Comments by the President and CEO
The year 2024 has been characterised by major challenges, including a tragic fatal accident, problems on the Iron Ore Line, production disruptions and falling iron ore prices. At the end of the year, however, all production facilities were up and running again.
The energy issue has become an increasingly important factor for both our competitiveness and our ability to reach important climate targets. The geopolitical situation is creating great uncertainty.
Yet in this turbulent world LKAB is strengthening its position relative to our competitors – we are becoming a more important player in building sustainable value chains – with 80 percent of the EU’s iron ore production. We have the qualities required to enable the steel industry to move away from emissions intensive blast furnace technology.
At the same time, our deposits of rare earth elements and phosphorus provide great opportunities to reduce the EU’s import dependency and contribute to strengthening the Union’s self-sufficiency. LKAB’s strength is that we can adapt and that we combine business acumen with sustainable and responsible mining – an approach that has permeated our entire business since its inception over 130 years ago. This creates value for both society and our customers. The commitment and skills of our employees have been crucial to our ability to adapt and continue to deliver high-quality iron ore and mineral products to our customers.
Over the past year we have witnessed an increasingly unstable geopolitical situation casting its shadow over Europe and the world at large.
The war in Ukraine has not only challenged security policy but also exposed the vulnerability of Europe’s energy supply. With continental Europe’s heavy dependence on imported gas, which has now been partly replaced by expensive liquefied natural gas (LNG), energy prices have skyrocketed.
High energy prices remain one of the biggest challenges, both for us and for Europe as a whole. The expansion of fossil-free energy is moving too slowly to support the climate transition, creating a paradox: the climate targets are becoming more difficult to achieve, while at the same time industry is under pressure from the EU Emissions Trading System (ETS). With a planned phase-out of free emission allowances by 2035, there is increasing pressure on sectors such as the iron and steel industry to transform. The companies are caught in a trap.
Europe is at a crossroad. Unless we and our customers have access to cheap and reliable energy and the resources needed to transition to fossil-free production, we risk seeing energy-intensive industries move to countries such as the United States and China. These countries not only offer cheaper energy but also less stringent climate requirements. Such a development would not only be an economic loss for Europe – with corporate bankruptcies, fewer jobs and, by extension, lower economic prosperity – but also a global climate threat, as emissions would likely increase in less sustainable production environments. In short: without cheap and reliable energy, Europe risks deindustrialising before the continent has had time to phase out fossil fuels.
Sweden’s entry into NATO in 2024 is a historic milestone. It marks a new era for our national security, but it also places demands on critical infrastructure such as the Iron Ore Line – the backbone of LKAB’s logistics.
The Iron Ore Line, which is already under strain, may need to cope with the increased pressure of rail transport between NATO countries, requiring coordination and investment to meet future needs.
Nearly half of all rail freight in Sweden, calculated in tonnes, is transported on the Iron Ore Line.
Following the major derailment on the Iron Ore Line in mid-December 2023 the line was taken back into operation in mid-February 2024, but had only been operating again for a few days when a new derailment put a stop to deliveries to Narvik. In total, the derailments brought deliveries on the Iron Ore Line to a standstill for 76 days.
Tragically, a fatal accident occurred in the Kiruna mine during the second quarter. The Swedish Work Environment Authority’s inspection indicates shortcomings that were also noted in our internal investigation. Several measures are being implemented based on these reviews, including targeted safety inspections with a focus on machine safety.
Within the Emissions Trading System (ETS), the European Commission took the decision that iron ore pellets and sinter are to be included in the same benchmark for the period 2026–2030. This means that LKAB will be entitled to around six million more emission allowances for pellet production in 2026–2030. The value of this is around SEK 4 billion at today’s prices.
During the year extensive efforts were made to remedy deficiencies and improve the quality of our plants, which significantly limited production. The efforts yielded results and at the end of the year the affected plants were back in full production.
During the autumn LKAB began a dialogue with Kiruna Municipality concerning replacement of a number of socially critical buildings that are outside the calculated impact area from mining operations. The future potential compensation, which is estimated to be just over SEK 2 billion, has increased provisions made for urban transformation.
Following several major seismic events in the Malmberget mine, the County Administrative Board announced in the autumn that it shares LKAB’s interpretation concerning working towards phase-out of the homes in eastern Malmberget. The compensation principle is that homeowners can choose between a new equivalent house or monetary compensation corresponding to the market value plus 25 percent.
At LKAB’s board meeting on 24 October an investment decision was made to establish a research and development centre and a demonstration plant for the processing of phosphorus and rare earth elements in Luleå.
2024 was a year of challenges, both externally and internally. However, several internal factors became particularly noticeable for LKAB. It is with a heavy heart that I reflect on the tragic fatal accident that took place in Kiruna during the year.
This is a reminder that our work on safety must never stop. The accident represents a failure that we take extremely seriously. Our employees’ safety is our top priority, and we have intensified our efforts to reinforce the safety culture throughout the organisation.
An important step in this work is the implementation of Critical Control Management (CCM) – a method of identifying and addressing risks before they lead to accidents. CCM means that we not only look at historical incidents but also analyse critical control points in order to anticipate and prevent potential events. By more clearly sorting and prioritising the most severe risks, we have been able to place greater focus on those areas where safety efforts make the most difference.
Net sales in 2024 amounted to MSEK 33,146, a decrease from MSEK 42,923 in 2023. The decrease is mainly due to lower delivery volumes and lower market prices. Despite this, our strategy for highly upgraded iron ore products and minerals has helped to mitigate the effects.
We have continued to prioritise deliveries for the steel industry’s transition towards fossil-free production – something that strengthens our long-term relevance.
Production and delivery volumes were affected by two factors: firstly, two major derailments on the Iron Ore Line that caused transport stoppages; and secondly, extensive downtime in our pelletising plants – with three of our largest plants having been at a standstill for long periods of time, resulting in significant loss of production. This put pressure on our supply chains and impacted our ability to maintain normal flows to our customers, which in turn had a negative impact on our results.
SEK bn
Overall, our deliveries of iron ore products during the year amounted to 21.9 (25.3) Mt and production decreased to 22.7 (26.2) Mt.
The average global spot price for iron ore was 110 (120) USD/tonne. At the end of the year, the price amounted to 100 USD/tonne. The market-quoted pellet premiums were just under 2 USD/tonne lower than in the previous year.
Operating profit for the year amounted to SEK 8.7 billion, corresponding to an operating margin of 26 percent. The result was affected by lower iron ore prices, low production and the long stoppage of the Malmbanan railway at the beginning of the year. With this in mind, LKAB has delivered a stable result in 2024 despite challenging market conditions and production restrictions.
Net sales for Business Area Iron Ore decreased to SEK 30,103 (39,556) million and operating profit amounted to SEK 9,268 (16,484) million. The decrease is mainly due to lower production, deliveries and falling market prices.
Business Area Special Products reported net sales of SEK 6,303 (6,944) million and operating profit of SEK 504 (640) million, mainly affected by lower sales volumes of magnetite, partly offset by improved margins in industrial mineral sales.
LKAB’s operations are unique and central to Sweden and Europe. Our business model is based on a crucial principle: converting mineral resources into mineable mineral reserves. The difference between these terms is fundamental in the mining industry.
Mineral resources refers to the total amount of identified minerals in the ground, while mineral reserves are the deposits that can be profitably extracted under current technical and economic conditions. Making this conversion possible calls for careful exploration, extensive analysis and development work as well as significant investments. Put simply, it is about how we can economically and efficiently mine iron ore from the ground.
Every day that we mine iron ore takes us closer to the end of our existing mineral reserves. It is therefore crucial that we continually identify new deposits and develop innovative mining methods and processes that increase our revenues and enable efficient and sustainable extraction. Mining can be compared to forestry where the forest is replanted in order to secure the future – but unlike the forestry industry, our mineral reserves do not grow back. This places high demands on us as a company to act responsibly and for the long term, in order to ensure both access and sustainability. It is our ability to do this – to replace what we mine with at least the same amount of new mineral reserves – that makes us a key global player in the mining industry, and that gives us our reason for existing.
Our operations require major investments and are sensitive to market changes. That is why we must constantly balance our economic responsibility with our climate responsibility. The mining industry is capitalintensive, and every investment involves great risks. However, these investments are also the key to ensuring our future competitiveness and contributing to a more sustainable world. As part of our strategy, we work not just to replace the volumes we mine every day. We want to increase our production of iron ore, raise the quality and create new revenue streams by extracting critical minerals.
LKAB is of great importance for the Swedish economy and is a key player in Norrbotten’s development. Through our business we create jobs, contribute to GDP and finance welfare via exports and tax revenues.
One example of our significance is that when there were stoppages on the Iron Ore Line in 2024, the effects became so great that they could be seen in Sweden’s GDP statistics. Our investments in urban transformation, infrastructure and housing contribute to the long-term attractiveness of our operating locations. At a national level, we are one of Sweden’s biggest exporters – strengthening the country’s position as a global role model of sustainable industry. Internationally, our production is crucial for Europe’s steel industry, where our highly upgraded iron ore products are supporting the transition to fossil-free technology and helping to reduce dependence on less sustainable imported materials. European Commission President Ursula von der Leyen has indicated that securing the mining of critical minerals on European soil is a strategic priority for Europe’s industrial future and for the security of the continent, and LKAB plays a key role in this too.
| 2024 | 2023 | |
| Net sales, MSEK | 33 146 | 42 923 |
| Operating proft, MSEK | 8 722 | 16 230 |
| Costs for urban transformation provisions, MSEK | -313 | -400 |
| Net financial income/expense, MSEK | 2 229 | 2 928 |
| Profit/loss before tax, MSEK | 10 951 | 19 158 |
| Profit/loss for the year, MSEK | 8 773 | 15 220 |
| Capital expenditure on property, plant and equipment, MSEK | 5 408 | 5 442 |
| Operating cash flow, MSEK | 1 740 | 10 704 |
| Return on equity, % | 11,0 | 20,0 |
| Net debt/equity ratio, % | -15,5 | -23,8 |
| Dividend to owner, MSEK | 4 400 | 7 600 |
LKAB’s strategy is made up of three parts, which together provide the foundation for our future development:
Mining at greater depths through increased automation, electrification and digitalisation for increased volumes.
We are investing in developing the mining technology of the future, with a focus on automation, electrification and digitalisation. Through this work we can reduce environmental impacts, increase the productivity of our mines and at the same time increase the safety of our workforce. Insights from increased exploration are creating the conditions for us to raise our production volumes through the extraction of the new deposits that we have identified. We are developing new technologies in collaboration with partners, all of whom aim to implement new solutions for innovative and responsible mining at great depths.
Increased product value and reduced climate impact.
Our goal is to revolutionise the iron and steel industry by enabling the production of fossil-free steel. This is being done by producing hydrogen from fossil-free electricity that can be used to reduce iron ore to sponge iron. This process can drastically reduce carbon emissions compared to the traditional blast furnace process that uses coal. This innovation is not only crucial for our own operations but also for our customers in the steel industry, who are striving to meet their climate targets.
Extraction of phosphorus and rare earth elements for increased self-sufficiency.
We are making efforts to use more of the materials we already mine in order to extract phosphorus and rare earth elements – critical minerals that are crucial for society. These critical minerals are central to the production of batteries, wind turbines and electric vehicles, among other things, as well as the mineral fertilisers on which half of the world’s food production depends. Through our efforts we can help to reduce Europe’s dependence on imported minerals and increase our self-sufficiency.
Europe has ambitious targets for reducing carbon emissions, but without access to cheap and reliable fossil-free energy, these targets are difficult to achieve.
High energy prices are already affecting the competitiveness of energy-intensive industries and the entire value chain. For LKAB, the supply of fossil-free energy is crucial, as our future depends on being able to transition to carbon-free
production.
LKAB is determined to be part of the solution. We are working actively to secure our own energy supply through strategic partnerships and long-term agreements. At the same time, we are a clear voice in the debate on Europe’s energy policy and the importance of prioritising investments in new competitive electricity production. Several types of power will be needed and must work together to create a stable and reliable energy system that meets both the climate goals and the needs of industry. We need all the fossil-free energy we can get.
The Iron Ore Line is LKAB’s lifeblood. It is crucial for our highly upgraded products to reach customers in Europe and the world.
Despite this, the line is under heavy strain – and with Sweden’s entry into NATO it may need to handle even more transport, thereby increasing the pressure further. Meeting the needs of the future will require investment in modernisation, increasing capacity and sustainable transport. These investments will support both the climate goals and Sweden’s industrial competitiveness.
In addition to the Iron Ore Line, permitting processes and attractive local communities are central to LKAB’s future. Today the permitting processes are often long and complex, which slows down both innovation and the necessary investments. To enable LKAB to realise its projects and contribute to Europe’s security of supply, these processes need to be reformed. A more efficient and predictable permitting system is crucial if we are to be able to take advantage of opportunities in the climate transition.
At the same time, we are working to create attractive local communities in Kiruna and Gällivare, where we maintain continuous dialogue with affected parties, including representatives of reindeer husbandry, in order to balance different needs.
Sustainable communities in the locations where we operate require a strong public sector with high-quality healthcare, education and public services. Supply of skills is a particular challenge, and we are working actively to secure access to the expertise required to run and develop our operations. By investing in infrastructure and community development we strengthen LKAB’s ability both to remain competitive and to lead the transformation of the industry.
Challenges can lead to development. In challenging times, we have become even better at what we do.
By optimising our processes, improving productivity and working methodically we have shown that we can respond to difficult times with strength and innovation. This confirms our ability to adapt while sticking to our long-term goals. The transformation towards carbon freedom continues, but this is not taking place in a
vacuum. For us to be able to achieve our goals, the right conditions must be in place: a stable supply of fossil-free energy, efficient permitting processes and long-term investments in infrastructure.
In 2024 we have taken significant steps forward in our development projects, from pilot plants to the implementation of new technologies that can revolutionise the entire mining industry. In autumn 2024 LKAB’s environmental permit application for our operations in Gällivare/Malmberget was published, marking the start of the formal review process in the Land and Environmental Court that is an important step in scaling up the production of phosphorus and rare earth elements – key materials for the climate transition and for reducing Europe’s dependence on imported minerals.
At the same time we have continued our work on fossil-free hydrogen, a fossil-free energy carrier that is key to enabling steel production without coal and reducing the industry’s carbon emissions.
Our new framework “One LKAB” creates clarity in how we work and how we lead at LKAB, and will help us develop a continued successful company together. We are determined to achieve our goals and contribute to a more sustainable future. Our focus on innovation and sustainability not only creates value for LKAB, but also for our customers and for society in general. These advances, combined with our strategic partnerships and determination, show that we are on the right track, even at a time of great challenges. Throughout LKAB’s long history, we have shown time and time again that we can cope with major changes and we have been an innovative trailblazer in the mining industry, both in Sweden and internationally.
I would like to end by expressing my warm and sincere thanks to all of our employees, customers and partners. Your commitment, your ideas and your hard work are the foundation for LKAB’s successes. It is through your efforts that we continue to be a driving force for sustainable development and economic growth – both in Sweden and in the global arena.
Jan Moström, President and CEO
Luleå, 27 March 2025
