Kund Datum Trafikverket 2014-02-26 Projekt GeoVista Nr Minerals in Barents GVR14003 Författare Kund Nr Hans Lindberg, Hans Isaksson TRV 2013/12890 Olof Martinsson Minerals in Barents The transportation needs in the Western Barents region Update: February 2014 GeoVista AB - - GVR14003 i Summary An increased global demand for mineral commodities has during the latest years led to an expansion of existing mining operations but also to an increased focus on developing existing mineral resources into new mines. The effects of this can be seen internationally in areas with high potential to develop economical mineral resources, such as the Western Barents region. This development puts high demands on the function of existing infrastructure and the development of new transportation solutions. In particular this is true for iron ore mines, where a large portion of the product needs to be transported from a mine to a smelter or a port. A study made in 2011 for The Swedish Transport Administration (Trafikverket), “Mineralråvaror i Barentsregionen” /GeoVista, 2011/, highlighted the long-term demands that the minerals industry would be put on the existing transport infrastructure in the Barents region. The study also discussed how industrial development in the region could be stimulated by meeting those transportation demands in an efficient way. Based on the results of the previous study, Trafikverket decided to monitor the development of the minerals industry in the Barents region. This report, a first update of the 2011 study, is produced within the 3-year cooperation project “Minerals in Barents – Partnership”, and financed by authorities for transport and development of the Northern regions of Sweden, Norway and Finland. The key focus is to report on the development of the minerals industry and in particular study the increased demands on transport systems in the region. The study aims to cover the Western Barents region as a whole. We have also summed up underlying parameters which control the development of the minerals industry, the relevance of different information emanating from the industry to the planning and development of transport infrastructure, and discussed the effect those external factors, infrastructure in particular, have on regional development. The geological potential for mineral deposits in the Western Barents region is very high, a fact which is internationally well known. The region also offers potential investors low political risk as well as favourable minerals and corporate legislation just to mention a few of the important parameters evaluated in the international competition for investment. Another important parameter is the status of existing infrastructure to transport the products from a developed mine. The lack of financing for mining projects, which hit the whole industry in 2013, is believed to have a short term negative impact on the development of the industry. However, this is temporary in nature and will only delay the planned projects in the short term. We will most likely to see a faster recovery the longer the current financial problems burden the industry. - GeoVista AB - - GVR14003 - ii This study on metallic and industrial mineral deposit data in the Barents region has primarily been based on the Fennoscandian Ore Deposit Databases (FODD) and is geographically divided into nine major territories; Troms fylke, Nordland fylke and Finnmark fylke in Norway, Västerbottens län and Norrbottens län in Sweden, Lapland region, Northern Ostrobothnia region and Kainuu region in Finland, and finally Murmanskaya oblast and Republic of Karelia in Russia. In the report we call this area the Western Barents region. The datasets have been examined, updated, to some extent modified and finally evaluated. The analysis of the deposits is divided in two parts; at first, the current and potentially near future production where metallic as well as industrial minerals, within 5-10 years, is analysed. Secondly, the product potential in the long term, up to 30 years or beyond, covering only metallic deposits, is evaluated. The mineral potential in the Western Barents region is huge. In the short term, within 10 years, there is currently knowledge of industrial and metallic mineral resources which would yield c. 24,000 Mt (million tonnes) of crude ore resulting in c. 6,700 Mt of products. In a longer term there are indications of metallic (only) mineral resources which potentially can yield in total c. 47,000 Mt of crude ore resulting in c. 10,000 Mt of products, industrial minerals not included. When it comes to products requiring voluminous transport, Murmansk, Karelia and Norrbotten can be considered as major contributors in the short term, with mineral resources and reserves of totally 7,600 Mt, 3,350 Mt and 6,650 Mt of crude ore, respectively, resulting in 1,940 Mt, 1,560 Mt and 1,540 Mt of potential products, respectively. Currently the total annual product volume constitutes c. 23 Mtpa (million tonnes per annum), 9 Mtpa and 32 Mtpa respectively for the three territories. It is emphasised that the conclusions come from data with varying degree of uncertainties, larger uncertainties where the projects are at an early stage of development. The study confirms the scenario previously presented /GeoVista, 2011/ of a considerable increase in product volumes from mines in the Western Barents Region, in the near future as well as in the longer perspective. The product volumes in the region are estimated to increase from today’s 75 Mt/year to 106 Mt/year in 5 years time and 118 Mt/year 10 years from today. Major increases in product volumes, which will affect the transport systems in Sweden and Norway, take place in Norrbotten (currently 32 Mt/year, 50 Mt/year in 5 years time and 61 Mt/year 10 years from today). A similar relative increase, but with smaller product volumes, is seen in Finnish Lapland. Note that product volumes, not volumes of crude ore, are of interest when planning for transportation of minerals. An upgrade of the knowledge of industrial mineral resources and potential is recommended for the future of the project. - GeoVista AB - - GVR14003 - iii The scenario indicates a strong case for the development of long term transport solutions particularly in Swedish Norrbotten where iron ore production will lead to considerable pressure on existing infrastructure in the years to come. We see a similar scenario in Northern Finland, where the needs to reach a deep harbour favourably could be solved by a joint east-west transport solution from the Sodankylä-Sokli area via Kaunisvaara and Svappavara through Kiruna to Narvik. There are however a number of alternative solutions. The increased need for transport solutions in the region will require investments, or to be otherwise addressed, in the following areas: Increased capacity on Malmbanan, Kiruna – Narvik as well as Malmberget – Luleå. Possibly also including Kiruna – Malmberget. A new railway between Svappavaara and Kaunisvaara, optimised in relation to other mineral deposits along the way, like the Vittangi, Lannavaara, Masugnsbyn and Pajala deposit clusters. A possible continuation of this route from Kaunisvaara to Kolari, the Hannukainen area and further eastwards to Sodankylä and Sokli. A route that probably also should be optimised following a mineral asset study of the area. Such a study could also be extended to cover a south-north railway route alternative from Kemijärvi to Sodankylä, bending eastwards through the Lapland greenstone belt and optimised according to mineral deposits. A transport solution from the Kallak iron deposit being developed in Jokkmokk, possibly including other deposits along the way, a major overhaul of Inlandsbanan between Jokkmokk and Gällivare. Possibly a transport solution south-west of Kiruna. In the short-medium term Laver, in southern Norrbotten, may produce a large volume of crude ore. However, the product volumes from Laver will be minor. Possibly a specific transport solution in western Västerbotten, will be needed since Nickel Mountain now also considers producing an iron concentrate that will impact the transport system in the area. In Finland, a transport route to the Mustavaara iron deposit was studied by the Finnish Trafikverket but the project was not identified as of sufficient national economic advantage for mineral and forest transports. In Norway, most deposits are located rather close to the sea and thus, transport will be solved from there. The Karasjokk iron ore field in southern Finnmark is one exception. - GeoVista AB - - GVR14003 - iv It is important to emphasise that estimated production volumes in new mining areas, starting in 5-10 years time from now actually requires that planning and building of such infrastructure commences long before the actual need is safely proven, in order to be in place when the volumes are produced. Equally important is the understanding that infrastructure is one of the key parameters to stimulate exploration efforts to take place in a particular region. Thus, an infrastructure investment made for a planned development which for some reason becomes modified or postponed, could still result in a positive calculation of return on investment. This is especially true if the location of e.g. a transport corridor for a new railway is optimised with relation to known deposits in the area. Such adjacent deposits are, given the boost of infrastructure in the vicinity, most likely to become contributors to railway fees paying off the investment in the future. Sweden, Finland and Norway have an interesting opportunity to cooperate, with some of the best known deposits in Europe located in Sweden and Finland and some of the world’s best deep harbours from which to ship the products, located in Norway. Finally: When talking about infrastructure needs for an expanding minerals industry, we often think of railway or other means of transport to export the products from the region. What was the first thought when you saw the cover photo? What port is it from, what are they shipping? See below.