Response to interpellation 2023/24:5 on LKAB's future ownership of SSAB
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns LKAB's strategic ownership of SSAB and the risks of vertical integration of state-owned companies. M argues that LKAB's ownership is an operational matter for which the company's board and management are responsible 1 2. M emphasizes that the government focuses on infrastructure, electricity supply, and permits in northern Sweden rather than reviewing specific business decisions 2 3. C argues that LKAB's ownership provides a corner position that can block decisions and create unrest for private actors 4 5. C asks whether the government plans to issue ownership directives to LKAB or evaluate the holding to ensure fair treatment of other steel producers 5.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Elisabeth Thand Ringqvist has asked me two things. Firstly, she has asked whether I have analyzed if there are risks, and if so which ones, with a wholly state-owned mining company having a decisive influence on a steel company operating in a fully competitive market. She wonders if I, in that case, intend to take any measures on this account. Secondly, she has asked whether the government has any plans to reduce the ownership in SSAB.
LKAB and other companies with state ownership are subject to the same laws as privately owned companies, including the Competition Act (2008:579) and the Companies Act (2005:551). In the Companies Act, there is a division of responsibility between the owners and the company's management. It is the company's board of directors that is responsible for the company's organization, the management of its affairs, and the ongoing management of the company's operational activities.
LKAB's holding in SSAB is an operational matter for the company's management and board to handle. I therefore do not intend to take any actions. I can, however, state that LKAB continuously informed the then responsible minister regarding the shareholding in SSAB.
In this context, it can be noted that LKAB's ownership in SSAB amounts to 10.5 percent of the capital and 16 percent of the votes. The Companies Act contains a number of rules regarding the general meeting's decision-making where different levels of share ownership provide different opportunities for influence. For example, an ownership share of at least 10 percent of all shares in the company gives the shareholder the right to request that the general meeting be convened to discuss a specified matter, request a dividend payment or a special audit of the company, as well as bring a claim for damages to the company. An ownership share exceeding 50 percent of all shares in the company implies a control position as the shareholder can in principle decide on the company's management and organization.
LKAB is a company operating in a competitive market and is at the absolute forefront of the development of the future's fossil-free iron and steel industry. The Government follows the company's development with interest. We have confidence that the company's board and management are developing the company in the best possible way.
Elisabeth Thand Ringqvist (C)
Madam Speaker! I would like to thank the Minister for Finance for the answer, even though it was very short and perhaps not so exhaustive.
Let me provide some background as to why I think this issue is urgent. SSAB was formed by the state in 1978 by merging a number of steelworks that were not doing very well. The state then gradually reduced its ownership, and in 1989 SSAB was listed on the Stockholm Stock Exchange.
Under the Bildt government in 1992, all direct ownership was sold off. But LKAB, the state-owned company, has for a long time had a passive ownership. It has varied in size. When the Alliance government took office, the shareholding corresponded to approximately half of today's.
In an interview in Svenska Dagbladet at the same time, the significance of the ownership was downplayed. The former SSAB CEO Olof Faxander said that LKAB is a passive owner that does not participate in the election work for the board and has not elected any persons to board seats. The CFO added that it is nothing to worry about and that it is their own placements that are managed within the company. It thus concerned the operational activities, which the Finance Minister referred to.
Then the holding decreased, and four years ago - in the autumn of 2019 - one only had 2.3 percent of the capital and 3.6 percent of the votes. Then the holding increased radically over two years. The share price was then 30 kronor. If it were a financial investment and if one were in a position where one could have exited it early this spring, I could only have congratulated the Finance Minister. It would have, in fact, entailed a large extra dividend from LKAB during the next spring. But now the problem is that it no longer seems to be a financial investment but a completely strategic one.
When LKAB purchased four times as many shares, it sounded completely different from the company management. On June 7, 2021, when the last large position was purchased, LKAB's CEO expressed himself like this in an interview in Dagens industri: "With Industrivärden's exit from SSAB, we see it as important for the company that there is a stable industrial ownership group. From our portfolio of A- and B-shares, we have rebalanced so that we have basically kept the capital share intact but increased in voting power so that SSAB will have an industrial majority owner." He continued: "In SSAB's transformation to become the fossil-free steel alternative, a clear strategy will be needed. We have a great interest in building SSAB into a strong fossil-free steel producer. The ownership in SSAB is a strategic issue for us." This, therefore, concerned LKAB.
I fully understand that state-owned companies operating in competitive markets integrate horizontally. Sometimes size is important to assert oneself, and we want to ensure that the companies we own provide a good return. But when state-owned companies integrate vertically, and especially so far down the value chain where there are many other private actors, there are great risks that they will cause a lot of trouble.
Against that background, Madam Speaker, I reformulate the question and ask the Minister for Finance to state what reasons she sees for LKAB to continue to have a strategic holding in SSAB.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank the member for the interpellation.
LKAB is a large company that I believe very many Swedes feel pride in. We own it together, after all. It is not just a state-owned company, but our common one. It is also a company that is at the forefront in many ways regarding transition.
As I pointed out in my response, it is not my task as owner minister and responsible minister for the company to be involved in the operational matters. The question of ownership in SSAB is obviously a strategic business decision, as the interpellator also mentioned, and it then becomes somewhat strange if I, as the owner representative from the state's side, am to review or give orders on what the company shall or shall not do.
How large the ownership should be is a decision that the board and the company own. Just as the interpellator says, it has varied over time, and now there is an ownership of 10.5 percent. There are quite a few other owners. The Finnish state is included in one corner.
What I want to focus my efforts on is what is now happening in Norrbotten and the rest of Sweden. We are to facilitate for companies, both state-owned as well as entirely privately owned or both, by resolving the permit issues, the infrastructure issues in the north and the electricity supply. I and the entire government are dedicating time and effort to those issues so that it will actually be possible to continue developing all the companies up here that do so much for the transition. It is, therefore, what I am focusing my strength and energy on.
I have full respect for the fact that one can have many views on what the state should own, generally, or what companies should be involved in owning. But as the Minister for Ownership, I shall not interfere in the operational matters, and I do not.
Elisabeth Thand Ringqvist (C)
Madam Speaker! Thank you, Minister for Finance, for an elaboration of the answer! I agree that it is very important to get the permit issues, infrastructure issues, and electricity supply issues in northern Sweden in order. This applies to all the counties that are Norrland, and it is somewhat from there that this question originates. It is very important that LKAB, which is to function as a completely impartial seller of ore, now has a strategic position in the largest steelworks. We have only had one steelworks in Sweden, but there are more that are interested in competing and buying the ore that LKAB has.
As the Minister for Finance himself described it, it gives a very strong position to have an ownership share of at least 10 percent of all shares in a company. It is therefore no coincidence that one has moved up to that type of position. It is often called a corner position and means that one can block almost all decisions of a major character that must go through the general meeting. It means in principle that LKAB has a veto against all potential deals that could be made on the market with SSAB.
As the largest owner, one also has an interest in understanding how the board is composed. Unlike how it was previously when this was a financial investment – now it is, therefore, a strategic investment – one is now the largest owner and also the one who appoints the board in SSAB.
A company whose ownership directive is constantly discussed is Vattenfall. What I have understood is that LKAB does not have any ownership directive. As a 100-percent owner of a company, one should, of course, leave the operational responsibility, just as the Finance Minister says. But in this case, it is such that LKAB has entered a rather dynamic period, and the ownership dialogue perhaps needs to be closer than it has been when one has done approximately the same thing for hundreds of years when picking up ore from the mines in Norrbotten.
Madam Speaker! If the strategic ownership is to be retained and the Minister for Finance does not want to interfere in the operational activities, is there then any initiative or interest in issuing ownership directives to LKAB in the rather large transition process that the company itself and its strategic holdings face?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! Fundamentally, this is a company for which we as owners - the state with the Riksdag - set very clear return requirements. We are clear about what we want and what they should create in terms of value. It is the owner's task, together with the Riksdag, to set the direction for the company. In our ownership dialogues, we naturally discuss what the returns and the future investments look like, in order to obtain information and see how the company intends to proceed.
It is simply the owner's main task to ensure that the company can continue to develop in the best way, do its part and contribute to the transition and create very much utility and value for the entire Swedish people. Once again – that is where I place the focus.
Elisabeth Thand Ringqvist mentioned the word disorder. I do not know if she thinks that LKAB creates disorder. I can be very clear that my task as the responsible owner minister is that if I were to see problems with this company or other companies, if they act improperly or in conflict with current competition legislation, it is of course to react. But with LKAB's limited ownership share in this company, it is neither one nor the other; it is not what we and I see.
Fundamentally, I see very many challenges, like very many opportunities, regarding what is now happening in Norrland, especially perhaps in Västerbotten and Norrbotten, for LKAB and many other companies that are part of this. What we are focusing on right now as a government is to ensure that permits are in place, that there is electricity, and that there are opportunities for these companies to flourish, regardless of whether it is the state that owns them or not.
Again: I place my weight on this, and I as an owner minister or the government at all should not be involved in the operational matters. LKAB has made this decision. As I said, and as Elisabeth Thand Ringqvist also pointed out, the ownership has varied over time. Now it is 10.5 percent. It is a strategic decision, as they say. I may not share the view that it is a completely decisive ownership. But it is a strategic ownership, and it is something that the board has made a decision on.
Elisabeth Thand Ringqvist (C)
Madam Speaker! I did say that there is a risk of disorder when state-owned companies move down the value chain and integrate vertically instead of doing so where they actually belong. I believe that there can be such risks regardless of which part of the state-owned company portfolio it concerns.
It is a strategic ownership. One can wonder where the initiative comes from. In a company that is 1 to 100 percent state-owned, one might imagine that it is a discussion that one has with its owner. But that was in the case before the current Finance Minister's time – whether such a discussion has occurred or not, she cannot account for.
If the government does not want to sell or reduce its strategic ownership in SSAB, it is still the case that LKAB is the largest owner. The company LKAB has said that it is important that SSAB has an industrial partner. That may have been the case at the time these acquisitions of shares were made, but it may not be so today. There can, of course, be reason to evaluate that.
Does the Minister for Finance then see, with this continued ownership, for which no notification has been made to reduce it, any risk that one, as the largest owner in SSAB, complicates the situation in northern Sweden by reason of the fact that there are today several different steel producers who are interested in a fair treatment in order to be able to purchase the ore that LKAB has?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank you again for this debate. It is a debate that is ongoing here but also in other ways, outside the chamber.
The Swedish state owns LKAB, and LKAB is the largest owner with 10.5 percent of the shares. Second is the Finnish state. It is therefore in this case two states that together have an indirect ownership in SSAB. But I have confidence that LKAB and its board and management do what the Swedish people expect, namely ensure that there is a return and a long-term strategy and that they handle all different types of both investments and business in a completely right and correct way. I see or hear absolutely no tendencies toward anything else.
My confidence in LKAB is strong, and it is they who make the operational decisions. With LKAB and other companies, I believe that we will see a fantastic development in the northern part of Sweden. Above all, if we ensure that we get electricity production and some infrastructure moving - including the fact that the Malmbanan must function better - I believe that this will go splendidly. Thank you for the interpellation!
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.