Interim Report July–September 2024: A quarter marked by challenges in production

LKAB’s third quarter was marked by major production disruptions and several lengthy production shutdowns. Net sales and operating profit for the quarter were also impacted by lower iron ore prices and deliveries. 

Net sales for the third quarter amounted to MSEK 8,373 (10,819) while operating profit amounted to MSEK 2,067 (4,987), with the decrease in profit due to weak production, lower deliveries and falling market prices. 

High inventory levels for pellets following the stoppages on the Iron Ore Line meant that the weak production did not limit the capacity to deliver, however. During the quarter the delivery volume was affected by seasonal maintenance work on the Iron Ore Line and also by deliveries being cancelled due to production cutbacks by customers as well as one-off events at some of our customers. The delivery volume for the quarter amounted to 5.9 (6.3) Mt. 

Challenges in production limited the volume for the quarter, which amounted to 4.9 (7.0) Mt due to production disruptions and several lengthy production shutdowns for remedial measures in affected plants. These measures will continue in the coming months, thereby restricting production in the fourth quarter as well. 

The average global spot price for iron ore products was lower than in the same period last year and amounted in the quarter to USD 100 (114) per tonne, which was also USD 12 lower than in the previous quarter. At the end of the third quarter the price level had recovered somewhat to USD 108 per tonne. Despite a weaker market, demand for LKAB’s highly upgraded iron ore products has been stable, but the market is volatile and there is considerable uncertainty concerning global economic development and its impact on the iron ore industry. Quoted pellet premiums for the quarter were just over USD 8 per tonne lower when compared with the same period last year.

“We are seeing a continuation of the production disruptions that had already started in the second quarter and which, together with further stoppages in production during the quarter, have had a considerable effect on the production volume and will continue to have an impact in the coming months as well. It is of the utmost importance that we implement the extensive measures which have been started if we are to achieve the production stability that provides a basis for our profitability,” says Jan Moström, President and CEO LKAB.

Environmental permit application in Gällivare published
In May 2023 LKAB submitted an application for the environmental permit required to begin the transformation in Gällivare. In addition to continued mining and processing activities, the application covers – among other things – the establishment of a first demonstration plant for producing fossil-free sponge iron using the HYBRIT technology and an apatite plant for extracting phosphorus and rare earth elements from current waste streams. During the quarter the court published the environmental permit application. The court’s plan for processing the case indicates a decision at the end of 2025. 

LKAB takes the next step in its critical minerals initiative
At today’s board meeting the Board made an investment decision to establish a research and development centre and a demonstration plant for the processing of phosphorus and rare earth elements in Luleå. The decision marks an important step in LKAB’s ongoing transformation and initiative for the extraction of critical minerals.

Contact: Niklas Johansson, Senior Vice President Public Affairs and External Relations LKAB. Tel: +46 (0)10-144 52 19. E-mail: niklas1.johansson@lkab.com