Our annual update explains how legal and fiscal stability are only two of several advantages attracting exploration and mining companies to the Nordic countries, and scans the latest advances from the region’s mine technology suppliers
By Simon Walker, European Editor
Having provided a cornerstone for European hardrock mining for centuries, Norway, Sweden and Finland are once again attracting renewed interest as companies from around the world increase their exploration and development budgets. And while the fourth of the mainland Nordic countries, Denmark, cannot offer the same geological potential, across the north Atlantic, exploration spending in Greenland is also on the increase.
The international mining community perceives the Nordic countries in general to be an attractive destination for exploration for a number of reasons, not least of which is their political and economic stability. Indeed, the most recent edition of the Fraser Institute’s annual survey of mining companies ranks both Finland and Sweden within the top 10 most attractive jurisdictions worldwide for mining-sector investment, with Greenland and Norway not far behind. In all probability, if Greenland and Norway had a better-developed existing mining industry, they too would be higher in the rankings.
Add to that the geological potential of the region, and it is easy to see the why it is proving to be an attractive destination for more and more companies’ exploration dollars. Not that exploration is any easier than in other parts of the world—far from it, in fact—but a variety of political and economic factors over many years has meant that this remains under-explored territory that still has the capability of revealing very attractive development opportunities.
Looking back 20 years, Sweden led the way with the deregulation of exploration and liberalized mining legislation that allowed a resurgence of private-sector interest in the country’s mineral wealth. By the late 1990s, the growing list of foreign majors actively exploring in Sweden included Anglo American, Barrick Gold, BHP, North Ltd., Outokumpu, Phelps Dodge and Rio Tinto, complementing a raft of international juniors as well as domestic private-sector companies.
Since then, Norway has also updated its mining laws, with a new Mineral Act that came into force at the start of 2010, while Finland aimed to have its revised mining legislation in effect by this July. In Greenland, meanwhile, the increased level of self-government achieved in mid-2009 shifted responsibility for mineral resource development from Denmark to the island’s government, with new legislation introduced there last year. In each case, the effect has been to increase the attractiveness of the country’s mineral potential to outside investors, while maintaining stringent requirements for environmental protection and adherence to the existing socio-economic framework.
The results speak for themselves. According to the Metals Economics Group in the 2010 edition of its Corporate Exploration Strategies report, companies budgeted around $150 million for exploration in Norway, Sweden, Finland and Greenland last year, a figure that excludes the additional investment involved in the accelerating search for new iron-ore resources across the region.
The Geological Endowment
In simple terms, most of Finland and much of northern Sweden consists of Precambrian basement—the Baltic Shield—while on the other side of the north Atlantic, Greenland is predominantly underlain by a section of the Laurentian Shield that extends across northern Canada. Between the two, on the eastern side of Greenland and through Norway, rocks of the Caledonian fold belt run up against the older basement blocks, with oceanic spreading having separated into two what was originally a continuous structure.
Historical mining for iron ore, copper, zinc, lead and silver within the more accessible parts of Norway, Sweden and Finland proved that the potential of the Baltic Shield rocks to host economic deposits was no less than that of shield areas in other parts of the world. Development of iron-ore and base-metal resources further north that came later only reinforced this view, while the discovery of gold in various parts of northern Sweden and Finland added to the list of exploration targets.
Nonetheless, it is only fair to note that much of the Nordic mining industry is indeed historical, with mines such as Sala (silver), Falun and Grong (copper), Laisvall (lead) and Finland’s iron operations now long closed. On the other side of the coin, the Kiruna iron ore mine celebrated its centenary in the late 1980s and has a long future still ahead of it, while polymetallic ores have been won from Sweden’s Skellefte district since the 1920s with no sign of an end in sight. The key has been continued exploration, with new ore zones being identified sufficiently frequently to allow the industry to thrive.
With the possible exception of far southern Sweden, virtually the whole of the Nordic region offers attractive exploration potential. Today, companies are prospecting for iron ore, base metals, gold, nickel, molybdenum, platinum-group metals and diamonds, as well as a range of industrial minerals for use in fertilizer production, construction and specialist applications.
The Industry Bounces Back
The mining industry in the Nordic countries was no less immune to the effects of the global economic downturn than were its counterparts elsewhere in the world. Demand slumped, costs rose and producers battened down the hatches and waited for better times—which fortunately did not take long to materialize.
Using company results as a yardstick for the health of the industry, in 2009 iron ore giant LKAB reported net profits of SEK719 million on revenues of SEK11.9 billion from the sale of 18.7 million mt of products. Last year, it sold 26 million mt worth SEK28.5 billion ($4 billion) and generated SEK9.1 billion in profits. (All dollar figures in US$ unless otherwise indicated.)
Similarly Boliden, focused mainly on copper and zinc, reported net profits of SEK4 billion on revenues of SEK36.7 for 2010, compared with profits of SEK2.5 billion on revenues of SEK27.6 billion in 2009. In both cases, the improvement came about through a combination of higher commodity prices and greater sales tonnages.
While LKAB is wholly, and Boliden predominantly focused on domestic operations, international companies are playing an increasingly valuable part in the resurgence of the Nordic mining sector. Inmet Mining, which operates the Pyhäsalmi base-metals mine in Finland, is Canadian-domiciled, as is the operator of the Kittilä gold mine, Agnico-Eagle. Northern Iron, which restarted production at the Sydvaranger iron ore mine in northern Norway in 2009 hails from Australia, while South Africa’s Gold Fields has been evaluating the platinum group metals potential of the Arctic Platinum Project for much of the past 10 years.
Attracted by Northern Ore …
The surge in demand for iron ore that has been so evident in recent years has led to renewed interest in resources in all four of the Nordic mining countries. In Greenland, the Isua banded-iron formation deposits attracted the attention of a number of majors before finally being taken up by London Mining. The company is now working on a bankable feasibility study on a 15-million-mt/y open-pit operation, based on a JORC-compliant resource of some 950 million mt. Grading 36.5% iron, the deposit is from 180 to 440 m thick, with the mine site surrounded on three sides by the island’s ice cap.
London Mining is completing an additional 7,000–8,000 m of diamond drilling this year to improve its resource estimate. The initial design envisages the use of magnetic separation and flotation to produce a 70.2% Fe blast-furnace feed concentrate, with a pipeline carrying concentrate slurry from the plant to a floating loading wharf. A scoping study on the project has indicated a $2-billion capex requirement, with the company predicting the start of construction late next year and commissioning in 2015. In March, London Mining raised $30 million from the Anglo Pacific group in return for a 1% royalty on the project’s output, and is using this to fund the feasibility study.
Already in production since 2009, Northern Iron’s Sydvaranger mine in the far north of Norway produces a 66% magnetite concentrate. During its former period of operation, from 1910 to 1997, the mine produced 200 million mt of products. The mine shipped 1.4 million mt of product last year from 3.3 million mt of ore mined.
Following a lightning-induced breakdown in its primary mill in July, the company is now predicting an output of 1.65-1.7 million mt of magnetite concentrate this year. Last October, it began a $25-million debottlenecking project aimed at achieving its 2.8-million mt/y nameplate capacity, with new crushing capacity and improvements to the existing concentrator circuit. It is also planning to replace its existing 95-mt-capacity truck fleet with 190-mt units, as well as sourcing a greater proportion of softer ore in its mill feed, and has already completed studies for a further doubling of capacity. Earlier this year the company signed an offtake agreement with Tata Steel for the supply of up to 5.5 million mt of product over the next five years.
Farther south, Norway’s other iron ore producer, Rana Gruber, has been working deposits in the Dunderland valley near Mo i Rana since 1936. In 1999, the company opened its first underground operation at the Kvannevann mine, with an output of 1.6 million mt/y of ore. A new haulage level at the mine will allow production to be increased to 2.1 million mt/y, with the mine’s life extended until at least 2023. Part of Rana Gruber’s resource consists of manganese-rich magnetite, with the company producing both magnetite and haematite concentrates.
Sweden’s iron ore industry, long dominated by LKAB, looks set for an influx of new producers if the projects currently under evaluation prove viable. LKAB itself is in expansion mode, aiming to increase its capacity from 27 million mt/y to 37 million mt/y of pellet products by 2015. Having already commissioned a new haulage level at its Malmberget mine near Gällivare, the company is spending SEK12.4 billion on a similar extension at Kiruna that will allow the mine to be deepened by a further cut.
LKAB opened a third mine, Gruvberget, in the middle of last year, and is now developing two more—Mertainen and Leveäniemi—from which it will source the additional ore needed to meet its increased pellet-production target.
However, LKAB is by no means alone in the area surrounding Kiruna, with a number of other companies now evaluating iron ore resources there. In November, Kiruna Iron, a subsidiary of ASX-listed Scandinavian Resources, acquired the Rakkuri project there from Anglo American and Rio Tinto, and is now continuing exploration in order to increase the size of the regional resource to around 500 million mt. The company paid $7 million for the project and for access to Anglo’s exploration database covering Sweden, which contains data collected over the past 10 years of work in the country.
Other companies that have been active in the Kiruna area include Avalon Minerals and Grängesberg Iron. Avalon acquired the Viscaria copper-iron mine from Phelps Dodge in 2008, and has since upgraded the resource there to 66 million mt containing 600,000 t of copper and 2.4 million mt of iron. Previously run by Outokumpu, between 1982 to 1997 Viscaria produced 12 million mt of ore grading 2.3% copper from a volcanogenic massive sulphide-type (VMS) deposit.
Avalon has been working on a feasibility study, with the aim of starting mining in 2013, but in August was unsuccessful in completing a planned financing exercise to fund the project.
Further advanced, Northland Resources’ Kaunisvaara project, close to the northern border between Sweden and Finland, is now under construction, with both the Tapuli and Sahavaara mines permitted. Northland has a production target of 1.5 million mt of magnetite concentrate in 2013, rising to 5 million mt/y thereafter. Capex requirements for Kaunisvaara are $694 million, with the operation based on an initial seven- to eight-year resource.
The company is also evaluating the Pellivuoma resource, and is carrying out a feasibility study on the Hannukainen copper-gold-iron ore deposit across the border in Finland, where production could begin in 2014 or 2015.
… and Farther South
In June, Grängesberg Iron sold its exploration properties in the Kiruna area to Kiruna Iron for $2 million, and is now focusing on reopening its namesake operation in the Bergslagen district of mid-central Sweden. In operation from the 16th century until 1989, Grängesberg produced 180 million mt of high-grade ore, with current resources estimated at more than 88 million mt. Grängesberg Iron is now carrying out a prefeasibility study on an operation capable of supplying 2.5 million mt/y of products for export, and is believed to be planning an IPO to raise up to $30 million.
Also exploring for iron in Bergslagen, Nordic Iron Ore is focusing on the old Blötberget and Håksberg mines, which were abandoned around 1980 after a long productive history. Nordic Iron is also following the IPO route, aiming to raise up to $25 million, with a prefeasibility study on reopening the mines now under way.
Bergslagen was a major European center for iron ore production long before the northern Swedish deposits were discovered. Relatively close to the Baltic Sea coast, the mines supplied ore to both domestic and export markets. Another former Swedish Steel (SSAB) operation here, the Dannemora mine, is now being reopened by Dannemora Minerals, with production planned to begin in 2012.
The company completed dewatering the mine to the 470 m level in early 2010, and since then has supplied several European steelmakers with trial samples of lump ore and sinter fines. First commercial production is scheduled for mid-next year, with the company planning to use Dannemora as the first step in developing further resources in the district, starting with the Riddarhyttan deposit.
Adding Nickel to the Nordic Metal Mix
Although nickel sulphide ores were worked in various places during the 20th century, production in Finland ceased once Outokumpu ended most of its mining activities to focus on its stainless-steel business. However, the commissioning of the Sotkamo mine in late 2008 marked a new era in nickel mining in the country.
In June, Talvivaara Mining spent €60 million in buying out part of Outokumpu’s 20% holding in the project, and has an option to take full ownership for a further €240 million.
Using bio-heap leaching, Talvivaara produced 10,400 mt of nickel and 25,500 mt of zinc last year, with the process ramping up toward its target annual output of 30,000 mt of nickel and 60,000 mt of zinc. The operation held 24.3 million mt of ore on its leach pads at the year-end, having mined 13.3 million mt during the year. The primary heap reclaim and secondary heap stacking systems were commissioned during 2010, while the company continued with its process optimization program.
Talvivaara is also seeking permitting for a uranium-recovery operation, with Canada’s Cameco Corp. funding up to $60 million of the cost of an extraction plant. The company is predicting an output of up to 350 mt/y of uranium as yellowcake, with Cameco taking all of the output up to 2027.
Farther north in Finland, First Quantum Minerals is developing the Kevitsa nickel prospect it acquired when it bought Scandinavian Minerals in 2008. First Quantum gave the go-ahead for the mine in late 2009, with production at a rate of 10,000 t/y of nickel and 20,000 t/y of copper scheduled for 2012. In April, the company provided an updated reserve estimate for the project, which now stands at 161 million mt of ore containing nickel, copper, cobalt, gold and PGMs.
First Quantum is now predicting a 32-year mine life, producing 5 million mt/y of ore from an open-pit operation. Capex for the mine is $400 million, with an expansion study to a throughput of 7.5–10 million mt/y now under way.
Other Nordic nickel projects include Belvedere Resources’ Hitura mine in Finland, and IGE Resources’ Rönnbäcken development project in northwestern Sweden. Belvedere bought Hitura, formerly operated by Outokumpu, in 2007, but put the operation on care-and-maintenance in late 2008 at a time of low nickel prices. It reopened Hitura in July last year, having bought the operation again, this time from the administrators of its bankrupt subsidiary, Finn Nickel.
IGE Resources is evaluating Rönnbäcken through its subsidiary, Nickel Mountain Resources. The company is currently at prefeasibility-study stage on the sulphide-ore project, looking at an open-pit operation that could produce up to 25,000 t/y of nickel. The study is due for completion late next year, based on deposit resources totaling some 526 million mt of low-grade mineralization.
The upsurge in world steel production has obvious implications for companies producing other metals that find uses as alloying applications. Nickel is one such, with chromite and molybdenum being others.
When Outokumpu decided to focus on the downstream end of its business, it retained ownership of just one mining operation: the Kemi chromite mine in northwest Finland, which forms an integral part of its Tornio ferrochrome-production facility. The Kemi deposit was worked as an open-pit from the late 1960s until 2005, since when production has come exclusively from underground.
The current 1.3 million mt/y ore output is treated to give 200,000 t/y of lump ore and 400,000 t of chromite concentrate, which is used as ferrochrome feed at Tornio. Smelter capacity there is now being doubled to 530,000 t/y of ferrochrome, with the company also investing in an output expansion at Kemi.
The mine has proven reserves of some 36-million-mt within an 87-million-mt resource, but recent work by the Geological Survey of Finland has indicated the regional chromite resource could well be much larger than had previously been estimated. According to Outokumpu, the intrusion that hosts the chromite may extend to a depth of 4 km, while the chromite-bearing layers could reach depths of 2–2.5 km.
In eastern Greenland, meanwhile, Quadra FNX acquired the Malmbjerg molybdenum project with its takeover of International Molybdenum in 2007. The deposit had been investigated by other companies in the past, including Amax Mining, and InterMoly was looking at an open-pit operation capable of producing up to 10,400 mt/y of molybdenum. Quadra FNX has since put the project on the back burner.
As E&MJ reported in detail in its October 2010 edition, one of the key developments in the Nordic base-metals sector has been Boliden’s successful completion of the $850-million expansion project at its Aitik open-pit copper mine in northern Sweden. The four-year project will result in ore capacity reaching 36 million mt/y by 2014.
The impact of the expansion was, however, already benefiting the company last year, with copper output rising from 54,600 mt in 2009 to nearly 76,000 mt in 2010. Aitik also produced more silver and gold, with Boliden planning to begin molybdenum production there as well. The Aitik expansion has been undertaken in conjunction with a 16,000-mt increase in copper cathode-production capacity at the company’s Rönnskär smelter, to 250,000 t/y.
In January, Boliden announced a $580-million expansion at its Garpenberg mine in the Berglagen district, with ore production scheduled to rise from the current 1.4 million mt/y to 2.5 million mt/y by 2015. Boliden acquired Garpenberg in 1957, in an area that has hosted base- and precious-metal mining since the 13th century; current reserves will allow operations to continue there until at least 2030. The investment will cover a new concentrator, new shafts and underground development, the company has said, with its aim being to cut production costs by up to one-quarter once the expansion is fully operational.
In the meantime, the company was able to run its Boliden Area concentrator at higher capacity last year than in 2009, thanks largely to the completion of the new Hötjärn tailings pond and the commissioning of another new mine in the district, Maurliden Östra. Boliden has operated nearly 30 mines in the area since the first was opened in the 1920s, with four in operation today: Renström and Kristineberg (underground), and Maurliden and Maurliden Östra (open-pits).
Boliden is also investing $70 million to restart its Kankberg mine as a gold and tellurium producer. Previously operated during the 1990s as a copper-zinc mine, Kankberg should produce 37,000 oz/y of gold and 41 t of tellurium, equivalent to around 10% of the world’s current tellurium output. Reopening the mine will involve underground development together with a partial reconstruction of the existing Boliden Area concentrator and gold-recovery plant, with production scheduled to begin in mid-2012.
In continuous operation since 1857, Lundin Mining’s Zinkgruvan mine reached a milestone earlier this year with the first shipment of concentrate from its new copper-recovery plant. The discovery of an area of copper-rich ore next to the historical zinc-rich orebody led the company to build the new plant, which came on stream late last year, as well as to develop a new access ramp from surface. This in turn will benefit the existing zinc operation by providing additional flexibility, according to Lundin. The company expects full 7,000-mt/y copper capacity to be achieved in 2013, the project having cost some $40 million to complete.
In Finland, Inmet Mining’s Pyhäsalmi is scheduled to mine 1.4 million mt of VMS ore this year and produce 13,300 mt of copper and 31,900 mt of zinc, plus 800,000 mt of pyrite it sells to the chemicals and fertilizer industries worldwide. The mine, which Outokumpu opened in 1962 as an open-pit operation, is now completely underground at a depth of between 1,000 and 1,400 m. As Inmet points out, this presents its own challenges in terms of geotechnical stability, with work being undertaken on modeling to optimize the mining sequence. Pyhäsalmi is also a leader in the use of tele-remote mining systems, with studies now under way on the use of automated longhole drilling and electronic detonators for blasting to give better ore fragmentation and stope stability.
Of the few mines that have operated in Greenland to date, Black Angel was the most successful. Closed by Boliden in 1990 on the grounds of reserve exhaustion after a 17-year life, the mine was conspicuous for its aerial-ropeway access to the workings, if nothing else.
However, substantial resources remain in the mine pillars while the retreating ice sheets have revealed additional lead-zinc mineralization, all of which is now being targeted by Angel Mining (formerly Angus & Ross). Recent developments include updating an earlier feasibility study on the project to include an on-site underground concentrator, and preparations for the reinstallation of a cable-car system to access the old workings.
High-value Targets and Production
Although the Nordic countries have never been recognized as lying within a major gold province, the geological provenance of the Baltic Shield suggests much more remains to be discovered. Indeed, until the 1980s, virtually all of the region’s gold production had come as a byproduct from copper or zinc mining; Mineral Deposits of Europe, published in 1974 by the U.K. Institution of Mining and Metallurgy, hardly mentions gold production as being of interest there at that time. Boliden’s namesake mine, which operated from 1926 to 1967, was a notable exception.
Saattopora, Outokumpu’s short-lived gold mine in northern Finland, brought new attention to the gold potential of the central Lapland greenstone belt, with the operation having produced 200,000 oz of gold and 5,200 t of copper between 1988 and 1995. Agnico-Eagle’s Kittilä mine, which lies in the same geological environment, has a 4.9-million-oz proven and probable reserve, and is set to remain in production until beyond 2030.
With open-pit mining scheduled to last until 2013, the operation moved underground last year. Production of 150,000 oz is planned for this year, rising to 173,000 oz from 2012, while the company already has a 50% capacity expansion under evaluation. Other options include sinking a shaft and continuing an appraisal of mineralization outwith the current mine footprint.
The Björkdal gold mine in Sweden went through a number of ownership changes since it was opened in 1988, before being acquired by Gold Ore Resources from Minmet in 2007. The mine has now produced more than 1 million oz of gold, with a target output of around 44-46,000 oz this year.
Meanwhile, Dragon Mining’s Svartliden open-pit, in the west of the Skellefte district, has already notched up more than 250,000 oz since being commissioned in 2005. Surface mining will end next year, with a transition to underground following the completion of a new ramp system.
Dragon also operates the Orivesi and Jokisivu gold mines in Finland, and the Vammala production center, where ore from the mines is treated. Production is expected to be 30,000 oz this year, drawn from the Sarvisuo and Kutema Deeps operations at Orivesi and from Kujankallio and Arpola at Jokisivu. Recent drilling at Juomasuo, on the Kuusamo prospect in northeastern Finland, has returned some high gold values, the company reported.
Endomines commissioned its Pampalo gold mine in the Karelian gold belt of eastern Finland at the beginning of this year, with the aim of producing 17,000–19,000 oz during 2011. Nordic Mines began ore production at its Laiva operation in June, with the first gold pour scheduled for August.
Lappland Goldminers is using its Pahtavaara mine in northern Finland, acquired from Scan Mining in 2008, as a springboard for other Nordic gold operations. Recent exploration has indicated the potential for underground mining to complement the existing open-pit operation there, at the adjoining Länsi area. Pahta-
vaara produced nearly 24,000 oz last year. Other projects include Ermarksberget and Fäboliden, inland from the Skellefte district of Sweden, deposits that lie within a regional trend the company refers to as ‘The Gold Line.’
Orex Minerals is the latest company to try its hand at evaluating the Barsele gold prospect in the same area, having paid Northland Resources $15 million for it earlier this year. Exploration over the past 25 years has indicated a diorite-hosted gold zone and a gold-enriched VMS resource.
In northern Norway, Arctic Gold is evaluating the potential to restart mining at the old Bidjovagge copper-gold mine, idle for the past 20 years, while the state coal mining company, Store Norske, has established a prospecting subsidiary to carry out gold exploration in Svalbard and on the Norwegian mainland.
And in southern Greenland, Angel Mining is producing gold again from the Nalunaq operation, bought from Crew Gold in 2009. The operation, which features an underground cyanide leaching unit, achieved its first pour in May, with a target output of 24,000 oz/y. It produced 308,000 oz when operated by Crew from 2004 to 2008.
Targeting Rare Earths
As described in the December 2010 edition of E&MJ (pp. 46–53), the prospect of short supply of rare-earth elements (REEs) has fuelled a worldwide upsurge in exploration, with the Nordic countries being no exception. In Sweden, Tasman Metals recently unveiled an updated resource estimate for its Norra Karr nepheline syenite-hosted REE prospect, with a preliminary economic assessment scheduled for completion by the year-end. Norra Karr has an inferred resource of 60.5 million mt averaging 0.54% total RE oxide, with what the company describes as “an unusually high” proportion of yttrium and dysprosium.
In Greenland, Hudson Resources is evaluating the Sarfartoq carbonatite-hosted resource that contains REEs, niobium and tantalum, while Greenland Minerals and Energy is working at Kvanefjeld, which contains REEs, uranium and zinc. A prefeasibility study on Kvanefjeld has indicated capex requirements of $2.3 billion to commission an operation with an output of 44,000 mt/y of rare-earth oxides and 3,900 mt/y of U3O8. On the west coast, meanwhile, Avannaa Resources has identified two zones of REE mineralization at its Karrat Isfjord prospect in an area that was not previously recognized as having REE potential.
Uranium is also the target for Aura Energy at its Häggån prospect in central Sweden, where it has an inferred resource totaling 810 million mt grading 162 g/t U3O8 plus vanadium, molybdenum, nickel and zinc, hosted in alum shales. Having spent some time looking at the area around the old Sala silver mine, Tumi Resources has expanded its targets to include both copper (at the old Tomtebo mine) and tungsten, while further north, Tertiary Minerals recently issued a JORC-compliant 2.7 million mt indicated resource estimate for its Storuman fluorspar prospect.
One of the salient features of the current wave of interest in Nordic mining and exploration is just how many of the prospects now being evaluated have already either been mined and abandoned, or have been the subject of repeated exploration programs. On the other hand, the existence of old mines has proved to be an indicator for the presence of mineralization nearby or in similar geological settings, paving the way for a new generation of mining.
The key to both aspects is the strength of commodity demand worldwide, with high prices (relative to the recent past, at least) driving the search for new deposits, and the re-appraisal of old ones. In this respect, the Nordic countries are continuing to benefit from investment in exploration, with their governments having gone out of their way to facilitate new mining projects—on a sustainable basis.
Political, economic and fiscal stability, coupled with business transparency and a truly inviting, well-researched geological endowment: all of the key features on any exploration manager’s wish-list.