Tschudi buys Arctic iron mine
Six months after the closure of the Sydvaranger mine outside Kirkenes, Norway, Felix Tschudi buys the bankruptcy assets. But new mining could be a long shot. VIDEO STORY.
This is a great day for Kirkenes, the local town council cheered as Felix Tschudi today presented his takeover to local politicians. Tschudi buys the bankruptcy assets of former owner Northern Iron Ltd for NOK 78 million ($8.3 million). That includes the mine, a company railway line and a processing plant.
However, the joy of the local town council might soon silence. Felix Tschudi and his Tschudi Group will not be able to bring the mine back in operation anytime soon.
The local community should not have too high expectations, Tschudi himself told local politicians. In the first phase, only a handful of people will be employed for maintenance tasks. And a second phase will include only low-scale production, or «campaign mining», company financial director Peter Steinness Larsen elaborated.
That will reduce mining to only a modest share of local economy. Before the Northern Iron Ltd bankrupted in November 2015, iron mining accounted for a major share of local economic activity and about 400 people were employed.
«Sydvaranger is important for Kirkenes, and the valuable local mining competence must be preserved», Tschudi said in today’s press conference. He stressed that his company now will seek to partner up with other companies which can assist in restarting the mines. «But we do not know how long time it will take, it could take two years, five or ten years», he added
However, the interest of Felix Tschudi in Kirkenes goes far beyond mining. The key focus for the Tschudi Group is within shipping and Kirkenes has a lot to offer.
According to the company leader, the location of Kirkenes near the border to Russia opens big opportunities.
«Russia was the reason why we first engaged in Kirkenes in the early 1990s, and it was also a key motivation for the acquisition of Sydvaranger in 2006», Tschudi says. «We wanted to explore the possibilities for a port located in the immediate vicinity of Russia».
This remains a core strategic concern of the company. «We should continue to develop activities connected with Russia, and Kirkenes has a fantastic location for this», Tschudi underlines.
Over the last years, Tschudi has engaged not only in iron mining, but also in sales of aggregates. Several hundred thousand tons of aggregates is now sent from Kirkenes to Novatek’s Yamal LNG project.
In 2006, Tschudi acquired the Sydvaranger mine and soon got Australian investors on board. An estimated three billion kroner were invested in the facilities which had stood abandoned after the previous state-owned miner bankrupted in the mid-1990s. Tschudi remained a major stakeholder in the Northern Iron until it closed down last November.
Since then, trustee Leif Petter Madsen has tried to find a buyer for the assets. He reached a break-through in negotiations in March.
«Tschudi represents the best strategic and economic solution for the mine», Madsen told journalists. According to the trustee, a total of 17 companies had shown interest, but soon only the Tschudi Group was left on the list.
