Press release 29th of May 2012
The strike in Norway is having a disproportionate effect on Swedish LKAB, since Ofotbanen is the only railway targeted in the conflict. For each day of the strike, the financial impact on LKAB amounts to between 60 and 70 million kronor. LKAB is therefore seeking dispensation from strike action on the railway.
Since 6 o'clock a.m. on 24 May, all rail traffic on Ofotbanen, the Norwegian section of the Ore Railway, has been standing still. The reason for this is that Jernbaneverket's rail traffic controllers at the train control center in Narvik have gone out as a result of the Norwegian public-sector dispute. As of 7.00 a.m. on 30 May, the Lödingen pilot station will also be targeted, which will freeze operations at LKAB's harbor terminal in Narvik.
For LKAB, as a third party whose main operations are in Sweden, the strike is having unreasonable and disproportionate consequences. LKAB's deliveries to customers are being drastically affected, and 65 percent of our ore products are being stockpiled. Our iron ore deliveries are fully contingent upon a functioning railway and harbor facilities. LKAB has therefore today, 29 May, submitted a request to Jernbaneverket, the Norwegian National Rail Administration, and Kystverket, the Norwegian Coastal Administration that they take measures to alleviate the detrimental effect on LKAB. LKAB seeks dispensation from strike action.
"Strike action targeting Ofotbanen and the pilots has relatively little impact on Norwegian interests, and LKAB is the party that is bearing most of the brunt. LKAB has full respect for the unions' right to strike and takes no position in the conflict. However, the strike is having serious and major consequences for LKAB," says Markus Petäjäniemi, Senior Vice President, Logistics and Sales.
Our credibility with customers is being damaged. Along with the fact that LKAB has a reputation as a reliable long-term supplier, one of the most important competitive advantages for LKAB and other companies operating in the Nordic region has to do with low political risk and stable rules for the labor market in our neighboring countries. There is a danger of this type of event placing LKAB in jeopardy, since customers may turn to competitors on the world market.
Should the strike draw out, LKAB cannot discount the necessity of layoffs. There is a risk that the strike may affect operating locations in both Norway and Sweden.
More information: Markus Petäjäniemi, Senior Vice President, Logistics and Sales. +46 920-381 96