Nordic Mining: Incentive for Innovation – by Simon Walker (Engineering and Mining Journal – October 31, 2016)

Producers are viewing today’s tough conditions as an incentive to explore the feasibility of introducing new operating systems

Using a nautical metaphor, to say that mining and exploration in the Nordic countries is in the doldrums is perhaps as apt as it gets at the moment. Operating in respected, stable fiscal and legal environments comes at a price, which, in this case, relates to higher labor and social costs.

Add on the challenge of maintaining operations in remote, sometimes sub-Arctic locations, and it becomes easy to see why industry participants are being cagy about spending.

Across the board, the message appears to be the same—costs must be trimmed wherever possible to keep existing mines viable. As for exploration, the junior sector still seems to be active in terms of project involvement, although the level of input has unquestionably fallen since the heady days of five years ago.

To put the situation into context, iron ore prices peaked at more than $187/metric ton (mt) in February 2011, since when price movements were inexorably downward—with a few brief exceptions—right through to December last year. For the Norwegian and Swedish iron-ore industry, the result was carnage, at least as far as the fleet of new startups that had set sail under such promising conditions only a few years ago was concerned. Even LKAB, with its much larger, long-established operations, is having to bite the financial bullet in order to keep treading water.

And as for the other main commodities upon which most of the Nordic mines are founded—copper, zinc, nickel and gold—the picture has been similar. However, the shake-up within the participating companies has been less severe, although some acquisition opportunities have emerged as players have sought to divest assets that they no longer see as being core to their businesses.

Looking back through the last six years of E&MJ reports on Nordic mining and exploration, it is interesting to see how the headlines have reflected the changing conditions within which mining and exploration has had to function:

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