LKAB develops Europe's biggest iron ore project

LKAB¬ī( can look back on more than 120 years of successful, sustainable mining striving to be in harmony with the environment and society in the Arctic region. LKAB presently produces around 90% of the iron ore mined in EU and specialises in high-grade iron ore pellets for steel producers. LKAB commands a market position as the world's third-largest and Europe's largest manufacturer of iron ore pellets.

In the early 2000s LKAB's Board of Directors adopted a decision in principle to realize LKAB's targets and strategies for increasing the delivery capacity from 25 million tons of iron ore to 37 million tonnes. The growth programme LKAB 37 comprises the three mew open-pit mines Gruvberget, Mertainen and Leveäniemi in the Svappavaara field, south of Kiruna and as well expansion of railroad and port capacity. The growth strategy is based on the ambition to keep pace with the growth of the company's customers and to strengthen LKAB's competitiveness.

The market

During full year 2014 global crude steel production is expected to grow by 4.2 percent to a total of 1,675 million tonnes. In general terms, due to increased demand, low steel inventories and somewhat better steel prices, the outlook for 2014 appears to be better than for 2013. Over the long term, demand for steel is expected to rise by 3.7 percent per year up until 2025. The demand for high-quality iron ore products is growing, since they enable greater flexibility in the steelmakers' raw-materials mix. Stringent environmental regulations drive demand for high-quality products such as lump ore, pellets and high-grade fines. As a consequence, the difference in price between high-grade and low-grade iron ore products also increases. Over the long range no fundamental change has occurred on the iron ore market. Growth in China and the rest of the world is also expected to continue to drive demand for more steel and, consequently, for iron ore.

The world's four largest iron ore producers, Vale, Rio Tinto, BHP Billiton and FMG, together account for nearly 45 percent of annual iron ore production and more than 70 percent of global seaborne trade in iron ore. LKAB's deliveries of 25.5 million tonnes in 2013 represent a global market share of about two percent. In terms of volume, LKAB is therefore a niche player. Much of the company's competitive advantage is due to our position as a technology leader and a supplier of added value in the form of high, consistent product quality and assured deliveries.

Europe's biggest iron ore project is in Svappavaara

LKAB has decisions in place to build and operate three new mines in the Svappavaara field, south of Kiruna: Gruvberget, Mertainen and Leve√§niemi. Gruvberget is already in operation. Mertainen have after several years in the environmental court been granted permission to open and operation will commence in 2016 while the Leve√§niemi mine is in the middle of the permitting process. The total investment amounts to more than ‚ā¨ 1billion in the three mines including expansion of railroad capacity and ports. The LKAB 37 growth programme will result in 500 new direct jobs and 1000 indirect jobs, in total 1500 new jobs.

New exploration discoveries made during 2013 increase the ore base by nearly 100 million tonnes of magnetite in two of the new mines in Svappavaara. Mineral asset in Leveäniemi have increased by 76 million tonnes, while assets in Gruvberget have increased by 21 million tonnes of magnetite. The magnetite ore in Mertainen has been known since the turn of the twentieth century and test drilling has been conducted on several occasions during the 1900s and 2000s. Testing to define the extent of the mineralization to the south and at depth continues.

Göran Bäckblom
Vice President Public Affairs LKAB Group

The new Gruvberget mine is in operation since 2010. Annual production is 2 million tonnes of magnetite iron ore with an average grade of 58%. The anticipated mine life is 7 years.
Leveäniemi mine was previously in operation 1963-1984. The plan is to re-open the mine. Permits are pending. The planned annual production is 12 million tonnes of magnetite iron ore with an average grade of 44% and 15 years mine life.
Operating permit for the new Mertainen mine was granted in 2014. The mine will become operational in 2016. Annual planned production is 10 million tonnes of magnetite iron ore with an average grade of 36 %. Planned mine life is 10 years.
Photos: R√ļnar Gu√įmundsson