LKAB chief executive officer Lars-Eric Aaro told Bloomberg on May 20 that is company intends to double its exploration spending in Sweden’s Arctic as it searches for a deposit to match its Kiirunavaara mine, the world’s largest contiguous body of iron ore.
LKAB will boost its exploration spending to 200 million kronor ($30 million) annually from 100 million kronor and is hiring more geologists to guide it to potential deposits.
“There’s a saying in mining, especially when you’re looking for big volume bodies, that if you’re looking for elephants you have to go to elephant land — and our part of the world is elephant land,” Aaro told Bloomberg. “We now have the equipment to look at rocks deeper down but what’s under there is so far totally unknown. But, the geology is there and there could be a new Kiirunavaara mine — it will just be deeper underground.”
Sweden sits on 60 percent of Europe’s known iron ore and 2 percent of the global total. Prime Minister Fredrik Reinfeldt has said that the resource ore is equivalent to what oil has meant for Norway since it was discovered in the 1960s.
LKAB, which is moving parts of the towns of Kiruna and Malmberget to ensure it can continue production in those two locations, had sales of 27 billion kronor and a profit of 8.8 billion kronor last year. LKAB paid a dividend of 5 billion kronor to the Swedish state for 2012, equivalent to 0.6 percent of the government’s forecast income in 2013, as well as taxes of 3.77 billion kronor. Those contributions to Sweden’s budget are likely to increase as LKAB opens new mines and expands.
LKAB forecasts an increase in production to at least 33.5 Mt (37 million st) by 2015, from 24 Mt (26.3 million st) last year, as it opens three new openpit mines in Svappavaara, near its existing mines in Kiruna and Malmberget. The company is likely to then continue to increase production volumes as it has “very good portfolios of exploration,” Aaro said.
“The 33.5 Mt (37 million st) we forecast in 2015 is absolutely not a cap for the future,” Aaro said. “If we’re successful, can control costs and develop markets for our products, it would be possible to take the next action by 2020 and a logical next step by 2025 or so would be production of 45 Mt (50 million st).”
The next discoveries are likely to be found at depths of 200 m (656 ft) or more, unlike the close-to-surface bodies in Kiruna or Svappavaara, Aaro said.