Models for compensation complete

January 18, 2016

During 2015, LKAB decided to henceforth compensate property owners, residents and business owners that are affected by mining operations. Now, the details of how stakeholders will be compensated are official.

“To meet the challenge we are now facing, LKAB will assume control over new construction projects in order to find cost-effective solutions and secure access to new properties,” says Stefan Hämäläinen, LKAB’s urban transformation manager.

Homeowners and apartment building owners will be offered the choice of two alternatives: a replacement building of a standard that is equivalent to that of the building to be replaced, or a sum of money equivalent to the building’s market value plus 25 percent. In terms of architecture and materials, the new buildings will not be replicas of the old ones. However, they will be comparable.

Owners of cooperative housing units will be compensated with a sum of money. LKAB’s offer is based on two principles. Compensation will be in the form of an amount per square metre of living area, which corresponds to the price per square metre of a newly produced cooperative housing unit in the orefields communities, plus a supplement that is based on an individual assessment of the condition and standard of the housing unit.

“We want to give owners of cooperative housing units the opportunity to invest in newly produced dwellings of equivalent standard in the community. We are working to encourage more people to invest in the orefields communities, and we have several investors and developers who are prepared to build new rental and cooperative housing,” says Stefan Hämäläinen.

Consideration will be given to the condition and standard of the dwelling or property. This means that those who have renovated and remodelled their home, cooperative housing unit or apartment building and thereby improved the standard of the property will receive a higher assessment value than those who have not.

Tenants who do not own a property will be given priority access to both older and newer rental apartments. Those who move to newly produced units will be subject to a stepwise increase in rent, which means that tenants will retain their present level of rent and the rent will be successively increased over seven years. LKAB has thereby increased the stepwise rent increase from five to seven years. Regardless of landlord, all tenants who must move are subject to LKAB’s stepwise rent increase.

Business owners that must relocate will be compensated in several parts: Business owners who own properties will be offered replacement properties and those who rent will be offered new premises with a stepwise rent increase of up to five years. In addition, LKAB will provide remuneration for relocation costs and loss of income due to relocation.

“Finding compensation solutions that allow LKAB to remain competitive and continue to produce has been a long process. We are very confident that this meets requirements for equitable compensation that is sustainable in the long term, so that LKAB and the orefields communities can stand side by side, even in the future,” says Stefan Hämäläinen.

Securing conditions for continued mining and, thereby, LKAB’s survival, has necessitated the relocation of some 5,000 housing units and 700,000 square metres of housing and commercial premises in central Kiruna and Malmberget. This means that about 10,000 people, or about one quarter of the population of the orefields communities, will eventually have to move.

LKAB is an international high-tech minerals group that mines and upgrades the unique iron ore of northern Sweden for the global steel market. Sustainability is core to our business and our ambition is to be one of the industry’s most innovative, resource-efficientand responsible companies. The group had sales of more than SEK 20 billion in 2014 and employs about 4,500 people in 15 countries. Other group business include industrial minerals, drilling systems, rail transport, rockwork services and property management.