More than iron ore LKAB

MORE THAN IRON ORE

LKAB is a high-tech international minerals group. Abigail Saltmarsh looks at its operation and its recent moves to focus on sustainability.

LKAB is one of Sweden’s oldest industrial companies and has been an important player in the country’s export industry for more than a century. The group has continued to succeed because of its ability to respond to the market and to current demand, as well as because of its emphasis on adding value and exceeding expectations.

Now the group is focusing on the future again, implementing organisational changes and concentrating on sustainability. This has seen a new unit, with overall responsibility for energy, come together from the start of March 2013, says president and CEO Lars-Eric Aaro.

“With the new organisation, we will concentrate all of our energy efforts in one unit. We can thereby achieve the very high goal we have set,” he says.

A world leader

Luossavaara-Kiirunavaara AB (LKAB) is a high-tech international minerals group, a world-leading producer of processed iron ore products for steelmaking and a growing supplier of mineral products for other industrial sectors. It supplies highly processed iron ore products for blast furnaces and direct reduction services to the steel industry, customised minerals for other industries and mining products and technologies.

Most of its iron ore products are sold to European steelworks but it has other important markets in North Africa, the Middle East and South East Asia. Sales of industrial minerals take place chiefly in Europe and to growing markets in Asia and the USA.

A reliable partner

The company was founded in 1890 and since then has played the role of reliable supplier and partner to the European steel industry. It built Europe’s first pelletising plant in Malmberget back in 1954 to improve the processing level and add value for its customers.

Today it has large-scale operations in a competitive global market. It is a small producer in terms of volumes but it is one of the world’s leading process exponents and the world’s second largest producer of iron ore pellets. Other industrial minerals have been added to its product portfolio alongside the rich, high-grade iron ore from the north.

Long-tem collaboration

In 2012, LKAB’s production and shipments reached record high levels in the fourth quarter, while lower iron ore prices had a negative impact its sales and earnings. The global supply of iron ore increased slightly during the year due to increased capacity in Australia but steel producers in Europe are still producing at reduced capacity. Long-term demand for iron ore, however, is expected to continue to be strong.

The group has just signed a seven-year purchase agreement with Emirates Steel in Abu Dhabi, United Arab Emirates, for delivery of one million tonnes of direct reduction pellets per year. Emirates Steel, a new customer for LKAB, is investing aggressively in the latest technology to become a major steel producer in the Middle East.

“This agreement confirms that our products meet high demands on quality internationally. We are very pleased to be able to support the development of Emirates Steels via long-term delivery and collaboration,” says Mr Aaro.

Emirates Steel is the largest steel producer in The United Arab Emirates (UAE). The company, which was formed in 1998, uses the latest technology in the manufacture of steel products for the construction market in UAE and the Middle East. It buys

DR pellets from LKAB. This is a functional iron ore product that is specially adapted for steelmaking via the direct reduction route. In the direct reduction process natural gas is used, which reduces carbon dioxide emissions. Improvements for growth

The move underlines LKAB’s ability to respond to customer requirements. Mr Aaro believes the reorganisation of the group will also strengthen its platform for the future. With the aim of reducing energy use, climate impact and energy costs, the new unit, with overall responsibility for energy in LKAB, will be overseen by Anders Kitok, most recently senior vice-president of the mining division.

The mining division will now include the logistics function, which entails total responsibility from mine to customer. Markus Petäjäniemi, most recently senior vice-president of logistics and sales, will assume the position of senior vice-president of mining. The sales division will be a purely sales and marketing oriented organisation, and will be temporarily headed by Mr Aaro.

“By once again placing logistics under mining we will consolidate overall responsibility from mine to customer,” he adds. “This will improve our cost efficiency even more.” n