Swedish city is moving as Europe ramps up its minerals push

The ripple effects from Europe’s growing appetite for raw materials extend all the way to Sweden’s far north.

Thousands of residents and buildings are being uprooted in Kiruna, a city that lies 145 kilometers (90 miles) north of the Arctic Circle. The relocation project is regarded as one of the world’s most radical urban transformations.

Kiruna is physically on the move because of ground subsidence from the expansion of a sprawling underground iron ore mine. A new home is being created about 3 kilometers east of the old town as part of a multi-decade process that’s expected to be completed by 2035.

“It’s a place that would seem exotic to so many and, in a way, I guess it is, but also it is a small town like so many others — struggling with what they are struggling with and challenged by being so dependent on one company,” Jennie Sjöholm, senior lecturer at Sweden’s University of Gothenburg, told CNBC by video call.

Established 125 years ago as a city for the iron ore mining operations of state-owned firm LKAB, Kiruna is a small community that serves as both a significant European space hub and home to the world’s largest underground iron ore mine.

LKAB is small in global terms but a highly significant regional player, accounting for 80% of all iron ore mined in the European Union.

Alongside its iron ore operations, which are integral to the steel-making process, LKAB recently identified one of Europe’s largest known deposits of rare earths, further strengthening its position in the extraction of essential materials for the green transition.

There are several obstacles to the successful relocation of Kiruna, with players across the spectrum raising political, economic and environmental concerns. Indeed, both the municipality and LKAB have called for greater financial support from the state, as well as the release of more land to accommodate the transformation.

Others have also flagged concerns about the relationship between resource extraction and community sustainability, particularly regarding the potential impact on indigenous Sami reindeer herding and culture.

The city’s relocation, which was first planned in 2004, received international attention in August 2025 during the spectacular move of its iconic Kiruna Church. In a feat of engineering, the 113-year-old timber building was moved in its entirety by specialized trailers over a period of two days.

At around the same time, however, LKAB also announced the expansion of its iron ore mine would require the relocation of an additional 6,000 people and 2,700 homes. The mining company, which is responsible for the move, has estimated compensation costs of 22.5 billion SEK ($2.4 billion) over the next 10 years.

Niklas Johansson, senior vice president of public affairs and external relations at LKAB, told CNBC that those being asked to relocate were being offered the market value of their property, plus an additional 25%, or the construction of a new home. Around 90% have elected to take a new house, Johansson said.

“The problem at the moment is that the local municipality has very little land that they own [or] that they can make, from an administrative point of view, buildable,” Johansson said.

“They have had to buy land from the state, who owns most of the land above the Arctic Circle. And here you have conflicts with reindeer herding, conflicts with defense, conflicts with nature, etcetera,” he added.

Mats Taaveniku, chairman of the municipal council in Kiruna, described the city’s relocation as a “huge project,” that could yield major opportunities for European citizens for decades to come.

A successful outcome, he added, hinges in part on greater financial and political support from both the Swedish government and the European Union.

“We have what we can call a big fight between the municipality and LKAB, and the municipality and our own government,” Taaveniku told CNBC by video call.

“The EU has to step up to support us. It’s not enough to make a decision that we have critical and strategic minerals. They have to support us with political…