Base metals such as copper and zinc run like a train on the world market, the same applies to precious metals such as gold. For a basic raw material such as iron ore, the situation is the opposite.
Christian Kopfer, commodity analyst at Arctic Securities, believes that the situation for iron ore is about two things – there is a large supply on the world market while the steel industry is not growing.
- There is a large surplus of steel on the world market, it can also be perfectly recycled and it is done to a certain extent around the world. But in Europe, the recycling of steel will increase sharply in the next 10-20 years.
There are thirteen active mines in Sweden. Seven of them produce copper, five of which are owned by Boliden. In addition to copper, lead, gold, silver and zinc are also mined in the mines.
Boliden's sales and profit have increased compared to last year, the company's reports show.
When it comes to copper, demand is high, despite a weak economy. According to Christian Kopfer, they are due to electrification, where copper is used in many products. Boliden's advantage is also that the company has a diversified group of minerals, he believes.
- Historically speaking, it has been quite difficult to increase supply as demand has grown. That has driven up prices. It is not only about electrification but also about the consumption of electricity. For example, AI, data centers draw huge amounts of power.
Kaunis Iron, which mines iron ore in Pajala, has had a tough year. In the first quarter of this year, operating profit ended in the red. In reports from quarters one and two, the company emphasizes that the result was affected by geopolitics, an uncertain global economy and higher costs for, among other things, transport.
Last week, the company's representatives announced that the plans for a stock market listing were postponed. CEO Klas Dagertun stated a difficult external and market situation as the reason.
Even for state-owned LKAB, the going is tough, profits fall to zero. The mining company is under pressure from fierce competition at the same time as the amount of iron ore increases in Europe.
- We just have to cope with these fluctuations, said CEO Johan Menckel recently in an interview with DN.
LKAB is in a period where several large projects will be put on hold. The company wants to start mining the Per Geijer deposit, which will both secure future ore supply, but where there are also rare earth metals. Something that, if LKAB is allowed to start mining, would reduce Europe's dependence on China.
- The current ore body is getting narrower the further down we mine. A prerequisite for us to be able to continue mining ore in Kiruna is to start with Per Geijer as soon as possible in order to maintain volumes. But that also presupposes that we get the necessary permits, said Johan Menckel.
At the same time, LKAB will also switch from iron pellets, which they produce today, to fossil-friendly sponge iron.
Christian Kopfer believes that producers like LKAB need to find their niche in iron ore to regain a strong position in the market.
- Demand for sponge iron will increase sharply in Europe over the next 10-20 years. It should be a good opportunity for LKAB.
