LKAB forced to cut down
KIRUNA The train derailment, the winter traffic stoppage and upcoming maintenance work on the Malmbanan railway are forcing the mining company LKAB to reduce production.
Ore traffic is now running as usual, but the stocks of iron ore products that were built up during the traffic stoppage have not decreased. The period of railway works will soon begin, which means lower capacity on the the railway.
The derailments in December and February caused a total of 76 days of stoppage in traffic to the port of Narvik. This meant lost revenue of SEK 100 million per day. Iron ore products equivalent to more than 600 full trains are now lying in piles in Kiruna and Svappavaara. It is unclear when they can be delivered to customers.
“The problem is not excess ore stocks per se, but the fact that there is insufficient delivery capacity to meet our planned production leading forward. If no measures are taken, our stocks will continue to grow dramatically over the coming years. Planned maintenance work on Malmbanan reduces capacity even more, since traffic must be halted for long periods,” says CEO Jan Moström.
LKAB is now investigating the closure of a pellet plant in Kiruna or Svappavaara. If so, this would mean giving notice to staff. The financial consequences of limiting production further would, at current prices, mean a loss of revenue of around SEK 5 billion per year, or around SEK 30 billion by 2030.
“We have already been forced to restrict crude-ore transports between Svappavaara and Malmberget, thereby lowering production in Malmberget by one million tonnes per year, which corresponds to revenue of more than one billion kronor at current prices. Among other measures, we will also reduce the amount of external labour and transfer more work to our own personnel, says Jan Moström.
Lennart Håkansson, North Sweden Business
