Some of these guys might find themselves without a job as LKAB is forced to cut staff. Photo: Trude Pettersen
LKAB in trouble
Europe’s biggest iron ore producer faces major cost cuts and possible staff reduction as 2015 accounts show a loss of €750 million.
February 17, 2016
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The company now adopts a string of adaption measures which includes new cost cuts of up to €105 million, a press release reads.
«The current market situation and the future prospects mean that we must reduce annual costs further, and we are now planning new actions,» says Jan Moström, LKAB President and CEO. He confirms that a new efficiency program will be presented during the second quarter of 2016 and that it will be fully effective in 2017.
The losses come amid a €84 million cost cut conducted in the course of 2015.
It is the low ore price level which is the underlying headache of the company. The spot price for iron ore in December fell to a historic low of USD 38/ton.
LKAB has over the last years prepared for a major increase in output. That strategy remains in place, the company says. However, the target volume of 37 million tonnes will be moved forward in time.
The weak results come amid the process of moving production facilities around Kiruna, the company town. Major parts of the town is moved in connection with expanded mining in the area.
LKAB is not the only iron producer in trouble. In neighoring Norway, company Northern Iron in November closed its Sydvaranger mines following mounting deficits.
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