Swedish miner LKAB gets permit for fossil-free sponge iron plant

A Swedish environment court gave the go-ahead on Monday for state-owned mining group LKAB to build a fossil-free sponge iron plant at its Malmberget site in Gallivare.

The demonstration factory will be an integral part of the plans of “green steel” venture Hybrit, which is owned by LKAB, steelmaker SSAB and state-owned utility Vattenfall.

The venture aims to replace coking coal, traditionally needed for ore-based steel making, with hydrogen and electricity.

“Permission can be granted because it is possible to limit the impact that the activity may have through conditions,” the Land and Environment Court in Umea said in a statement.

An investment decision is still pending for the Hybrit demonstration plant, which would produce up to 1.5 million tons of fossil-free iron sponge a year. A smaller Hybrit pilot plant in Lulea opened in 2020.

European green steel projects have increasingly been delayed, scaled back, or cancelled, as switching to hydrogen-based direct reduced iron systems and electric arc furnaces from coal-based blast furnaces requires investments of billions of euros, and hydrogen from renewable energy is expensive in many places.

“Our ambition is to gradually strengthen our competitiveness by further processing our pellets into fossil-free sponge iron, while also broadening our business with critical minerals,” LKAB CEO Johan Menckel said in a separate statement.

Monday’s ruling is subject to appeal.

Hybrit is one of two big green steel schemes in Sweden, where renewable electricity is accessible and cheap.

In April, startup Stegra secured a lifeline to complete its hydrogen-based steel factory in Boden, raising 1.4 billion euros ($1.6 billion) in additional funds.

On Monday, the court also said it approved LKAB plans for continued mining operations at the site, expansion of the tailings dam, and a facility to extract apatite from waste materials in the iron ore production.

Apatite is a mineral from which phosphorus and rare earths can be recovered.

LKAB mines turned out about 26 million tons of iron ore products in 2025.

($1=0.8614 euros)

(By Greta Rosen Fondahn; Editing by Anna Ringstrom and Clarence Fernandez)