Despite the resumption of traffic on the Ore Railway line, it hasn't alleviated LKAB's challenges. After major derailments this past winter, the stockpiles of iron ore products have not decreased. And soon, railway maintenance work is scheduled.
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“We are forced to reduce production. Initially, we will decrease by approximately one million tons per year. But the situation is so serious that if we cannot run more ore trains, we must shut down even more operations and lay off staff,” says LKAB’s CEO Jan Moström.
A 76-day stoppage in traffic to the port of Narvik resulted in lost revenues of 100 million Swedish crowns per day. Now, iron ore products equivalent to over 600 full trains are piled up in Kiruna and Svappavaara. It’s unclear when they can be delivered to customers.
“The stockpiles themselves are not the biggest issue, but rather that the delivery capacity is lower than our future production rates. If we cannot genuinely increase capacity within the existing system together with the Swedish Transport Administration and Norwegian rail operator BaneNor, we will be forced to take even more drastic measures. In that case, a pellet plant with associated processing facilities and mine production would have to be shut down. That would then necessitate layoffs,” Jan Moström stated.
LKAB is considering shutdowns in either Kiruna or Svappavaara, and discussions with unions have begun. Further limiting production would also mean a revenue loss of around 5 billion Swedish crowns annually, or around 30 billion until 2030.
“We already have to limit ore transports between Svappavaara and Malmberget, thereby reducing production in Malmberget by one million tons per year, equivalent to over one billion crowns in revenue at current prices. Among other things, we will also reduce the amount of external labor and transfer more work to our own staff. It’s about lowering costs as production volumes decrease and retaining as much of our own expertise as possible if we are forced to shut down operations,” says Moström.
Recently, LKAB has invested nearly one billion crowns related to the Ore Railway, including more ore wagons and an additional locomotive workshop.
“This situation cannot be solved with just minor changes. We will do everything in our power to avoid having to shut down a pellet plant and lay off staff. Together with the Transport Administration and other stakeholders, we will try to increase rail traffic so we can start reducing the stockpile, or at least not build it up further,” Moström states.
High hopes rest on the Swedish Transport Administration’s initiated work to improve railway maintenance and planning efficiency.
“Now, clear political decisions regarding capacity expansions, beyond what is currently planned, are also needed in the near and long-term to create the required capacity on the railway line. Having to cut production despite customers clamoring for our products and us earning good money is bitter,” concludes Jan Moström.
The translation was written by an AI system, though the original text was authored by a human.
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