Swedish town pays a price for its mining success

Annica Henelund swings open the front door of her fabric shop as she has thousands of times before. Inside, not much has changed in the past 51 years. Piles of bright cloth line tabletops and shelves from floor to ceiling. Most of it will never be sold.

In a few short weeks, the store must be empty and ready for demolition.

Residents of Kiruna have long known this moment would come. As the state-owned iron-ore mining company LKAB expands its operations underground, this Arctic town is sinking into the ground. So it’s relocating. A shiny new city center located 2 miles east was inaugurated last fall.

But Ms. Henelund, who runs the store with her sister, didn’t think it would happen like this. They can’t afford rent and other costs in the new center, so they’re closing down the shop they inherited from their mother and aunt. “Things shouldn’t have gone as bad as they did,” she says about two years of tense negotiations with the mining company. “We are so tiny for them. ... But for us, it’s our lives.”

In Kiruna, it’s rare to hear complaints about the city transformation, as the process is called. The project was an urban planner’s dream – a blank slate for reinventing a city of the future. The most beloved buildings are being painstakingly transported to the new town, which aspires to be one of the most modern and livable in Sweden. Though they may prefer to stay, most locals accept the need to move to allow LKAB to continue mining.

Yet seeds of unease have taken root among residents like Ms. Henelund who say their voices have been drowned out. While the revenue that LKAB produces is vital to Sweden’s welfare state – and thus benefits every Swede – some wonder if the company lost sight of the balance between meeting its own needs and doing right by the town it founded.

“We trust LKAB so very, very much. Definitely too much,” says Gunnar Selberg, who served as mayor of Kiruna from 2021 to 2022. Of the town’s 23,000 residents, around two-thirds depend on the mine for employment. In office, Mr. Selberg pushed the municipality to take a stronger stand in its dealings with the company.

“The relocation process is challenging both LKAB and the municipality to take into account each other’s interests and goals to find solutions that benefit the town,” says Chelsey Jo Huisman, a researcher at the Stockholm School of Economics who wrote her Ph.D. dissertation about Kiruna’s city transformation. “It can be frustrating when the municipality and residents are needing and wanting to prioritize other values when so much comes down to an economic logic for LKAB.”

“Mother” of Kiruna

Historically, the mining company has taken its role as the “mother” of Kiruna seriously. No town existed here before LKAB arrived in this icy landscape in 1900. In the beginning, the mining company provided the town’s library, fire station, school, and hospital, as well as housing for workers. The municipality of Kiruna didn’t form until 1948.

In recent years, Mr. Selberg has found himself having to explain this history to company leadership, who now view LKAB’s role in Kiruna primarily through the lens of profit. Whether due to rising global competition or strict stock agreements with the Swedish government, he says that poses a challenge for residents of Kiruna who are used to trusting LKAB to call the shots.

According to Ms. Henelund, what has been missing in her interactions with LKAB is respect. She and her sister calculated a sum they would need to close down the family store. For two years, she says the mining company pressed them on every Swedish krona, putting them on hold for months at a time and flying in a lawyer from Stockholm. “They threatened us,” says Ms. Henelund, tearing up. LKAB did not respond to requests for comment.

“This is something that is a negotiation between LKAB and the private individuals,” says Nina Eliasson, head of planning for the city. As she sees it, most of the 6,000 residents who need to move – close to a third of the population – are satisfied with the process. Businesses were offered space in new shopping centers, and homeowners were given 125% of the market value of their homes.

“You can’t argue with LKAB”

One Sunday evening, a crowd spills out of the Aurora conference center in the new city center, coats hugged tight as wind whips around the town hall. The movie theater sold out for “The Abyss,” a 2023 thriller that imagines the collapse of Kiruna into the ground.

Birgitta Skagerlind isn’t fazed by the dramatization of her town’s plight. Yet she isn’t convinced by the real-life solution. She says she didn’t receive the full sum she was promised for the apartment she owned in the old town – and wasn’t able to afford one of the new apartments. Instead she’s renting.

“You can protest, but about what?” says Ms. Skagerlind, who works at the local hospital. “You can’t argue with LKAB.”

That’s a common refrain around here: Don’t bite the hand that feeds you.

It’s a hand that also feeds Sweden’s government coffers. The deposits under Kiruna are Europe’s richest source of iron ore, 80% of which is produced by LKAB. Its two mines in Kiruna and the nearby city of Gällivare brought in 21 billion kronor ($2 billion) in profit in 2022 – over a third was distributed as dividends to the government, helping to underwrite the country’s social programs.

Meanwhile, the municipality is falling deeper into debt as costs for the city transformation rise. While LKAB foots a portion of the bill, municipal debt reached 2.2 billion kronor ($210 million) in 2022.

Timo Vilgats, a high school teacher, wishes he could have played a more active role in the design of the new school, which opened last fall. But the bigger problem, he says, is that the politicians are “completely united” with the mine. “It means the people have no voice,” he says.

He’s seen other ways of doing things. His eldest daughter works for a mine in Gällivare that similarly forced her family to move to a new area. He says she and her husband felt their needs were listened to and were amazed by how generous the mining company there was in allocating them new space.

In the frenzy of the transformation in Kiruna, Mr. Vilgats feels the human side of things has gotten lost. “I think everyone, especially those with power,” he says, “needs to be more humble, and try to understand.”

Editor’s note: The story was updated to clarify Dr. Huisman’s explanation of the relationship between LKAB and the town.