The company is headquartered in Moscow and is the official agency through which Russia, and previously the Soviet Union, exercised its Svalbard policy.

From the 1960s through the 1980s, Arktikugol carried out a series of oil drilling attempts on the archipelago but never succeeded at finding profitable reservoirs.

[2] On 16 March 1913 the financiers of the expedition established the company Handelshuset Grumant – A. G. Agafeloff & Co. to exploit the mine.

[5] At the time a challenge for the Russian interests on Spitsbergen was that the Soviet Union was not yet party to the Svalbard Treaty.

On 17 November 1931 The Anglo Russian Grumant Co. sold all its mining claims to the newly established Arktikugol.

[13] When purchasing Grumant, the Russian company had agreed to forfeit its right to operate a long-distance radio station.

The issue was raised to a diplomatic level, but resolved itself after it became clear that Grumant Radio would only be relaying via Barentsburg.

Key infrastructure, such as docks and power stations, were destroyed and the coal heaps set ablaze.

[32] Arktikugol had also initiated simple 140-square-meter (1,500 sq ft) building at Kapp Boheman and broken 4,000 tonnes of coal.

[35] Arktikugol built a new power station at Colesbukta, but the quality of the coal mined at Grumant was diminishing.

This caught the interest of Soviet authorities, who started working on their own petroleum prospecting plans from 1962.

Arktikugol was at the time not making any money from the coal mining, and it saw advantages of establishing an alternative, potentially more profitable industry.

As in coal mining, the Svalbard Treaty hindered any non-discrimination compared with other country's economic activities.

[41] The issue received a temporary closing on 17 July 1965, when Arktikugol accepted to pay royalties on any production.

[48] The company opened new cultural centers, both including 25-meter (82 ft) swimming pools, in Barentsburg and Pyramiden in 1987.

This would allow the company access to hard currency, although the coal's poor quality and high sulfur content gave low prices.

Maintenance was cut to a minimum, and in 1995 the schools and kindergartens were closed and children and most wives returned to the mainland.

[52] The Arktikugol-chartered Vnukovo Airlines Flight 2801 crashed into Operafjellet on 29 August 1996, killing all 141 people on board.

[53] In the first accident the Russians sent their own rescue crew and equipment and proposed a joint Norwegian-Russian investigation.

It change the policy towards a long-term presence, and proposed closing coal mining and replacing it with other industry.

The last breaking of coal took place on 1 April and by the late summer the town had been shut down, and all activities moved to Barentsburg.

[52] Arktikugol continued to reduce its welfare level: employees' wages were cut, free food was withdrawn and the barn closed.

Large sums of money could not be accounted for, government instructions and plans had not been implemented and the Russian presence had not been managed in a suitable way, especially related to diversification.

The infrastructure was dilapidated, the subsidies per produced tonne of coal were increasing rapidly and 17.5 percent of all man-hours were being used on resolving accidents.

[59] The company's management was replaced in late 2006 and the state grants were given for fire fighting equipment to quench the political embarrassment.

The new management also announced plans to invest in new infrastructure, including a shopping mall equaling that in Longyearbyen.

[60] A small group of employees were moved to Pyramiden in 2007 to keep it maintained and clean it up, including the construction of a dam to keep a river from flooding the town.

From that year a series of safety and environment requirements investments were made, largely to comply with Norwegian standards.

Observers including Øyvind Nordsletten, the former Norwegian ambassador to Russia, have theorized that the Russian government continues funding its operations in order to maintain a foothold in the Arctic, not out of an actual need for Svalbard's resources.

[53][68] On 17 October 2006 Norwegian inspectors detected an underground, smoldering fire in Barentsburg, prompting fears that an open fire might break out, which would have forced the evacuation of all of Barentsburg for an indefinite period of time, and also caused unknown environmental problems for the entire archipelago.