North Sweden launches a series of articles on raw materials and the mining and forestry industries in the County of Norrbotten and the County of Västerbotten in Northern Sweden, highlighting the importance of the area to the EU's supply of raw materials. The first article in the series is on LKAB, one of the largest players in the iron ore market in Europe.
In the EU, there is a debate on how Europe will meet its needs for raw materials in the future and reduce its import dependency. Northern Sweden is a key player to accommodate the EU's future supply of raw materials. To highlight the area's importance for the entire EU, we launch a series of articles on the commodities sector - assets and development - in Norrbotten and Västerbotten with emphasize on the mining industries in minerals and metalls this fall and on forestry in Q1, 2016.
The first article in the series is about LKAB, one of the largest players in the iron ore market in Europe. We will highlight the ore mining and production of the LKAB unique pellets that contains a high content of iron, the world’s leading research on the production of steel and the societal transformation and the move of the towns of Kiruna and Malmberget, which is a consequence of the propagation of the mining industries and of the ore bodies that lean beneath the towns with ground deformations as a result.
We will also highlight the work in progress of the European Innovation Partnership on Raw Materials (EIP RM), as well as the work with the mineral strategies on Swedish national level and in Norrbotten and Västerbotten.
EIP RM gathers Member states, industries, researchers and non-governmental organizations to promote innovations inthe raw materials sector. The aim is to promote and stimulate innovation along the entire value chain of raw materialsproduction. Sweden is represented in the steering committee by representatives from the governments, Luleå University of Technology (LTU), Swerea/Mefos and LKAB. We will follow up the European Commission's work on EIP RM with areport on the first Strategic Evaluation Report containing a set of recommendations on the SIP (i.e. the Strategic Implementation Plan of the EIP RM) revision, as well as the 2015 Annual Monitoring Report. Both reports will be published by the European Commission in March-April 2016.
Raw Material Article Series Part 1:
LKAB - one of the largest players in the iron ore market in Europe
Accounting for 90 % of the total iron ore production in the EU today, LKAB is one of the largest players in the iron ore market in Europe. The company has a leading roll both as a producer and its work for the climate. LKAB conducts world-leading research in the field of production of steel and its climate impact.
Luossavaara-Kiirunavaara Aktiebolag (LKAB) is the world's technologically leading supplier of iron ore pellets to the global steel industry and a growing supplier of industrial minerals to various industries. The company was founded in 1890 and became state owned in 1957.
LKAB mines and refines iron ore in Kiruna, Svappavaara and Malmberget, in the County of Norrbotten, Northern Sweden. Iron ore products are shipped by train on the Iron Ore Line (Malmbanan)/Ofotbanen to the ports in Narvik and Luleå, and to SSAB steel mill in the City of Luleå. LKAB accounts for 90 percent of the iron ore production in the EU and is the leader in quality and the sustainable option in the specialist field of iron ore pellets. LKAB has approx. 4.500 employees of whom 20 percent are females. LKAB turnover 2014 SEK 20.6 billion and shipped 25.7 million tons of iron ore products.
A large part of the iron ore resources in the world is located superficially in the earth’s crust and can therefore be relatively easy mined in huge open pits. LKAB's ore deposits, however, are mostly mined in underground mines, which are more than 1000 meters deep. Breaking ore at great depths is a logistical challenge, and that is why LKAB tries to make iron ore mining as effective and professional as in the pits.
In LKAB's underground mines the ore is extracted by sublevel caving. This method lets the gravity do its work to get the ore tumbling into the development drifts. Then the ore is shipped out with large trucks, trains and elevators up to the processing plants at ground level. Sublevel caving is an efficient mining method in steep orebodies and allows the maximum withdrawal from the ore body with high security. In the open pits, LKAB is using the pallet mining method that provides efficient extraction of the ore above ground.
LKAB is the world's fourth largest producer of iron ore pellets. The company has since the seventies become a leading supplier of high-quality and climate-smart iron ore pellets. In the early 2000s LKABs board of directors decided to increase the delivery capacity of 25 million tons of iron ore to 37 million tons. The growth program LKAB 37 included the opening of three new open-pit mines in the Svappavaara Field, expansion of processing capacity, upgrading of locomotives and wagons as well as the expansion of capacity on the Malmbanan/Ofotbanen and harbors in Narvik and Luleå. The growth program will meet the increasing demand for high quality iron ore products and strengthen LKAB's competitiveness by increasing production and thus distribute the cost of mining in several tons produced.
In 2014 the global crude steel production was expected to grow by 4.2 percent to a total of 1.675 million tons. The steel industry is now struggling with falling demand and price declines. This year, 2015, steel production will reduce by 1.4 percent, or 25 million tons. In 2014 was expected the global crude steel production to grow by 4.2 percent to a total 1 675 million tons. The steel industry is now struggling with falling demand and price declines. This year, 2015, steel production will reduce by 1.4 percent, or 25 million tons. China's growth has stabilized at a lower level.
Projections show that towards 2020, steel production will be lower than peak year 2014, while production of cheap fines from iron ore (from Australia amongst others) is growing. This is expected to lead to long-term lower prices.
While steel production is on a lower level, the demand for high quality iron ore products is increasing. Stringent environmental regulations drive the demand for high quality products such as iron ore pellets. As a result, the difference increases in price between the high and low quality iron ore products.
Relocation of Kiruna and Malmberget
LKAB's continued mining operations and growth is dependent on move of the central parts of Kiruna and Malmberget. 5.000 homes and 700.000 square meters of residential and commercial premises will be replaced. Societal transformation in Kiruna and Malmberget is a consequence of mining industries propagation and of the ore bodies that leans beneath the towns, with ground deformations as a result.
The need to move parts of the center of Kiruna has been known since 2004. It was then the first forecast that the iron ore mining would affect the towns was first presented by LKAB. Much has happened since then, the railway bypassing Kiruna also has a new route, the electricity supply has been rebuilt and the main sewer in the city have rerouted. Road 870 towards Nikkaluokta has a new route and the E10 will also get a new route.
The move will begin in 2018 and is estimated to be complete in 2035. LKAB and the municipality of Kiruna, together with those who want to build, plan in detail when the replacement dwellings and premises will be ready in Kiruna's new center.
Sustainable iron ore pellets
LKAB is an international leader in research and development of pellets. LKAB's pellets have an unusually high content of iron, about 67%, resulting in less environmental impact than competing products. LKAB produces two varieties of pellets: blast furnace pellets and direct reduction pellets. More than 80% of their production consists of iron ore pellets, the rest is sinter fines. Sinter is finely ground sand of iron ore that are lumped together into larger pieces before it can be used in steel mills.
/Alexandra Strömbäck & Oskar Ivarsson