ANNUAL REPORT AND LKAB SUSTAINABILITY REPORT 2 0 1 0 ANNUAL REPORT AND SUSTAINABILITY REPORT AND SUSTAINABILITY ANNUAL REPORT CONTENTS LKAB 2010 Overview of the past year 4 President’s report 6 Group strategies 10 LKAB’S ANNUAL REPORT 12 Market and economic trends 13 International iron ore trade 15 Capacity and logistics 17 Ore reserves and mineral resources 19 Research and development 20 SUSTAINABILITY REPORT 22 Stakeholders and sustainability issues 24 Value creation 25 Urban transformation, Kiruna and Malmberget 27 Environment 31 Significant events during the year 33 Environment per operating location 34 Energy 37 2010 Atmospheric emissions 39 Waste 41 Water 44 Deformations 45 Seismic events/rock mass displacements 45 Site remediation 46 Co-workers 47 Sustainability Management 110 GRI index 112 Auditors’ statement of assurance, Sustainability Report 114 CORPORATE GOVERNANCE REPORT 52 Board of Directors and Group Management 56 Auditors’ Report on the Corporate Governance Report 59 FINANCE 60 Group overview 60 Report of the Directors 62 Financial reports and notes 72 Proposed disposition of unappropriated earnings 108 Auditors’ Report 109 LKAB, BOX 952, SE 971 28 LULEÅ, SWEDEN www.lkab.com Glossary 115 Addresses 116 Annual General Meeting and financial information 117 ANNUAL REPORT AND LKAB SUSTAINABILITY REPORT 2 0 1 0 ANNUAL REPORT AND SUSTAINABILITY REPORT AND SUSTAINABILITY ANNUAL REPORT CONTENTS LKAB 2010 Overview of the past year 4 President’s report 6 Group strategies 10 LKAB’S ANNUAL REPORT 12 Market and economic trends 13 International iron ore trade 15 Capacity and logistics 17 Ore reserves and mineral resources 19 Research and development 20 SUSTAINABILITY REPORT 22 Stakeholders and sustainability issues 24 Value creation 25 Urban transformation, Kiruna and Malmberget 27 Environment 31 Significant events during the year 33 Environment per operating location 34 Energy 37 2010 Atmospheric emissions 39 Waste 41 Water 44 Deformations 45 Seismic events/rock mass displacements 45 Site remediation 46 Co-workers 47 Sustainability Management 110 GRI index 112 Auditors’ statement of assurance, Sustainability Report 114 CORPORATE GOVERNANCE REPORT 52 Board of Directors and Group Management 56 Auditors’ Report on the Corporate Governance Report 59 FINANCE 60 Group overview 60 Report of the Directors 62 Financial reports and notes 72 Proposed disposition of unappropriated earnings 108 Auditors’ Report 109 LKAB, BOX 952, SE 971 28 LULEÅ, SWEDEN www.lkab.com Glossary 115 Addresses 116 Annual General Meeting and financial information 117 LKAB’s logistics in FIGURES LKAB delivered a total of 26 million tonnes of finished iron ore products during 2010. A RECORD! LKAB POSTS AN Ore harbor in Narvik: Ore harbor in Luleå: OPERATING PROFIT FOR 2010 OF 17.2 Mt 5.8 Mt TWELVE THOUSAND TWO HUNDRED , (215 vessels) (437 vessels) Fe3O4 4100 Other deliveries to THE HIGH-GRADE MAGNETITE ORE AND EIGHTY ONE MILLION KRONOR. EMPLOYEES customers and stocks, 3.0 Mt. Payload/car: Payload/train: FROM LKAB’s minES IS SOME OF MORE THAN 200 TRADES AND PROFESSIONS 100 tonnes 6,800 tonnes THE world’s BEST 68 cars LKAB PELLET PRODUCTION 2010 REDUCED ATMOSPHERIC EMISSIONS /train, so-called long train. Other Most of LKAB’s products are iron ore pellets with an products Although pellet production has more than 13% iron content of 66%. Carefully tested and measured tripled in the past 30 years, LKAB has additives in pellet manufacture increase productivity, managed to halve discharges of particulates PELLETS reduce energy input, result in lower wear and lead to 87% and emissions of sulfur dioxide and fluorides. In the past 30 years lower slag volumes in steelmaking. This dramatic reduction has been achieved 189 LKAB’s production has thanks to improved efficiency in g/tonne pellets increased by more than production, new technologies and improved knowledge of processes. 300% The goal is further reductions. while emissions of sulfur dioxide and fluorides and More information on emissions, discharges of particulates including carbon dioxide, is have decreased by 66% given on pages 39-41. Iron content FOR THE SAKE OF THE ENVIRONMENT In the ULCOS project (Ultra-Low Carbon dioxide Steelmaking), 103 50% 50% LOWER g/tonne pellets Europe’s steel and mining industries have joined forces in CO -EMISSIONS 2 research collaboration to find solutions for tomorrow’s environmentally friendly, ultra-low carbon dioxide steelmaking. 70 g/tonne pellets ENVIRONMENTal gains with “LKAB GREEN PELLEts” Total carbon dioxide emissions from the production of crude steel, 31 about 2,000 kg CO /tonne, are reduced when LKAB pellets are g/tonne pellets 2 250 used as the iron raw material. The manufacture of LKAB pellets kg CO /tonne SHARE OF PELLETS/ 2 10 generates one seventh of the carbon dioxide emissions as OTHER PRODUCTS IN g/tonne pellets LKAB’S PRODUCT RANGE EMISSIONS PER TONNE PELLETS PRODUCED, 2010 compared to sintering at the steelmill, and one-third as compared NITROGEN SULFUR OXIDE DIOXIDE PARTICULATES HYDROGEN HYDROGEN to hematite-based pellet manufacture. The reduction is about CHLORIDE FLUORIDE 215 kg and 95 kg CO2/tonne crude steel, respectively. DISTRIBUTION OF WOMEN AND MEN IN LKAB TOWARDS THE TOP LKAB’s ambition is to be an attractive employer for all individuals, One aim of LKAB’s sponsorship strategy regardless of gender, disability, cultural background or sexual orientation. is to offer broad sponsorship that contributes to active recreation, and to attract and assist talented young 110 athletes to reach the elite level. By giving kg CO /tonne 2 86% 14% 110 % are men are women the trio of young wrestlers Johanna Mattsson, Hanna Johansson and LKAB Annual Report 2010. 38 Sofia Mattsson from Gällivare have won Produced by LKAB in collaboration with Vinter. several gold, silver and bronze medals The Sustainability Report has been produced in collaboration with Hallvarsson & Halvarsson. kg CO /tonne 2 in national, European and world Photo: Fredric Alm, Andreas Lundberg and LKAB. championships, and their sights are set on Printed by: Luleå Grafiska. HEMATITE- LKAB BASED 17% of LKAB’s managers are women. In 2000 the corresponding figure was 4.6%. winning medals in the 2012 Olympics. PELLETS PELLETS SINTER LKAB 2010 THE LARGEST LKAB is one of Sweden’s oldest industrial companies. Founded in STEEL-PRODUCING 1890, the company has played a vital role in Sweden’s export industry and industrial development for more than a century. And for just as COUNTRIES, 2010 long, the company has been a reliable supplier and partner to the European steel industry. #1 CHINA Mt The rich, high-grade iron ore from the North has been complemented 120YEARS OF BELIEF IN THE FUTURE 2010: 626.7 with other natural minerals. LKAB is now an international, high-tech 2009: 573.6 minerals group with large-scale operations on a globally competitive market, and a reliable +9.3% resource that is constantly developing and aiming for the future. #2 JAPAN Mt MILLION TONNES 2010: 109.6 26 LKAB’s deliveries of iron ore 2009: 87.5 PERFORMANCE IN IRONMAKING PRODUCTS IN 2010, OF WHICH 21 +25.2% LKAB is a high-tech minerals group whose success is driven MILLION TONNES WAS PELLETS. by world-class research, development and production. #3 USA Mt 2010: 80.6 Europe’s R&D SUPPORTS LKAB’s growTH 2009: 58.2 largest iron A mineral is called ore when it can be +38.5% #1 ore producer mined profitably. R&D activities including process development create ore and #4 RUSSIA Mt The world’s contribute to LKAB’s profitability and 2010: 67.0 second-largest competitiveness. The growth target is pellet manufacturer more than 37 million tonnes of iron ore 2009: 60.0 #2 products per year by 2015. +11.7% #5 INDIA Mt 2010: 66.8 URBAN TRANSFORMATION 2009: 62.8 In the company’s financial statements for 2010, LKAB allocated 2,997 million kronor +6.4% towards urban transformation in Kiruna and RES RES Malmberget. According to a SIFO survey, T T #6 SOUTH KOREA Mt 97% of the population of Gällivare and 96% E E 2010: 58.5 of residents in Kiruna accept the urban 2009: 48.6 transformation in the orefields communities as M M +20.3% a consequence of the new main levels. #7 GERMANY Mt 2010: 43.8 2009: 32.7 >90% 1,250 1,365 +34.1% are sympathetic towards the urban #8 UKRAINE Mt transformation, In a research and optimization project 2010: 33.6 according to SIFO during 2010, LKAB’s R&D department 2009: 29.9 UNDERGROUND, UNDERGROUND, increased capacity at the MK3 pelletizing plant in Malmberget by +12.4% THE MALMBERGET THE KIRUNA Mine’s new Mine’s new #9 BRAZIL Mt MAIN LEVEL IS MAIN LEVEL IS (Source: Sifo, LKAB Framtid, Nov. 2009) 10% 2010: 32.8 BEING BUILT BEING BUILT 2009: 26.5 +23.8% HIGH QUALITY IN PRODUCTION LKAB 2010 During 2010 LKAB’s deliveries achieved The highest Luossavaara-Kiirunavaara AB (plc). quality value, LKAB is wholly owned by the #29 SWEDEN Mt a quality value of 95.2%. That is the best full-year Q value since quality Swedish state. 2010: 4.8 rating according to this system President and CEO: Lars-Eric Aaro 2009: 2.8 100% was adopted in 2000. was achieved in Chairman of the Board: +72.8% December 2010. Björn Sprängare Corp. ID No.: 556001-5835 (Source: worldsteel, January 2011) 4 OVERVIEW OF THE PAST YEAR LKAB elects to sign an- nual price agreements for its iron ore products, while many major pro- ducers switch to quarter- The Board votes on a 10 ly pricing. Construc- new strategy plan that LKAB announces plans The first modernized, en- tion begins on a stra- will include LKAB 37, tar- for three new open pit vironmentally friendly ter- tegically important pellet geting growth of about Lars-Eric Aaro is appoint- mines in the Svappa- minal locomotive, T46, is research centre, 35 per cent to 37 mil- ed President as of Jan 1.