Green Industrial Initiatives Industrial Adventure in Northern Sweden: Investments of Over SEK 1000 Billion in the Coming Years

Les på norsk

Extensive industrialization is currently taking place in Northern Sweden. The climate changes and the green shift are strong driving forces behind many of the initiatives currently taking place.

Several of the investments that are planned for the industry are closely connected to fossil-free production and electrification. In a number of Northern Swedish cities, major investments are made in the production of fossil-free steel, extraction of minerals, logistics, energy, and batteries.

The Swedish Prime Minister Ulf Kristersson (M) recently described the development in Northern Sweden like this:

"A unique region where a green industrial shift of historical magnitude is currently taking place."

An extensive governmental assignment

"We are coming out of a period of time where many in Sweden have become fascinated with what is taking place in the north," says the Swedish engineer Peter Larsson in an interview with High North News. He is the Swedish government's special coordinator for the major societal shift in Northern Sweden. Larsson is also the Senior Advisor of Engineers of Sweden and a board member of the Royal Swedish Academy of Sciences.

"Many prejudices have been refuted. Some have probably had an image of Northern Sweden, a wrongful image, as a place of high unemployment, for example."

When HNN is speaking with Larsson, he is looking out over Stockholm's archipelago, but during this last year, the engineer's gaze has been directed towards Norrland.

In December 2020, the Swedish government assigned Larsson the position of special coordinator for the sustainable restructuring of industry and society in Sweden's two northernmost counties. During the assignment, he has carried out over 2500 digital and physical meetings with a number of people, companies, and local authorities.

The special coordinator has been closely connected to the five municipalities most affected by the establishments and investments; Skellefteå, Boden, Luleå, Gällivare, and Kiruna. But other municipalities have also benefitted from the new awareness of Northern Sweden. The new image that is emerging is catching the eye of people in the southern parts of Sweden or investors that have not been previously active in the north, highlights Larsson.

What has surprised you most about the new industrialization of Northern Sweden?

"I am most impressed by the great support that this has had among many of the actors and their willingness to be involved; to quite simply participate. That also applies to the acceptance of the people and their willingness to participate, which has been important. In addition, it is remarkable how quickly this is happening. The social processes are quite extensive in their nature."

The focal point of investments

In Larsson's new report to the government, it is revealed that investments of over SEK 1000 billion are to be made in Sweden's two northernmost counties Norrbotten and Västerbotten in the coming 20 years. Northern Sweden has gained a leading position in the climate-warranted restructuring of the heavy industry, he writes.

The mining company LKAB's investments in the green mining industry and fossil-free sponge iron, Northvolt's establishment of a battery factory, and the companies H2 Green Steel and Hybrit Development's investments in steel production with fossil-free techniques are only a few examples. The technology of the latter Hybrit project has the potential to be able to reduce Sweden's CO2 emissions by a whopping ten percent if successful. 

"Many have become fascinated by the fact that it is possible to do something about climate challenges. The developments in Northern Sweden have become a positive model in that regard. That is very interesting," specifies Larsson. 

Of the 1000 billion being invested in the region, Larsson says that the Kiruna and Gällivare ore fields are the focal points. Here, the state-owned Swedish mining company LKAB produces large amounts of iron ore. The company is Europe's largest iron ore producer. 

In 2020, LKAB announced its plan for the largest restructuring in the company's history; to replace iron ore pellets with fossil-free sponge iron. As HNN has previously reported, this is part of an enormous investment of about SEK 400 billion in a shift to fossil-free production.

The investment was described as the largest Swedish investment ever. According to the mining company, the investments will amount to about SEK 10-20 billion a year over a period of approximately 15-20 years. With its new strategy, LKAB will pave the way for zero carbon dioxide emissions from its own processes and products within 2045. The shift will contribute to reducing the Co2 emissions among the company's customers by 35 million tonnes a year.

The major shift planned by LKAB also involves extracting critical minerals from mining waste.

"LKAB and others possess a broader perspective in which other metals and raw materials such as phosphorus are extracted in addition to iron ore," Larsson clarifies.

This month, LKAB announced that they have made a major discovery of mineral resources for rare earth metals in Kiruna. The deposit has the potential to become Europe's most important mine for critical raw materials and LKAB plans to extract these.

The mining company will build a circular industry park in Luleå which will extract critical minerals. The planned production start is in 2027. Only two months ago, the company announced that 100 percent of the concentrate from Luleå will go to the factory REEtec will build on Herøya in Norway.

The battery producer Northvolt

Larsson also highlights the investments of the battery producer Northvolt in Skellefteå which will have major ripple effects going forward. 

Larsson believes the industrial transformation in the north kicked off in 2017 when two decisions were made public. One was Northvolt's establishment of the battery factory in Skellefteå. The other was the formation of Hybrit, the joint venture between SSAB, LKAB, and Vattenfall. 

The battery factory Northvolt announced in 2017 a plan to develop the world's greenest battery cell and to establish a European supply of batteries. The Northvolt Ett factory's production is now underway in the city of Skellefteå on the Norrland coast. Just before New Year's Eve of 2021, the company produced its first battery cell at the mega factory and made its first commercial delivery in the spring of 2022. The car industry is one of the company's largest customer groups with its demand for electric car batteries.

The company informs that the production capacity at Northvolt Ett will increase towards 60 GWh per year to fulfill contracts worth over 30 million dollars. The company has secured contracts with customers such as BMW, Scania, Volkswagen, and Volvo Cars.

A piece of a puzzle

"We are one piece of a much larger puzzle, but we have had the advantage of being able to realize our plans quickly and we are therefore part of paving the way for other large-scale projects because we show them what is possible," says Anders Thor, the Northvolt Director of Communications & Public Affairs, Nordics, to HNN.

Thor says Northvolt has accumulated around USD 8 billion in funding to date and has an order stock of USD 55 billion over the next ten years.

What challenges do you envision in further developing the industry in Northern Sweden?

"The absolute biggest challenge will probably be the supply of expertise; getting as many as possible to see both the career and life opportunities in the north as quickly as possible. Our recruitment has been going well thus far and we have recruited the first 1300 employees for the factory. But since we are going to be at least 4000 employees, a lot of hard work remains," he says. Over 9 percent of Skellefteå's workforce is employed by Northvolt, according to the company.

"The new Norrland"

The climate issues are now taking place in the industry's board rooms - and climate-neutral products and processes are becoming tools in the competition between companies, explains special coordinator Peter Larsson. The investments also have a major effect on the municipalities and people in Northern Sweden. Larsson describes a "new Norrland" and a societal shift of which we only have seen the beginning.

"The total effect of the new jobs that are created can lead to an increase of 100 000 residents in the two northernmost counties. The population will become younger and more multicultural, among other things," he says to HNN.

The number is based on a fifteen-year period and takes into account that areas such as schools, families, and the public sector, expand. Today, the two counties have a population of 512 000. 100 000 more inhabitants will therefore be a great increase, specifies Larsson in the report.

More people, infrastructure, and energy

At the same time, many challenges lie ahead for the region. How to make more people move to the region has become the biggest question during this mission, emphasizes Larsson. Northern Sweden has been relatively thinly populated compared to the rest of the country and the workforce in the region is not sufficient in covering the industry's needs.

What is the demand for labor in the region's industry like at the moment?

"There is a strong demand and a continuous shortage," he says.

Analyses show that there might be a need for as many as 20 000 new employees. In the report, Larsson points to strategies when it comes to training and restructuring the workforce for new tasks, as well as attracting new people to the relevant municipalities. An important measure will also be to take better care of the workforce entering the country.

"Another big challenge is not least the new situation we are in with high inflation, increased interests, and uncertainty in the outside world. A problem is for example that the building of residential buildings risks declining in Northern Sweden when it really needs to increase. We are trying various initiatives within housing construction to keep increasing construction," he adds.

"We also need to avoid the phenomenon of people working in the region but living their lives in other places in the country. The fly-in/fly-out phenomenon does not create sustainable communities. The housing construction can help prevent this."

One of the most important questions going forward concerns sufficient power and electricity since the shift to electrification requires large amounts of energy production. Larsson believes that it will be essential to start effective processes when it comes to energy development. Investments in infrastructure will also be an important issue going forward. That entails improvement of the road network in some places, development of the Iron Ore Line going to both Narvik and Luleå, as well as the North Bothnia Line along the North Bothnia coast.