Swedish City Is Displaced by Race for Arctic Iron – by Niklas Magnusson and Johan Carlstrom (Bloomberg Business Week – May 21, 2013)


Swedes living in the Arctic town of Kiruna are packing up their belongings before their homes are bulldozed to make way for iron ore mining driven by Chinese demand.

LKAB (LKAB), Sweden’s state-owned mining company, opened a new level yesterday, more than 1 kilometer (3,281 feet) below the town, to be able to continue tapping the world’s largest contiguous body of iron ore. Many of the 18,000 who live above the deposit in the Scandinavian nation’s fourth-richest county will move a few kilometers east to accommodate the mine.

The extreme measure underscores the lengths to which governments and companies are willing to go to gain access to commodities prized by importers like China, the world’s fastest-growing major economy. And with LKAB producing 90 percent of all iron in the European Union, the willingness of Swedes to move is proving key to the whole region’s access to the metal.

“The move is of course crucial for the continuation of mining in Kiruna,” LKAB Chief Executive Officer Lars-Eric Aaro said in a May 20 phone interview. “Being Sweden’s seventh-largest exporter and third-biggest taxpayer, in addition to the dividend we pay the state each year, this is a national matter.”

The minerals produced by LKAB account for 64 percent of Sweden’s net exports. The iron ore below Kiruna was first tapped by LKAB in the late 1800s to help feed Europe’s industrial revolution and the founding of Sweden’s welfare state.

Tilted Disc

The deposit in Kiruna is shaped like a giant tilted disc of magnetite that slopes in under the city. As digging deeper shifts the ground, the town must move now. Since Kiruna owes its existence since 1900 to the mine, and because LKAB is the largest private employer, there’s little local opposition. Deputy Mayor Niklas Siren estimates that more than 95 percent of Kiruna’s residents back the relocation.

“We’re in symbiosis and dependent on each other — the town was built because of the mine, otherwise no devil would have built a city here,” Siren said in an interview at the 1963 town hall that overlooks the mine.

LKAB and the municipality target to start moving downtown Kiruna — based in Sweden’s most productive county per capita — this summer by constructing a new town hall about 2 kilometers to the east. As much as 35 percent of the town must move, including 65 percent of its apartments. While that may take decades, Kiruna aims to have basic amenities in place for a new city by 2017.

For the rest of this article, click here: http://www.businessweek.com/news/2013-05-21/arctic-iron-race-displaces-swedish-city-as-hurdles-get-bulldozed