Drivers of industrial transformation

Metals and minerals are needed in order to build infrastructure and buildings, to raise standards of living and for sustainable development around the world. At the same time, global greenhouse gas emissions need to be drastically reduced – a necessary climate transition that creates opportunities to strengthen our competitiveness.

ECONOMIC GROWTH AND DEMOGRAPHIC SHIFTS

Economic growth, population increase and urbanisation are driving demand for metals and minerals. Today more than half of the world’s population live in cities and this is expected to increase to nearly 70 percent by 2050. This brings about the need for infrastructure investments and increases demand for consumer goods. Forecasts suggest that around 1.8 billion new consumers will have joined the global middle class by 2030 – which will again increase the strain on the planet’s resources.1

DRIVING DEMAND

+50%

Demand for steel is expected to increase by almost 50 percent by 2050.2

CLIMATE CHANGE AND FINITE RESOURCES

Demand for sustainability and responsibility is increasing throughout the value chain, from raw materials to end products. Within industry, ever more stringent requirements are being made of resource-efficient production processes and solutions for managing waste. There is a particular focus on the energy issue and the need to phase out fossil fuels.

DRIVING TRANSFORMATION OF THE INDUSTRY

1/4

In total, the iron and steel industry accounts for a quarter of carbon emissions from industry worldwide.3

INDUSTRIAL TREND

LKAB’S RESPONSE

RENEWABLE ENERGY REPLACING FOSSIL ENERGY

The transformation within the industry is largely an energy issue, since access to renewable energy is a limiting factor. In contrast to many other countries, Sweden has a relatively good supply of fossil-free energy – which puts Swedish industry in a stronger position. A transition to renewable energy sources requires extensive expansion of the global infrastructure, which in turn is also expected to increase demand for iron ore and steel. By 2050 half of global steel production is expected to take place in electric arc furnaces (EAFs) rather than blast furnaces. In markets that are rich in natural gas resources, electric arc furnaces are already common because the process uses natural gas rather than coke. The carbon footprint is around 50 percent less with this technology. In Europe blast furnace technology is dominant, which means that European steel companies are facing a more radical shift.

FOSSIL-FREE PROCESSES AND ENERGY EFFICIENCY

Oil and coal need to be replaced by fossil-free alternatives such as wind, hydroelectric and solar power. The ambition within the iron and steel industry is to develop a process that uses hydrogen rather than coal for fossil-free steel production, and this calls for groundbreaking technological development. Developing the iron ore operations towards carbon-free sponge iron (DRI/HBI) means that LKAB will process the ore to a greater degree, while emissions of carbon dioxide will decrease because sponge iron contains less oxygen that needs to be oxidised away in the process of making finished steel. LKAB is improving its energy efficiency by such means as reusing hot water in production and using low-energy equipment. Modernising the plants also has an impact, and a steady rate of production means stable energy use.

EXTRACTION IS INCREASINGLY COMPLEX

Securing the long-term supply of raw materials is becoming more challenging for the global mining industry. Factors include access to water and energy, decreasing ore quality, increased infrastructure costs for mines in ever more remote locations and transitioning to mining underground when orebodies close to the surface have been mined out. LKAB has a high quality ore, but needs to be ready to mine ore competitively at greater depths.

AUTONOMOUS AND DIGITALISED MINING

Efficient production plants and products with climate benefits can help improve LKAB’s competitiveness despite mining at greater depths. After 2030 LKAB needs to be ready to mine iron ore deeper in the mines, and intensive work is in progress to develop and build an efficient autonomous production system that is carbon free and offers the highest level of safety.

CIRCULAR ECONOMY

The circular economy means transitioning from linear business models, in which products are manufactured from raw materials that are used and then discarded, to circular models in which resources are reused. In addition to recycling scrap for steel production, there is growing interest in and incentives for utilising and processing residual products from production as resources.

GREATER RESOURCE UTILISATION

Processing and developing by-products to increase resource utilisation, boost profitability and create new business opportunities. Among other things, LKAB is working to develop processes for extracting rare earth elements and phosphorous from the waste generated in iron ore production. Utilising slag from steel production to produce the concrete substitute GGBS that is in turn used in rock reinforcement in the iron ore mines is another example.