How covid-19 is affecting LKAB’s production

April 8, 2020

LKAB continues to operate in line with special restrictions related to the covid-19 outbreak. LKAB thereby assumes a great social responsibility by helping to slow the spread of infection and protecting risk groups while at the same time continuing to produce.

LKAB is taking social responsibility by ensuring that production can continue at the same time as measures are taken to slow the spread of infection. In doing so, LKAB reduces the burden on health care while continuing to make a socio-economic contribution via continued mining, processing and delivery of iron ore products.

“Primary industry is Sweden’s engine and we therefore have a responsibility to continue to operate. We will not shut down for precautionary reasons but will comply with the public authorities’ directives,” says Michael Palo, Senior Vice President Business Area Iron Ore, continuing, “It’s a matter of respecting our welfare and what primary industry has built over the years. The consequences of shutting everything down are devastating and we have only begun to see the effects of covid-19, layoffs and factories that are closing down. LKAB will take its responsibility and operate as long as possible – without taking any risks.”

At present LKAB’s production is not affected appreciably, but there is every indication of a changing market. It is really only a question of when the effects of covid-19 will hit LKAB with full force.

“Factory after factory is shutting down and most vehicle factories in Europe have already closed. At some point this will impact us and we have already seen early signs of this. Things will come to a halt somewhere in the system,” says Michael Palo.

To meet another reality in the wake of covid-19 LKAB is looking at various scenarios in a changing market situation. Among other things, LKAB is assessing the possibilities of slowing down production, closing processing plants and implementing maintenance measures instead. Postponing maintenance stops is also a possible way forward.

“As long as we have a market and personnel we will continue to operate. In that way, we are living up to our responsibility,” says Michael Palo.

Each unit is reviewing its operations to identify critical activities, manning and in what way resources can best be distributed between operations. Concurrently, the production plan is updated on an ongoing basis based on the different scenarios, but the strategy remains set. LKAB will continue to produce.

“Currently, the personnel issue is the most critical question and, depending on whether the public authorities choose to keep pre- and primary schools open, a personnel shortage will be the first thing to determine what we are able to manage,” explains Michael Palo.

While LKAB has a great social responsibility to continue to produce, the company has an even greater responsibility to protect risk groups and help to slow the spread of infection. This demands flexibility and cooperation.

“Everything takes place in a value chain from mine to port. Every single individual in LKAB is a part of that value chain. Each of us is important and makes a difference,” says Michael Palo.

The immediate future will be decisive for how well LKAB gets through the coronacrisis. Therefore, LKAB’s success in this regard hangs on each tonne of ore and each tonne of finished and delivered product.

“The shiploads that we manage to deliver and sell at today’s prices will carry us through the rest of the year,” says Michael Palo.

Within the course of a few months covid-19 has radically changed the playing field and thrown the world into a crisis. Fear and concern for those near to us, for our own health, for society and for the economy has spread in the wake of the outbreak. Therefore, it is important that we combine our efforts in taking measures to limit the spread of infection and that we carry out activities that strengthen LKAB for the future.

“Together as a company we will take responsibility for LKAB and ensure that we get through this safely and come out strong on the other side,” says Michael Palo, continuing, “This will pass and things will be better. We have something to look forward to on the other side.”