Tag: business

The cement problem

Cementa's site at Slite in Gotland
Cementa’s site in Slite, Gotland
image: Wikimedia commons

Gotland has a lot of limestone. Limestone is largely composed of calcium carbonate, a key ingredient in making cement. In a chemical reaction called hydration, water and cement combine to create concrete.

Cementa is a cement production company that provides cement to create the concrete used in building. One of the things that concrete helps build is apartment buildings. Sweden needs apartment buildings – the pace of building housing is such that every Swedish government promises / brags about how much housing it will create or has created. Housing, of the lack of it, has been blamed for everything from segregation to bad school results to rising crime rates. So it’s a big deal that the court of property and environmental affairs (mark- och miljödomstolen) overturned its own, earlier, positive decision and said no to Cementa’s application to continue mining limestone in Slite, Gotland.

Originally, the court had said yes. Cementa has been mining limestone in Slite for over a hundred years and the court said it could continue to do so. However, the Swedish Environmental Protection Agency (Naturvårdsverket), Gotland’s Botanical Association, the County Administrative Board of Gotland, and the Swedish Society for Nature Conservation (Naturskyddsföreningen) appealed the decision. On the second time around, the court found that Cementa’s impact on Gotland’s groundwater level had not been sufficiently investigated, and denied Cementa’s application for continued mining.

The outcry

The Swedish Construction Federation (Byggföretagen) is the trade association for private construction companies and employers. They were not late in decrying the decision, saying that 280,000 jobs were being risked. Cementa provides over half, and even up to 75% of all cement in Sweden, and it follows therefor that up to 3 of 4 building projects are at risk of not happening. Layoffs may start as early as August, according to SvD.

also carbon dioxide of course

It must also be mentioned that the Cementa factory at Slite currently stands for about 3% of Sweden’s carbon dioxide emissions. However, Heidelberg Cement, of which Cementa is part, only recently announced that the Slite facility was slated to be reorganized for carbon capture and become carbon neutral already 2030. Also this technology is threatened.

to the rescue?

Minister of many hats – Business, Industry and Innovation – Ibrahim Baylan has confirmed that he is set to invite interested parties to a meeting on the matter. Naturally and quite rightly so, judicial independence limits any particular actions, so who knows what he can do.

Meanwhile, Cementa is appealing the appeal.

Skål for state-owned businesses

Absolut midsommar – keeping health care funded
pic: absolut.com

Is Sweden a socialist country?! Although even through the 80’s it was still a thing, the idea that the Swedish state owned more businesses than not has pretty much been put to rest by this time. Still, there are several huge businesses that are owned or partly owned by the state, who has proven to be, at best, only a so-so business partner. SvD‘s Torbjörn Isacson went through part of the list today, with Telia’s recent sale of its Turkish business as a starting point.

Sweden owns 39.5% of Telia. The next biggest owner of Telia is Blackrock, which owns 3.1%. It’s safe to say Sweden’s ownership is the big one. Although it’s a controlling interest, the state doesn’t control Telia. Telia has a board like any other public company, who does the day to day work (for more about Telia see this blog post). However when Telia loses value or does bad business decisions it’s the state that takes a major hit as any huge shareholder would. Also when Telia does a good deal and makes money the state makes money. In this case, this means Swedish taxpayers.

That’s why Telia’s recent sale of its holdings in the Turkish company Turkcell must make the news. Not only did Telia and its shareholders take a huge, huge loss because the board’s idea was a disaster, Telia sold its holding to a buyer whose CEO is Turkey’s authoritarian leader Recep Tayyip Erdogan. As shareholders, Sweden’s taxpayers should be in the know – but in reality taxpayers have perhaps even less power than an average shareholder since the Swedish state must resign its active partner role to prevent a truly socialist state of affairs (see China for comparison).

Still, that doesn’t mean that the state ignores its business holdings entirely. Just recently, SvD reports, the parliamentary committee on enterprise (näringslivsutskottet) called on the three top state-owned businesses – Vattenfall, Jernhusen and Swedavia – to answer some questions on business practices like annual dividends, and handling the corona epidemic.

Vattenfall has been a leading money-loser. If it’s not one thing, it’s the other: too much snow, too little sun, too little snow, too much sun – and we won’t even bring up wind – they’re all reasons why Vattenfall needs to raise prices on Swedish energy consumers. Then there are other issues like nuclear power and electricity infrastructure that the state of Sweden is directly responsible for but again, must somehow disengage from their effects on its own business, Vattenfall, which, again, is somehow the reason Vattenfall must raise it’s prices on Swedish energy consumers. But it isn’t only Sweden where Vattenfall has its business. Vattenfall has business all over the world and the current record-low cost of electricity is again a reason that Vattenfall is losing money.

Jernhusen owns buildings and other real estate all along the Swedish railroad network and also has dealings inside Norway. Swedavia runs the airports. Both of these were taking losses even before Covid pulled the rug out from under them. And then, of course, we have SAS of which Sweden and Denmark each own just under 15%.

Another 100% state-owned, and Covid-hit business like all others, is Svenska Spel where the lack of sports and the closing of casinos has been financially disastrous. One would think that the state would be happy about less gambling, but it’s uncomfortable when it’s also making money for the state. We all know PostNord, which is 70% owned by the Swedish state and 30% owned by Denmark (note: for some reason, however, voting power is split 50/50). It has the impossible task of trying to be profitable while being prevented from raising prices or laying off workers, or even quitting the business entirely, by its own owners.

To make matters worse, it was in the 100% state owned LKAB (Luossavaara-Kiirunavaara AB) mines in Gällivare that a cluster of Covid virus has recently exploded. But even before that a number of questions regarding work practices were piling up.

Corona makes life more difficult for basically everybody, and misbehaving companies are common. Plus, some essential services should be guaranteed by the state, even if they’re not profitable. But as a general rule, should states be in the business of making money? Oh. Wait. We can’t forgot the good news – Systembolaget! A sure money-winner in Covid times and not. Swedes will have to keep drinking to keep the money rolling in – good thing it’s Midsommar.