Shuttered gates spell disaster for Swedish mining town

Once touted as the saviour of Pajala, the loss of their iron ore mine has the town fearing for its existence.


For four years Pajala believed in a dream of plenty fueled by a sprawling iron mine just over the horizon. It took less than a year for that dream to implode.

On Thursday, November 13, the unemployment office in the northern Swedish town will open early, and three extra staff will be manning the desk. The unemployment rate is about to spike.

The massive Kaunisvaara mine, 20 km from town, is about to close its doors. November 13th is the first day 240 mine workers and 191 ore truck drivers from Pajala are out of a job.

November 13th will be the day when Pajala’s unemployment rate goes from being one of the lowest in the country, to one of the highest.

“There are 12 jobs available in Pajala today,” says Kai Oja, section chief of the local employment assistance office. He turns his computer to show a dozen listings taking up a quarter of the screen.

Three workers walk away from the processing facility at the Kaunisvaara mine.

Seven years ago, the Kaunisvaara mine was anticipated to revitalize the aging Arctic town. One in ten people had no job, more than twice the national average. Healthcare work made up a quarter of the town’s jobs, with the young taking care of the old who remained as the town withered. Its population had dropped from a thriving 15,000 in the 1950s to just over a third of that as its youth moved away in search of opportunity.

“There’s not a lot of industries,” says Oja. Forestry, the region’s former mainstay, had long since petered out.

The mine was a welcome development and since it opened high school aged youth have been steadily funneling into the trades stream, rather than going onto post secondary education. The high salaries from mining and the chance to stay near home are a big draw for young job hunters. Even young women, usually the group to head for university, are being drawn to the mine. Oja says women are thought to make more responsible truck drivers,

“A lot of my friends could stay here in Pajala because they worked at the mine after school,” says Madicken Mettawainio, a young woman working in an electronics store. “But now they may have to move away.”

The digging began in 2010. In classic boomtown style, store hours lengthened and new businesses popped up to support the mine: mechanics, restaurants, and outfitters appeared to take advantage of the influx of workers and cash.

“Everyone was very happy,” says Lena Jatko, a city administrator, born in Pajala, who moved back in a wave of new hires preceding the mine’s opening. “Everyone was talking about the mine, and the future.”

Housing prices doubled and the municipal government declared a goal of attracting another 4,000 residents by 2020.

The Nordic Centre for Spatial Development likened Pajala to nearby Kiruna, home to the world’s largest iron mine.

The Kaunisvaara mine was once touted as possibly “the next Kiruna.”

But financial blunders plagued the Canadian-based owner of the mine, Northland Resources, since before the first blast.

“We face a temporary liquidity challenge,” CFO Peder Zetterberg told reporters in February, 2013, before the first shipment of iron had even left Kaunisvaara. That week the stock fell 90 per cent on news that the project had gone way over budget, the last of a series of precipitous drops that left the company essentially worthless.

In July 2013, Northland’s Kaunisvaara was bailed out by a coalition of companies, including state-owned LKAB, for $300 million CAD.

It wasn’t enough. A year and a half later, Northland issued a terse statement on October 7, 2014 saying it had faced “extremely constrained liquidity,” and was unable to raise enough money to keep the mine running. Today, the mine site is quiet, with a skeleton crew powering the giant operation down.

“They are still hoping for some financial guy to come in with a lot of money,” says Oja. “But that’s not likely.”

Thirty kilometres or so from the derelict site Jatko sits in her office down the hall from an ornamental wrought-iron tree, symbolic of the local industry. Several times she expresses hope that the state will, once again, swoop in to rescue the flailing mine.

She is convinced there are low-profile discussions going on now in government about a financial rescue, though she doesn’t know specifics, nor does she have evidence they are happening at all.

“If they don’t help now, they will have to help us all the time,” she says. Whether its a bailout upfront or unemployment payments for years, at the end of the day the Swedish government will be on the hook for Kaunisvaara.

Staring down the barrel of one of the biggest mass-unemployment crises in the town’s history she has to hold onto hope that something, or someone – anyone – will come through. Jobs, livelihoods and perhaps the town’s future are on the line.

“It’s hard to think about the future,” Jatko says. “If the mine is closed it’s very difficult for us to exist.”

Across the street at a quiet high-end outdoor equipment store, two-thirds of the stock is on sale. The store has little to do with mining, but in Pajala, nothing is far removed from Kaunisvaara and the sound of its doors banging shut will be heard everywhere.

“Everyone is a little worried,” says the sales clerk, a young woman in her twenties. “Everyone has a family member working there, and everyone is touched.”