Swedish iron ore producer LKAB has announced that reduced delivery capacity is forcing the company to cut its output. The company has stated that, after the derailments on the iron ore railway network in the December 2023-February 2024 period, iron ore products amounting to over 600 fully loaded cars have started to stockpile and that it is unclear when deliveries can be fulfilled to customers.
In the meantime, LKAB is also considering closing one of its pellet plants either in Kiruna or Svappavaar. Further productions cuts would lead to a decrease of SEK 5 billion ($457.1 million) per year in revenues, according to the company’s calculations.
“The problem is not excess ore stocks per se, but the fact that there is insufficient delivery capacity to meet our planned production leading forward. If no measures are taken, our stocks will continue to grow dramatically over the coming years. Planned maintenance work on Malmbanan reduces capacity even more, since traffic must be halted for long periods. We have already been forced to restrict crude ore transport between Svappavaara and Malmberget, thereby lowering production in Malmberget by 1 million mt per year,” Jan Malström, CEO of LKAB, stated.
