The third-quarter for LKAB saw stable production, increased delivery volumes and positive cash flow. Operating profit for the LKAB was MSEK 273 (-6,951), with impairment losses of MSEK -7,136 on property, plant and equipment having been charged to earnings in the third quarter of 2015. The underlying operating profit for the quarter was MSEK 762 (798).
“Continued efficiency improvements and cost savings have had an effect, primarily as a result of measures to improve productivity in daily operations and more efficient capacity utilization,” said Jan Moström, president and CEO.
LKAB’s delivery volumes increased by 16% compared with the same period the previous year. At the same time, the average spot price for the quarter increased to $59/metric ton (mt).
The positive impact of higher delivery volumes and a higher iron ore price remains countered by the results of hedging activities. The hedges were entered into at the lower iron ore prices during the fourth quarter of 2015 and the first quarter of 2016. Hedging was carried out to alleviate the effects of changes in prices and exchange rates in the market. This meant LKAB was not able to take full advantage of the price increase during the year.
“To sum up the year’s third quarter, business was better than in the same period last year,” Moström said. “The focus on maximizing pellet production remains and demand for LKAB’s processed iron ore products is strong. The price of processed iron ore products developed well compared to the market situation earlier in the year.”
All mining operations require the use of land, and LKAB’s commitment to and responsibility for urban transformation in the mining communities remains unchanged.
“LKAB will strengthen its long-term competitiveness through increased production, a focus on costs and the efficient use of the investments made in LKAB, and will do this in partnership with the communities where we operate,” Moström said. “The goal is mining operations that are financially, socially and environmentally sustainable in the long term.”
LKAB is an international high-tech minerals group that mines and upgrades the unique iron ore of northern Sweden for the global steel market. LKAB employs about 4,500 people in 13 countries.