{"id":16469,"date":"2016-02-26T13:47:02","date_gmt":"2016-02-26T12:47:02","guid":{"rendered":"https:\/\/www.mip.no\/en\/?p=16469"},"modified":"2017-04-06T13:47:04","modified_gmt":"2017-04-06T11:47:04","slug":"year-of-destiny-for-rana-gruber","status":"publish","type":"post","link":"https:\/\/www.mip.no\/en\/year-of-destiny-for-rana-gruber\/","title":{"rendered":"Year of destiny for Rana Gruber"},"content":{"rendered":"
– If we can make it through 2016 in one piece, then we will be on safer grounds.<\/strong><\/p>\n \u221a The ore prices have fallen by 80 percent<\/p>\n \u221a Currency hedging results in losses of millions<\/p>\n \u221a Considering moving operations to Germany<\/p>\n <\/p>\n Kjell Sletjs\u00f8e, Managing Director at Rana Gruber A\/S, does not like to tell the future. He leaves such things, as he puts it, to fortune tellers and stock brokers. So when asked the question that almost everyone asks: if he knows when the market will turn and the arrows start pointing upwards again, the answer is simply “no”.<\/p>\n However, he does tell you a lot about the realities and consequences behind these. An ore market in considerable flux with Brazil and Australia having increased production. A China which everyone puts their trust in but which cannot absorb the increase in production all by itself.<\/p>\n Overproduction causes a fall in prices. Such are the mechanics of the market. Ore prices have fallen by 80 percent in about three years. A market in almost free fall makes action necessary. Not everyone manages to restructure quickly enough.<\/p>\n – In Scandinavia, it is just LKAB and us left of what was once five ore companies. Syd-Varanger, Dannemora and Northland have all closed, says Sletsj\u00f8e.<\/p>\n <\/p>\n Stable and low<\/strong><\/p>\n Sletsj\u00f8e has invited us to his office in Gullsmedvika. The administration is based in a building that was completed in 2012 after the fire in the concentrating plant almost exactly five years ago. Rana Gruber has been in trouble before.<\/p>\n – You need a cup each. If we go down, we are going down in style, Sletsj\u00f8e chuckles when Gule Sider’s photographer and journalist suggest that they can share a cup of coffee, to ease the burden.<\/p>\n Sletsj\u00f8 takes a sip of coffee from a Thermos mug, grabs a pencil and draws a graph on a scrap of paper on the table in front of him. High peaks and deep valleys. Densely. Any market tends to swing, fast and often. The problem in the ore industry is that the prices have been very low, for very long. Sletsj\u00f8 draws a straight line across the step curves.<\/p>\n – When the price was 140 dollars a few years ago, people laughed at those who predicted a fall in prices of 25-30 percent. Those who said 80 dollars were ignored. Now we have hit 40 dollars, says the managing director of Rana Gruber.<\/p>\n <\/p>\n Currency bang<\/strong><\/p>\n As if a difficult market would not be challenging enough; Rana Gruber must use its liquidity to pay old bills. A weak NOK rate could have softened the fall somewhat, but has not provided any comfort. Rana Gruber listened to what turned out to be bad advice; they chose to hedge the Norwegian krone against the US dollar before 2013. They have lost many millions from that in 2015 and they will continue to lose in 2016.<\/p>\n – This will be very technical but in brief: Having to buy dollars for more than NOK 8 and then sell them at NOK 6 is bad business, says Kjell Sletsj\u00f8.<\/p>\n And then there is the property tax dispute with Rana municipality. The Court of Appeal has repealed the municipality’s collection of property tax from Rana Gruber for the period 2011-2015 and Rana Gruber has demanded NOK 24 million back from the municipality. So far, Rana municipality has paid NOK 6 million of this. Rana Gruber is bringing action against the municipality to get the rest.<\/p>\n – When we have bills to pay, clearly 18 million is a lot of money. A considerable amount of money, Rana Gruber’s boss says.<\/p>\n One of the first things that Sletsj\u00f8 did early on in 2014 when taking over as the Managing Director at Rana Gruber in the summer of 2013 was to make efficiency measures. Now, two years later, the results are clearly visible. The cost level in 2015 was about NOK 380 million lower than it was two-three years earlier. The number of employees and contractors has been reduced from about 460 to far below 300 in the new year.<\/p>\n – This has been entirely necessary. If we had been operating with the same cost base as three years ago, then in 2105, we would have an operating loss of NOK 390 instead of NOK 10 million. Or rather, we would not have had any result at all because there would not have been a Rana Gruber to operate unless we had taken those measures, says Sletsj\u00f8.<\/p>\n <\/p>\n