Swedish miner invests up to €39bn in massive transformation for carbon-free future

LKAB aims to remove fossil fuels from steel production.

The Swedish state-owned mining company LKAB unveiled massive new investments this week aimed at producing steel without fossil fuels.

The unprecedented plans, presented on Monday, should pave the way for global mining industry to help cut its carbon-footprints.

“This is the biggest transformation in the company’s 130-year history and could end up being the largest industrial investment ever made in Sweden. It creates unique opportunities to reduce the world’s carbon emissions and for Swedish industry to take the lead in a necessary global transformation,” said Jan Moström, president and CEO of LKAB, at a presentation.

LKAB is Europe’s largest iron-ore mining company, operating at Kiruna and Malmfälten in northern Sweden.

Investments are in the order of 10 to 20 billion Swedish kroner per year over the next 15 to 20 years. In total that will be between 150 and 400 billion kroner (€15 to €39bn) before 2040.

LKAB’s investments have three main directions:

  • Set a new world standard for mining.
  • Sponge iron produced using green hydrogen to replace iron ore pellets which will open the way for a fossils-free iron and steel industry.
  • Using fossils-free technology to extract strategically important earth elements and phosphorous for mineral fertilizer from today’s mining waste.

“The market for iron and steel will grow, and at the same time the global economy is shifting towards a carbon-free future. Our carbon-free products will play an important part in the production of railways, wind farms, electric vehicles and industrial machinery. We will go from being part of the problem to being an important part of the solution,” said Moström.

Iron and steel production account for 7 percent of all carbon dioxide emissions globally. By transforming that production from the ore produced by LKAB, the company estimates a reduction in global carbon dioxide emissions of about 35 million tons. That corresponds to two-thirds of Sweden’s carbon dioxide emissions, or 3 times as much as if all cars in Sweden were parked for good.

The initiative by the Swedish mining giant fits perfectly well with the European Union’s recently approved plans for a 60 percent cut in emissions by 2030 and climate neutrality by 2050.

“Our transformation will dramatically improve Europe’s ability to achieve its climate goals,” said Moström.

The Swedish government strongly supports the green push.

“Sweden will continue to take global leadership in the industry’s transformation and show that a fossil-free society is within our reach. By setting an ambitious climate agenda we can lay the best foundation for innovation and enhanced competitiveness, thereby creating sustainable jobs throughout the country,” said Isabella Lövin, Minister for the Environment and Climate.

Ibrahim Baylan, Minister for Business, Industry and Innovation said the move will create a new Swedish export industry which also will bring about positive change beyond the country’s borders.

“LKAB is a company of great significance both locally and for the whole of Sweden, and with this strategy will continue to play an important role in Sweden’s prosperity. Collaboration, innovation and technological development will enable LKAB to continue its operations and contribute to substantial reductions in carbon emissions as well as increased circularity,” Baylan said.

The investment phase will provide for about 3,000 jobs a year, LKAB estimates. That is a massive increase in workforce for sparsely populated northern Sweden.

Norrbotten county will become a hub in a green industrial transformation, the company stated when presenting the plans on Monday.