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2016-12-19

LKAB: Mertainen is mothballed

LKAB's new open-pit mine Mertainen outside Svappavaara will not be
taken into production. The prevailing situation in the market means
that the mine will be mothballed until circumstances change.

Mertainen is one of three open-pit mines in the Svappavaara field
which together were to increase LKAB's delivery capacity. The
decision to invest was taken in 2010, a time of high prices for
coarse iron ore fines - a product to which the deposits in Mertainen
are well suited.

"The market has changed in recent years. The products from Mertainen
cannot be made profitable at the moment. We are therefore focusing on
the Leveäniemi and Gruvberget open-pit mines in Svappavaara and
leaving Mertainen dormant until the market conditions change," says
Jan Moström, LKAB's President and CEO.

LKAB's strategy to maximize pellet production remains and demand for
processed iron ore products is strong. Prices for the processed
products have also developed positively during the year.

"The facilities in Mertainen will be kept in a condition such that we
are able to start production at just a few months' notice. We are
thus ready for any change in the demand for coarse fines. The global
need for steel, and therefore for iron ore, will basically continue
for a long time to come," says Jan Moström.

As a consequence of the decision, LKAB's Board of Directors has also
decided to write down the value of LKAB's assets by MSEK 1200, which
will impact earnings for the fourth quarter.

Contact: Bo Krogvig, Senior Vice President of Communications at LKAB,
Tel: 46 (0)8 429 34 45. E-mail:bo.krogvig@lkab.com

LKAB is an international high-tech minerals group that mines and
upgrades the unique iron ore of northern Sweden for the global steel
market. Sustainability is core to our business and our ambition is to
be one of the industry's most innovative, resource-efficient and
responsible companies. The group had sales of more than SEK 16
billion in 2015 and employs about 4,500 people in 13 countries. Other
group business include industrial minerals, drilling systems, rail
transport, rockwork services and property management.

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http://news.cision.com/lkab/r/mertainen-is-mothballed,c2152741
http://mb.cision.com/Main/11419/2152741/605596.pdf

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