| Summary: | This thesis is about competitive strength in the global markets for iron ore. Its focus is on the Swedish iron ore producer, LKAB, and its role in this global market. The finding of new vast deposits of iron ore in Brazil and Australia, together with falling transportation costs, meant that LKAB started to meet fierce competition in the 1970s. The company went into a deep crisis in the late 1970s and early 1980s, but has, in spite of underground mining above the Arctic Circle, survived and is now, in 1996, operating at a profit. The paper shows that a number of factors made this possible. Government grants provided to the company in the early 1980s made it possible for LKAB to reduce its operation, from a capacity around 30 million tons to 15 million tons, to better meet the market’s requirements. Introduction of higher sub-level caving and new, higher capacity machinery, increased the company’s productivity by almost 100% during the 1980s. The most important factor behind the company’s survival and sustained competitiveness is, however, its product development. The former core of LKAB, the high- phosphorus fines, is now replaced by the olivine pellet, developed in early 1980s. It is shown that an important precondition for LKAB’s development of the pellets, is its unique deposit of high grade magnetite ore. LKAB’s mining cost is shown to be relatively high, but the high grade magnetite ore means that LKAB has one of the lowest pelletizing costs in the world, which gives LKAB a favorable position on the supply curve for pellets. One of LKAB competitive advantages is therefore its rich deposit of high grade magnetite, which gives the company a special advantage in the market for pellets. The analysis in the paper also shows that the market for pellets is more price- and business cycle sensitive compared to the market for fines. These sensitivities in the pellet market, have, however, decreased over time and is now only marginally different from the market for fines, at least from a global, world market, point of ...
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