LKAB 2014 Annual and Sustai
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2014 ANNUAL AND SUSTAINABILITY REPORT REPORT AND SUSTAINABILITY ANNUAL 2014 ANNUAL AND SUSTAINABILITY REPORT A WORLD OF STEEL Demand for iron ore is driven by the demand for steel, China led to a sharp fall in the spot price of iron ore fi nes which in turn is strongly linked to GDP growth, during the year. In contrast, the market is stable for increasing urbanisation and prosperity in the world’s highly processed iron ore products, like LKAB’s pellets, emerging economies. The supply of fi nes in the iron ore as steel manufacturers place increasingly tougher market increased signifi cantly during the fi rst half of requirements on e ciency and environmental perfor- 2014, while demand, especially from China, declined. mance. Oversupply in combination with low steel prices in 150 years 47% 1.7GJ is how long steel has been recycled, is how much the price of per tonne of steel (HRC) is the amount of and it can be recycled over and over iron ore fell in 2014, with an average energy that steelworks can save by using without loss of quality. for the year of USD 97/tonne. blast furnace pellets instead of sinter. 100 % 1.3 tonnes 823 Mt increase. Global steel consumption is how much the total weight of a of steel was produced in has doubled in 35 years. 40 tonne truck can be reduced if high- China in 2014. That is almost half strength steel is used in platforms of total world steel production. and chassis1. 1 www.advantageenvironment.com 50 % 320 kg 933 Mt of world steel production less carbon dioxide is emitted per of iron ore was imported by is used for buildings and tonne of steel produced (HRC) if blast China. That is a 13.8 percent infrastructure. furnace pellets are used instead increase from last year. of sinter. FROM SWEDISH OREFIELDS – TO THE WORLD LKAB operates in northern Sweden amidst Europe’s richest iron For nearly 125 years, LKAB has been a key driver of Sweden’s ore deposits. Our production, processing and world-leading growth and exports that built up infrastructure, industries and research and development facilities are located here. We trans- knowledge. We help communities grow and develop and serve as port fi nished iron ore products by rail to the ports of Narvik and a safe, secure, attractive employer. At the same time, we a ect Luleå for further transport to customers, primarily in Europe, the the people, environment and other industries in our surround- Middle East, Asia and the US. The mining of iron ore in northern ings. Our values and Code of Conduct guide us to act responsibly, Sweden generates considerable socio-economic value. in cooperation with, and with the trust of, the world around us. LKAB AND SOCIETY 26 Mt 83 % GROW SIDE BY SIDE new homes need to be built in the was the total amount of iron of LKAB’s sales consist of high- 5,000 mining communities as a result of ore products LKAB delivered to quality iron ore pellets – blast urban transformation. customers in 2014. furnace pellets and direct reduction pellets. of Gällivare’s residents and 96 percent 97% of Kiruna’s believe that LKAB is very valuable to the municipality. people visited LKAB and were 25,000 received by our visitor services in 2014. LKAB’s mines are themselves major destinations. MSEK 700 5,491MSEK WITH RESPONSIBILITY is how much LKAB’s costs will was invested by LKAB during the year. FOR THE ENVIRONMENT decrease through process MSEK 1,700 in the growth programme optimisation, new purchasing is the total energy savings achieved for new open-pit mines, MSEK 413 73 TJ through energy e ciency measures. agreements, hiring freezes in environmental investments. and sta reductions. is the degree of purifi cation of fl ue 90 % gases from the MK3 pelletizing plant in Malmberget after additional environmental investments. of land north of Mertainen is 2,600 ha protected from exploitation by LKAB’s 77% 71,232 environmental compensation plan. was the approximate number of of LKAB’s iron ore AS AN ATTRACTIVE products are exported to tonnes of fi nished products Europe’s steelworks. transported on the Malmbanan EMPLOYER railway every day during the year. of LKAB’s employees are women. The 19.4 % percentage is steadily increasing and the target is 25 percent women by 2020. employees have been trained so far in 60 % 4 th 500 the new Code of Conduct adopted at the end of 2013. is how much LKAB increased its LKAB is the world’s fourth-largest sales of magnetite ore for uses other pellet producer. place in Universum’s “Sweden’s Best than steel production. 5 th Employers” survey. EVENTS IN 2014 1 CONTENTS 2014 EVENTS DURING THE YEAR ABOUT LKAB’S ANNUAL AND SUSTAINABILITY REPORT 2014 Events in 2014 1 In accordance with the state’s ownership policy and guidelines for state-owned The year in numbers 2–3 companies, LKAB has prepared an annual report and a sustainability report as per the Global Reporting Initiative (GRI) guidelines. LKAB has chosen to report LKAB’s objectives 4–5 fi nancial and non-fi nancial (social and environmental) information in the same report for a better understanding of the company and its operations. The report President’s Report 6–8 structure largely adheres to the reports of the last two years, with LKAB’s strategy as the basis. The Sustainability Report for 2014 was prepared as per G4, JAN FEB and a GRI Index with the core scope is found on pages 74–75. The index refers 1 THIS IS LKAB 9 primarily to this report, but some selected informational points refer to a sepa- LKAB – A global group 10–11 rate appendix (GRI Appendix 2014) available on LKAB’s website. SSAB AND RUUKKI MERGE STRONG START TO THE YEAR INVESTMENTS IN NARVIK Signifi cant sustainable development issues 12–13 The audited Annual Report includes the Administration report as well as the 22 January. Two important custo- 31 January. LKAB delivered nearly 17 February. LKAB is investing an ad- Corporate Governance Report on pages 62–67. Customer o ering 14 mers for LKAB announce that they 2.29 million tonnes of fi nished pro- ditional SEK 1 billion in a new transport will form a joint company. ducts in January, which is an annual system from ore stockpiles to shiploa- Sustainability information that was reviewed by the auditors is found on pages 4–13, 21–60 and 74–77 as well as in the GRI appendix on LKAB’s website at 2 CUSTOMERS AND MARKETS 15 mean value of 26 million tonnes. ders in the port of Narvik. www.lkab.com. Iron ore market drivers 16–17 LKAB – An active player in growing niches 18 MAR APR Market development 19 LKAB Minerals complements the core business 20 100 MILLION TONNES OF ORE NEW CODE OF CONDUCT NEW CHAIRMAN OF THE BOARD 12 March. New exploration 26 March. LKAB’s Board of Directors 29 April. LKAB’s owner selects Sten 3 OBJECTIVES AND STRATEGY 21 discoveries increase the ore base adopted a Code of Conduct for the Jakobsson as the new Chairman of the by almost 100 million tonnes of Group. The Code of Conduct is part of Board. He succeeds outgoing chairman Strategic focus areas 22–23 magnetite in two of LKAB’s open- the sustainability strategy and repla- Marcus Wallenberg at LKAB’s AGM. Performance in Ironmaking 24–29 pit mines in Svappavaara. ces previous ethics policies. Flexibility 30–35 MAJ JUN Safe and resource-e cient production 36–43 Growth 44–48 AGREEMENT WITH AGREEMENT WITH LKAB MINERALS TURNS 25 Urban transformation 49–54 GÄLLIVARE MUNICIPALITY KIRUNA MUNICIPALITY 4 June. The anniversary was celebra- 8 May. The Supreme Administrative 14 May. LKAB and Kiruna Municipa- ted by having all sta participate in a Attractive LKAB 55–60 Court did not give leave to appeal the lity enter into a joint agreement on health challenge where together they cooperation agreement between LKAB urban transformation and relocation walked, ran, swam and bicycled to 4 OUR GOVERNANCE AND CONTROL 61 and Gällivare Municipality, thereby of City Hall and central parts of the raise EUR 25,000 for WaterAid. making it legally binding. city of Kiruna. Corporate Governance Report 62–67 Board of Directors 68–69 JUL AUG Group management 70–71 Auditor’s statement on the PERMIT FOR MERTAINEN READY FOR MINING LOWER IRON ORE PRICES Corporate Governance Report 72 3 July. In a partial ruling from 18 July. Mining in Mertainen can 15 August. The price of iron ore drops, the Land and Environment Court begin since the Swedish Agency which a ects LKAB’s margins. An enhanced Auditor’s Limited Assurance Report a permit was issued for planned for Marine and Water Management cost-cutting programme is implemented. on LKAB’s Sustainability Report 73 activities in Mertainen including withdrew its appeal to the Supreme GRI Index 74–75 preparatory work, which began Court. Materiality analysis 76–77 immediately. SEP OCT 5 OUR FINANCIAL ACCOUNTS 78 Administration Report 80–91 COMPENSATION GETS GREEN LIGHT SUSTAINABILITY 26 September. LKAB’s plan to compensate for nature conserva- REQUIREMENTS FOR SUPPLIERS Financial statements 92–100 tion values at the mine in Mertainen is approved by the Land and 13 October. A new framework for all Notes 101–133 Environment Court. The plan is the fi rst of its kind and its approval LKAB suppliers will lead to more sustai- is the result of a long-term biodiversity project. nable purchasing and strengthen LKAB’s A rmation by the Board 134 position as one of the world’s most Auditor’s Report 135 resource-e cient mining companies.