THE ROLE OF PRODUCT DIFFERENTIATION IN THE IRON-ORE INDUSTRY - THE CASE OF LKAB

The analysis show how the Swedish iron ore producer, LKAB, in spite of mining its ore underground in an arctic climate at relatively high co sts, has remained internationally competitive thanks to its large-scal e operation with high grade magnetite ore, pelletization and relativel y short distance to both its shipping harbour and its international ma rkets. LKAB starts at a relatively high level on the supply curve with respect to mining costs, but as the analysis continues to describe, L KAB moves gradually downwards on the supply curve on delivered pellet costs. The analysis clearly shows that LKAB has successfully managed t o find its comparative advantage and that its competitive strength is sustainable, primarily thanks to its rich deposits of magnetite ore. C opyright (C) 1996 Elsevier Science Ltd.