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2016-01-18

LKAB: Models for compensation complete

During 2015 LKAB's decided how LKAB would henceforth compensate
property owners, residents and business owners that are affected by
mining operations. Now, we are able to present, in detail, how these
stakeholders will be compensated.

"To meet the challenge we are now facing, LKAB will assume control
over new construction projects in order to find cost-effective
solutions and secure access to new properties," says Stefan
Hämäläinen, LKAB's urban transformation manager.

Homeowners and apartment building owners will be offered the choice of
two alternatives: a replacement building of a standard that is
equivalent to that of the building to be replaced, or a sum of money
equivalent to the building's market value plus 25 percent. In terms
of architecture and materials, the new buildings will not be replicas
of the old ones. However, they will be comparable.

Owners of cooperative housing units will be compensated with a sum of
money. LKAB's offer is based on two principles. Compensation will be
in the form of an amount per square metre of living area, which
corresponds to the price per square metre of a newly produced
cooperative housing unit in the orefields communities, plus a
supplement that is based on an individual assessment of the condition
and standard of the housing unit.

"We want to give owners of cooperative housing units the opportunity
to invest in newly produced dwellings of equivalent standard in the
community. We are working to encourage more people to invest in the
orefields communities, and we have several investors and developers
who are prepared to build new rental and cooperative housing," says
Stefan Hämäläinen.

Consideration will be given to the condition and standard of the
dwelling or property. This means that those who have renovated and
remodelled their home, cooperative housing unit or apartment building
and thereby improved the standard of the property will receive a
higher assessment value than those who have not.

Tenants who do not own a property will be given priority access to
both older and newer rental apartments. Those who move to newly
produced units will be subject to a stepwise increase in rent, which
means that tenants will retain their present level of rent and the
rent will be successively increased over seven years. LKAB has
thereby increased the stepwise rent increase from five to seven
years. Regardless of landlord, all tenants who must move are subject
to LKAB's stepwise rent increase.

Business owners that must relocate will be compensated in several
parts: Business owners who own properties will be offered replacement
properties and those who rent will be offered new premises with a
stepwise rent increase of up to five years. In addition, LKAB will
provide remuneration for relocation costs and loss of income due to
relocation.

"Finding compensation solutions that allow LKAB to remain competitive
and continue to produce has been a long process. We are very
confident that this meets requirements for equitable compensation
that is sustainable in the long term, so that LKAB and the orefields
communities can stand side by side, even in the future," says Stefan
Hämäläinen.

Securing conditions for continued mining and, thereby, LKAB's
survival, has necessitated the relocation of some 5,000 housing units
and 700,000 square metres of housing and commercial premises in
central Kiruna and Malmberget. This means that about 10,000 people,
or about one quarter of the population of the orefields communities,
will eventually have to move.

Kontaktperson: Anders Lindberg, +46 980 783 55. E-mail:
anders.lindberg@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 20
billion in 2014 and employs about 4,500 people in 15 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/models-for-compensation-complete,c9897604
http://mb.cision.com/Main/11419/9897604/465996.pdf

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