HYBRIT: LKAB will be responsible for the construction of the demonstration plant in Gällivare

November 1, 2023

LKAB and Hybrit Development AB have submitted a supplementary application to the Swedish Energy Agency for support for the next step in the development of the HYBRIT initiative. The supplement clarifies that LKAB is responsible for the construction of the planned demonstration plant and will be the main recipient of any state aid. At the same time, the requested amount of support is reduced from the previous SEK 4.9 billion to SEK 3.7 billion.

The HYBRIT initiative for fossil-free iron and steel production run by SSAB, LKAB and Vattenfall is entering a new phase with a focus on the production of fossil-free sponge iron on an industrial scale. A supplementary application to the Swedish Energy Agency within the framework of Industriklivet is prompted by changes in the project where LKAB takes over the implementation of the demonstration facility from Hybrit Development AB (HDAB).

The takeover is in line with the development of the HYBRIT collaboration and the aim of developing a fossil-free value chain for iron and steel production, where LKAB produces sponge iron from fossil-free iron ore pellets, Vattenfall produces fossil-free energy and SSAB fossil-free steel. The demonstration facility planned for LKAB’s industrial area in Gällivare is central to the step from successful pilot phase to industrial production and is a key in LKAB’s strategy for the future. The volumes from the demonstration plant are intended for SSAB’s conversion.

“The development of the HYBRIT technology for iron sponge production on a large scale is central to our transition, for the climate and for Swedish competitiveness. That LKAB becomes the operator and responsible for the construction of the facility is a natural step for the entire value chain. We want to change, invest and create a competitive, carbon-dioxide-free future where LKAB becomes a supplier of sponge iron”, says Niklas Johansson, Senior Vice President of Communication and Climate at LKAB.

“The planned construction of the demonstration facility builds on the positive results achieved within the HYBRIT initiative, and where the pilot activities in Luleå also continue to have an important role in technology development. We have come a long way with the research and development packages that we envisioned when we started six years ago, a very successful work in which we also applied for a number of patents. Now it’s about using these advances for our owners during the next stage of industrializing the technology, while the technology development continues within Hybrit Development”, says Ulf Spolander, General Manager of Hybrit Development AB.

Since the original grant application was prepared, the estimated investment cost for the demonstration project has increased to over SEK 20 billion, among other things as a result of the global situation with price and cost increases. Analysis work has also been done on the establishment, where parts of the project are adapted to enable planned future expansion of the sponge iron production. Despite this, the previously applied aid amount is reduced from SEK 4.9 billion to SEK 3.7 billion.

“The support is about sharing risk to get past the initial stage, from pilot phase to industrial production. In recent years, we have seen progress in technology maturity for important parts of the project, while interest in fossil-free products is increasing on the market. This reduces the risk for the project and thus the need for support. At the same time, it is important to see that we operate on a global market, with competing initiatives that receive state support at significantly higher levels”, says Niklas Johansson.

The demonstration project is one of 35 projects from 12 EU countries that are part of the integrated IPCEI project Hy2Use. IPCEI stands for Important Projects of Common European Interest and enables EU countries to provide state support to priority initiatives with a strategic common European interest.

LKAB has started to restructure its mining and processing operations with the goal that all products and processes will be carbon dioxide free by 2045 – a step-by-step transition for the production of sponge iron that will reduce carbon dioxide emissions for customers worldwide by 40-50 million tons per year, corresponding to almost the entire Sweden’s annual emissions of greenhouse gases. In Gällivare, the new hydrogen-based HYBRIT process will be built on an industrial scale for the first time. In May 2023, LKAB submitted an application for an environmental permit, which is necessary to begin the conversion.

“There are both bright spots and disappointments in the process so far. We see, for example, that the road to a possible construction permit to be able to start construction will take longer than we initially hoped for. Exactly how it affects the main schedule in general is difficult to say today, but that the start of production may be postponed is a possible scenario that we are dealing with. The most important thing for us is that we build an efficient facility with the best possible technology for long-term sustainable sponge iron production”, says Niklas Johansson.

LKAB works to move forward as quickly as possible and sees that the court and various authorities are making an effort to speed up the process, while others have a lack of resources. The permit is desirable as soon as possible, but it is clear that how these processes are handled is crucial to how quickly the transition can be carried out.

Contact: Anders Lindberg, Group Media Relations Manager at LKAB, Tel: 46 (0)980 783 55. E-mail:anders.lindberg@lkab.com

LKAB is an international mining and minerals group that offers sustainable iron ore, minerals and special products. We are committed to developing carbon-free processes and products by 2045, leading the transformation of the iron and steel industry. Since 1890 we have developed through unique innovations and technological solutions and are driven forward by more than 4,500 employees in 12 countries. In 2022, the LKAB group had sales of about SEK 47 billion. www.lkab.com