How the Kiruna Mine Works and Why Sweden Is Moving a Whole Town

Most mining risk is assumed to sit underground, in the rock, the grade and the machinery. At the Kiruna mine in northern Sweden, the method that makes the operation so productive is also moving the ground beneath an entire town. Its main haulage level sits about 1,365 m below the surface, and the effects reach all the way to the streets above.

This matters to you as a resource investor because LKAB, the Swedish state-owned miner that runs Kiruna, produced 86% of the European Union’s iron ore in 2025. The company expects to lose about 2 Mt of deliveries in 2026 because rock conditions at Kiruna have changed.

Europe is relying on Swedish ore for steel security, low-carbon steel and critical minerals. That makes one Arctic orebody unusually important.

Here is how the mine works, why a town is being rebuilt, and how much weight Kiruna actually carries in European and global supply.

How does the Kiruna mine actually work, and how big is it?

Kiruna is a large underground operation that uses sublevel caving, a method explained in the next section. Few iron ore mines anywhere operate at this depth or scale.

In 2024, according to the US Geological Survey (USGS), Kiruna produced 13.8 Mt of enriched ore and 0.4 Mt of lump ore for direct sale. Enriched ore is ore that has been processed to raise its iron content. LKAB’s total enriched output that year was 31.0 Mt, so Kiruna supplied roughly 45% of the group’s enriched production.

LKAB does not publish a Kiruna-only figure for 2025. The group numbers still show how much the operation shapes the whole business.

LKAB reported 2025 net sales of SEK 33.325 billion and operating profit of SEK 3.3 billion. One source gives SEK 7.3 billion for operating profit, so you should check this against the Year-end Report published on 10 February 2026.

The LKAB Year-end Report 2025 ties lower full-year earnings partly to higher costs from the urban transformation in Kiruna, so you can check the operating profit figure against the primary source.

From sublevel to pellet: the ore path

Ore travels through a chain of infrastructure before it becomes a saleable product:

1. Automated or highly mechanised equipment extracts ore from the production sublevels.
2. The ore drops through ore passes, which are vertical shafts that move broken rock to lower levels by gravity.
3. Crushers break it into smaller pieces.
4. Electric trains carry it along the main haulage level.
5. Hoisting systems lift it to the surface for processing.

Most of it ends up as pellets, which typically make up 85-90% of LKAB’s products. A pellet is a small, hardened ball of concentrated iron ore that steelmakers feed into their furnaces.

The point for you is simple. When Kiruna slows, LKAB’s whole output slows, and so does a large share of Europe’s ore supply.

Why does sublevel caving deform the ground above it?

Why would a mining company need to move a town? The answer lies in how the ore comes out.

Sublevel caving is an underground mining method in which ore is extracted level by level and the rock above is deliberately allowed to collapse into the empty space. The sequence runs like this:

1. Ore is extracted from a series of underground sublevels.
2. Removing the ore leaves voids.
3. The hanging wall, the rock lying above the orebody, fractures and caves into those voids by design.
4. Waste rock fills the mined-out areas, but the rock mass above keeps moving downward and inward.
5. That movement reaches the surface as subsidence, cracking, tilting and horizontal strain.

LKAB states plainly that the more ore it extracts, the more the ground above sinks. Subsidence is not a failure of the method. It is how the method works.

The method allows high recovery at large scale. That benefit comes with costs at depth. Stresses rise as mining goes deeper, operations become more complex, and the deformation zone at the surface spreads wider.

Swedish courts have set limits on how much movement land outside the industrial area can tolerate.

Ground movement thresholds Swedish Environmental Court criteria outside the industrial area cite limits of about 0.3% horizontal strain and 0.2% vertical tilt. Land that exceeds these limits falls inside the zone where buildings, roads, railways and utilities can no longer safely remain.

This is why expansion carries structural costs. LKAB needs permits to mine below 1,365 m, and every step deeper is likely to push the deformation envelope further outward. If you are judging whether relocation costs will recur, the method itself suggests they will.

What is happening to the town of Kiruna?

In 2004, LKAB told the municipality that the town centre would have to move so mining could continue beneath it. A new centre has since risen about 3 km east of the old one, with planning running to about 2035.

Historic buildings have been moved rather than demolished. The Kiruna Church was relocated in 2025 at a reported cost above SEK 500 million. It is often described as 113 years old, although that detail has not been independently confirmed. One 2025 report counted 25 buildings moved and 16 remaining in that programme.

Residents can choose an equivalent replacement building, or cash at market value plus 25%.

Then the zone grew. In August 2025, LKAB found that ground effects were larger than expected, adding a further 650 homes and 20 businesses to the relocation list.

You should treat this as an open-ended liability tied to mining depth, not a project with a fixed budget. The plan has already been redrawn once.

How other mining towns compare

Malmberget, LKAB’s other major underground mine, has also required progressive relocation using the same method and compensation model. It is the closest precedent.

Chuquicamata in Chile was relocated because its open pit was expanding toward the town. Picher in Oklahoma was abandoned after lead-zinc mining left severe subsidence and environmental damage. Against those cases, Kiruna stands out as planned and company-financed.

For readers wanting the full human and financial picture, our dedicated guide to Kiruna’s resident relocation explains how the compensation model and rebuilding timeline work for the roughly 6,000 people affected.

How much does Kiruna matter to European and global iron ore supply?

Supply security and green steel

LKAB produced 86% of EU iron ore in 2025, delivering about 26 Mt. That is a group share, not a Kiruna figure. An academic summary citing the Swedish Geological Survey (SGU) puts Sweden above 90% of EU output, a figure not independently confirmed. The two numbers measure different things and do not contradict each other.

Prices cut into the value of that volume. The global spot price averaged US$102/t in 2025, down from US$110/t in 2024, before finishing the year at US$109/t. LKAB linked weaker 2025 earnings partly to lower prices and pellet premiums.

HYBRIT, a joint programme between LKAB, steelmaker SSAB and utility Vattenfall, uses hydrogen instead of coal to make fossil-free sponge iron. LKAB’s industrial step centres on Gällivare and Malmberget rather than Kiruna, and no total programme investment figure has been published.

Per Geijer and the risks

Per Geijer is a deposit near Kiruna that LKAB describes as important to the mine’s long-term life. LKAB’s August 2026 update cites about 1.2 billion tonnes of mineral resources and 2.2 Mt of in-situ rare-earth oxides. The European Commission named it a Strategic Project under the Critical Raw Materials Act in March 2025.

Resources are not reserves A mineral resource is an estimate of material that may be economically extractable. A reserve is the portion shown to be economically mineable. Per Geijer’s rare-earth figures are inferred resources, the lowest confidence category, and a reported growth of almost 30% has not been independently confirmed.

LKAB committed about SEK 800 million to a Luleå demonstration facility for phosphorus and rare earths, but has made no final investment decision on the full industrial park. Sources differ on the scope of a May 2026 permit.

Because inferred rare-earth resources carry the lowest geological confidence, the gap between in-situ tonnage and separated, saleable oxide output will decide whether Per Geijer becomes more than a long-dated option for LKAB.

The main risks for you to weigh:

• Price cycle: higher 2025 volumes did not protect earnings from lower prices.
• Permitting: mining below 1,365 m and developing Per Geijer both need approval.
• Indigenous rights: the Gabna Sámi community says Per Geijer could split reindeer migration routes, and the Stockholm Environment Institute has questioned the project’s consistency with Indigenous-rights obligations without mitigation.
• Rare-earth economics: recovery, metallurgy and separation remain unresolved.
• Green-steel demand: delays in hydrogen and electricity supply could postpone demand for premium pellets.

Kiruna’s strategic value is real, but it is concentrated in a small number of assets and decisions.

Three variables to watch as Kiruna goes deeper

Kiruna’s trade-off is now plain: highly productive underground mining, ground that moves as a result, a town being rebuilt, and a continent that needs the ore.

Three variables will tell you which way that balance tips:

1. The production adjustment: LKAB expects about 2 Mt of lost deliveries in 2026 from mid-year, with recovery targeted for 2027.
2. Permits: approval to mine below 1,365 m and to develop Per Geijer.
3. The relocation zone: any further expansion after the August 2025 revision.

Before acting on any figure here, verify it against LKAB’s reports and SGU resources, particularly where sources conflict.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results, and forward-looking statements are speculative and subject to change.