Sweden's Kaunis Iron to continue iron ore mining at current rate after court backing

Iron ore miner Kaunis Iron said it will continue mining in Pajala in northern Sweden after the Swedish Environmental Protection Agency's demand to completely revoke its operating license was partially reversed on Jan. 13.

The Land and Environment Court at Umea, Sweden, has allowed for mining to be limited to 7 million mt/year of raw iron ore, from 20 million mt/year permitted previously, after considering the EPA's application to withdraw Kaunis Iron's permit.

"This is an important decision for all Swedish industry, that a granted permit applies," Klas Dagertun, CEO of Kaunis Iron, said in a company statement Jan. 13.

However, he added that "the decision limits future production increases and does not meet our long-term needs."

The judgement will become legally binding in three weeks from Jan. 13, if not appealed to the Land and Environment Court of Appeal, a spokesperson for the EPA said in an email.

Kaunis Iron said the 7 million mt/year rate corresponds to current production levels at its operations, which are close to the Finnish border and just inside the Arctic Circle. Kaunis Iron took on operating the Kaunisvaara iron ore concentrate project in July 2018, which had been initially developed by Northland Resources and had lain idle for a number of years. Northland had also planned to develop the Hannukainen project across the border in Finland.

Kaunis wants to expand mining into Sahavaara, near Kaunisvaara, and submitted a new application to the Land and Environment Court in Umea in July 2019.

Kaunis Iron's website states a target of 2.1 million mt/year of finished magnetite-based concentrate ore product.

Industry sources said Kaunis's high-grade iron ore product is utilized mainly by merchant pellet plants, with export sales usually via bulk vessels loaded at Narvik, Norway.

High-grade pellet feed may see pricing support after pellet premiums increased in 2021 from weak levels in 2020. Pellet demand has been driven by new direct reduction iron (DRI) plants and higher DRI output, strong demand to reduce emissions and save energy at steel plants, and high ferrous scrap prices.

Kaunis Iron said the reasons cited around the environmental impact put forward by the EPA were erroneous, and noted that the procedure with the EPA over the current permit had taken three-and-a-half years.

Sweden's iron ore and steel industry have cited concerns around complex processes in planning and EPA requirements for new projects, which may slow the transition to lower emissions steelmaking. The HYBRIT joint venture, LKAB and H2 Greensteel have plans for iron ore-based DRI plants in Sweden. SSAB is developing a new electric-arc furnace steel plant in Oxelosund, which is planned to be ready in 2025 and will lead to the decommissioning of blast furnaces at the site.

The Land and Environment Court also said on Jan. 13 it had postponed the January court hearing for Kaunis Iron's new operating permit, which also covers the Sahavaara project. This is to allow for further translations of Finnish stakeholder comments into Swedish, as part of mandatory consultations with Finland and Norway linked to the Convention on Environmental Impact Assessment in a Transboundary Context.

"We wish as soon as possible to enter upon main negotiations on our application for a new extended permit," Dagertun said. "Not until then can we realize our vision of sustainable mining operations for future generations in the Torne Valley."

The EPA's website said the Kaunis Iron operation carries environmental risks from the waste and effluent impact of ore mining at Tapuli and processing at Kaunisvaara on nearby waterways and wetlands.

The EPA noted dams were not built according to the permit, which could create risks, along with highlighting dust emissions from transportation of iron ore prior to shipping.