Logistics is key for succesful mining 03/02/2012 MINING AND RAILWAY LOGISTICS Markus Petäjäniemi LKAB Senior Vice President Marketing & Logistics TOWARDS 37 MILLION TONNES Logistics is key for succesful mining 03/02/2012 LKAB RAILWAY CAPACITY DEVELOPMENT 2011 2015 2020 3 •  Northwest: 10 trains •  Southeast: 5 trains •  Total 95 kton gives 35 Mt per year •  In practical 31 Mton •  Northwest: 12 trains •  Southeast: 6 tåg •  Total 114 kton gives 42 Mt per year •  In practical 37 Mt (simulated) •  Northwest: 14 trains •  Southeast: 8 trains •  Total 140 kton gives 51 Mt per year •  In practical 44 Mt (simulated) Logistics is key for succesful mining 03/02/2012 122 YEARS OF BELIEVE IN FUTURE 1890 LKAB company established 1903 ”Malmbanan” railway from Kiruna to Narvik opened, 1st shipment 1907 50/50 owned by Gränges & Swedish state 1955 LKAB first pelletizing plant in Malmberget, ”the pellet journey” starts 1957 100% Swedish state owned 1983 LKAB olivine pellet launched 1996 LKAB investing 50 MSEK in an experimental blast furnace 2008 Board decision in a new main haulage level in Kiruna (nr 7) 12,4 billion SEK •  •  >4000 employees (650 abroad), in 15 countries 14% women 4 LKAB TODAY •  •  •  •  •  •  •  •  •  •  •  90 % of EU iron ore production More than 4000 employees About 650 abroad Turnover 2010: 28,5 billion SEK Operating profit 2010: 12,4 billion SEK Transports > 30 Mton 2010 7% of Swedens cement consumption 2% of Swedens energy consumption 8% of Swedens industrial investments 2010 New hires: about 1250 persons 2011-2015 Exploration of REE production THE GLOBAL IRON ORE MARKET LKAB Competitors LKAB stands for: 90 % of EU iron ore production 3 % of global iron ore exports Steel builds prosperity in the world High quality iron ore pellets is needed LKAB GREEN PELLETS Magnetite based product with a sustainable profile - Refining process with lower carbondioxide emissions Well positioned -  only ca 10 % of world iron ore is magnetite -  global leadership in quality and climate properties 18 Mt/y, in 200 vessels 90 % of European iron ore production 6 Mt/y, in 400 vessels 40 % of European market for iron ore pellets Mining is ~15 % of swedish gross exports and 40 % of net exports Bruttoexport Nettoexport 100% = SEK 196 miljarder Kemivaror Verkstadsvaror 6 100% = SEK 70 miljarder Järnmalm och andra mineralvaror Järnmalm 9 5 Övriga mineral/ varor 40 30 60 49 Skogsvaror Källa SCB Övrig nettoexport CRUDE STEEL PRODUCTION 1969-2010 Crude Steel Production 1969 - 2010 (E) Japan China 700 600 500 400 t M 300 200 100 0 1 9 6 9 Source: worldsteel 1 9 7 1 1 9 7 3 1 9 7 5 1 9 7 7 1 9 7 9 1 9 8 1 1 9 8 3 1 9 8 5 1 9 8 7 1 9 8 9 1 9 9 1 1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 SWEDEN HAS A LARGE SHARE OF EUROPEAN ORE ASSETS Percent Del av världens tillgångar Del av Europas tillgångar2 Järnmalm1 60 2 Koppar 33 1 Zink 21 1 Uran 28 81 Nickel 19 2 Guld 0 4 1 Järnmalmreserv justerat för järninnehåll 2 Exklusive Ryssland samt Ukraina, innefattar tillgångar dvs. projekt som i nuläget ej är ekonomiskt fördelaktiga KÄLLA: USGS; RGM THE BIGGEST IRON ORE PROJECT IN EUROPE Mertainen Gruvberget Leveäniemi Malmbanan – ore railway the basis for LKAB establishment and a competitive company LKAB HAS INVESTED > 5 BILLION SEK IN A NEW LOGISTIC SYSTEM Increased efficiency: •  Increased cargo weight – 30 tonnes axle load •  Uniform locomotive- and ore car structure •  Efficient terminals and ports WORLD CLASS LOGISTICAL SYSTEM Va s Ko sija u p Bj pa re ö r rå s kl en id en – L S t Ab ån or isk g Ka dal o – 20 ise en L 12 ån pa g, kt e– 20 12 Pl an er as Lå ng ? MORE LONG MEETING PLACES ARE KEY FOR INCREASED CAPACITY ON ”MALMBANAN” Narvik STAX 30 es sn um tra Ro m Ka bak Bj t t e k ör rat nf t jel l S K Mot Kiruna 20 en g? ån ck L a k s b ras trä en ne a l St orne s r P o T n– rg f Be nsjö Re s uta Ra kvik o Kiruna Kr STAX 30 Sjöbangård KMB STAX 30, ej upplag Kalixfors Gäddmyr Svappavaara Lappberg STAX 30 Malmberget Fjällåsen LKAB Harrå – Lång 2011 Håmojåkk Linaälv Sikträsk Gällivare Gällivare STAX 30 Mot Luleå Stationer >750 m <750 m Byggs Lång, ej klar Luleå C Luleå Malmbangård SSAB STAX 30 Harrträsk – Lång 2009? Ripats Nuortikon Kilvo 09 ln 20 kejek ergrg k r i g s lc r b e Nattavaara ån Po Mu olikäsb aträ äsk äsk L k r T r N La llt dt jö – Koskivaara s å n Gu Sa ranLjus G LKAB Ho lm Bu fors Bo ddb – L Säden yn ång v sta Sä astk rt a vas lin r2 t en No t 01 –L rra 0 Su Su å n n g n d Ga erb der 20 mm y byn 13 e ls Sju tad khu Not s vike n– Lån g 20 09 10 n ste ö h lar Only 23 of 52 are with full length Luleå Four new meeting places gives enough capacity until 2015 AND SOMETIMES IT´S WINTER… … BUT THE TRAINS ARE MOVING ON! Thank you for your attention!