ålesund as an international Arctic natural sciences re- search station.”

In 1998 the company changed its name to Kings Bay AS. The board included people with insight into research administration.

Kings Bay employed 20 people at the end of 1998, with a total of 27 man-years worked. The 1998 accounts show operating revenues amounting to NOK 1.7 million, excluding investments. From 1993 to 1998 the operating result was improved from an operating loss of NOK 10.5 million in 1993 to an operating profit of NOK 1.7 million in 1998.

In recent years Kings Bay has taken on large development projects. In accordance with requirements from the Norwegian Air Traffic and Airport Management, the company has spent NOK 17 million on improvements to its airport. A new waterworks was constructed in 1996, and both the high-voltage and low-voltage power distribution grids were modernized. The growing number of activities in Ny-Ålesund has increased the need for a stable supply of power. For this reason, a total of NOK 30 million was granted for a new power plant, which commenced operations in December 1997. Work on the rebuilding and extension of the mess hall began in 1999.

Investments are needed in order to improve the housing situation in Ny-Ålesund. There are too few housing units there, and the standard of many of them is poor.

Activities in Ny-Ålesund have been increasing since the previous report to the Storting on Svalbard, both with respect to researchers and to other visitors. The number of guest nights has increased from 16 451 in 1994 to 23 034 in 1998. In 1996 Ny-Ålesund was given the status of Large Scale Facility under the EU research programme. This means that more EU-financed research projects will be located in Ny-Ålesund, which will make greater demands on Kings Bay's management of the infrastructure there. For a more detailed account of research activities in Ny-Ålesund see section 8.4.5 Infrastructure for research and education activities and section 8.5.6 Ny-Ålesund an international research and environmental monitoring station.

Ny-Ålesund is also an attractive area for cruise ships and tourist ships visiting Svalbard. During the summer months tourist ships visit Svalbard, and tourists go ashore to be shown the sights or browse in the shop. Because of the research activities, Kings Bay has chosen to restrict the tourist ship traffic by raising the harbour fees. The number of ships calling at Ny-Ålesund has been approximately halved during the last four years, dropping from approximately 100 in 1995 to barely 60 in 1998, but at the same time the number of passengers has increased. The company has benefited from the revenues from this activity.

Ny-Ålesund has also been assigned a number of contingency functions, and is used by the Governor, Longyearbyen Hospital and the fishing fleet in connection with accidents, illness, shipwrecks, etc. In conjunction with its responsibility for infrastructure, Kings Bay is also responsible for emergency preparedness.

In 1998 the company drew up a land-use plan for Ny-Ålesund, which, in combination with the company's annual and long-term budgets, will be used as a management tool for dealing with the increased activity in Ny-Ålesund.

To enable Kings Bay to perform its tasks satisfactorily, good communication with the research communities in Ny-Ålesund is important. This is effected through the Ny-Ålesund Science Managers Committee (NySMAC), which is a coordinating committee for research activities in Ny-Ålesund. Kings Bay has observer status. More details on NySMAC can be found in section 8.4.2 Organizational measures.

It is also important that Kings Bay collaborates closely with the Research Council of Norway and Svalbard Science Forum. The company should further develop its strategic planning in cooperation with the research communities.

The Government considers that Kings Bay AS should continue as a public corporation under the Ministry of Trade and Industry, and underscores the company's importance as a neutral facilitator of infrastructure services for the various research communities in Ny-Ålesund. In its role as facilitator, the company must take into account the growing interest in establishing and developing research in Ny-Ålesund. Research activities and infrastructure facilitation shall be given priority in accordance with the intentions of the local strategic plan, developed by the company together with the Norwegian Polar Institute. Other activities must be adapted to the needs of research activities.

The Government assumes that the price of goods and services supplied by Kings Bay AS will be the same for both Norwegian and foreign research institutions, in keeping with the Norwegian policy of treating Norwegian and foreign research institutions on Svalbard equally.

7.3.4 Bjørnøen AS

Bjørnøen AS was founded in 1918. The company was privately owned up to 1932, when the state acquired all the shares. Bjørnøen AS owns Bjørnøya and the company's share capital amounts to NOK 4 million. Company revenues derive from current leases.

Existing plans for protecting Bjørnøya, cf. section 6.3.4 Protected areas, have been found to have no financial consequences for Bjørnøen AS.

7.4 Current economic activity

7.4.1 Norwegian coal mining operations

General background

Norwegian coal mining operations on Svalbard are carried out by Store Norske Spitsbergen Kulkompani AS (Store Norske). The major markets for Store Norske are Norway, Finland, Germany and the United Kingdom. In recent years the company has also supplied coal to Sweden, Denmark and Iceland. Coal from Longyearbyen is generally used in metallurgy, while so far, Svea coal has only been used for power production and cement production.

Mining has been an important basis for other Norwegian activities in Longyearbyen and for Norwegian settlements on Svalbard, and has been an important instrument in Norwegian Svalbard policy. Thus mining operations have been viewed in a wider perspective than a purely commercial one.

The basic preconditions for Store Norske's coal mining operations are that they should be as cost-effective as possible within the prescribed limits, and that they must be based on well-tried methods that ensure that environmental and safety aspects are safeguarded in a satisfactory way.

Operating plan adopted in 1995

In 1995 the Storting approved the Government's proposal for a new operating plan for Store Norske. This scheme called for a halt to production at Mine 3 for financial reasons in 1996, one year earlier than originally planned. In its place, regular production at Svea was assumed from 1997. Regular operations at Svea were to be combined with slightly reduced operations at Mine 7 in Longyearbyen so that total annual production would not exceed 300 000 tons after the required restructuring had been implemented.

On the basis of this operating plan, the number of employees at Store Norske would gradually be reduced from approximately 260 in 1995 to approximately 210 at the beginning of 2000. On the basis of an annual production volume of approximately 220 000 tons from Svea and approximately 80 000 tons from Mine 7, the company estimated that the Svea Mine (Vestfeltet and Østfeltet) held reserves for 12-13 years of operations and that Mine 7 would be able to stay in operation until 2020.

Adaptations to new market conditions

1997 and 1998 saw a dramatic drop in prices on the international coal market, forcing the company to adopt immediate measures to adapt operating costs to the reduction in sales revenues. These included restructuring operations in Mine 7, temporarily increasing production at Svea and scaling down the number of employees through natural wastage. Production in the most costly areas of Mine 7 has been halted in favour of production in areas with good quality coal and which have been surveyed . However, according to the operating plans it will still be possible to mine the remaining resources in Mine 7 in the future. If coal prices remain low, the company expects to close down Mine 7 or to curtail operations there considerably as early as the end of 2001. Current operations at Svea Vest can only be continued until the autumn of 2000. Svea Øst has been surveyed and is no longer considered to be commercially viable.

Given the previously adopted production limitation of 300 000 tons annually, Store Norske has had limited opportunities for counteracting the reduction in operating revenues with a volume increase. In order to ensure continued operations without a higher state grant than was originally foreseen, an annual average production limit for Store Norske of 400 000 tonnes for the years 1999-2001 was set in the government budget for 1999.

Operations at Svea

Store Norske has chosen mechanically-driven working face mining as the form of operation at Svea. The greatest problems associated with this type of operation are related to stability variables of the rock face. On two occasions in 1997-1998, operations in Svea were disrupted for a number of weeks due to rockfalls. However, Store Norske has been able to cope with the ensuing problems, and operations were resumed without any injury to workers and with only relatively modest damage to machinery and equipment. After two years of operation, the company claimed that its experience so far has shown that this type of production is appropriate for production at Svea.

The Svea Nord Project

In 1997 Store Norske began to study the feasibility of continuing coal mining operations in Sentralfeltet after the reserves in Mine 7 and Svea Vest have been exhausted. Sentralfeltet, the largest known field on Svalbard, has been explored using a total of 69 drill holes. The area of Sentralfeltet where Store Norske is planning mining operations is called Svea Nord. On the basis of drill-hole data and seismic surveys, Store Norske has estimated that the field holds approximately 37 million tons of coal (gross). The company hopes to be able to extract 20 million tons of coal for sale. Seam thickness varies between two and five metres.

Store Norske believes that the reserves may constitute the basis for operations for 20 years and provide jobs for 150 workers. Future operations will be based on miners commuting from Longyearbyen, and it is assumed that no roads or power lines will have to be constructed to Svea. However, a decision to begin long-term operations at Svea Nord cannot be made before this field has been surveyed by drift operations. The drift surveys will provide answers with respect to coal quality, rock conditions surrounding the seam, faults/foldings in the field and water seepage.

The survey is expected to cost approximately NOK 140 million, and could be completed in 2001. Moreover, operating grants of approximately NOK 50 million are required for temporary production operations during the same period in the southern fringe zone of Svea Nord. If these surveys yield positive results and it is decided to continue coal mining operations, further state grants of approximately NOK 100 million will be required for the period 2001-2002. The total costs of this project are thus estimated at approximately NOK 290 million for the period 1999-2002.

Store Norske has stated that downscaling operations in Mine 7 and Svea Vest will require grants amounting to NOK 75 million for the period 2000-2002. Total grants for coal mining operations on Svalbard including exploration drifts will thus amount to approximately NOK 415 million during the period 1999-2002, according to Store Norske. This includes the operating grant already allocated for 1999. The company's estimates suggest that regular coal mining operations should reach break-even level in 2003, i.e. without a need for annual grants, if grants for operations, exploratory work and capital costs are allocated for the period up to 2003, and if the company does not have to repay these costs.

An external consultant commissioned by the Ministry of Trade and Industry reviewed Store Norske's reports and recommendations, and generally concurred with the assessments made. The consultant's report pointed out that the project is very sensitive to fluctuations in price and volume, and recommended a relatively high annual production volume of slightly less than one million tons.

Store Norske has established contact with a prospective partner with a view to industrial and/or ownership collaboration on the project if long-term operations prove to be feasible. However, such collaboration cannot be established before the findings of the survey are available.

If, on the other hand, mining operations are scaled down, Store Norske has estimated total costs for closing the mine at NOK 286 million. Any revenues from selling or renting out coal fields and other assets have not been included. This estimate is very uncertain; it depends, for example, on the environmental measures that must be implemented. If coal mining operations are begun at Svea Nord, winding up and cleaning up costs will be incurred when the mine is closed after approximately 20 years.

In the Revised National Budget for 1999, funds were allocated to Store Norske to begin an exploration drift at Svea Nord. For further details see Proposition No. 67 (1998-1999) to the Storting on new priorities and supplementary allocations in the 1999 government budget. This has been followed up in the Government's proposed budget for 2000, where NOK 66 million has been proposed for an exploration drift.

When the findings from the exploration drift are available, the Government will consider whether to start regular operations at Svea Nord. The Government has not yet decided whether operations at Svea Nord should be continued after 2002. When considering this issue, the Government will attach considerable importance to environmental consequences, the financial basis (assuming no grants from 2003), any changes in the settlements caused by commuting, and the possibility of alternative activities.

7.4.2 Petroleum activities on Svalbard

In the early 1960s oil companies began systematic oil exploration on Svalbard. This lasted from 1963 to 1977. A quieter period then followed before activities were resumed in 1983 and continued until 1994. The oil industry participated fairly substantially in the exploration, particularly during the last period, and a number of expeditions under the auspices of Norwegian and foreign oil companies were carried out, often in collaboration with universities in Norway.

From 1963 to the present, 17 exploration wells have been drilled. These are distributed as follows: two at Hopen, two at Edgeøya (Raddedalen and Plurdalen), two at Sørkapp Land (Haketangen), eight at Nordenskiöld Land (Grønfjorden, Van Mijenfjorden, Colesbukta, Reinsdalspasset and Kapp Laila), and three in the northwestern part of Oscar II Land (Brøggerhalvøya and Sarstangen). Findings so far have been negative. No appreciable quantities of oil or gas have been found in any of the wells. Three wells have yielded small quantities of gas, and traces of oil have been registered in some of the other wells.

Conclusions on the basis of drilling activities on Svalbard and future activity

Even though data from the wells drilled on Svalbard during the 1960s and 1970s are somewhat incomplete, the lack of reservoir rock with sufficient porosity and permeability seems to be the main reason why no oil was found. Due to the limited geophysical data, several of the wells may also have been drilled outside structural closures. However, some of the exploration activities carried out in the 1980s and 1990s were very comprehensive and included the collection of land and water seismic data, so that there is now a much better basis for making an assessment. The data compiled in this way formed part of a sound geological survey of the petroleum prospects. Leading operators on the Norwegian shelf have nevertheless concluded that continued exploration is not interesting at present from a commercial point of view.

Whether there will be renewed interest in oil exploration in the future is not certain. In connection with recent activities, some seismic studies have been undertaken on Spitsbergen, and the industry has assessed its claims on this basis. If the authorities facilitate data compilation and test drilling on a commercial basis, this may pave the way for new test drilling based on more precise prospect definitions.

Such activities are limited by environmental considerations. Any interest in future activities will be contingent on future development in the northernmost part of the Barents Sea, technological solutions, oil prices and the restrictions imposed by environmental considerations.

The importance of Svalbard for a geological understanding of the northern regions

For a number of years geologists have carried out field expeditions to Svalbard to study the geological developments on the archipelago. Oil companies and universities have undertaken field trips to Svalbard in connection with the surveying of the Barents Sea. There will always be a need to use Svalbard as a geological laboratory. The scope of the activities of the oil industry and of some research activities will largely be determined by the activity in the Barents Sea. The geology on land is unique and of immense importance for understanding geological development in the Barents Sea. This access to field sites, which will enable geological control and supplementing of compiled data from the shelf, represents enormous savings as the number of oil wells that need to be drilled will be dramatically reduced. It is thus extremely important that geological research should be maintained in key areas on Svalbard in order to enhance our understanding of the geology of the Barents Sea.

Since 1990 the Petroleum Directorate, in cooperation with the oil companies and universities, has undertaken various field surveys on land (Spitsbergen, Bjørnøya, Hopen and Kong Karls Land) in connection with the surveying of the Barents Sea.

The northern part of the Barents Sea (north of 74° 30' N) is not open for exploration, and compared with the other parts of the Norwegian continental shelf, petroleum exploration in this area is at an early stage. Since the mid-1970s the Petroleum Directorate has compiled more than 70 000km of reflection seismic data from the northern part of the Barents Sea. Two regional seismic data packages from the northern part of the Barents Sea have so far been made available to the petroleum industry. These constitute approximately one sixth of the total amount of data compiled by the Petroleum Directorate in the area.

The Petroleum Directorate also collects gravimetric data. Regional studies of gravity and magnetic data provide valuable confirmation of seismic data in surveys of relatively unexplored areas, where varying seismic quality and geological complexity make satisfactory seismic interpretation difficult.

Since 1990 the Petroleum Directorate has undertaken 23 stratigraphic drillings in the Barents Sea north of 74° 30' N. In total these represent more than 2 100m of core material. The findings from these drillings will be made available to the industry.

Environmental considerations and protection of Bjørnøya

Because of the vulnerability of the Svalbard environment, stringent restrictions have been introduced for the collection of seismic data and exploration drilling for petroleum. These are based on the principles that these activities may not leave any visible traces in the natural environment, and that they may not pollute the environment. In practice this means that these activities can only be carried out when the ground is frozen and covered by snow.

These principles were followed in connection with the operations in Reindalspasset in 1991 and at Kapp Laila in 1994, and few visible traces were registered afterwards. However, the use of heavy off-road vehicles in connection with coal mining operations and oil and gas exploration in the period prior to 1990 has left well-defined and to some extent tracks that worsen with time. In recent years clean-up operations have been carried out at some older exploration sites. Even though exploration drilling on land can now be carried out in such a way as to leave a minimum of traces, any exploitation of commercial finds may lead to serious disturbance of the natural environment.

When it comes to the compilation of seismic data, the restrictions have resulted in the development of special techniques which leave no traces after the activity. Seismic data are compiled in winter using a snowstreamer.

Bjørnøya is important for safety reasons in connection with the petroleum activities in the Barents Sea. If petroleum activities are to be allowed in the northern region of the Barents Sea, safety will be a decisive requirement. In addition to the island's current importance in the context of emergency preparedness with respect to areas already opened up to exploration in the Barents Sea, there may be a future need for emergency response measures, communication installations, geological field surveys, land-based control facilities for sub-sea completion and temporary storage of safety equipment.

The conservation plans have taken these factors into consideration. Reference is made to the protection of Bjørnøya in section 6.3.4 Protected areas.

Given its location, Hopen will be important in the same way as Bjørnøya for safety in connection with petroleum activities north of 74° 30' N in the Barents Sea. The future needs here will be the same as those described above for Bjørnøya.

7.4.3 Fisheries

Fishing operations are carried out in the internal waters of Svalbard, in its territorial waters and in the fisheries protection zone around it. However, fishing in the internal and territorial waters is far less extensive than fishing in the fisheries protection zone around Svalbard. By virtue of its sovereignty over Svalbard, Norway has the right to exercise the extended fishery jurisdiction that is laid down in the Law of the Sea in the waters around Svalbard. A Royal Decree was issued on 3 June 1977 pursuant to the Act of 17 December 1976 No. 91 relating to the Economic Zone of Norway, establishing a 200-mile fisheries protection zone around Svalbard. The reason for establishing a non-discriminatory fisheries protection zone was primarily to obtain control of and restrict fishing in the area in order to protect the resources and prevent unregulated fishing.

Towards the end of the 1980s some dredging for molluscs was carried out in these waters. Studies that showed extensive overfishing of Iceland scallop stocks led to the closure of parts of the catch fields in 1988. Since 1990 only two vessels have participated in Iceland scallop fishing in the Svalbard area. The method of fishing (dredging of the ocean floor) affects the structure of the ocean floor as benthos and sediments are scraped loose in addition to molluscs. The extent of the long-term damage to the ocean floor ecosystem as a result of this has not been determined.

Currently most of the fishing is for shrimp and cod. Since 1996, the fishing effort in the shrimp fisheries has been regulated and only vessels from nations that have traditionally fished shrimp in the area are permitted to participate. The fishing effort permitted for each country has been established on the basis of their earlier fishing operations around Svalbard. Restrictions have been introduced with respect to the number of vessels that may be used for shrimp trawling and the number of days of fishing allowed in Svalbard's internal waters, territorial waters and the fisheries protection zone.

During some periods the intermixture of cod or haddock below stipulated minimum size has caused problems for the shrimping industry. A relatively comprehensive monitoring programme has been used to survey the intermixture of fish below minimum size in shrimp catches. If this exceeds prescribed limits, the fishing grounds are temporarily closed. Regulations have been laid down for the application of new fishing technology, such as sorting grids. The use of sorting grids in shrimp and cod trawls has been made obligatory. In areas that have been closed because the intermixture of fish below minimum size is too large, fishing permits may be granted for fishing with the use of a grid with a finer sorting capability than prescribed, if the intermixture of small fish is within the lawful limits.

In 1986 Norway introduced regulations on cod fishing in the fisheries protection zone for the first time. Pursuant to these regulations, vessels from Norway, Russia, the EU, the Faeroe Islands and Poland are allowed to fish in the zone.

Fishing for other species is marginal. It is prohibited to fish most other commercial fish species that are found in Svalbard's territorial waters and internal waters, for example capelin, red-fish, Greenland halibut, and Norwegian spring-spawning herring. Similar bans have been introduced in recent years in the fisheries protection zone.

The fisheries regulations are relatively comprehensive. The provisions governing fishing are similar for Svalbard's territorial waters and internal waters and for the fisheries protection zone. They include provisions on reporting, the keeping of catch records, mesh size in fishing gear, the use of sorting grids, minimum sizes and so on. Moreover, there is a total prohibition on all other fishing than shrimp trawling in Bjørnøya's territorial waters and in specified areas on the western side of Spitsbergen.

The enforcement of these provisions in Svalbard's territorial and internal waters is the responsibility of the Governor of Svalbard. However, in practice it is the Coast Guard that controls fishing in these waters on behalf of the Governor.

The value of the fish caught off Svalbard is substantial, see Table 7.3. It is essential that these resources are properly managed so that it is possible to continue harvesting in the future, and that biological diversity is maintained in the short and long term. A number of seabird and sea-mammal stocks on Svalbard and in the Barents Sea depend on sustainable management of the commercial fish stocks.

Table 7.3 Total catches and catch value of fish caught in the Svalbard zone 1998 distributed by fish species and country

Fish

Norway Russia EU Other Total Norwegian
average
price
Total
value
  Tons Tons Tons Tons Tons NOK NOK
(1000)
Greenland halibut 919 859 187 39 2 004 15.29 30 646
Cod 16 146 34 057 18 848 3 032 72 083 11.70 843 375
Haddock 1 959 209 231 24 2 423 9.47 22 946
Red-fish 766 652 129 13 1 560 5.96 9 298
Wolf-fish 1 085 2 808 247 47 4 187 4.14 17 336
Shrimp 34 516 509 1 234 3 799 40 058 12.18 487 845
Other 370 284 260 11 925 6.07 5 612
Total 55 762 38 519 21 136 6 926 121 237   1 386 413

The table gives an estimate of the value of the total fish resources in the Svalbard zone (i.e. ICES statistical area IIB). The Norwegian catches are compiled on the basis of preliminary statistics from sales notes, the Russian catches on figures submitted in connection with the annual negotiations in the Joint Norwegian-Russian Fisheries Commission, while catch figures for the EU and other countries are based on catches reported by these countries' vessels to the quota control database of the Directorate of Fisheries. Reported catch quotas also include permitted amounts of by-catches. As an estimate of how much has been fished in the zone, catches registered as caught in the ICES statistical area IIB have been used. This area does not overlap the fisheries protection zone around Svalbard, so that catch figures may deviate from actual catches in this zone. In order to calculate the total catch value, Norwegian average first-hand prices for fish caught in ICES area IIB have been used.

In connection with shrimping at Hinlopen and on the north side of Svalbard during the winter, incidents have occurred that underline the need to enhance safety at sea and reduce the risk of shipwreck and other types of accident. This is dealt with in more detail in section 6.3.10 Acute pollution and section 10.1 Safety at sea.

7.4.4 Travel and tourism

Trends

When debating Report No. 39 (1974-75) to the Storting concerning Svalbard and Report No. 40 (1985-86) to the Storting concerning Svalbard, the Storting agreed to the development on Svalbard of controlled and varied tourism on a small scale. In Report No. 50 (1990-91) to the Storting on industrial measures for Svalbard, the Government advocated facilitating the development of tourism as a commercial activity on Svalbard. However, it was emphasized that tourism must be controlled and that it must not be allowed to reach a scale that could threaten the distinctive wilderness character of the area.

Since Report No. 50 to the Storting was presented, there has been considerable growth in the tourist industry on Svalbard. The number of tourists has increased, as has the number of tourist products, companies, agents and employees in the industry. Investment has flourished and the earning capacity has been substantial, resulting in considerable ripple effects on Svalbard. Today this industry constitutes an important basis for settlement and activities on Svalbard, particularly in Longyearbyen. According to a report from Svalbard Nærings-utvikling AS "Industrial development on Svalbard 1989-1998", the increase in the number of tourists has made a vital contribution to the growth of commerce and industry in Longyearbyen in the 1990s. It is estimated that tourism-generated turnover in 1998 amounted to approximately NOK 122 million, resulting in local purchases corresponding to NOK 55 million. It has also been calculated that each man-year initially generated by the tourist industry yields 0.8 man-years in derived activities locally. This means that jobs in this sector corresponding to 126 man-years generates 84 man-years in derived activities. The report shows that the industry continues to employ a substantial number of temporary and seasonal employees. There does seem to be a trend, however, towards more year-round activity and an increase in the number of man-years worked by permanent employees.

Figure 7.1 Guest nights at hotels and boarding houses in Longyearbyen 1991-1998

1) The steep growth in 1996 was due to the sale of a large number of campaign tickets by the airline company Braathens.

Source: Svalbard Næringsutvikling AS - Info-Svalbard 1998.

Since the mid-1980s, the tourist industry on Svalbard has developed from a single establishment providing tourist accommodation, one restaurant, two cafés and one ticket office to a number of accommodation and restaurant businesses, several tour operators, rental companies, transport companies and souvenir shops. In the early 1990s travel to Svalbard was mainly on business. However, in recent years there has been a growth in the holiday and leisure markets. The trend in the number of guest nights in Longyearbyen shown in Figure 7.1 illustrates this. Figures up to the third quarter of 1999 show a 7.1 per cent decline in the number of guest nights.

The approximately 46 200 guest nights registered in Longyearbyen in 1998 represent approximately 17 900 guests. Of these, approximately 10 200 guests came for holiday and recreational purposes, approximately 5 500 came on business and approximately 2 200 were participants in courses or conferences on Svalbard. In the spring of 1999 Longyearbyen had an accommodation capacity of 234 rooms with a total of 497 beds to meet the varying needs of different customer categories. Longyearbyen also has a campsite. Additional accommodation is being constructed, and there are plans for the establishment of new enterprises.

Travel and tourism in Ny-Ålesund is restricted because of the research activity. However, holiday and recreational travel and courses and conferences have given rise to a need for some accommodation. In 1991 approximately 920 guest nights were registered, while the figure for 1998 was approximately 1 050.

In recent years the tourist industry on Svalbard has developed a number of activities and holiday programmes for tourists and permanent residents. Activities offered to visitors generally involve trips in the wilderness. In summer there are guided hikes in the mountains, on glaciers and along the shore, with or without camping, hikes with pack-carrying dogs, fossil hunting, visits to the Russian settlement, kayak trips, horse-back riding, etc. In winter some of the most popular activities include guided snowmobile trips and ice caving in glaciers, and dogsledding and skiing trips are also offered. Irrespective of the season, there are sightseeing trips and visits to the mines. Since 1995 there has been an increase in motor traffic, particularly snowmobile traffic. New and untraditional products have also been introduced on a trial basis. Ideas being floated include helicopter trips, heli-skiing, allowing boats to be ice-locked and diving. Both local and external operators are responsible for this innovative development of products adapted to an ever more sophisticated, discerning and affluent public. However, none of these new products are offered today.

A number of cruise ships call at Svalbard today. Cruise tourism is expanding all over the world, and it is not unlikely that this will affect Svalbard in the future. In 1990, approximately 16 000 people visited Svalbard on overseas cruise ships (passengers and crew). In 1998, the figure was approximately 27 000. Cruise tourism accounts for the largest single group of tourists in terms of numbers. The largest ships carry approximately 2 000 passengers. On average one or two trips ashore are arranged while the ships are anchored at Svalbard. The most frequently visited places are Magdalenefjorden, Ny-Ålesund and Longyearbyen.

Organization

Until 1990 no single person or organization was responsible for dealing with joint tasks and hosting functions connected with tourism on Svalbard, although for several years Spitsbergen Travel AS operated a tourist information service in Longyearbyen in the summer. Report No. 50 (1990-1991) to the Storting pointed out that the tourist industry needed a coordinating body to perform the functions that are commonly handled by municipal and county authorities on the mainland. The Government indicated that Svalbard Samfunnsdrift would be the coordinating body for travel and tourism through Svalbard Næringsutvikling.

Figure 7.2 A train of snowmobiles at Isfjord Radio

Photo: Bjørn Frantzen

As a result of this, a tourist information service called Info-Svalbard was established in 1991. Today Info-Svalbard is organized as a separate department under Svalbard Næringsutvikling. Info-Svalbard is part of the public tourist information service on Svalbard. In addition to serving as a secretariat for Svalbard Reiselivsråd, where most of the tourist enterprises in Longyearbyen are represented, the office is also concerned with host duties, tourism statistics and the adaptation of tourism to the environment. Info-Svalbard does not sell tourist products.

As the number of enterprises in tourism and travel-related activities was increasing, the need for a coordinating body became even more apparent. Svalbard Reiselivsråd (the Svalbard tourist board) was therefore founded, with the aim of encouraging cooperation on product development, marke-ting, quality assurance, development of expertise and environmental measures. The budget for tourism measures is generally based on income from membership fees and a cash grant from Svalbard Næringsutvikling.

Today Svalbard Reiselivsråd consists of 37 member companies, all of which are located on Svalbard. Virtually all of them represent Norwegian ownership interests and primarily employ Norwegians with knowledge of local conditions.

Svalbard Reiselivsråd is making considerable efforts to raise the professional level of the member companies and to enhance the quality of their products. One of its measures is a three-year pilot project to train and educate guides and tour leaders to work on Svalbard. Guidelines have been drawn up to prevent snowmobile tourism on Svalbard from having a negative impact on the environment. At the same time the industry is interested in improving the quality of organized snowmobile trips as a tourist product. Experience has shown that the tourist industry on Svalbard has acted in a responsible way when developing its product, among other things by emphasizing an environmentally friendly approach.

In addition to cooperating with Info-Svalbard, the tourist industry also collaborates with the public authorities on Svalbard, particularly the environmental authorities. This cooperation has functioned well, and it is important to continue to develop it to ensure that problems are resolved at an early stage and to maintain the positive dialogue that has already been established.

Framework parameters

The most important measure governing tourism is the Tourist Regulations of 18 October 1991. These are intended to regulate tourism and other travel activities in order to protect the natural and cultural environment and to ensure that safety precautions are observed and that other rules are complied with. The regulations oblige groups and persons to notify the authorities of trips to certain areas on Svalbard, and to take out insurance when going there. The insurance obligation for travel agents applies irrespective of the area and comprises all types of costs incurred by the public authorities with respect to search and rescue missions or transport of the sick in connection with the activities of the enterprise in question. Prior to each summer and winter season each travel agent must notify the Governor of the tour programmes they have planned on Svalbard. Tourist carriers must report on planned transport of visitors to areas outside the permanent settlements. For ocean-going trips and trips to or in national parks or nature reserves, the authorities must be notified of the sailing plan, including planned disembarkation. Individual travellers who are not permanent residents must report any trips they are planning that include travel outside the permanent settlements, with the exception of certain specified areas. In areas where the notification requirement applies, individual travellers are also obliged to take out insurance. Travel to or in national parks or nature reserves must also be reported to the Governor, who in such cases may require that the programme be changed.

When the Government in Report No. 50 (1990-1991) to the Storting called for the development of environmentally sound tourism as an industry on Svalbard, it was presupposed that a management plan would be drawn up to ensure such development. The Ministry of the Environment has drawn up a management plan for tourism and outdoor recreation on Svalbard for 1995-1999. This plan established long-term guidelines for the control of tourism and outdoor recreation on Svalbard, and set targets for acceptable use and pressure on various geographical areas on the archipelago. The main element of the plan is the division of Svalbard into zones. Different forms of tourism and outdoor recreation are allowed in the different zones based on the varying pressures on the environment.

As a follow-up to Report No. 50 (1990-1991) to the Storting , the Ministry of Trade and Industry took the initiative to have a tourism plan drawn up for Svalbard. Such a plan was drawn up by Svalbard Næringsutvikling AS in 1994 and updated in 1997. The plan is a strategy document with goals for the further development of the tourist industry on the archipelago, emphasizing among other things the environmentally beneficial development of the industry.

Challenges

The Government assumes that the potential for the tourist industry on Svalbard will continue to be substantial in the years ahead, even though the figures for 1999 show a decline. At the same time it is important to emphasize that the tourist industry may represent a drain on Svalbard's natural resources. It is thus an important challenge for the authorities to ensure that tourism is developed and carried out in keeping with the overriding objectives of the Svalbard policy.

Svalbard has no roads linking the various settlements. Almost all travel and transport between and outside the settlements is therefore by boat, aircraft, helicopter or snowmobile. The travel and tourist industry has helped to curb the negative impact of increased motor traffic, but it will still be incumbent on the authorities to restrict and control motor traffic in keeping with the goal of protecting the distinctive wilderness character of Svalbard. Motor traffic is dealt with in more detail in section 6.3.3 Motor traffic.

Most tourists who come to Svalbard use Longyearbyen as their point of departure. This means that much of the traffic is concentrated in the vicinity of Longyearbyen, where somewhat more intensive land use can be accepted than elsewhere on Svalbard. However, care must also be exercised with respect to motor traffic in these areas too, both to protect the natural environment and in order to facilitate non-motorized tourism in the area.

There is a growing interest in operating tourism enterprises on Svalbard. Most agents in the tourist industry are members of Svalbard Reiselivsråd. However, in recent years a number of new agents have entered the scene who are not members of this body. This also applies to the largest branch of tourism on Svalbard, the overseas cruise industry. The bulk of the cruise industry comprises foreign companies of various sizes that do not have offices either in Longyearbyen or elsewhere on Svalbard. Most of these tour operators come from southern or central Europe and offer summer cruises. Svalbard Reiselivsråd will continue to be an important organization and partner for developing the tourist industry on Svalbard. However, other measures will need to be actively employed in order to reach agents who are not members of Svalbard Reiselivsråd.

The closure of Svalbard Næringsutvikling, of which Info-Svalbard is a department, will have consequences for the current organization of the tourist industry. However, most of the key tasks carried out by Info-Svalbard should be continued.

Follow-up

The Government intends to carry on the work of facilitating safe and environmentally sound tourism on Svalbard. In the light of the overriding goal for Svalbard, which is that it should be one of the world's best managed wilderness areas, it is not desirable to develop tourist products that pose environmental or safety risks. In view of the vulnerable environment on Svalbard, the Government intends to establish strict environmental framework parameters for the further development of tourism on the archipelago.

The Government will evaluate various mea-sures to meet the growth in tourism, including measures in the context of the proposed environmental act for Svalbard. In this connection emphasis will be placed on the need to maintain competition within the travel and tourist industry.

Coordination between the agents in the tourist industry is essential if tourism on Svalbard is to be controlled. The industry has so far shown a responsible attitude, and there is reason to believe that environmentally friendly tourist programmes can be developed in collaboration with the authorities, especially the environmental authorities on Svalbard. However, developments will be reviewed regularly. The Government's intention is that activities that may damage the natural environment should be regulated directly

On the basis of tourism trends on Svalbard in recent years, the Government will decide whether the Tourist Regulations need to be revised. Some agents in the travel and tourist industry have marketed programmes that conflict with environmental or safety considerations, for example polar bear viewing. The Tourist Regulations have not proved suitable in such cases as they offer limited possibilities for prohibiting specific tour programmes. The question of whether to introduce a statutory provision requiring guides with local ties or knowledge of local conditions should be considered. The same applies to whether a provision should be introduced requiring tours to be part of organized programmes, for example snowmobile trips to the east coast or other remote locations on Spitsbergen. The Government will also consider introducing a provision requiring tour operators to use approved guides, for example by demanding that guides must have completed Svalbard Reiselivsråd's guide and tour leader programme. Today it is required to notify tour programmes before each season, but there is no obligation to submit this notification before the product has been marketed. It might be appropriate to establish a formal approval scheme for programmes before they are marketed. The Tourist Regulations are being revised, and in this connection a clarification of the distinction between travel agents/tour operators on the one hand and carriers on the other will also be considered. This distinction is currently subject to discretion, a practice which has been found to be unsatisfactory. Even though the Tourist Regulations currently allow the authorities to require reports on completed tour programmes with respect to all categories of tourist, it has been difficult to acquire sufficient information. One solution may be to impose restrictions on operators who fail to notify their activities in accordance with the current rules, for example by refusing permits for tour programmes or travel for the following season. As regards the search and rescue insurance which every operator is obliged to take out for each season, the insurance premium is in some cases too small in relation to the actual costs of a rescue mission. The size of the insurance premiums will therefore be reviewed.

The management plan for tourism and travel will be revised in line with recent developments, and the tourist industry on Svalbard will be involved in this work. In this connection a proposal for "Principles and codes of conduct for Arctic tourism" presented by the World Wide Fund for Nature (WWF) in 1998 will be examined in more detail. In collaboration with tour operators, environmental organizations, managers, researchers and the local population, the WWF has drawn up a proposal for principles and guidelines for environmentally sustainable tourism in the Arctic. The objective of these guidelines is to help to control tourism in such a way that it has a positive economic ripple effect on Svalbard, while preventing a negative impact on cultural remains and the natural environment.

The Government also considers that the travel and tourist industry itself should assume responsibility for developing and following up the travel and tourism plan in a dialogue with the authorities. Given the developments expected in the industry in the next few years, it may be appropriate to review and update the plan in a few years' time.

The Government intends to give the industry more responsibility for developing travel and tourism on Svalbard. In this connection the authorities have entered into a dialogue with Svalbard Reiselivsråd about continuing the main tasks of Info-Svalbard. Information and host activities are normally financed by the municipal authorities on the mainland. If the travel and tourist industry is to take on the tasks now dealt with by Info-Svalbard, it is logical for the authorities to provide funding. The Government considers that Svalbard Reiselivsråd should continue to be an important partner for the authorities with respect to the development of the travel and tourist industry.

The Government considers that more emphasis should be given to developing organized guided tours to areas in the vicinity of Longyearbyen and to the other areas on Svalbard. This applies to traffic on land and by sea. In this connection, Svalbard Reiselivsråd's training programme for guides is a positive contribution.

7.4.5 Space-related activities

The Norwegian Space Centre and its subsidiaries have two main activities on Svalbard: the establishment and operation of Svalbard Satellite Station (SvalSat), and the operation of launch facilities for scientific rockets (SvalRak).

SvalSat downloads data for civilian purposes from polar orbiting satellites and controls these satellites. It also offers its services to international satellite organizations. The Norwegian Space Centre invested NOK 42 million in connection with the establishment of SvalSat. The owners of the two satellite antennas on Platåberget, NASA and Lockheed Martin/Kongsberg Defence & Aerospace AS, have invested approximately NOK 100 million. SvalSat became fully operative in 1998 on completion of the station building and the technical facilities. The station conducted trial operations in 1998, and regular operations commenced in the spring of 1999 with the launch of the US satellite Landat 7. There are now 11 employees at the station, and turnover in 1999 is expected to be about NOK 15 million.

The Norwegian Space Centre and Tromsø Satellite Station, which are responsible for the operation of SvalSat, are making active efforts to develop the station. Eumetsat, the European meteorological organization, is expected to choose Svalbard as the main station for its new satellite system and hence to install two new satellite antennas . Moreover, it is expected that another satellite antenna will be established for US users. There is reason to believe that in a few years SvalSat will be operating four to five large satellite antennas, thus becoming a satellite station of significant dimensions. The Regulations of 11 June 1999 lay down special rules for operating the ground station to ensure that its operation complies with the Svalbard Treaty.

Boks 7.1 Svalbard Satellite Station (SvalSat)

SvalSat is a ground station for controlling and downloading global data from polar orbiting satellites. A growing number of satellites for earth observation, collecting meteorological and scientific data and telecommunications are being launched into polar orbits. This has created a demand for new ground stations that are able to control and download data from such satellites. Due to Svalbard's proximity to the North Pole (78° N), SvalSat is the only station in the world that can download data from polar orbiting satellites without having to collaborate with other stations. The station can receive data from all of the 14 daily passes made by a typical polar orbiting satellite.

SvalSat was built to download data for civilian purposes, such as weather forecasting and environmental data. The services it offers include:

  • downloading global stored data from polar orbiting satellites owned by international organizations such as Eumetsat EPS, NASA, EOS and NOAA, including coverage of blind orbits for other stations
  • demultiplexing of temporarily stored data
  • interfacing with regional and local applications centres
  • satellite and payload command, including ranging

Activities at SvalSat have led to a large increase in telecommunications traffic and could yield substantial revenues for Telenor Svalbard AS.

In 1997, the Norwegian Space Centre established a launch service for scientific rocket probes, SvalRak, at Ny-Ålesund. Andøya Rakettskytefelt AS, a company owned 90 per cent by the Norwegian Space Centre and 10 per cent by Kongsberg Defence & Aerospace AS, invested NOK 5 million in its establishment. Activities at SvalRak are administered and operated by Andøya Rakettskytefelt. The first four rockets were launched the same year and provided substantial scientific results. No launches were carried out at SvalRak in 1998, nor will there be any during 1999. Two campaigns are planned during the winter/spring of 2000-2001.

7.4.6 Other economic activities

In 1998, Svalbard Næringsutvikling registered the establishment of 15 new companies in the areas of travel and tourism, manufacturing, retailing, vehicle repair, transport, real estate, public administration and research services. There has been significant construction in Longyearbyen and Ny-Ålesund in recent years, and a number of contractors have set up business in Longyearbyen. In recent years contracts that were previously awarded to contractors on the mainland have more often gone to local companies. Furthermore, trade between Ny-Ålesund and Longyearbyen has increased since Kings Bay AS sometimes uses service and contracting companies in Longyearbyen instead of companies located on the mainland. Some of the activities previously carried out by state-owned companies are now being opened up to competition.

In recent years there has also been growth in commerce and services, which have customers among the local population and tourists. Most of the commercial activity is concentrated in the centre of Longyearbyen.

There are a number of small manufacturing firms in Longyearbyen, mainly established by women. These are primarily engaged in the production of souvenirs and jewellery, in part based on local raw materials. Longyearbyen also has some consultancy and auditing firms.

Moreover, Mine 3 is currently being rented to the Swedish company Nordiska Genbanken. This company has established a gene bank containing more than one and a half million different types of seed. Svalbard was chosen for this storage because of its dry, cool climate, and inside the mine the permafrost ensures that the temperature is kept constantly below 0°C all year round.

7.5 The Mining Code and claims

7.5.1 The Mining Code

Article 8 of the Svalbard Treaty states that Norway is obliged to provide mining regulations, and prescribes in detail what these regulations must include and how they are to be drawn up. The Mining Code for Svalbard was laid down pursuant to Article 8 by Royal Decree of 7 August 1925. The Mining Code accords all nationals of those states which have ratified or adhered to the Svalbard Treaty, and those companies that are domiciled and legally established in these states, the right to search for, acquire and exploit coal, mineral oils and other minerals and rocks which are the object of mining or quarrying.

Searching for minerals may be done on one's own land and land owned by others. However, surveying on others' land (including the state's) requires a licence from the Commissioner of Mines. The licence is valid for two years and entitles the searcher to carry out any work that is necessary or expedient in order to find minerals or rocks or to study already existing finds. However, these activities must be carried out in accordance with the parameters that apply at any given time to activities on Svalbard, for example environmental considerations. Whoever discovers a deposit of minerals or rocks has a right to this discovery in preference to subsequent discoverers if he visibly locates the discovery point and notifies the Commissioner of Mines of the discovery.

The searcher may apply for a claim within five years of marking the discovery. The Commissioner of Mines makes a claim survey within two years after the application for a claim has been filed. He determines the boundaries of the claim (maximum 10km2), and checks that the conditions for granting the claim have been satisfied, including whether any other person has a prior right to the claim. When the claim survey has been finalized, the claim-holder has the sole right to extract all minerals and rocks within the claim, provided that he complies with the requirement to work the claim, i.e. mining operations must begin within four years and in each subsequent five-year period at least 1 500 man-days of mining work must be performed. The Ministry of Trade and Industry may grant exemptions from the obligation to work the claim on certain conditions. Claim-holders are obliged to pay to the state an annual due amounting to NOK 6 000 per claim. If the due is not paid, the claim lapses, i.e. the claim-holder loses his right to the claim.

The proprietor of the ground on which the claim has been given is entitled to participate in up to one fourth of the operations. If the proprietor of the ground wishes to avail himself of this right, he must notify the claim-holder within one year after the claim has been published in the Norwegian Gazette. An agreement must be made between the proprietor of the ground and the claim-holder with respect to the former's obligation to pay parts of the cost of the operations and his right to profits. Mining operations must meet mining standards, and those in charge of the technical management on the spot must meet certain requirements. Maps must be prepared of mines that cannot be viewed on the surface, and the Commissioner of Mines must be notified if operations in such mines are discontinued.

The Commissioner of Mines on Svalbard supervises mining operations. The Labour Inspection Authority, the Petroleum Directorate, the Directorate for Fire and Explosion Prevention and the Directorate for Product and Electrical Safety also have responsibilities in connection with mining operations.

7.5.2 Current claims activities

As of 1 January 1999 there are 451 valid claims on Svalbard, covering a total of 4 717km2. The bulk of these claims, 316 in total, are held by Store Norske Spitsbergen Kulkompani AS. Other claim-holders include Polargas AB (50), Trust Arktikugol (35), Petro Arctic AB (19), Statoil (14), Norwegian Holding (11) Norwegian Petroleum AS and partners (3) and Norwegian Petroleum Group AS (3). Claim-holders are primarily interested in coal and oil, but claims have also been submitted for gold and bar-ytes. Figure 7.3 shows current claims on Svalbard.

The number of claims has been declining since 1989, when there were 1 067 valid claims. This decline is related to fluctuations in activities in the oil sector, and to the fact that at the end of the 1980s the claims due was index-linked, which led to an increase in the annual due from NOK 1 500 to NOK 4 500 in 1988. In 1993 the due was increased further to NOK 6 000.

Figure 7.3 Map of claims on Svalbard

7.6 State ownership interests on Svalbard

Table 7.4 Overview of properties on Svalbard

Land
registration
no.

Property
name
Km2 area Title owner
1 Statsgrunn 58 477.0 The state
2 Bjørnøya 178.1 Bjørnøen A/S
3 Storfjord 64.5 The state
4 Calypsostranda 7.1 "
5 Vestre Fagerfjord 2.6 "
6 Søre Fagerfjord 60.6 Kulspids
7 Austre Fagerfjord 29.6 The state
8 Midterfjord 30.3 "
9 Midterhuk 14.1 "
10 Søre Lågfjord 33.0 "
11 Ingvaldsbukta 13.8 "
12 Indre Lågfjord 689.6 Store Norske Spitsbergen Kulkompani A/S
13 Nordre Lågfjord 126.0 The state
14 Kolfjellet 45.9 "
15 Lågnes 195.1 "
16 Russekeila 68.7 "
17 Grønfjordbotn 84.1 Store Norske Spitsbergen Kulkompani A/S
18 Grøndal 368.3 Store Norske Spitsbergen Kulkompani A/S
19 Barentsburg 56.3 Trust Arktikogul
20 Colesbukta 41.4 Store Norske Spitsbergen Kulkompani A/S
21 Grumant 79.3 Trust Arktikogul
22 Longyeardal 286.3 Store Norske Spitsbergen Kulkompani A/S
23 Adventdal 231.8 Store Norske Spitsbergen Kulkompani A/S
24 Austre
Adventfjord
217.6 Elin Horn, Johan Jacob Horn, Elin Horn Galtung,
Karin Horn Tønjum, Henning Horn
25 Saksedal 230.1 Store Norske Spitsbergen Kulkompani A/S
26 Tempelfjella 15.1 The state
27 Gipsdal 247.6 "
28 Indre Billefjord 74.4 Store Norske Spitsbergen Kulkompani A/S
29 De Geerfjellet 28.4 The state
30 Pyramiden 47.1 Russki Grumants 1)
21 Nordfjord 48.5 The state
32 Bohemanflya 68.4 Trust Arktikugol
33 Daudmannsøyra 65.7 The state
34 Vestre St.
Jonsfjord
15.1 "
35 Austre St.
Jonsfjord
18.9 "
36 Øyrane 191.9 "
37 Forlandet 5.5 "
38 Kongsfjord 295.0 Kings Bay A/S
39 Kongsfjordøyane 1.3 The state
40 Blomstrandhalvøya 17.0 "
41 Austre Krossfjord 19.9 "

1) Trust Arktikogul administers the land in Pyramiden today, even though this is not evident from the land register for Svalbard.

Source: The land register for Svalbard and Report No. 40 (1985-1986) to the Storting.

All land that was not assigned to private owners when the Svalbard Treaty entered into force - so-called treaty land - is considered to be state property pursuant to Section 22 of the Svalbard Act. Consequently, most land on Svalbard is owned by the state: 95.2 per cent is state property, 4 per cent is owned by Norwegian companies with state ownership interests, Trust Arktikogul owns 0.4 per cent and 0.4 per cent is owned by other private owners. See Table 7.4.

The state's interests as landowner are administered by the Ministry of Trade and Industry, and the state's interests in the companies Bjørnøen AS, Kings Bay AS and Store Norske Spitsbergen Kulkompani AS (Store Norske) are also managed by the same ministry. These companies own Bjørnøya and the land at Ny-Ålesund, Svea and Longyearbyen and other central areas on Nordenskiöld Land, respectively.

In 1933, in connection with the transfer of substantial state funds to Store Norske, an agreement was entered into between the state and Store Norske according to which Store Norske would compensate by giving the state, at no cost, land that was needed for various public facilities. The public authorities were also allowed free use of the company quay and mooring facilities. It was also made a condition that all leases to foreign nationals had to be approved by the ministry.

Exercising ownership rights is one of the measures open to the state for controlling developments on Svalbard. Even though the exercise of this right takes place within the framework of both the Svalbard Treaty and Norwegian legislation, including the Mining Code, the active use of land ownership rights enables the state to influence developments in a way that is compatible with the overriding objectives of the Svalbard policy. This applies to Svalbard in general and especially to the Norwegian settlements. Here the land is owned by companies with state ownership interests, which has allowed framework parameters to be established for operations and activities which would otherwise be subjected to detailed and legal regulation in other forms, such as the allocation of land for buildings and facilities, the establishment of various types of enterprise and the pricing of joint ser-vices.

Land registration no. 22, title no. 1 (formerly Land Register no. 22), Longyeardal, is owned by Store Norske. The property includes the entire settlement in Longyearbyen and considerable uncultivated land. In connection with the division of the Store Norske group, Svalbard Samfunnsdrift AS was given responsibility for the provision of public services and the construction and operation of the infrastructure in Longyearbyen. A cooperation agreement was also entered into between Store Norske and Svalbard Samfunnsdrift with respect to land registration no. 22. Under the agreement, Svalbard Samfunnsdrift will draw up proposals for land-use plans, prepare sites and decide on building matters in Longyearbyen. Moreover, Svalbard Samfunnsdrift is empowered to offer for lease under its own name sites that have been separated from the property.

Collaboration between the companies has been based on this agreement since 1989. Since there is no legislation corresponding to the Planning and Building Act which applies on the mainland, the authority to manage Store Norske's properties in Longyearbyen has been used as a measure for maintaining overall control of development in Longyearbyen. The regulations on land-use planning in the settlements on Svalbard were laid down on 24 February 1997, and apply to specified planning areas. Svalbard Samfunnsdrift is responsible for planning in Longyearbyen on behalf of Store Norske.

No provisions governing building matters have been introduced on Svalbard. The leasing agreements and the cooperation agreement between Store Norske and Svalbard Samfunnsdrift are thus an important basis for the handling of building matters. Svalbard Samfunnsdrift has drawn up its own rules for building matters, which follow as far as possible the principles of the Planning and Building Act. The current procedure, where Svalbard Samfunnsdrift enters into leases, lays down building conditions and processes building applications, is very unsatisfactory. Therefore provisions are required that will provide a better basis for handling building matters.

Local administration in the settlements is to some extent based on the exercise of ownership rights. In Longyearbyen plans are being made for the Longyearbyen Community Council to take over Svalbard Samfunnsdrift AS (cf. Chapter 14 Development of the local community in Longyearbyen). Even though separate regulations have been drawn up both for land-use planning and for the handling of building matters, building will continue to be dependent on land being made available by the owner for this purpose. The question of how ownership rights in Longyearbyen can best be administered needs to be considered. One possibility would be to transfer the ownership rights back to Store Norske, but this would first have to be evaluated in more detail. Leasing land would then be one of the remaining activities of Store Norske in Longyearbyen.

The Government considers it important that land in the settlements remains in the hands of a single owner.