Sweden's LKAB Invests $380 Million on Iron Pelletizing Plant to Maintain Global Market Edge

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). One of Sweden's iron mining majors, state owned LKAB, is investing $380 million in a new pelletizing plant, which will increase the company's production capacity by about two million tons, to a total per annum of 25 million tons. The company expects this project to increase turnover by $112 million and give permanent employment to up to 40 people.

The main $70 million construction contract for the plant at the Vitafors industrial site in Malmberget is now being executed by NCC, a leading $6.5 billion a year Nordic construction and development company. The contract covers project design, expansion of the existing enrichment plant, structural construction of a new pellet plant, and a new unloading station, including silos and storage space for unprocessed product from Kirkuna mine. NCC has around forty people on the project, which is scheduled to be in operation by December 2006.

The Malmberget plant is the largest Swedish project to date that is being executed in a partnering format. The customer, contractor, and designer form an integrated project organization with strictly delineated responsibilities and joint incentives for achieving the established goals of the project. Malmberget (mountain of iron) traditionally has produced about 33% of the company's total Swedish production.

Outokumpu Technology (OT) (OTC:OUTOF)(Helsinki, Finland) has the $78 million contract for the technical design and delivery of the new plant, covering the EPC functions, which will be based on Lurgi traveling grate technology. The 2.5 million ton initial rating can be increased with only minor modifications. OT also has the $8 million contract to deliver a grinding technology package for the concentrator for the Malmberget project. This technology package includes one trunnion supported rod mill, claimed to be the largest ever built, and two shell-supported ball mills. The concentrator is scheduled for commissioning in August 2006.

ABB (NYSE:ABB) (Zurich, Switzerland) is working on a $27 million contract for the LKAB plant to supply automation and electrical equipment for the expansion project to augment the site's 145 kV switchgear capabilities. In addition, ABB will supply complete electrification systems and industrial IT process automation to the new production facility. Process control systems for the existing concentrator will also be modernized. Scope of the contract also includes medium voltage switchgear and power factor compensation, emergency power distribution, intelligent motor control centers, instrumentation, as well as low voltage and medium voltage drives to increase the efficiency of the large process fans.

ABB has been modernizing LKAB's existing pellet plant, which was built in the 1960s. The company has been installing the equipment in six phases over a three-year period (2003-2006) during the plant's twice yearly, fourteen-day maintenance shutdowns.

LKAB is active in the extremely competitive global market and is a local regional supplier. They saw the time as right for structural investment. President Martin Ivert says that LKAB has focused on increasing capacity utilization without investing in new plants or hiring more personnel. "This has enabled us to increase our volumes from 20 million tpa to 23 million tpa in just a few years," he said.

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