According to the Swedish Minerals Act LKAB is obliged to pay for the effects and costs that arise when the company's mining activities lead to urban transformations.
To date LKAB has paid out about 11.3 billion Swedish crowns and reserved a further 11 billion for the transformations since year 2006. Many people ask if LKAB can afford to pay for the urban transformations. The simple answer is that as long as we have mining operations in Malmfälten we have to be able to.
Being able to pay is a necessity if we are to continue mining and it’s not something we can opt out of or postpone. It’s expensive to mine iron ore deep under ground. LKAB always has to plan far ahead and think about the costs to make it profitable to continue. If costs are too high, it’s of course impossible to continue mining. Luckily the urban transformations will take place over a long period and not everything needs to be paid at the same time.
Provisions in SEK
Paid out in SEK
Several billion SEK
We can’t say how much the urban transformations will ultimately cost. This is because LKAB has chosen to mine deeper. In both Kiruna and Malmberget it’s a matter of several billion.
The urban transformations are included in the costs for goods sold. The provisions made are charged to the operating profit and entered on the balance sheet as a liability. When the money is finally paid out, it appears as urban transformation payments in the flow.
Keep track of the costs
LKAB details how much the urban transformations have cost every year in its annual and sustainability report.Read more here.
We want to do the right thing
Before LKAB is given a permit to mine iron ore in a particular area, the municipalities have to alter their local plans from residential and commercial areas to industrial areas. This in turn means that LKAB has to reach agreements with all the property owners and businesses that currently stand in the way of production at the mine. One of LKAB’s urban transformation team’s most important tasks is therefore buying properties, partly from the local authority and partly from private individuals.
LKAB has so far financed several major infrastructure projects and compensated the municipalities for municipal premises like schools, swimming baths and community centres. LKAB has also bought some properties from private owners.
Frågor och svar
Check if your shop and business are concerned at “Time to move”, where you can find out if and, if so, when you will have to move.
Time to move Malmberget
Time to move Kiruna
Both compulsory acquisition and expropriation mean that a property owner has to sell their building as a result of a decision by an authority. It is not something that LKAB can decide. LKAB only buys properties through voluntary purchase agreements. We do so when new areas are needed for mining or if the urban transformations mean that roads or other infrastructure are moved as a result of our operations.
The urban transformation process is developing all the time. Agreements already entered into apply and LKAB has been careful to treat everyone the same at any given time. Compensation amounts, conditions in the community and even the housing markets change as the years go by.