INTERIM REPORT Q2/2019 - Cision · Production of iron ore products, Mt 6.2 6.1 12.8 13.4 26.9...

LKAB INTERIM REPORT Q2/2019 1

OPERATIONS – SECOND QUARTER

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales 3, 4 9,233 6,160 16,562 12,386 25,892

Operating profit/loss 4,116 931 6,629 2,492 6,869

Less: costs for urban transformation provisions 102 735 487 1,530 2,106

Underlying operating profit/loss 10 4,218 1,666 7,116 4,022 8,975

Net financial income/expense 383 370 930 571 -185

Profit/loss before tax 4,499 1,300 7,559 3,063 6,685

Profit/loss for the period 3,552 1,092 5,940 2,442 5,274

Operating cash flow 1,772 1,333 4,272 3,103 3,126

Investments in property, plant and equipment 570 762 961 1,356 2,455

Depreciation -709 -732 -1,405 -1,454 -2,857

Deliveries of iron ore products, Mt 6.7 6.4 12.8 13.2 26.8

Proportion of pellets, % 84 84 85 84 82

Production of iron ore products, Mt 6.2 6.1 12.8 13.4 26.9

Return on equity, % 10 22.6 13.9 22.6 13.9 14.1

Net debt/equity ratio, % 10 6.3 11.6 6.3 11.6 9.2

LKAB IN BRIEF |

6.2 MtProduced during the quarter

6.7 MtDelivered during the quarter

84%Percentage of pellets for the quarter

HIGH IRON ORE PRICES LIFT LKAB

INTERIM REPORT Q2/2019

We are focused

on extensive

technology shifts

that have the

potential not just

to boost LKAB’s

business, but also

to contribute to a

more sustainable

industry in a broader

perspective.

• Both production and delivery volumes in the second quarter were higher than in the same quarter last year, despite start-up problems following the scheduled maintenance shutdowns in Malmberget and Kiruna during the quarter.

• Operating profit for the second quarter amounted to MSEK 4,116 (931), mainly due to higher prices for highly upgraded iron ore products and a stronger dollar exchange rate for the period. Lower costs for urban transformation provisions also had a positive impact.

• During the second quarter the average global spot price1 for iron ore products reached its highest level for five years and was USD 118/tonne at the end of the quarter. For the second quarter the average price was USD 100 (65)/tonne, compared with USD 83/tonne in the first quarter of 2019. The premium for pellet sales remained at a high level.

• Operating cash flow for the second quarter was MSEK 1,772 (1,333). The improvement is primarily due to the increase in profit.

• The return on equity was 22.6 (13.9) percent.

• The net debt/equity ratio was 6.3 (11.6) percent.

1Platts IODEX 62% Fe CFR North China

In the second quarter net sales increased by 50 percent to MSEK 9,233 (6,160) compared with the same period last year, while operating profit was boosted to MSEK 4,116 (931). The quarter was characterised by very good market conditions and a continued focus on ensuring future competitiveness.

LKAB INTERIM REPORT Q2/2019 2 GROUP |

THE LKAB GROUP

NET SALES AND OPERATING PROFIT/LOSS

ANALYSIS OF CHANGE IN OPERATING PROFIT/LOSSMSEK

Q2 Q1–Q2

Operating profit 2018 931 2,492

Prices, iron ore 1,968 2,517

Currency effect, iron ore incl. hedging of accounts receivable 594 1,413

Volume and mix, iron ore 220 -371

Volume, price and currency, industrial minerals 26 67

Costs for urban transformation provisions 633 1,043

Depreciation 23 49

Other income and expenses -279 -581

Operating profit 2019 4,116 6,629

Net sales for the second quarter were 50 percent higher when compared year-on-year. The improvement is mainly due to higher prices for highly upgraded iron ore products, a stronger dollar exchange rate and higher delivery volumes. The average spot price for iron ore in the quarter was USD 100 (65)/tonne and the pellet premium remained at a high level, increasing further during the quarter.

The cost level for the quarter, excluding provisions for urban transformation, was higher than in the same period last year – mainly as a result of increased maintenance work, higher costs for rock reinforcement and increased exploration.

Sales for the first half increased by 34 percent or MSEK 4,176 compared with the same period last year, mainly as a result of higher market prices and a stronger dollar exchange rate. Lower delivery volumes in the first quarter had a negative impact.

Operating profit for the first half of the year increased by MSEK 4,137 or 166 percent compared with the previous year. The cost level for the first half, excluding provisions for urban transformation and volume effects, was higher than in the same period last year – mainly as a result of increased maintenance work, higher costs for rock reinforcement and increased exploration.

CASH FLOW

MSEKQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Cash flow from operating activities before changes in working capital 3,861 1,897 6,705 4,466 7,559

Change in working capital -1,375 197 -1,364 -8 -831

Capital expenditures (net) -565 -760 -941 -1,354 -2,446

Acquisition of subsidiaries -39 -39 -1,146

Acquisition/divestment of financial assets -111 -90 -11

Operating cash flow 1,772 1,333 4,272 3,103 3,126

Operating cash flow for the first quarter was MSEK 1,772 (1,333) and for the first half MSEK 4,272 (3,103), mainly due to the positive effects of the stronger earnings and lower capital expenditure. Higher expenditure on urban transformation and increased trade receivables had a negative effect. Expenditure on urban transfor-mation amounted to MSEK 1,581 (646) for the first half of the year.

NET SALES AND OPERATING PROFIT/LOSS Net sales 2019 Net sales Operating profit/loss

RETURN ON EQUITY Rolling 12 months Target return on equity

OPERATING CASH FLOW Operating cash flow 2019 Operating cash flow

-10

-5

0

5

10

15

20

25

Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3

%

2016 2017 2018 2019

-3,200

-1,600

0

1,600

3,200

4,800

6,400

8,000

9,600


MSEK

2016 2017 2018 2019

-2,000-1,500-1,000

-5000

5001,0001,5002,0002,5003,0003,500


MSEK

2016 2017 2018 2019

LKAB INTERIM REPORT Q2/2019 3 GROUP |

THE LKAB GROUP

NET FINANCIAL INCOME/EXPENSE AND NET FINANCIAL INDEBTEDNESSNet financial income/expense was MSEK 383 (370) for the second quarter and MSEK 930 (571) for the first half of the year, with positive stock market development in the first quarter having a positive effect on financial investments when compared year-on-year.

The net debt/equity ratio was 6.3 (11.6) percent, which is mainly due to lower provisions for urban transformation and increased equity, as a result of the strong earnings for the period.

CREDIT FACILITIES

MSEK NominalUtilised

(nominal) Available

Commercial paper programme, maturing within one year 5,000 200 4,800

Bond programme 7,000 4,009

Maturing December 2019 1,991

Maturing June 2021 1,000

Other bond financing, maturing 2022 250 250

Credit facility 5,000 5,000

Total 17,250 3,441 13,809

There were no changes to nominal credit facilities during the quarter. All credit facilities are subject to 100 percent retention of title.

SUSTAINABLE DEVELOPMENTSustainability is central to LKAB’s strategy. Securing access to ore after 2030, when the current main haulage levels are expected to be mined out, is the basis for the next generation of LKAB – which is why exploration work is being intensified further. LKAB is conducting extensive development programmes aimed at sustainable future mining and steelmaking processes. Four different sub-projects are being conducted under the Sustainable Underground Mining (SUM) umbrella, including a project to develop autonomous, smart, carbon-free vehicles for within the mine. As part of the Hydrogen Ironmaking Breakthrough (HYBRIT) initiative, a pilot facility is being constructed in Luleå to produce hydrogen for use in testing direct reduction of iron ore. The pilot facility is scheduled for completion by next summer. During the summer the construction of a pilot facility in Malmberget will also start, for testing fossil-free pellets. The building of pilot facilities for ReeMAP has also begun, the aim being to use residual products from mining iron ore to extract rare earth elements and phosphorous products.

SIGNIFICANT EVENTS IN THE SECOND QUARTERAfter a protracted process it was announced on 17 June that the Municipality of Kiruna has decided to give LKAB the planning consent required for future mining in Kiruna. Now that planning consent has been granted, detailed planning work to convert parts of the city centre into industrial land can continue.

OUTLOOK FOR 2019 The steel industry in Europe and the MENA region is affected by a slowdown in demand. Steel prices have been pushed down and the steelmakers’ profitability has deteriorated considerably. In the short term there is a risk of LKAB losing delivery volumes, since steelmakers have scaled back their capacity and are prioritising purchases of cheaper iron ore of lower quality. During August the iron ore price has fallen significantly from high levels.

Demand for LKAB’s pellets remains strong. LKAB is continuing to focus on stability, profitability and productivity improvements in order to enhance competitiveness. Work on the urban transformation is in an intensive phase with an increased number of acquisitions, which will mean increased expenditure over the year.

NET FINANCIAL INDEBTEDNESS

Net financial indebtedness

NET DEBT/EQUITY RATIO

Net debt/equity ratio Target range for net debt/equity ratio, 0–30%

MSEK

%

Risks and uncertainties

LKAB is exposed to various risks. Risk management plays a vital part in minimising the impact of factors that lie beyond the Group’s control. The Group employs methods for evaluating and limiting these risks by ensuring that they are managed according to approved guidelines and methods.

LKAB works actively to identify, analyse and control how various types of risks affect the business and how LKAB can best avoid or address them. Effective risk management is a business-critical success factor.

Major risks include securing mineral reserves, access to land for the mining operations, volume dependency, the price of iron ore products and transac-tion exposure in USD.

For further information concerning risks, please refer to LKAB’s 2018 Annual Report.

-10

-5

0

5

10

15

20

25

30


2016 2017 2018 2019

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000


2016 2017 2018 2019


THE STEEL AND IRON ORE MARKET

The global steel and iron ore industryGlobal production of crude steel increased in the second quarter by five percent compared with the same period last year. During the quarter steel prices fell in Europe, the USA and MENA, while there was a slight increase in steel prices in China. China’s steel exports increased compared with the previous quarter but decreased by 14 percent compared with the same period last year.

The second quarter was characterised by strong increases in iron ore prices. Reductions in exports of iron ore from Brazil and Australia, mainly as a result of the dam failure in Brazil and storms in Australia, were major contributory factors. At the same time, steel prices have fallen everywhere except China and steelmakers’ margins have reduced, giving rise to steel companies issuing profit warnings and scaling down their capacity. Crude steel production in Europe decreased in the quarter by three percent.

Iron ore spot price developmentsAt the beginning of the second quarter the IODEX 62% Fe spot price was USD 88/tonne. The spot price then rose gradually during the quarter and at the end of the quarter reached a new five-year high of USD 118/tonne. The average price for the quarter was USD 100/tonne, which was USD 17/tonne higher than in the previous quarter. Quoted pellet premiums for blast furnace pellets and DR pellets increased during the quarter to USD 70/tonne and USD 76/tonne respectively. The pellet premium in China remained volatile and was quoted at USD 23/tonne at the end of the quarter, a decrease of USD 10/tonne compared with the previous quarter. The price difference between Platts IODEX 65% Fe and 62% Fe increased at the beginning of the quarter, reaching a peak of USD 17/tonne in mid-May, after which it decreased and ended the quarter at USD 11/tonne. The average for the quarter was USD 15/tonne, an increase of USD 2/tonne compared with the previous quarter.

In summary, the iron ore price and the pellet premiums developed strongly during the quarter, while the dollar exchange rate remained high – all of which favour LKAB.

MARKET DEVELOPMENT |

MARKET DEVELOPMENT

THE DEVELOPMENT OF THE SPOT PRICE FOR IRON ORE AND QUOTED PELLET PREMIUMS

1 July 2014–30 June 2019

USD/tonne

1Platts IODEX 62% Fe CFR North China

Source: PLATTS

USD/SEK

CHANGES IN THE DOLLAR EXCHANGE RATE

1 July 2014–30 June 2019

Source: The Riksbank

Price 62% Fe DR pellet premium Atlantic basin bf pellet premium

20

40

60

80

100

120

201920182017201620152014

6

7

8

9

10

201920182017201620152014

Dollar rate


The Northern Division encompasses the mines and processing plants in Kiruna, as well as rail freight services and the ports in Narvik and Luleå.

OPERATIONS SUMMARY

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales 3.4 5,380 3,402 9,328 6,533 14,416



Underlying operating profit/loss 10 3,226 1,346 5,179 2,767 6,178

Investments in property, plant and equipment 249 290 432 488 850

Depreciation -422 -484 -840 -964 -1,848




Production volumes for the second quarter increased by 0.1 Mt year-on-year, which was mainly an effect of fewer production disruptions in the pelletising plants. Deliveries increased by 0.4 Mt and amounted to 3.7 (3.3) Mt, with the proportion of pellets at 88 (86) percent.

Sales for the second quarter increased by 58 percent. High prices for highly upgraded iron ore products combined with a higher dollar exchange rate, higher delivery volume and a higher percentage of pellets explain the increase in sales compared with the same period last year.

Operating profit for the second quarter amounted to MSEK 3,130 (599) and is largely a result of the high level of sales and the decrease in provisions for urban transformation. Costs, excluding provisions for urban transformation, were some-what higher than in the same period last year, mainly due to increased deliveries.

In the first half of the year 7.1 (7.3) Mt of finished products were produced. The lower production volumes are mainly due to production disruption in the pelletising plants in the first quarter. Delivery volumes were also affected by the lower pro-duction volumes and amounted to 7.1 (7.1) Mt.

Sales in the first half were higher than in the same period last year, mainly as a result of higher market prices for iron ore and a stronger dollar exchange rate. Operating profit for the period was higher than in the same period last year, primarily due to the increase in sales and the decrease in costs for urban trans-formation provisions.

As of 1 June the logistics operations have been incorporated into the Northern Division, which now includes rail freight services, the terminals in Kiruna, Svappa-vaara and Malmberget, and the ports in Narvik and Luleå. Previously the logistics operations were part of the Sales and Logistics unit under Other Segments. Earlier periods have been restated in accordance with the change.

NORTHERN DIVISION |

NORTHERN DIVISION

• The Northern Division mines and processes iron ore products in Kiruna.

• The mining takes place in the Kiruna underground mine. The current main haulage level is 1,365 metres under-ground.

• The ore is processed above ground in three concentrating plants and three pelletising plants.

• The Northern Division produces both blast furnace pellets and pellets for steelmaking via direct reduction, known as DR pellets.

• The processed iron ore products are transported along the Malmbanan and Ofotbanen ore railway to the port in Narvik, for shipment to steel mill customers around the world.

• The iron ore operations have a sales organisation for the markets in Europe, Asia and the Middle East.

FACTS

PRODUCTION OF IRON ORE PRODUCTS (k tonnes)Northern Division

2019 2018

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q4Q3Q2Q1

LKAB INTERIM REPORT Q2/2019 6 SOUTHERN DIVISION |

SOUTHERN DIVISION

The Southern Division covers mines and processing plants in Malmberget and Svappavaara.

OPERATIONS SUMMARY

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales 3.4 3,756 2,614 6,669 5,294 10,534


Less: Costs for urban transformation provisions 6 -21 5 200 192

Underlying operating profit/loss 10 1,193 429 2,266 1,428 2,991

Investments in property, plant and equipment 287 379 472 633 1,151

Depreciation -231 -222 -455 -440 -903




The production volume for the second quarter was 2.8 (2.8) Mt, despite start-up problems following the scheduled maintenance shutdown in Malmberget during the quarter. Deliveries were somewhat lower than in the same period last year and amounted to 3.0 (3.1) Mt, with the proportion of pellets at 79 (83) percent.

Sales for the second quarter increased by 44 percent year-on-year, mainly due to higher prices for highly upgraded iron ore products and a higher dollar exchange rate.

Costs, excluding provisions for urban transformation, were higher than in the same period last year, primarily because of increased maintenance work at the processing plants, higher prices for crushed ore and increased rock reinforcement costs. Operating profit for the second quarter was MSEK 1,187 (450).

The production volume for the first half decreased to 5.7 (6.1) Mt, mainly due to the long maintenance shutdown in Svappavaara at the start of the year. The lower production volumes also affected delivery volumes, which amounted to 5.7 (6.0) Mt, with the proportion of pellets at 78 (82) percent.

Sales for the first half increased by 26 percent, mainly as a result of higher prices for highly upgraded iron ore products and a stronger dollar exchange rate. Costs were higher because of increased maintenance work at the processing plants, increased costs for rock reinforcement and higher prices for crushed ore. Operating profit for the first half increased by 84 percent and amounted to MSEK 2,261 (1,228).

• The Southern Division mines and pro-cesses iron ore products in Malmberget and Svappavaara.

• The mining takes place in Malmberget’s underground mine and the Svappavaara open-pit mines.

• Magnetite is mainly mined in the Malm-berget mine, but also hematite. The mine has around 20 orebodies, of which around 10 are currently mined.

• In Svappavaara ore is mined in the Leveäniemi open-pit mine. Mining at Gruvberget ended in March 2018.

• The ore is processed above ground in two concentrating and pelletising plants in Malmberget and in one concentrating and pelletising plant in Svappavaara.

• The Southern Division produces both blast furnace pellets and pellets for steelmaking via direct reduction, known as DR pellets, as well as fines.

• The processed iron ore products are transported along the Malmbanan ore railway, mainly to the port in Luleå and on to European steel mill customers.

• The iron ore operations have a sales organisation for the markets in Europe, Asia and the Middle East.

PRODUCTION OF IRON ORE PRODUCTS (k tonnes)Southern Division

2019 2018

FACTS

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q4Q3Q2Q1

LKAB INTERIM REPORT Q2/2019 7 SPECIAL PRODUCTS DIVISION |

SPECIAL PRODUCTS DIVISION

The Special Products Division is a leading global supplier of industrial minerals, with a major focus on LKAB’s own minerals of magnetite, mica and huntite. The division also provides products and services to LKAB such as drilling systems, mechanical services, concrete production, contract work and rockwork. These products and services are also marketed to external customers.

OPERATIONS SUMMARY

MSEK Note Q2

2019 Q2

2018 Q1–Q2

2019Q1–Q2

2018 Full year

2018

Net sales 3.4 1,213 950 2,345 1,791 3,806

Operating profit/loss 97 92 186 156 330


Depreciation -38 -14 -75 -28 -62

Net sales for the second quarter increased by 28 percent in a year-on-year comparison. The increase is mainly attributable to the acquisition of the UK industrial minerals company Francis Flower, which was completed in December 2018. Sales are also being enhanced by extensive works in the exploration drifts of the Kiruna mine, commissioned by the Northern Division.

Operating profit for the quarter improved by five percent and amounted to 97 (92) Mt, the acquisition of Francis Flower having made the main contribution to the increased earnings.

Net sales for the first half were 31 percent higher than in the same period last year, amounting to MSEK 2,345 (1,791). The increase is largely due to the acqui-sition of Francis Flower. Increased sales of magnetite for offshore gas pipeline projects and for work in the exploration drift in Kiruna also contributed.

Operating profit for the first half increased by 19 percent and amounted to MSEK 186 (156).

Capital expenditure and depreciation increased during the year, mainly as an effect of the acquisition of Francis Flower, but the division’s increased assignments in the mines in Malmberget and Kiruna also affected the level of investment.

• The Special Products Division covers LKAB Minerals, LKAB Wassara, LKAB Berg & Betong, LKAB Kimit and LKAB Mekaniska.

• LKAB Minerals mines and sells minerals and also processes and sells iron ore for applications outside the steel industry. The business has sales offices and production units in Europe, the US and Asia.

• LKAB Wassara develops and manu-factures water-powered precision drilling systems for mining, construc-tion and exploration drilling as well as dam building and geothermal energy. Customers are located throughout the world.

• LKAB Berg & Betong is a leading provider of full service solutions for the mining and construction industries. LKAB Berg & Betong is also the world’s largest producer of sprayed concrete.

• LKAB Kimit supplies explosives to the mining and construction industries.

• LKAB Mekaniska is a quality-conscious engineering company offering services throughout the supply chain, from planning and design to final inspection.

FACTS

LKAB INTERIM REPORT Q2/2019 8 OTHER SEGMENTS AND PARENT COMPANY |

OTHER SEGMENTS

OPERATIONS SUMMARY

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales excl. hedging 17 16 29 29 86

Net sales hedging -33 -87 -97 -72 -80

Total net sales 3.4 -16 -71 -68 -43 6

Operating profit/loss -258 -211 -474 -347 -540


Depreciation -18 -12 -35 -23 -44

The lower operating profit for the quarter and the first half is mainly due to increased exploration and a negative result for hedging activities. Under LKAB’s hedging strategy, price and currency risk in the Group’s forecast sales are not normally hedged. Outstanding accounts receivable are hedged, however.

Logistics operations, which previously fell under Other Segments, are included in the Northern Division with effect from 1 June. Earlier periods have been restated in accordance with the change.

1 Group-wide functions within Other Segments mainly refers to the Group functions for HR, communication and finance, as well as strategic R&D and exploration.

PARENT COMPANY

The Parent Company LKAB consists of the Northern Division and the Southern Division and the group-wide functions reported under Other Segments. The Parent Company includes the majority of LKAB’s operating activities as well as the Group’s financial activities.

OPERATIONS SUMMARY

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales 8,590 5,765 15,266 11,601 24,194

Operating profit/loss 10 3,947 756 6,317 2,185 6,163


Underlying operating profit/loss 4,049 1,491 6,804 3,715 8,269

Investments in property, plant and equipment 478 729 810 1,298 2,256

Depreciation -544 -590 -1,072 -1,172 -2,272



Other Segments covers supporting operations such as Group-wide functions1 and certain operations that are run as subsidiaries. Other Segments also covers financial operations, including transactions and gains/losses relating to financial hedging of iron ore prices, foreign currency effects and purchases of electricity.

LKAB INTERIM REPORT Q2/2019 9 SIGNATURES |

SIGNATURES

FINANCIAL INFORMATION

Interim Report Q3 2019 25 October 2019

Interim Report Q4 2019 (together with Year End Report) 14 February 2020

Annual General Meeting 23 April 2020

Reports are available at www.lkab.com

Any questions concerning the Interim Report may be directed to Jan Moström, President and CEO, or to Peter Hansson, Senior Vice President, Finance, +46 920 381 00.

This report was not subject to review by the company’s auditors.

The Board of Directors and CEO give an assurance that this interim report for the first half provides a true and fair representation of the performance of the Group’s and the parent company’s business, position and earnings and describes the significant risks and uncertainties faced by the parent company and the companies making up the Group.

Luleå, 14 August 2019Luossavaara-Kiirunavaara AB (publ)

Göran PerssonChairman of the Board

Gunnar AxheimBoard member

Eva HamiltonBoard member

Lotta MellströmBoard member

Anders EleniusEmployee representative

Dan HallbergEmployee representative

Tomas LarssonEmployee representative

Jan MoströmPresident and CEO

Bjarne Moltke HansenBoard member

Ola SalménBoard member

Gunilla SaltinBoard member

Per-Olof WedinBoard member

LKAB INTERIM REPORT Q2/2019 10 LKAB – GROUP |

LKAB – GROUP

STATEMENT OF INCOME

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales 3, 4 9,233 6,160 16,562 12,386 25,892

Cost of goods sold -4,790 -4,908 -9,296 -9,285 -17,989

Gross profit/loss 4,443 1,251 7,266 3,101 7,903

Selling expenses -26 -59 -72 -90 -135

Administrative expenses -142 -135 -285 -273 -478

Research and development expenses -130 -103 -236 -186 -386

Other operating income 86 77 172 143 382

Other operating expenses -115 -101 -216 -204 -416

Operating profit/loss 3 4,116 931 6,629 2,492 6,869

Financial income 499 421 1,095 695 429

Financial expense -116 -51 -165 -124 -614

Net financial income/expense 383 370 930 571 -185


Tax -947 -2091 -1,619 -6211 -1,411


Attributable to Parent Company shareholders 3,552 1,092 5,940 2,442 5,274

Earnings per share before and after dilution (SEK) 5,075 1,559 8,485 3,488 7,534

Number of shares 700,000 700,000 700,000 700,000 700,000

STATEMENT OF COMPREHENSIVE INCOME

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018


Other comprehensive income for the period

Items that will not be reclassified to profit/loss for the year

Remeasurement of defined-benefit pension plans -158 50 -277 88 -20

Tax attributable to actuarial gains and losses 32 -10 57 -18 -9

Total items that will not be reclassified to profit/loss for the year

-126 40 -220 70 -29

Items that have been or may be reclassified subsequently to profit/loss for the year

Gains/losses on translation of foreign entities for the period 27 105 191 298 60

Change in fair value of available-for-sale financial assets for the period

-14 -109 59 -63 -304

Changes in fair value of cash flow hedges for the period -3 85 -37 124 140

Changes in fair value of cash flow hedges transferred to profit/loss for the year

-22 8 -48 3 -6

Tax attributable to components of cash flow hedges 6 -20 19 -27 -29

Total items reclassified to profit or loss -6 69 184 336 -139

Other comprehensive income for the period -132 109 -36 406 -168

Total comprehensive income for the period attributable to the Parent Company shareholders

3,420 1,201 5,904 2,848 5,106

1Includes positive remeasurement effects of MSEK 99 resulting from the decision to change the corporate tax rate in Sweden with effect from 2019.


LKAB – GROUP

STATEMENT OF FINANCIAL POSITION

MSEK Note 30 Jun 2019 30 Jun 2018 31 Dec 2018

ASSETS

Non-current assets

Intangible assets 5 1,386 211 1,326

Property, plant and equipment for operations 30,978 31,071 30,776

Property, plant and equipment for urban transformation 7,880 7,870 7,376

Interests in associates and joint ventures 42 39 31

Financial investments 6 1,079 1,284 1,026

Non-current receivables 102 2

Deferred tax asset 26 30 25

Total non-current assets 41,493 40,505 40,562

Current assets

Inventories 3,452 2,975 3,344

Accounts receivable 3,541 2,040 2,217

Prepaid expenses and accrued income 223 215 251

Other current receivables 1,483 1,244 1,544

Current investments 6 26,671 22,333 18,753

Cash and cash equivalents 6 2,177 4,146 2,290

Total current assets 37,548 32,953 28,399

TOTAL ASSETS 79,040 73,459 68,961

EQUITY AND LIABILITIES

Equity

Share capital 700 700 700

Reserves 570 860 386

Retained earnings incl. profit/loss for the year 40,035 34,754 37,487

Equity attributable to Parent Company shareholders 41,305 36,314 38,573

Total equity 41,305 36,314 38,573

Non-current liabilities

Non-current interest-bearing liabilities 1,596 3,236 1,247

Other non-current liabilities 0 1 11

Provisions for pensions and similar commitments 1,959 1,570 1,647

Provisions, urban transformation 12,850 14,869 14,378

Other provisions 1,229 1,229 1,219

Deferred tax liabilities 1,639 1,861 1,538

Total non-current liabilities 19,273 22,766 20,040

Current liabilities

Current interest-bearing liabilities 10,578 7,097 3,756

Trade payables 1,440 1,605 1,581

Tax liabilities 386 198 156

Other current liabilities 384 392 320

Accrued expenses and deferred income 1,269 1,058 1,087


Other provisions 220 129 199

Total current liabilities 18,462 14,379 10,347

Total liabilities 37,735 37,145 30,388

TOTAL EQUITY AND LIABILITIES 79,040 73,459 68,961


LKAB – GROUP

STATEMENT OF CHANGES IN EQUITY

Equity attributable to Parent Company shareholders

Reserves

2018MSEK Share capital

Translation reserve

Fair value reserve

Hedging reserve

Retained earnings

including profit/loss for the year

Total equity

Opening equity 1 Jan 2018 700 -222 754 -7 35,124 36,348

Profit/loss for the year 5,274 5,274

Other comprehensive income for the year 60 -304 105 -29 -168

Comprehensive income for the year 60 -304 105 5,245 5,106

Dividend -2,882 -2,882

Closing equity 31 Dec 2018 700 -162 450 98 37,487 38,573


Reserves


Translation reserve

Fair value reserve

Hedging reserve incl.

hedgingcost reserve

Retained earnings


Total equity

Opening equity 1 Jan 2019 700 -162 450 98 37,487 38,573

Adjustment for IFRS 16, after tax -8 -8


Other comprehensive income for the year 191 59 -66 -220 -36

Comprehensive income for the year 191 59 -66 5,720 5,904

Dividend -3,164 -3,164

Closing equity 30 Jun 2019 700 29 509 32 40,035 41,305


Reserves


Translation reserve

Fair value reserve

Hedging reserve incl.

hedgingcost reserve

Retained earnings


Total equity

Opening equity 1 Jan 2018 700 -222 754 -7 35,124 36,348


Other comprehensive income for the year 298 -63 100 70 406

Comprehensive income for the year 298 -63 100 2,512 2,848

Dividend -2,882 -2,882

Closing equity 30 Jun 2018 700 76 691 93 34,754 36,314


LKAB – GROUP

STATEMENT OF CASH FLOWS

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Operating activities


Adjustment for items not included in cash flow 867 1,475 1,951 3,054 4,988

Income tax paid -532 -355 -1,216 -1,004 -2,228

Expenditures, urban transformation -969 -523 -1,581 -646 -1,871

Expenditures, other provisions -4 -8 -1 -14

Cash flow from operating activities before changes in working capital 3,861 1,897 6,705 4,466 7,559

Cash flow from changes in working capital

Increase (-)/Decrease (+) in inventories -148 -184 -108 -373 -702

Increase (-)/Decrease (+) in operating receivables -1,061 55 -1,249 -65 -331

Increase (+)/Decrease (-) in operating liabilities -166 326 -7 430 202

Change in working capital -1,375 197 -1,364 -8 -831

Cash flow from operating activities 2,486 2,093 5,342 4,458 6,729

Investing activities

Acquisition of property, plant and equipment -570 -762 -961 -1,356 -2,455

Disposal of property, plant and equipment 6 2 20 2 9

Acquisition of subsidiaries 5 -39 -39 -1,146

Disposals/acquisitions (net) in current investments -111 -90 -712

Acquisition/disposal of other financial assets -1,625 -3,821 -7,918 -4,292 -11

Cash flow from investing activities -2,339 -4,581 -8,988 -5,646 -4,315

Financing activities

Repayments/borrowing repurchase agreements 589 1,995 6,741 6,162 833

Redemption of loans upon business combination -128

Repayment of lease liabilities -25 -49

Dividends paid to Parent Company shareholders -3,164 -2,882 -3,164 -2,882 -2,882

Cash flow from financing activities -2,600 -887 3,527 3,280 -2,177

Cash flow for the period -2,453 -3,375 -119 2,091 237

Cash and cash equivalents at start of period 4,629 7,519 2,290 2,051 2,051

Exchange difference in cash and cash equivalents 1 1 5 3 3

Cash and cash equivalents at end of period 2,177 4,146 2,177 4,146 2,290

Change in cash and cash equivalents -2,453 -3,375 -119 2,091 237

Sub-components of cash and cash equivalents

Cash and bank balances 1,977 4,146 1,977 4,146 2,190

Current investments (maturity <90 days) 200 200 100

Cash and cash equivalents 2,177 4,146 2,177 4,146 2,290

Consolidated operating cash flow

Cash flow from operating activities 2,486 2,093 5,342 4,458 6,729

Acquisition of property, plant and equipment -570 -762 -961 -1,356 -2,455

Disposal of property, plant and equipment 6 2 20 2 9

Acquisition of subsidiaries -39 -39 -1,146

Acquisition/disposal of other financial assets -111 -90 -11

Operating cash flow (excluding current investments) 1,772 1,333 4,272 3,103 3,126

Disposals/acquisitions of financial assets (net) -1,625 -3,821 -7,918 -4,292 -712

Cash flow after investing activities 147 -2,488 -3,646 -1,188 2,414

Cash flow from financing activities -2,600 -887 3,527 3,280 -2,177

Cash flow for the period -2,453 -3,375 -119 2,091 237

LKAB INTERIM REPORT Q2/2019 14 LKAB – PARENT COMPANY |

LKAB – PARENT COMPANY

INCOME STATEMENT

MSEK NoteQ2

2019Q2

2018Q1–Q2

2019Q1–Q2

2018Full year

2018

Net sales 8,590 5,765 15,266 11,601 24,194

Cost of goods sold -4,417 -4,781 -8,518 -9,018 -17,309

Gross profit/loss 4,173 984 6,748 2,583 6,885

Selling expenses 2 -37 -14 -46 -38

Administrative expenses -93 -88 -183 -167 -305

Research and development expenses -124 -99 -227 -177 -372

Other operating income 13 10 17 10 29

Other operating expenses -23 -14 -24 -18 -37


Profit/loss from financial items 268 1,043 448 1,511 1,142

Profit/loss after financial items 4,215 1,799 6,765 3,696 7,304

Appropriations 2,093


Tax -903 -3102 -1,448 -7272 -2,022

Net income for the period1 3,312 1,489 5,317 2,969 7,376

1 Profit/loss for the period corresponds to comprehensive income for the period. 2 Includes negative remeasurement effects of MSEK 70 resulting from the decision to change the corporate tax rate in Sweden with effect from 2019.



BALANCE SHEET


ASSETS

Non-current assets

Intangible assets 72 72 72

Property, plant and equipment for operations 25,229 25,808 25,624

Property, plant and equipment for urban transformation 7,880 7,870 7,376

Financial assets

Interests in subsidiaries 2,388 2,390 2,388

Interests in associates and jointly controlled entities 43 41 32

Receivables from subsidiaries 3,760 2,640 3,874

Other non-current securities 203 248 248

Other non-current receivables 213 112 115

Deferred tax asset 1,594 1,747 1,594

Total financial assets 8,201 7,178 8,251

Total non-current assets 41,383 40,929 41,323

Current assets

Inventories 2,801 2,411 2,622

Current receivables

Accounts receivable 3,062 1,692 1,848

Receivables from subsidiaries 161 183 619

Other current receivables 1,377 1,058 1,303

Prepaid expenses and accrued income 112 128 131

Total current receivables 4,712 3,061 3,901

Current investments 26,097 21,811 18,826

Cash and bank balances 1,436 3,830 1,767

Total current assets 35,046 31,113 27,115

TOTAL ASSETS 76,428 72,041 68,438



BALANCE SHEET


TOTAL EQUITY AND LIABILITIES

Equity

Restricted equity

Share capital (700,000 shares) 700 700 700

Statutory reserve 697 697 697

Non-restricted equity

Profit/loss brought forward 21,896 17,684 17,684

Profit/loss for the period 5,317 2,969 7,376

Total equity 28,610 22,050 26,457

Untaxed reserves 13,650 15,263 13,650

Provisions


Other provisions 1,438 1,485 1,452

Total provisions 14,289 16,353 15,831

Non-current liabilities

Bond loans 1,247 3,236 1,247

Other non-current liabilities 1

Total non-current liabilities 1,247 3,237 1,247

Current liabilities

Liabilities to credit institutions 10,497 7,097 3,756

Trade payables 1,057 1,293 1,021

Liabilities to subsidiaries 1,094 1,442 1,896

Current tax liabilities 390 212 126

Other current liabilities 282 281 242

Accrued expenses and deferred income 908 784 766


Other provisions 220 129 199

Total current liabilities 18,632 15,138 11,253

TOTAL EQUITY AND LIABILITIES 76,428 72,041 68,438

LKAB INTERIM REPORT Q2/2019 17 NOTES |

NOTES

NOTE 1 Accounting policies This interim report was prepared in accordance with IAS 34, Interim Financial Reporting, and applicable regulations in the Annual Accounts Act. Disclosures in accordance with IAS 34 are provided both in notes and elsewhere in the interim report. The interim report for the Parent Company was prepared in accordance with Chapter 9 of the Annual Accounts Act, Interim Reporting.

All amounts are presented in SEK millions (MSEK) unless otherwise indicated. Rounding differences may occur.

Described below are changed accounting policies and calculation methods applied by the Group with effect from 1 January 2019. In other respects the accounting policies and calculation methods applied in this interim report conform to the accounting policies applied in the preparation of the 2018 annual report. For further information concerning the Group’s accounting policies refer to LKAB’s Annual and Sustainability Report for 2018. Other amendments to IFRS effective from 1 January 2019 have had no impact on the Group’s earnings or financial position or on the presentation of the interim report.

Accounting policies changed due to new or amended IFRS IFRS 16 LeasesThe Group is applying IFRS 16 Leases with effect from 1 January 2019. For lessees, IFRS 16 means that almost all leases are recognised in the statement of financial position. The lessee recognises a right-of-use asset, representing a right to use the underlying asset, and a lease liability, representing an obligation to make future lease payments. Leases with a term of 12 months or less or where the underlying asset has a low value are exempted.

Depreciation of the right-of-use asset and interest expense for the lease liability are recognised in the income statement. Previously the Group recognised operating lease expenses on a straight-line basis over the lease term. This results in an increase in operating profit compared with the situation had the previous accounting policies been applied.

The discount rate used is the LKAB Group’s marginal loan interest rate, which refers to the Group’s borrowing cost based on a reference interest rate for inter-est rate swaps.

The lease payments are recognised as an outgoing payment in financing activities, with the result that cash flow from financing activities decreases and cash flow from operating activities increases compared with the situation had the previous accounting policies been applied.

The lease liability is recognised under loans payable and thus increases net financial indebtedness, which affects the calculation of the net debt/equity ratio.

The Group applies the modified retrospective approach, which means that the cumulative effect of the introduction of IFRS 16 is recognised in the opening balance of retained earnings as of 1 January 2019 without restating comparative information. The rights-of-use assets attributable to previous operating leases are mainly reported at amortised cost from the start of the lease.

The table below summarises the effects on assets, liabilities and equity in the opening balance as at 1 January 2019.

Effects on assets, liabilities and equity, 1 January 2019

MSEK

Carrying amount

1 January 2019

Restatement acc. to IFRS

16

Restated 1 January

2019

Assets

Property, plant and equipment for operations 30,776 395 31,171

Deferred tax assets 25 2 27

Total assets 30,801 397 31,198

Equity

Profit/loss brought forward 37,487 -8 37,479

Total equity 37,487 -8 37,479

Liabilities

Non-current interest-bearing liabilities 1,247 323 1,570

Current interest-bearing liabilities 3,756 82 3,758

Total liabilities 5,003 405 5,408

Total equity and liabilities 42,490 397 42,887

During the first quarter adjustments were recognised in respect of the lease com-mitments attributable to a business combination completed in December 2018. As a result of the adjustments, further lease liabilities and right-of-use assets are recognised at MSEK 52.

Change in method of calculating costs of urban transformationEffective from 2019 the cost of provisions for urban transformation is calculated using a production-based method. This means that the cost is calculated on the basis of ore extracted relative to the estimated total volume for the current main haulage level.

Up to and including 2018 the cost was based on the estimated extent of the ground deformations, on the basis of the environmental conditions in force.

The effect of the changed calculation method is to spread the costs of the urban transformation more evenly, since the cost is related to production. The changed calculation method is judged to have no significant effect on earnings for 2019 compared with the previous calculation method.

NOTE 2 Significant assumptions and estimates The preparation of financial statements requires management and the Board of Directors to make assessments and assumptions that affect recognised assets, liabilities, income and expenses and other information provided, such as contingent liabilities. For further information concerning these, please refer to LKAB’s 2018 annual report.


NOTES

NOTE 3 Segment reporting Segment information is provided on pages 5–8 of the interim report.

The divisions in summary

Northern Southern Special Products OtherEliminations/

group adjustments Group

MSEK

Q1–Q2 2019

Q1–Q2 2018

Q1–Q2 2019

Q1–Q2 2018

Q1–Q2 2019

Q1–Q2 2018

Q1–Q2 2019

Q1–Q2 2018

Q1–Q2 2019

Q1–Q2 2018

Q1–Q2 2019

Q1–Q2 2018

External income 8,533 6,148 6,532 5,225 1,581 1,073 -84 -60 16,562 12,386

Internal income 795 385 137 69 764 718 16 17 -1,712 -1,189

Total net sales 9,328 6,533 6,669 5,294 2,345 1,791 -68 -43 -1,712 -1,189 16,562 12,386

Operating profit/loss 4,697 1,444 2,261 1,228 186 156 -474 -347 -41 11 6,629 2,492

Net financial income/expense 930 571

Profit/loss before tax 7,559 3,063

NOTE 4 Revenue breakdown Revenue from contracts with customers for the segments is reported below broken down by product/service area and region. The table also includes a reconciliation between the revenue breakdown and total external income according to Note 4.

Northern Southern Special Products Other Group

MSEK

Q2 2019

Q2 2018

Q2 2019

Q2 2018

Q2 2019

Q2 2018

Q2 2019

Q2 2018

Q2 2019

Q2 2018

Product/service area

Pellets 8,011 5,620 5,666 4,648 13,677 10,268

Fines 291 418 865 560 1,156 978

Magnetite 483 452 483 452

Mineral sands 276 269 276 269

Other industrial minerals 726 278 726 278

Mining and construction services 96 71 96 71

Other 231 110 1 17 3 13 12 245 142

Total 8,533 6,148 6,532 5,225 1,581 1,073 13 12 16,659 12,458

Region

Europe 4,210 3,036 6,211 4,730 1,088 763 13 12 11,522 8,541

MENA 3,320 2,290 113 222 57 3,490 2,512

Rest of world 1,033 822 208 273 436 310 1,647 1,405

Total 8,533 6,148 6,532 5,225 1,581 1,073 13 12 16,659 12,458

Revenue from contracts with customers 8,533 6,148 6,532 5,225 1,581 1,073 13 12 16,659 12,458

Other income – financing activities -97 -72 -97 -72

Total external income 8,533 6,148 6,532 5,225 1,581 1,073 -84 -60 16,562 12,386


NOTE 6 Disclosures regarding financial instruments The table below shows the financial instruments measured at fair value in the statement of financial position. Group, 30 Jun 2019

MSEK Level 1 Level 2 Level 3 Total

Shares, financial assets 705 705

Shares, current holdings 6,808 6,808

Interest-bearing instruments 20,027 20,027

Derivatives 59 34 93

Total 764 26,869 27,633 Group, 31 Dec 2018

MSEK Level 1 Level 2 Level 3 Total

Shares, financial assets 646 646

Shares, current holdings 6,381 6,381

Interest-bearing instruments 12,476 12,476

Derivatives -4 170 166

Total 642 19,027 19,669

Fair value calculationThe following summarises the methods and assumptions mainly used in deter-mining the fair value of financial instruments reported in the table above.

Level 1Quoted prices (unadjusted) on active markets for identical assets or liabilities.

Level 2Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Interest-bearing instrumentsThe value of interest-bearing instruments is calculated using data from the interest-bearing securities market, obtained from Bloomberg.

Shares and alternative investmentsThe value of these investments is calculated using data from the stock market or received directly from brokers.

DerivativesThe fair values of derivative contracts are calculated using official quotations obtained from Bloomberg.

No transfers have been made between Levels 1 and 2.

Fair value of other receivables and liabilitiesThe carrying amount of other receivables and liabilities is estimated to be a reasonable approximation of fair value.

NOTES

NOTES |

NOTE 8 Transactions with related parties No transactions that have significantly affected the company’s financial position and earnings took place between LKAB and related parties.

NOTE 7 Pledged assets and contingent liabilities, Parent Company

Pledged assets

MSEK30 Jun

201930 Jun

201831 Dec

2018

As pledged assets for own liabilities and provisions

Company-owned endowment insurance 112 112 112

Deposit of cash and cash equivalents 112 121 121

Collateral provided, derivatives 240 182 56

Pledged assets bonds repurchase agreements 8,307 6,897 1,567

Total pledged assets 8,771 7,312 1,856

Contingent liabilities

MSEK30 Jun

201930 Jun

201831 Dec

2018

Guarantees, FPG/PRI 16 15 15

Guarantees, GP plan 4 4 4

Guarantees, Swedish Tax Agency 63 63 63

Surety given for subsidiaries 28 29 29

Collateral, remediation 62 65 63

Total contingent liabilities 173 176 174

NOTE 9 Events after the end of the reporting period There are no significant events after the end of the reporting period to report.

NOTE 5 Business combinations

On 3 December 2018 the Group acquired 100 percent of the shares in the privately owned UK companies Francis Flower (Northern) Ltd and Gurney Slade Lime & Stone Co. Ltd for MSEK 1,277 and paid in cash. A provisional purchase price allocation was prepared for the 2018 year-end accounts pending final calculation

of the fair values of acquired assets and liabilities. A portion of the total purchase consideration was withheld for settlement following establishment of the final values. In the second quarter of 2019 a further MSEK 39 was paid for the acquisition of the shares. This amount is recognised as Group goodwill.


NOTES

NOTE 10 Key ratios – disclosures Alternative key ratiosThe company also presents certain non-IFRS financial benchmarks and key ratios in the interim report. The management considers this supplementary information to be important if readers of this report are to obtain an understanding of the company’s financial position and performance.

Definitions

Return on equity Profit/loss after tax as a percentage of average equity (rolling 12-months).

Underlying operating profit/loss

Operating profit/loss excluding costs for urban trans-formation provisions and impairment of intangible assets and of property, plant and equipment.

Operating cash flow Cash flow from operating activities and investing activities relating to property, plant and equipment.

Net financial indebtedness Interest-bearing liabilities less interest-bearing assets.

Net debt/equity ratio Net financial indebtedness divided by equity.

Operating cash flow

A reconciliation of operating cash flow can be found in the section The LKAB Group in summary.

Net financial indebtedness

MSEK30 Jun

201930 Jun

201831 Dec

2018

Loans payable 12,174 10,333 5,003

Provisions for pensions 1,959 1,570 1,647


Provisions, remediation 1,357 1,309 1,346

Less:

Cash and cash equivalents -2,177 -4,146 -2,290

Current investments -26,671 -22,333 -18,753

Financial investments -1,079 -1,284 -1,026

Net financial indebtedness 2,596 4,218 3,552

Net debt/equity ratio

MSEK30 Jun

201930 Jun

201831 Dec

2018

Net financial indebtedness, MSEK 2,596 4,218 3,552

Equity, MSEK 41,305 36,314 38,573

Net debt/equity ratio, % 6.3 11.6 9.2

NOTE 11 Quarterly data for the Group

MSEK NoteQ2

2019Q1

2019Q4

2018Q3

2018Q2

2018Q1

2018Q4

2017Q3

2017

Net sales 9,233 7,329 6,911 6,594 6,160 6,227 6,208 5,958

Operating profit/loss 4,116 2,513 1,900 2,477 931 1,561 1,324 1,808

Less: costs for urban transformation provisions 102 386 289 287 735 795 353 263

Less: impairment of property, plant and equipment 14 12

Underlying operating profit/loss 10 4,218 2,899 2,189 2,764 1,666 2,357 1,691 2,083

Net financial income/expense 383 547 -790 35 370 201 47 40

Profit/loss before tax 4,499 3,060 1,110 2,512 1,300 1,762 1,371 1,849

Operating cash flow 1,772 2,500 -1,529 1,552 1,333 1,770 587 1,916

Investments in property, plant and equipment 570 391 624 475 762 594 600 489

Deliveries of iron ore products, Mt 6.7 6.1 6.8 6.9 6.4 6.8 7.3 7.1

Proportion of pellets, % 84 86 79 82 84 84 81 81

Production of iron ore products, Mt 6.2 6.5 6.7 6.8 6.1 7.3 7.2 6.5

Return on equity, % 10 22.6 16.0 14.1 14.6 13.9 13.4 14.4 6.6

Net debt/equity ratio, % 10 6.3 4.7 9.2 5.0 11.6 -9.4 -6.6 -4.4

LKAB INTERIM REPORT Q2/2019 21 LKAB IN BRIEF |

LKAB 2018 IN BRIEF

Northern DivisionComprises mines and processing plants in Kiruna. The products are transported along the Malmbanan and Ofotbanen ore railway to the port in Narvik for shipment to steelworks customers around the world.

Southern DivisionComprises mines and processing plants in Malmberget and Svappavaara. The products are transported along the Malmbanan ore railway, mainly to the port in Luleå for shipment to European steelworks customers.

Special Products DivisionDevelops and supplies products and services including industrial minerals, drilling technology and full service solutions for the mining and construction industries.

25.9

Luleå

Ore Railway

Malmberget

SvappavaaraKiruna

Narvik

ARCTIC CIRCLE

150,000 tonnes of iron ore are mined by LKAB every dayLKAB’s ore deposits are largely mined in underground mines more than a thousand metres below the surface, making demands of both safety and efficiency. All the iron ore mined is then upgraded in our processing plants. Here the ore is sorted and concentrated before finally being pelletised, i.e. fired to become small round iron ore pellets. From the processing plants the iron ore products are transported by rail to the ports and shipped to customers in Europe, the Middle East, North Africa, the USA and Asia. sales in SEK billion

Three divisions

77% 82%of LKAB’s iron ore products are exported to Europe’s steelworks.

of LKAB’s delivery volumes consist of iron ore pellets.

INTERIM REPORT Q2/2019 - Cision · Production of iron ore products, Mt 6.2 6.1 12.8 13.4 26.9...

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