LKAB’s green transition initiatives have received approval from the Swedish National Audit Office, but it is still uncertain whether the efforts will be financially viable. For a year, the Swedish National Audit Office has investigated the state-owned company Luossavaara-Kiirunavaara Aktiebolag (LKAB)’s green transition of its business.
The mining giant LKAB has extracted iron ore in Northern Sweden for over a hundred years and is currently Europe’s largest iron ore producer.
According to the National Audit Office’s latest review, the planning has been conducted in a professional manner up to this point. Yet, the report emphasizes that the investment’s profitability is far from guaranteed if implemented.
A major societal and industrial shift is taking place in Northern Sweden. This green industrialisation has received both support and criticism. For some companies, the investments have reached a standstill, while others have been persisting.
The National Audit Office has been looking into LKAB’s work toward green transitioning. However, LKAB being wholly owned by the Swedish state gives them the added benefit that the state will carry the financial consequences of the transition, the review states.
In 2020, the company ramped up its green transition efforts, committing to investments of hundreds of billions of SEK. A key focus is converting parts of its production to fossil-free sponge iron.
This way, the company could produce high-value iron ore product (sponge iron), gradually replacing its current iron ore pellets. The company would adopt a near-zero-emission process, supporting the broader move toward a fossil-free steel and iron sector.
The National Audit Office’s investigation centered on LKAB’s proposed industrial-scale demonstration plant in Malmberget, located in Gällivare municipality in northern Sweden.
HNN had reported in November 2024 that LKAB postponed its transition to producing fossil-free sponge iron until after 2040 in Kiruna municipality, where the company currently mines iron ore and plans future extraction of critical minerals. The Malmberget facility is planned as the initial phase of LKAB’s shift toward fossil-free sponge iron production. However, the Audit Office notes that a final investment decision has not yet been finalized.
According to the application LKAB sent to the Swedish Energy Agency for support from the Industrial Leap scheme, “the cost is approximately SEK 31 billion, including a smaller part which is not an investment cost,” the Audit Office states.
“It is reasonable for LKAB to investigate the possibility of switching to fossil-free production. But it is important that the company continues developing the decision-making basis that the board must consider before making any investment decision,” says Auditor General Christina Gellerbrant Hagberg.