Sweden has granted environmental approval to state-owned mining company LKAB for a major critical minerals industrial park in the northern city of Luleå, marking a significant step in Europe’s efforts to secure supplies of rare earth elements and phosphorus amid growing geopolitical and supply-chain concerns.
The approval, issued by Sweden’s Land and Environment Court, allows LKAB to move ahead with plans to extract rare earth elements and phosphorus from by-products generated at its existing iron ore operations in Gällivare, roughly 250 km northwest of Luleå. The project has been positioned as a cornerstone of the European Union’s strategy to reduce dependence on imported critical raw materials, particularly from China and Russia.
LKAB said the planned industrial park on Svartön island in Luleå will process apatite concentrate recovered from iron ore production streams that are currently treated largely as waste. The extracted materials will be used to produce rare earth elements, phosphorus for mineral fertilizers and gypsum for the construction sector.
“This is a very welcome decision for LKAB, and for increased self-sufficiency in Sweden and Europe,” LKAB President and CEO Johan Menckel said after the ruling. “By extracting phosphorus and rare earth elements from residual products from iron ore mining, we can strengthen our future competitiveness whilst also helping to secure important supply chains.”
The permit comes at a time when Europe is scrambling to build domestic supply chains for minerals considered essential for food security, defence systems, renewable energy technologies, electric vehicles and advanced electronics.
Europe’s dependence problem
Phosphorus is a key ingredient in mineral fertilizers and is critical to agricultural production. LKAB estimates that once the industrial park reaches full-scale operation, it could produce enough phosphorus to meet seven times Sweden’s annual demand and around 8 per cent of total European Union demand.
Europe currently imports around 90 per cent of its phosphorus requirements, with Russia historically serving as a major supplier.
The dependence is even more pronounced in rare earth elements, a group of 17 metals used in permanent magnets, electric vehicle motors, wind turbines, defence systems, smartphones and other high-tech applications. Europe currently has no significant rare earth extraction industry, while China dominates global mining, processing and refining.
The strategic urgency has intensified amid growing global competition over critical mineral supply chains. Several governments, including those in Europe and North America, have increasingly treated rare earths and other critical minerals as matters of economic and national security.
Demonstration plant already under construction
LKAB began construction of a demonstration facility in Luleå in January 2025 after approving an investment of SEK 800 million (about $73 million). The facility is intended to test and validate technologies for extracting phosphorus and all 17 rare earth elements from iron ore mining residues.
The company says the demonstration plant will be the first facility of its kind in Europe. Process equipment installation is already underway and operations are expected to begin during the second half of 2026.
According to LKAB, the demonstration facility will provide the technological foundation for a future full-scale industrial park that could become one of Europe’s most important sources of critical minerals.
The court noted that temporary environmental conditions would apply because the project represents a new industrial activity. Additional investigations on emissions and environmental impacts have been mandated before final operational parameters are established.
Backed by EU strategic minerals policy
The Luleå industrial park, LKAB’s iron ore mine in Gällivare and the company’s Per Geijer rare earth deposit near Kiruna have all been designated Strategic Projects under the European Union’s Critical Raw Materials Act (CRMA).
The CRMA was introduced to strengthen Europe’s supply security for critical minerals considered essential to the green transition, digital industries and defence manufacturing. Strategic Project status can provide accelerated permitting processes, improved access to financing and priority treatment within EU industrial policy frameworks.
LKAB executives have repeatedly argued that Europe’s vulnerability to external supply disruptions makes domestic production increasingly urgent.
“The need is significant. Today Europe is almost entirely dependent on imports of these strategically important and critical minerals, while demand is rising rapidly,” LKAB CEO Johan Menckel said following the permit approval.
Per Geijer deposit could reshape Europe’s rare earth supply
Beyond the Luleå processing facility, attention is increasingly focused on LKAB’s Per Geijer deposit near Kiruna, promoted as one of Europe’s most significant rare earth resources.
LKAB has estimated that if Per Geijer eventually enters full production, it could supply up to 18 per cent of Europe’s rare earth demand. The deposit contains around 1.2 billion tonnes of resources, including an estimated 2.2 million tonnes of rare earth oxides, according to company and industry estimates.
Commercial production, however, remains years away. Industry estimates suggest full-scale output may not begin until the next decade due to permitting, infrastructure and environmental review requirements.
Indigenous opposition remains a major hurdle
Despite political support from Stockholm and Brussels, the Per Geijer project faces growing scrutiny from Indigenous Sámi communities, whose traditional livelihoods depend heavily on reindeer herding.
A report published by the Stockholm Environment Institute warned that the proposed mine could disrupt key migration routes used by Sámi reindeer herders and potentially conflict with Sweden’s obligations under international Indigenous rights frameworks.
“LKAB’s project carries a significant risk of violating the indigenous rights of the Sámi community members,” Stockholm Environment Institute researcher Rasmus Klocker Larsen said in the report.
Sámi representatives have argued that the project threatens traditional grazing lands and could irreversibly alter cultural and economic practices that have existed for generations. Several groups have indicated they are prepared to challenge future approvals through legal action.
While the EU can designate projects as strategically important, final authorization remains under Swedish national jurisdiction, making domestic political and legal considerations decisive for future expansion plans.
The outcome of the Per Geijer project is increasingly viewed as a test case for Europe’s broader critical minerals strategy: balancing the drive for industrial self-sufficiency with environmental protections and Indigenous rights.