High Iron Ore Prices Gave Record-High Profits for LKAB

LKAB operates several iron ore mines in Kiruna and elsewhere in North Bothnia in Northern Sweden. The company is the largest iron ore producer in Europe. (Photo: Arne O. Holm, High North News)

“In 2021, we delivered the strongest result ever for LKAB”, says CEO Jan Moström of LKAB.

The Swedish mining company LKAB Monday presented its 2021 annual report.

In 2021, LKAB had a turnover of almost SEK 49 billion. Net turnover increased by almost SEK 15 billion. In 2020, turnover was approximately SEK 34 billion.

Furthermore, LKAB sums up 2021 with an operating result that is more than 130 above that of the previous year. The operating result increased to almost SEK 27 billion.

The operating result, or surplus, mainly derives from high prices on iron ore, the company writes in a press statement.

Strong result

Jan Moström, CEO of LKAB. (Photo: Fredric Alm/Alm & ME)
Jan Moström, administrerende direktør og konsernsjef i LKAB. (Foto: Fredric Alm / Alm & ME).
Jan Moström, CEO of LKAB. (Photo: Fredric Alm/Alm & ME)

The result for the year 2021 as a whole rose to SEK 22.6 billion, up from SEK 9.8 billion in 2020.

“In 2021, we deliver the strongest ever result for LKAB. As one of Sweden’s largest export companies we strengthen the preconditions for our important transition [green transition, journ. note] while also raising the level of dividends to our owner, the Swedish state”, says LKAB’s CEO Jan Moström in the press statement.

It is proposed to pay the Swedish state a SEK 12.4 billion dividend. That is more than twice the amount of the year before and equals 55 percent of the year’s profits.

The company adds that the historically strong operating cash flow of SEK 20 billion strengthens the preconditions for leading the way in the transition of the iron and steel industry.

Higher iron ore prices

According to LKAB, the operating result for the year overall is mainly driven by higher prices on high-processed iron ore products.

The average global spot price on iron ore products during the year was USD 160 dollars per ton. For the year before (2020), the same figures was USD 109 per ton.

Towards the 2021 end-of-year, there was a drop in the global price on iron ore, which was then at USD 119 per ton. Both net turnover and operating result [in the 4th quarter, journ. note] were lower, compared to the same period the year before.

Lower volumes supplied, and Covid-19

The company adds that the positive effect of good market conditions was somewhat countered by lower dollar exchange rates and lower supply volumes, as well as higher costs.

It was also characterized by higher energy prices, continued costs related to a massive seismic incident in Kiruna in May 2020, as well as an extended maintenance stop due to Covid-19-related measures.

Green transition

LKAB writes in the press release that the green transition the company has started, aiming for CO2-free processes and products by 2045, demands extensive investments over a 15-20 year period.

“As the transition is to be funded mainly from the company’s own operating cash flow, the competitive capacity of the current production structure is vital”, the company stresses and concludes:

“This year’s record-high results strengthens our preconditions, yet we have to be competitive also in times during which the iron ore price does not beat former records. Increasing efficiency and maintaining production and supply levels is decisive”, says CEO Jan Moström.


This article was originally published in Norwegian and has been translated by HNN's Elisabeth Bergquist.

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