• Sweden mines re-open as global demand booms
• Commodities hit by Greek crisis and strong dollar

With iron ore trading at record levels, more and more investors everyday are gaining an interest in this base metal.

Two Swedish iron ore mining companies in the municipality of Ludvika, northwest of Stockholm, are separately considering initial public offerings in a move to finance re-opening of old mines.

Both companies have secured funding from investors to conduct feasibility studies, preliminary environmental impact assessments and to meet other necessary requirements. If they come out well, the next step is in both cases to float the companies.

Newly founded Nordic Iron Ore’s main deposits are Blötberget and Håksberg. The owners intend to “urgently develop” the company’s business and plan to float the company at the stock exchange in the fourth quarter of 2011.

The company is looking to raise 100 - 150 million kronor ($16-24 million) via a new share issue in connection with the IPO. Total facility financing will amount to approximately 2 billion kronor, the company’s CEO Christer Lindqvist said.

“We are now conducting a pre-feasibility study that will be finished in Q3 and we expect to submit an environmental permit application in Q4”, he told The Swedish Wire via e-mail. “The mine is expected to be in operation turn of the year 2014 / 2015 if all environmental requirements are met”.

Grängesberg Iron AB, based in the geologically famous Bergslagen, intends to re-open the historic Grängesberg mine, which closed in 1989.

To get better access to international investors with a commodity focus the company is evaluating a possible IPO on Oslo Axess and later on the Oslo Stock Exchange. Oslo Axess has a focus toward companies in a pre-commercial phase.

“A broad investor base and good share liquidity are important prerequisites for a secure financing of the project to re-open the Grängesberg iron ore mine”, the company said in a statement.

Grängesberg Iron aims to turn the old mine into a profitable production unit for delivering more than 2.5 million ton high-quality iron ore products per year to the European and Middle East markets.

The company aims to land at least 175 – 200 million kronor via the IPO, spokesperson John Thoweman told The Swedish Wire.

Total investments for the entire project, including a pellets factory, are roughly estimated to 3–5 billion kronor. The owners are currently carrying out a review of investment needs.

“Grängesberg is one of the biggest investment projects in Sweden at the moment”, said Lars-Åke Josefsson, Industrial Officer of the city of Ludvika.

Globally, the location of a mining firm relative to its buyer is an important consideration, Seeking Alpha writes in an investor’s guide. For instance, Swedish mining companies enjoy a considerable advantage over Canadian and Brazilian iron ore producers who ship to Europe

Iron ore is the second largest commodity market in the world behind crude oil, and is the main ingredient in steel.

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Commissioned article. Published in collaboration between Stockholm Business Region and The Swedish Wire.

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