The future is the most pressing issue of our time LKAB’S SUSTAINABILITY REPORT 2008 56 | READING INSTRUCTIONS SUSTAINABILITY REPORT 2008 CONTENTS READING INSTRUCTIONS 56 READING INSTRUCTIONS In late-2007, the Government and the Ministry of Enterprise, En- ergy and Communications adopted new guidelines for sustain- 57 SUSTAINABILITY YEAR 2008 ability reporting by state-owned companies. To enable compari- son against the reports of other companies, both nationally and internationally, it was decided that reporting should be done in 58 OUR APPROACH TO SUSTAINABILITY accordance with the Global Reporting Initiative, GRI. GRI pro- REPORTING vides a systematic framework for sustainability reporting. 59 ABOUT LKAB This report, which is LKAB’s first sustainability report, describes the company’s operations from economic, social and environ- 61 LKAB’s STRATEGY AND GOVERNANCE mental perspectives. The report begins with an account of LKAB’s strategic ap- 65 WORK WITH ECONOMIC ISSUES proach to sustainability issues and of the company’s operations. Thereafter, the following sections contain tables and disclosures 67 WORK WITH ENVIRONMENTAL ISSUES of sustainability performance with respect to the three areas: Economy, Environment and Society. The performance indica- 81 WORK WITH SOCIAL ISSUES tors applied are stated in the GRI guidelines and in GRI’s sector supplements for the metal & mining industry. The company’s 89 GLOSSARY strategy and vision with respect to sustainability are given in the President’s comments in the Annual Report. 90 GRI INDEX LKAB intends to present sustainability reports annually, starting with this report for 2008. Historical figures are presented for 94 ATTESTATION – STATEMENT OF ASSURANCE indicators where such figures are available. 95 CONTACT INFORMATION This sustainability report has been reviewed by external auditors. View towards Nikkaloukta from Kiruna. SUSTAINABILITY REPORT 2008 ABOUT LKAB | 57 Sustainability year 2008 “In its relations with the people who are affected by the living and working conditions are essential for LKAB’s future transformation, LKAB strives to provide assurance. They success. Therefore, it is important that people can rely upon must be confident that the company will find sustainable and the company, together with other key stakeholders, to find rea- reasonable solutions based on the prevailing situation in each sonable and sustainable solutions for those who are affected individual case.” by the structural transition. LKAB’s President and CEO, Ola Johnsson in reference to the structural transformation LKAB HAS IDENTIFIED FIVE AREAS OF PRIORITY FOR SUS- in the orefields communities TAINABILITY: Safety. For LKAB, safety in particular and working environ- Iron ore mining is a long-term enterprise. Production under ment in general, have top priority. Since the tragic fatal ac- ground requires time-consuming investments and has an cident that occurred in February 2008, an intensive effort to impact on the landscape. Since the company was established, prevent similar incidents, with a focus on rock reinforcement, 118 years ago, LKAB has worked with a long-term perspec- has been under way. During 2009, work to prevent accidents tive. In recent years, this approach has been formalized, for in the workplace resulting from failure to observe safety proce- example, with the introduction of quality certification and dures will be intensified. environmental and energy management systems. Health. The long-term program of health promotion has con- Now, for the first time, LKAB is presenting a sustainability re- tinued to bear fruit. During 2008, the number of LKAB employ- port. This is a natural step, considering the long-term perspec- ees on long-term sick leave was reduced from 50 to 25. tive that characterizes the company’s relation to employees, Environmental and climate impact. The intensive effort to customers, the iron ore reserves, nature and the communities reduce the company and industry’s environmental and climate in which we are active. A further systematization of LKAB’s impact continues. LKAB’s experimental blast furnace in Luleå sustainability performance aims at strengthening this attitude is an important base for ULCOS, a joint European project of and ensuring that it permeates all aspects of the company’s which the aim is to halve the iron and steel industry’s carbon operations. dioxide emissions by 2020. Together with Statoil/Hydro and During 2008, Group management appointed a steering com- Höganäs AB, LKAB has agreed to conduct a pre-study during mittee with operative responsibility for sustainability issues. 2009 aimed at creating steelworks with the world’s lowest Targets and priority areas for sustainability were identified. carbon dioxide impact. Thereby, work on the introduction of reporting procedures, Gender equality. Further progress has been made towards formalization of stakeholder dialogues and planning of training gender equality. The proportion of female employees increased initiatives commenced. during the year from 12.5 to 13.1 percent, and the proportion Despite the economic downturn, LKAB must plan for the of women in managerial positions is now 13.3 percent. future. The company is in an intensive phase of investment, Group Management now has its first female member. with new main levels being built in the mines in both Kiruna Diversity. As a dominating economic force and a major and Malmberget. employer in the orefields communities, LKAB has a long-term These efforts to secure future mining also make their mark at need for skilled and qualified co-workers. Therefore, during surface level, in the form of deformations and the resulting 2009, in work towards greater gender equality, more focus will need to relocate infrastructure and residential areas. During be placed on achieving diversity to ensure that LKAB is an at- 2008 and 2009, 150 homes in Malmberget will be relocated or tractive employer for all individuals. replaced. In Kiruna, work on the construction of a railway by- pass will begin in 2009. Within a few years, the first residential GROUP SUMMARY areas will be relocated. MSEK 2008 2007 2006 2005 Owing to these developments, individuals will face major Net sales 23 128 16 385 14 615 14 337 changes. This will pose a challenge for LKAB for years to Operating income 10 327 6 148 6 256 6 109 come. Vital communities in which people can find attractive -operating margin, % 44,7 37,5 42,8 42,6 Profit after financial items 10 389 6 344 6 382 6 451 -profit margin % 44,9 38,7 43,7 45,0 OVERALL SUSTAINABILITY OBJECTIVES Tax -2 748 -1 665 -1 785 -1 904 Net income for the year 7 641 4 679 4 597 4 547 1-year perspective. To have established structures for the Group’s work with re- Fixed assets 21 415 19 447 14 341 9 798 gard to sustainability. Current assets 14 916 10 233 11 524 10 776 3-year perspective. To have good processes for sustainability reporting according Shareholders’ equity 25 218 22 251 19 076 14 802 to GRI, above all with respect to documentation, archiving, performance measure- Cash flow for the year 3 948 -1 159 70 554 ment, follow-up, and dialogue. Return on equity, %* 32,2 22,6 27,1 36,6 Equity/assets ratio, % 69,4 75 73,8 72,0 5-year perspective. Sustainability actions will result in business advantage for Capital expenditures (fixed assets) 4 682 5 968 4 844 2 648 LKAB and will be fully integrated into the business strategies. Average number of employees 4 086 3 885 3 737 3 563 * After tax. 58 | OUR APPROACH TO SUSTAINABILITY REPORTING SUSTAINABILITY REPORT 2008 Our approach to sustainability reporting In writing the sustainability report, LKAB has followed use the enterprise management system Movex. Other Group the GRI guidelines for defining the content of the report. companies, principally foreign entities, use local business man- This means that LKAB has attempted to ensure that the agement systems. The long-term goal is to have a consolidat- information covers topics and indicators that reflect the ed business management system for the entire LKAB Group. organisation’s significant economic, environmental, and social impacts. Consideration has also been given to LKAB’s monitoring system for carbon dioxide emissions meeting LKAB’s most significant stakeholders’ needs for The system is based on internal procedures emanating, in information. turn, from permits granted by the County Administrative Board and from descriptions of procedures for monitoring emis- REPORTING ACCORDING TO GRI sions from different sources. An internal quality plan describes LKAB reports according to the Global Reporting Initiative (GRI) LKAB’s carbon balances, based on carbon input and out- G3 Guidelines. LKAB is of the understanding that this report put in iron ore pellet production at the company’s plants in complies with GRI’s C+ Application Level. The auditors’ state- Sweden. This is supplementary to permits granted by the ment of assurance is given on page 94. County Administrative Board and serves as a checklist and instruction. Appended to the quality plan are descriptions of SCOPE AND BOUNDARY OF THE REPORT procedures for monitoring emissions per plant, which form the This report pertains mainly to the LKAB Group’s Nordic opera- basis of LKAB’s monitoring system. External reports of annual tions, which account for 85% of the Group’s total sales and emissions are submitted to an independent accredited verifier, upon which the sustainability actions of the reporting year have to the Swedish Environmental Protection Agency and to the focused. County Administrative Board of Norrbotten County. Work with the adoption of GRI as the Group’s reporting standard has been directed during the first year towards the establishment of structures and procedures for reporting of sustainability data. LKAB has applied the GRI matrix for defin- ing materiality issues and stakeholders. The reporting period is the calendar year, and reported data refer to the same period, unless otherwise indicated.