This week, the mining company LKAB announced an increased pace in the project to produce fossil-free iron in northern Sweden. It will require large amounts of power.
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In the last six months, northern Norway has had much lower electricity prices than the southern parts of the country, but this may change if electricity consumption in the northern areas increases.
Tuesday on the state-owned Swedish mining company LKAB they want to accelerate the Hybrit project in Gällivare in northern Sweden and increase production targets. The project will ensure fossil-free production of iron by using hydrogen instead of coal and coke.
The hydrogen must be produced with electricity.
–LKAB’s project will require a large share of Sweden’s electricity production, and this could affect prices in northern Norway as well. LKAB warns that they need 20 terawatt hours (TWh) of electricity in 2030, increasing to 50 TWh in 2040 and 70 TWh in 2050.
20 TWh corresponds to 12 percent of last year’s electricity production in Sweden, which according to The Swedish Energy Agency was 166 TWh.
LKAB is just one of many players who want to use more electricity to cut emissions. To avoid higher prices, power production must therefore be increased, LKAB believes.
– We need to double electricity production over the next 25 years, where the iron and steel industry’s value chain may need around every other upcoming terawatt hour, says CEO Jan Moström in LKAB.
The Hybrit project is being carried out together with a key customer for LKAB, the listed steel producer SSAB, and the energy company Vattenfall. LKAB has said they will use 400 billion Swedish kroner on this change over the next 20 years.
Can increase northern Norwegian prices
LKAB’s plans for increased electricity consumption on the Swedish side of the border may also have consequences for electricity prices in northern Norway, according to trading manager Tom Eirik Olsen at Ishavskraft.
–– It all depends on their pace. This is a plan they have communicated for a long time, that they need maybe 50-55 TWh for iron and steel production. This is one of the reasons why the forecasts for northern Norwegian prices are on the rise from 2027–2028 and beyond, says Olsen.
– When you reach 2030, you will begin to approach southern Norwegian prices in the forecasts. The power you can not carry out today, it is taken by new consumption. Then you will for more and more hours connect to the southern Norwegian prices, he says.
Requires increased power production
On Thursday, LKAB made one investment decision. The company will spend 700 million Swedish kroner on the preparations for fossil-free iron production.
Sweden should increase electricity production to ensure that ordinary consumers are not affected by the increased consumption, LKAB points out.
– When I write that we need what corresponds to almost half the day’s electricity production in Sweden, then note that we do not want to steal it from you so you have to get a wood-burning stove and trolley. No, increased electricity production is needed, or we will not be able to do this, writes LKAB’s press manager Anders Lindberg on Twitter.
LKAB’s electricity needs alone can be covered by 1,200 wind turbines, he points out. It’s over 4,000 wind turbines in Sweden. According to Lindberg, it would require around 0.5 percent of Sweden’s area if 100 terawatt hours of onshore wind were to be developed.
He also points out that the company is interested in power from neighboring countries, and that Northern Norway has a surplus of power. But then more networks must be built.
– We should be able to buy it, if only there were enough cables over the mountains, write Lindberg.
Builds little power
So far, there is a surplus of power in the High North, especially in Sweden, according to Olsen in Ishavskraft. This has contributed to the low prices lately.
– There is currently a power surplus in the High North of around 59 TWh per year, and perhaps 7-8 TWh of this is on the Norwegian side. This fits very well into LKAB’s plans, he says.
Relatively little new power development is planned in northern Norway, but in Sweden more is being developed, he points out.
– More power will be developed on the Swedish side, but on the Norwegian side there is so far a full stop. However, it may become more attractive to develop wind power in the north if prices gradually rise. There are several plans for new wind power in northern Norway, says Olsen.
– Is this good or bad news?
– It’s all as you see it. The low prices we have in the High North provide opportunities for the future business community to establish themselves. Hopefully this will provide lasting jobs for the region. Norway is very competitive on electricity prices, he says.
– But some northerners may fear southern Norwegian prices?
– It will no doubt happen if you do not continue to expand new power production. It is precisely because we have this large surplus of power that we have the low prices now, he says.
– It is not just power lines that determine prices. Sweden has many power lines between north and south with a total of five times the capacity of Norway’s English cable, but they still have low prices in northern Sweden. This is because the region has more electricity than they can export, he says.
– The climate can not wait
At the beginning of the 2030s, the entire LKAB production will be restructured from making iron pellets using coal and coke to making iron fungus with hydrogen.
Production is initially expected at 5.4 million tonnes a year, but the company wants to increase it to 24.4 million tonnes by 2050.
– The climate can not wait, and demand for the raw material to be able to produce fossil-free steel is already here, even before we are out on the market, says LKAB manager Moström.
– What we have started is in class with the industrial and technology development that took place in the post-war years and which culminated with the lunar landing. In addition to the urgent climate, the new world political situation also affects the need for us to increase the pace, says Jan Moström.
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