business
LKAB, Northern Sweden:
Working to Relocate Almost a Million Tonnes After 2 Closure of the Strait of Hormuz
The situation around the Strait of Hormuz has affected the Swedish mining company LKAB's deliveries of iron ore. "We are closely monitoring the development and have a close dialogue with our customers about handling various scenarios," says LKAB's press officer to HNN.
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The Swedish mining company LKAB is working to relocate large quantities of iron ore products due to suspended deliveries following the unrest around the Strait of Hormuz.
As HNN has reported, he closure of the strait, following the war in Iran, has impacted the company's exports.
Nearly a quarter of LKAB's production goes to North Africa and the Middle East, and over ten percent of the company's production goes to customers within the Strait of Hormuz.
Almost a million tonnes
"The delivery problems to the Middle East primarily concern a couple of customers in the region. We are closely monitoring the developments and have a close dialogue with our customers about handling various scenarios," says press officer Mikko Viitala at LKAB to High North News.
In March, the estimated value of cancelled deliveries was SEK 700 million. This involved enormous amounts of quantities, equivalent to about half a million tonnes.
During the second quarter of the year, the company is revising the estimated amount that will be suspended.
"During the second quarter of the year, the assessment is that it will affect approximately 0.9 million tonnes, which we are actively working to relocate," informs Viitala.
"At the same time, deliveries to several other markets continue as usual," he emphasises.
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Decline in results
The Swedish mining company also recently presented this year's first interim report, which addresses the lower delivery volumes, largely due to disruptions in transport flows in the Middle East.
While having impacted sales revenues, the decline in delivery volumes is nevertheless not so significant overall, and production volumes also remain relatively stable, according to the report.
However, the interim report shows a significant decline in sales and earnings compared to the same period last year.
Net sales for the first quarter totalled SEK 7.9 billion, down from SEK 9.6 billion during the same period last year.
The decline in sales is primarily linked to a weaker US dollar, lower iron ore prices and lower pellets premiums.
Furthermore, the company's operating profit dropped sharply; from SEK 3.6 billion in the first quarter of last year to SEK 860 million in the same period this year.
LKAB states that the lower earnings are primarily a result of the lower sales revenues and higher energy prices during the quarter.
