Maintenance to dent LKAB pellet output

Swedish iron ore pellet producer LKAB is to extend maintenance at its Svappavaara pelletisation plant, with the facility now expected to be off line until January, dragging down 2018 output.

During the Svappavaara maintenance, it was discovered that beams supporting a cooling system need to be replaced sooner than expected. This means LKAB will now carry out in 2018 much of the maintenance scheduled for 2019.

"The impact on production volumes remains to be seen and will be looked at. In the short term, there will of course be some production loss, however we might be able to catch up because of fewer and shorter maintenance stops in the coming years," a spokesperson said.

Svappavaara was taken off line from 27 July to 9 August after a fatal accident. The company then declared force majeure on some contracts on 10 August after a fire on the rail line connecting the plant and the port of Narvik. The company warned on 15 August that it would take around two months to catch up with iron ore rail deliveries, after it lifted the force majeure.

This year's disruptions at LKAB have already put a further strain on tight global pellet supply, with some European buyers even turning to India for pellet this year in an attempt to secure enough material.

The decision to keep Svappavaara off line until January could result in more seaborne demand for Indian pellet, pushing cfr China prices beyond the current level of $150-155/t cfr for high-alumina material.