LKAB Malmtrafik
LKAB Malmtrafik, earlier Malmtrafik i Kiruna AB, is a Swedish railway company which operates the iron ore freight trains on the Iron Ore Line and the Ofoten Line. MTAB is a wholly owned subsidiary of the mining company Luossavaara–Kiirunavaara. In Norway, operations are handled by the subsidiary Malmtrafikk AS. Malmtrafik hauls ore from LKAB's mines in Kiruna, Malmberget and Svappavaara to the ports of Luleå and Narvik, the latter located in Norway. The company owns 28 Iore locomotives and 750 hopper cars. Each train is 68 cars long and weighs, allowing the company to transport 33 million tonnes per year.
Traditionally the ore hauling had been done by the Swedish State Railways and Norwegian State Railways. In the late 1980s, LKAB started a process to take over operations and increase efficiency by using heavier and longer trains. Because of the profitability in the operations, especially NSB was reluctant to lose the operations. In 1993, LKAB received permission to operate their own trains in Sweden, and from 1996 in Norway. MTAB and MTAS were created in 1996 when they took over the hauling formerly operated by NSB and SJ. It inherited Dm3 and El 15 locomotives. Originally established as a joint venture between LKAB, NSB and SJ, with the mining company as a majority owner, LKAB bought the whole company in 1999. By 2011, the renewal process will be finished, and only trains pulled by Iore will be in operation.
History
Background
In 1884, LKAB's predecessor Gellivare Aktiebolag is granted concession for mining in Malmberget. Four years later, the first part of the Iron Ore Line, from Malmberget to Luleå, was completed. In 1889, the mining company filed for bankruptcy, and the Government of Sweden bought the line for 8 million Swedish krona, half the investment cost. Construction of the Ore Line and Ofoten Line from Gällivare to Narvik started in 1898 and was completed in 1902. In 1915, the section from Kiruna to Riksgränsen is electrified, and by 1923 the whole section from Narvik to Luleå is electrified. In 1940, the Port of Narvik was bombed, and all export for the remainder of World War II went via Luleå. In 1957, the Government of Sweden bought LKAB.Hauling of the ore trains along the Iron Ore Line and Ofoten Line has traditionally been operated by the two state railways, SJ and NSB, who have sold their services directly to LKAB. With dwindling profits in LKAB during the early 1980s, in 1983 LKAB used an arbitration to reduce its transport costs to SJ from 310 to 235 million per year, with subsequent discounts achieved with NSB. In 1988, LKAB demanded further efficiency improvement, and stated that both SJ and NSB were making large profits on the operations. A committee was established by both countries' transport ministries to find areas of improvement. During the 1970s and 1980s, the number of employees working on the ore logistics had been halved, and NSB stated that they did not believe there was much more room for higher efficiency. NSB had a 50% profit margin on the operations.
Establishment
In December 1991, LKAB stated that they wanted to take over the operation of the ore trains from NSB and SJ. At the time, they were paying 0.15 Swedish krona per tonne kilometer in Sweden and 0.30 Norwegian krone per tonne kilometer in Norway, while comparable rates abroad were between SEK 0.03 and 0.10 per tonne kilometer. While SJ had several times during the 1980s agreed to reduce their rates, NSB had not offered the same, and was making a profit of NOK 60 to 70 million per year. LKAB stated that they, by taking over operations themselves, could save SEK 200 million per year. In addition, they stated that they could save between SEK 50 to 100 million in auxiliary fields. LKAB had sent an application to Swedish authorities for permission to take over operations, and had received positive feedback from SJ. NSB, on the other hand, did not support a solution where they did not operate the trains themselves. LKAB stated that if an agreement with NSB could not be reached, they would shift all their transport to the Port of Luleå.In February 1992, a report ordered by Kiruna Municipality recommended that LKAB, SJ and NSB create a common company to operate the ore trains. At the same time, SJ stated that the consequence of LKAB taking over operation could be that passenger trains on the lines would be terminated. In April 1992, LKAB was awarded traffic rights by the Swedish Rail Administration. There was a disagreement as to whether the agency had the authority to do this, and SJ stated that it was only the Ministry of Enterprise, Energy and Communications who had the authority to award traffic rights on the stem lines, in particular from Boden to Luleå. The rights also did not affect the Ofoten Line.
The following day, SJ and NSB stated that they were considering establishing a joint venture that would take over the operations of the ore trains. In May, LKAB stated that Norway would, through its membership in the European Economic Area, be required to allow any train operator to run trains on a line, while this was rejected by NSB who stated that this only applied within the European Union, of which Norway was not a member. In late May, NSB stated that they were able to cut costs by 25% and that they would reduce the price to LKAB more than this. LKAB rejected the proposal, and stated that NSB had shown their ability of restructuring too late. By August, SJ and NSB had offered to reduce the price from SEK 650 million to 450 million, but LKAB stated that they believed it was possible to reduce the costs further.
In September, Norwegian Minister of Transport and Communications Kjell Opseth from the Labour Party, stated that it would be "unfortunate" if LKAB should take over the operations. The Swedish Government stated that it was their intention to privatize LKAB. On 18 September, 3,000 in Narvik held a general strike against LKAB's plans. At the time it was not possible for NSB to fire redundant employees, at that the state agency would have to continue to pay their Narvik employees who would not be hired by LKAB, should the latter take over operations.
In October the Swedish Ministry of Communications gave the final permission for LKAB to take over operations in their own right. On 26 October, SJ and NSB signed a new five-year contract with LKAB where the latter would purchase transport services from the two state railway. The annual price had then been reduced from SEK 650 to 400 million. Political commentators stated that the agreement allowed LKAB to keep all the profit in the line and introduce new cost savings, while SJ and NSB kept face by keeping the operating contract. The price reduction would mean that both NSB and SJ would have to lay off employees.
In 1993, the state railways were losing money on the ore trains. In January 1994, SJ and NSB stated that they were going to merge the operations of the Iron Ore Line and the Ofoten Line. In May 1994, LKAB applied for traffic rights on the Ofoten Line. This was rejected in December by the Norwegian Ministry of Transport and Communications, who stated that the company did not meet the criteria in the law, including that the applicant had to have rail transport as their main activity.
In January 1995, it was proposed that a joint venture would be created between LKAB, SJ and NSB. The Norwegian Union of Railway Workers protested the proposal, and the Norwegian Centre Party stated that their feared this was the first step into converting NSB to a limited company. By February the negotiations were in a deadlock, and SJ and NSB stated that they were issuing an invitation to tender for a new class of locomotives. In March, LKAB again applied for permit to operate their own trains in Norway and stated that they would only join a joint venture if they were the majority owner. On 8 June, LKAB established a Swedish and a Norwegian subsidiary dedicated to rail transport. This would bypass the rationale provided by the Ministry of Transport in denying them traffic rights, and LKAB stated that there was no way the Norwegian authorities now could deny them such rights, given EU Directive 91/440.
File:MTAS T44 no. 5 at Narvik.jpg|thumb|left|T44 locomotive shunting ore cars at the Port of Narvik
On 27 June, LKAB, SJ and NSB reached an agreement where the three would establish a joint venture owned 51% by LKAB and 24.5% each by NSB and SJ. At the time there were 350 employees in the three companies involved in the transport, and the new company would recruit its employees among these, although it would need significantly fewer employees. The plans called for the new companies taking over operations from 1 January 1996. The organization was protested by local labor unions in Narvik. In December, Kjell Opseth created a committee under the ministry, led by State Secretary Torstein Rudihagen of the Labour Party, which would look at the reorganization, thus postponing the date of the start of operations. In late January, the committee concluded that LKAB met the criteria to receive traffic rights. The report also showed that 55 jobs would be lost in Narvik and that the Norwegian Railway Inspectorate had concerns regarding the safety of LKAB's operations.
In Sweden, the labor unions protested after LKAB demanded that the employees switch union from Swedish Union for Service and Communications Employees to the Swedish Metalworkers Union. This was rejected by the workers, who would both have to reduce their pay and work five more years before retirement. In May the Opseth stated that the Norwegian Government would give the necessary rights to the joint venture. At the same time, the state would give Narvik Municipality economic support and real estate for commercial development. With Malktrafik's take-over, 50 employees, equally distributed between the two countries, became redundant. On 28 May, 22 train drivers, all Swedish, took out sick leave in protest towards being forced to switch labor union and receive lower wages and worse pension rights. This caused a third of the ore trains to be canceled.
File:IORE 110+109 Gällivare 11.08.04.jpg|thumb|Twin Iore locomotives in Gällivare
On 28 June, the transfer of operations was finalized when the Labour Party, the Conservative Party and the Progress Party voted in the Parliament of Norway, with 67 against 45 votes, to grant Malmtrafik the necessary rights. The Centre Party, the Christian Democratic Party, the Socialist Left Party, the Liberal Party and the Red Electoral Alliance voted against. NSB's workshop and depot were to be transferred to a new company, Norsk Verkstedindustri, which was intended to create new jobs in Narvik.