LKAB acquires 49 percent of the shares in Duroc Rail AB - another strategic investment in railway and logistics

LKAB acquires 49 percent of the shares in Duroc Rail AB from the Nasdaq-listed Duroc AB group, which retains majority ownership of 51 percent. The preliminary purchase price is approximately SEK 75 million. At the same time, LKAB will invest up to SEK 200 million to build a new industrial property for Duroc Rail at Hertsöfältet in Luleå. Duroc Rail is a certified operator with unique expertise in wheel maintenance for locomotives and wagons with experience of the climate in northern Sweden.

The Ore Railway runs between the port of Luleå and the port of Narvik, passing by the iron ore fields in northern Sweden. Almost half of all goods transported by rail in Sweden and Norway is currently being transported on the Ore Railway, with LKAB's volumes accounting for the largest share. For LKAB, the Ore Railway is an integrated part of the production system that starts in the mine and ends at the steel and mineral customers via the railway and ports. High capacity and availability of the Ore Railway and rolling stock in the form of locomotives and wagons is therefore business critical. The investment is a further step for LKAB to strengthen its capacity and flexibility to meet the growing challenges of the Ore Railway. In the past year alone, LKAB has invested in a new locomotive workshop in Kiruna, ordered 100 new wagons and started major work to modernise and upgrade the IORE locomotives used to transport iron ore, totalling an estimated value of SEK 600 million.

“Duroc Rail has unique expertise in wheel maintenance for locomotives and wagons. LKAB is entering into this partnership to ensure that Duroc Rail remains and develops its operations in Luleå. They are part of a larger system and a prerequisite for efficient and predictable rail transport. Rail transport is completely dependent on effective maintenance of the railway wheels. This is important for LKAB and other railway operators today, and in the future," says Linda Bjurholt, Logistics Manager at LKAB and CEO, LKAB Malmtrafik.

The wheel maintenance business was established in Luleå more than 100 years ago. Duroc Rail currently rents premises from SSAB on Svartön in Luleå, but due to SSAB’s planned transformation from blast furnace to electric arc furnace operations which requires access to more land, the lease will not be renewed. New buildings, equipment, certifications and other measures mean that the move will be a major investment.

“Duroc Rail needs new industrial properties, and with LKAB as shareholder we can ensure development and capacity for the future, where we see that the green transformation that is taking place will require more efficient maintenance of wagon and locomotive wheels. We will therefore continue to invest and develop our offering for all customers in the region. We are pleased that our more than 100-year-old company with 50 employees in Luleå will continue to develop,” says John Häger, CEO Duroc AB.

Within Business Area Special Products, LKAB is developing new businesses in addition to the iron ore production, such as industrial minerals for external customers, as well as key services such as concrete, drilling, explosives, rockwork, mechanical-engineering services, and maintenance for LKAB's own operations.

“LKAB's long-term strategy is to secure key services and products for efficient, safe, and sustainable operations. We work with partnerships and subcontractors, but also by developing or acquiring companies that have specific expertise, for example in managing supply risks. Duroc Rail is an important investment for us, it is a well-managed company with good development potential in several areas and will be an important part of LKAB,” says Leif Boström, Senior Vice President Business Area Special Products, LKAB.

The transaction is formally subject to the completion of the property transfer for the new industrial property, which is expected to take place before the end of the year.

Duroc Rail AB and the group Duroc AB

Duroc AB has owned 100% of the company since 1997. Duroc Rail AB delivers 8,000-10,000 serviced wheelsets per year for freight and passenger transport, mainly in northern Sweden. The company currently has a turnover of approximately MSEK 150 and around 50 employees.

Duroc acquires, develops, and manages companies with an emphasis on industry and commerce. With deep knowledge of technology and the market, the group's companies aim for a leading position in their respective sectors. As an owner, Duroc actively contributes to development. Duroc is listed on Nasdaq Stockholm (short: DURC). www.duroc.se

New industrial premises at Luleå Industrial Park – a centre for the green transformation
LKAB will build and own the industrial property, which will be leased to Duroc Rail AB. Groundwork has already begun, the construction contract will be procured and with a planned move in 2025, Duroc Rail will be one of the first companies at Luleå Industrial Park.

Contact: Karoline Carlson, Head of Communications Business Area Special Products. Tel: +46 70 295 89 78. E-mail: karoline.carlson@lkab.com

LKAB is an international mining and minerals group that offers sustainable iron ore, minerals and special products. We are committed to developing carbon-free processes and products by 2045, leading the transformation of the iron and steel industry. Since 1890 we have developed through unique innovations and technological solutions and are driven forward by more than 4,500 employees in 12 countries. In 2022, the LKAB group had sales of about SEK 47 billion. www.lkab.com