Translation To:
Damian Hicks, Scandinavian Resources
From:
Kristoffer Gregersen, Apeland Informasjon
Date:
November 15th 2011
Publication: Svenska Dagladet Front page SEK 2000 million investment in Nordic mineral prospecting COSTLY SEARCH: Nordic minerals are hotter than they have been for a long time. This year mining companies are investing around SEK 2 billion in mineral exploration activities – a figure that is expected to rise by 10 per cent in 2012. Lundin Mining, Broliden and state-owned LKAB are among Sweden’s largest investors. The trend is being driven by a rally in raw materials prices. Pages 4-5 MINERAL RICH: The search for minerals in the Nordic region is setting new records in 2011. Mining companies are investing EUR 230 million or around SEK 2 billion to prospect in Sweden, Finland, Norway and Greenland. 2012 will see this figure rise by a further 10 per cent, according to analysts at Raw Materials Group (RMG).
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Record in hunt for new mines Company ploughs almost SEK 690 into Swedish soil OSLO “Prospecting tracks developments in metals prices with a delay of one year. Since prices have been so high this year, investments will be high next year, too,� says Magnus Ericsson, CEO of RMG.
Raw Materials Group has its own index for metals prices. When it was launched in 2000 the base was set at 100. This year the index has risen to 407 points, which means that metals prices have quadrupled since the start. Among the Swedish companies, it is Boliden, LKAB and Lundin Mining that are investing the most money. Overall, prospecting to the tune of SEK 690 million will be carried out in Sweden. But over the past ten years the so-called junior companies have become steadily more important. These are companies which have so-far not started their own production. They often have their bases in Australia, Canada or the UK. We are talking about companies like Scandinavian Resources and Beowulf, which are searching for iron ore; Tasman, which is looking for rare earth metals; and Drake Resources, Dragon Mining and Gold-Resources, which are prospecting for gold. All told, there are 25 junior companies exploring for minerals in Sweden. Prospecting costs in Finland and Greenland will have reached some SEK 500 000 each by the end of the year. In Norway the mining industry fizzled out in the 1990s and early 2000s. But in recent years prospecting has started up again, with a 25 per cent increase this year, after a trebling in 2010. The industry journal Resource Stocks carries out an annual survey of key people in the mining and oil industries, called the World Risk Survey. Participants are
asked to judge which county they think offers the best conditions for the mining industry. Finland comes out on top in the survey, while Sweden is in fourth place. Damian Hicks, chair of Scandinavian Resources, says the difference between Australia and Sweden is that here it is possible to get the ore out. “For iron ore the most important thing is transport . You can make a smaller discovery or you can find a billion tonnes in Pilbara in Australia. But without transport you simply cannot get the ore out, since the three largest companies control the railway,” Damian Hicks says. His company has already obtained a promise that they can haul out as much ore as they want to Luleå for onward shipping. “There is probably room for smaller amounts on the ore-carrying railway line to Narvik, too.” Damian Hicks is reluctant to criticise the Swedish authorities, but points out that other countries without such large iron ore deposits as Sweden are investing more heavily in their railways. In next year’s national budget there is funding for the construction of four new passing places, which will increase transport capacity on the ore-carrying line. “But the best thing would be a double track. I understand that it cannot be done overnight given the steep drop from the border down to Narvik. But they built railway lines a hundred years ago with a lot less technical expertise. I am sure that it can be done again,” Hicks says. The European Commission announced a couple of days ago that it has included several important Swedish transport routes in its trans-European transport network, TEN-T.
TEN-T is a transport system that benefits the whole of Europe and can therefore be partly paid for with EU funding. The Swedish transport routes are the Bothnian Corridor, SundsvallHaparanda-Oulu, the Ore Railway and the railway lines Malmo-Gothenburg and Malmo-Stockholm. “I am very pleased that the Commission has listened to our arguments about the importance of the transport system in northern Europe for the supply of raw materials and for European industry,” Sweden’s Infrastructure Minister Catharina Elmsäter Svärd says. The Commission’s proposed scheme regulates how a functioning European transport system should be built up in the period to 2050. By BJÖRN LINDAHL bjorn.lindahl@svd.se Why investment in the Nordic region is increasing Magnus Ericsson sees three reasons by the Nordic region has become so attractive: 1. The Nordic region is under-explored compared with other parts of the world with similar geological conditions, such as Canada, Australia and West Africa. 2. The attitudes of the authorities and the general public to the mining industry are generally positive. The so-called ‘resource nationalism’ which is spreading in the developing world, with demands for a greater share of the profits or the nationalisation of companies, has gained little ground in the Nordic region. 3. The infrastructure is good, and there is a plentiful supply of experienced personnel and subcontractors.
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Australian wants to open three mines There are strong similarities between Kalgoorlie in Western Australia and Kiruna in Sweden, says Damian Hicks, chair of Scandinavian Resources, which has become the largest licence-holder in Kiruna. How he wants to mine ore close to the ore-carrying railway. “I was born in Kalgoorlie, which is some 600 km inland from Perth. The place was founded because someone found gold there. Everyone who arrived a hundred years ago came because of gold. Today, people live there because it is a nice place,” he says. “In Kiruna, it’s all about iron, but I understand those who think that it is a nice place. We are very sensitive to those who are concerned about the environment, even though mining has always had an impact on it,” he says. Scandinavian Resources’ strategy is to combine many small iron-ore finds into one profitable business. That is why they have taken over licences in and around the Kiruna area, or acquired them through swap agreements. An open-cast mine can start producing ore in 2015. Since it lies so close to the railway line, the investment involved is lower than it would otherwise have been. Damian Hicks founded the business together with Olof Forslund, a former regional manager of the Swedish Geological Survey. The high price of iron ore means that deposits found during a large-scale geological survey in the 1960s can now be mined profitably. “Our ambition is not simply to start a mine, we have a long-term plan. In five, ten years we hope to have at least three mines.”
Today Scandinavian Resources is a listed company in Australia, with a market value of SEK 170 million. But the first Kiruna mine is a project for more than SEK 800 million. “For this reason we will raise SEK 65-100 million in November, and then a bit later on we will apply for a parallel listing on either the Oslo or Stockholm stock exchange. In this connection we will raise a further SEK 170 million. By BJÖRN LINDAHL Caption: Geological conditions in Canada and Australia are similar to those in the Nordic region, but the difference is that large parts of the Nordic region have still not been fully explored with regard to mineral deposits. Mining companies are now investing billions to prospect for minerals at higher latitudes. Bottom row: Carl Bildt and Jonas Gahr Støre on the ore-transport railway. Damian Hicks and Markus Bachmann, both of Scandinavian Resources. Prospecting manager Amanda Arrowsmith (nearest the camera) from Scandinavian Resources discusses conditions in Kiruna with a technical consultant. PHOTO: DAVID MAGNUSSEN, MARTE KOPSTAD, HANS LINDBERG Pipe to replace double-track railway Pipeline Kiruna-Narvik Scandinavian Resources is set to carry out a study of whether a pipeline could be built from Kiruna to Narvik, instead of a double-track railway line for ore transport. The distance involved is 180 km, and similar pipelines, in which the ore is ground so fine that it can be transported in water as a slurry, already exist. When will the Chinese arrive? It is simply a matter of time before Chinese mining companies start becoming interested in Sweden, according to Magnus Ericsson of Raw Materials Group.
“The Chinese state steel company is as big as 200 SSABs. It produces 600 million tonnes of steel per year, and is seeking to secure supplies of iron ore,� he says. 600 million tonnes of steel is produced by the Chinese state steel company. The company is as big as 200 SSABs.