Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Sweden’s LKAB will cut its iron ore output following derailments on a railway linking Sweden and Norway and reduced transport capacity going forward, the state-owned mining company said in a statement on Wednesday.
LKAB said it will cut production by one million tonnes per year, and added it may also take additional measures, including laying off staff.
Iron ore stockpiles built up after derailments in December last year and February this year on the Malmbanan railway, which LKAB uses to transport the ore to Norway’s Narvik port.
Derailments during the winter stopped traffic for 76 days and caused a revenue loss of 100 million Swedish crowns per day, the mining company said.
While traffic has since resumed, LKAB said capacity would be impaired until 2030 as other traffic is expected to increase on the railway.
It estimated the revenue losses from the production cuts to amount to 5 billion Swedish crowns ($474 million) per year, or about 30 billion crowns by 2030.
“The situation is so serious that if we cannot run more ore trains, we will have to stop even more operations and give notice to staff,” LKAB CEO Jan Mostrom said.
($1 = 10.5412 Swedish crowns)
(By Greta Rosen Fondahn; Editing by Terje Solsvik)
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