Minerals bring economic boom to the north of Sweden

Kiruna_mineThe job market is bright in Norrbotten County, fuelled by growing global demand for iron-ore and other industrial and precious metals. And while the ground under the city of Kiruna is sinking because of the iron ore mine, it is precisely because of that iron ore, that the job market is soaring. 

“In Kiruna we have 2.8 percent unemployment,” says Terje Raattamaa, the head of the Employment Office in Kiruna. “That is one of the lowest unemployment rates in Sweden.”

Just outside the small mining town of Pajala, Northland Resources, an international mining company, is currently building two new iron ore mines.

“We’ve done exploration during the past seven years, but before we started the construction last year, there was just a swamp area and trees here,” says Niclas Dahlström from Northland Resources. “Now we’re investing over US $720 million in the site.”

Northland Resources already has three large customers that will buy every single ounce of iron ore the company produces during its first decade. Two traders, Standard Bank and Stemcor, will buy the product and sell it. The third customer, the large steel conglomerate Tata Steel, will use the raw material itself.

Northland Resources says it will employ hundreds of people. “During the next two years we’ll employ 400 new people and about 200 people working with logistics, driving large trucks to put the product on rail,” says Dahlström.

Labor shortage

While many areas in Sweden suffer from high unemployment, Norrbotten is having trouble finding workers.

The Employment Office in Norrbotten has created a special unit to focus solely on the mining industry. Three people are travelling to the Netherlands next month to entice engineers there to come to the north of Sweden. And that team will head to Trollhätten, in western Sweden, where Saab’s factory is located.

Raattamaa says the region needs about 5,000 new workers over the next five years and he says the service sector is benefiting as a result of the boom.

Housing shortage

Annelie Vinsa, the CEO of the municipal-owned housing company Kiruna Bostäder, says that city is experiencing a housing shortage. “If you want an apartment in Kiruna you’ll have to wait four or five years,” she says.

Kiruna is also in the process of moving parts of the city because the ground is sinking, so that will put an added stress on the housing shortage. Vinsa says Kiruna Bostäder is building 110 new apartments over the next two years, and other companies will be building 300 new apartments in the next three years.

But she says builders and housing companies have to be careful. “Ten years ago they had to stop building apartments and many were empty so we don’t want that to happen again,” says Vinsa.

Another open question is whether the Iron-Ore train line that gets the raw material from the mines to the coast can handle the increased capacity.

Most observers say though that the boom has room to expand over the next several decades. Recently, the CEO of the state-owned miner LKAB, whose mine is under Kiruna, and who employees 1,900 in the city, said 2011 will be one of its best year’s ever.

Radio Sweden

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