In 1896, Vesteraalens Dampskibsselskab started tours to Hotellneset (a peninsula 1 to 2 kilometres (0.62 to 1.24 mi) north-west of Longyearbyen). To accommodate tourists, they built a prefabricated hotel, but it was not profitable and was closed after the 1897 season. However, two families overwintered in 1898–99 and Norway Post operated a post office at Hotellneset from 1897 to 1899.

The first commercially viable coal on Svalbard was harvested by Søren Zakariassen in 1899. In 1901, Bergen-Spitsbergen Kullgrube-kompani started mining coal in Adventtoppen. The American industrialist John Munroe Longyear visited Spitsbergen as a tourist in 1901, where he met with an expedition prospecting for coal. He returned to Spitsbergen 1903, where he met Henrik B. Næss in Adventfjorden, who gave him samples and information on coal fields. Along with his associate Frederick Ayer, Longyear bought the Norwegian claims on the west side of Adventfjorden, and expanded the claims significantly the following year.

In 1906, the Boston-based Arctic Coal Company, with Ayer and Longyear as the main shareholders, started mining in Mine 1a, after having built docks and housing. The company had American administration, but mostly Norwegian laborers, and named the town Longyear City. Coal was transported the 1.2 kilometers (0.75 mi) from the mine to the port using an aerial tramway. In 1913, the company started preliminary work to open Mine 2a.

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