A long way to go to become a new Kiruna, above the start of the new iron-mine in Pajala. Photo: Odd Iglebaek
- We have done a series of tests and are currently now in the detailed planning phase. We want to start production in three places to begin with, Tapuli, Stora Sahavaara and Pellivuoma all of which are close to Pajala. The total estimated amount of iron-ore at the three sites is close to 200 million tons, he explains. In order to maintain confidence on the stock-market Northland publicly however only talks about confirmed findings.
Construction work in Tapuli can commence next year, at Stora Sahavaara in 2012 and at Pellivuoma in 2013. The distance between the three areas is only a few kilometres and the ore from all three plants will be brought to a central mill facility to be built close-by at Kaunisvaara. The mill will be 136 metres long, 86 metres wide and 43 metres high, in other words it will be a large construction.
Current production-plans for mining in Pajala have a twenty year horizon and work on the assumption of extracting 100 million tons, which is viewed as a minimum figure. At Kiruna, iron-ore production has been going on for close to 120 years and by 1990 production figures had reached 1 billion tons.
In terms of phase one in Pajala Northland calculate that they have invested 617 million US$ in the project with a pay-back time of 5.8 years.
The prospecting arm of Northland Resources has also identified an additional 100 million tons of iron-ore 20 km to the northeast in Hannukainen, on the Finnish side of the border. However many knowledgeable commentators suggest that the total level of resources in this field, often called the Pajala-shield, could reach volumes equivalent to that which has already been produced in Kiruna.
The end-product from the LKAB-mines in Kiruna is iron-pellets. Northland Resources plans to stop one step before this, with what is called concentrate (powder). The product will be sold on the world market and letters of intention have been signed between Northland and the potential buyers of the concentrate the Gulf Industrial Investment Company (GIIC) in Bahrain.
The importance of transport
The current market price for metal and the operational techniques for its recovery from the ground are, generally speaking, the decisive factors in respect of mining. For iron however the volumes to be transported are huge and thus transportation costs are also of the utmost importance to the profitability of any project.
This is an old lesson. Iron-ore from the mines in Kiruna was first transported to the Gulf of Bothnia at the end of the nineteenth century, but only in 1903, thirteen years after the opening of the mine, was a new railway line built to the ice-free harbour of Narvik. Since then Narvik has been the main loading-site for the LKAB-company. The company's headquarters and a second harbour are however to be found at Lulelå in the Gulf of Bothnia. Here, however, the water freezes during winter.
The importance of ice-free harbours has diminished with the development of major new ice-breakers. For Sweden the main base for such vessels is Luleå. New ways of constructing ships, such as with double hulls, have also rendered the ice less of a danger.
In the short term however the only possible transport-route from Pajala is to connect to the Finnish Kolari-Kemi railway line. The Finnish railway authorities are prepared to improve facilities here in order to handle the weight of iron-concentrate. This is also the case for the port of Kemi, where loading will take place.
– But before production can begin in Pajala 17 km of railway line has to be built to connect the new facility with the line on the Finnish side of the border. This must be ready by 2013 and is calculated to cost 800 million SEK. I am, however, confident that the Swedish government will take the responsibility and solve this issue in due course, underlines Bengt Niska, who is the Commissioner of Pajala.
Future transport-routes
Many things are uncertain about the future of the Pajala iron-mines. However if the volumes of production grow substantially it will most likely only be a question of time before the capacity of Kolari-Kemi has to be expanded, particularly in respect of harbour handling capacities. The Swedish town of Kalix hopes to gain from this. Robert Forsberg, Mayor of the municipality explains:
- We are also prepared to build a new deep-water harbour. However, to make this feasible we need an improvement to be made on the new Bothnia-railway from Kalix to the border town of Haparanda. This must get a double set of rails so trains from Finland can also use the port.
It is up to the Swedish government and Northland Resources to negotiate this. – At present we are in a wait-and-see situation, depending on how everything develops, comments the spokesperson for Northland Resources Jonas Lundström.
In the debate over the Pajala-mine proposal, at least when viewed from the longer term perspective, the issue of transport via Kiruna and to the Norwegian harbour of Narvik will play an increasingly central role. To connect Pajala with Kiruna necessitates the building of some 140 km of new railway-track, at a cost of several billion SEK.
- At present there is however no capacity for additional transport from Kiruna to Narvik. We are fully utilising the possibilities for our own needs and have also started to consider double tracking the route, notes, Lars-Eric Aaaro, Acting President and CEO of LKAB.
The fourth option debated is an entirely new railway line connecting Kolari in Finland with Skibotn in Troms in Northern Norway. The length of this line would be 312 km and the cost could easily reach 24 billion NOK. However harbour facilities would be excellent and there would not be competition with LKAB.
- Of course any ice-free alternative would be of interest to us in a longer-term perspective, says Jonas Lundström of Northland Resources. – However it is not really on the agenda at the moment, he adds.
Future employment prospects
The mining-industry is currently in an almost constant state of technological turmoil implying that the number of workers necessary is likely to diminish significantly. Indeed, the industry is in many ways similar to the timber- related industries in this respect. For example LKAB had at its peak in 1961 a staff of more than 8300. Today their employees in Sweden number just above 3100.
- For Northland Resources we estimate that the total numbers of jobs will be somewhat less than 1000 by 2014-2015, notes Jonas Lundström.
LKAB-headquarters in Kiruna to the left and a train with iron-pellets to the right. Photo: Odd Iglebaek
By Odd Iglebaek