LKAB has decided to renegotiate all major supplier contracts. This will help to secure LKAB's competitiveness now and in the future.
All supplier contracts, principally for services including maintenance, consulting and rubber-tired vehicle transports, will be renegotiated forthwith. The aim is to achieve significant cost reductions and this measure is part of LKAB’s programme for reducing overall costs.
The price of iron ore, which fell by more than 50 percent during 2014, continues to fall. For LKAB, this presents new market conditions and affects the company's profitability.
“For LKAB to remain a profitable and successful company, further cost reductions are essential and each must put his house in order when margins decline. We at LKAB – and our suppliers – must together respond by reducing costs,” says Tage Lundin, CPO, Manager Purchasing, LKAB.
Renegotiations began on the10th February and all suppliers with framework agreements/call-off contracts will be subject to review.