The Arctic This Week Take Five: Week of 9 December, 2024

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Luleå Steel Producer Receives Grant for Green Transformation

As reported by High North News on December 11, the Swedish steel producer SSAB has received SEK 1.45 billion (USD 132 million) in funding from the EU’s Just Transition Fund and Swedish state co-financing to convert its Luleå plant in Northern Sweden to fossil-free production. The plant, currently Sweden’s largest carbon emitter, will shift from coal-based blast furnaces to a mini-mill with electric arc furnaces. This transformation is expected to reduce the plant’s carbon emissions by 90%, contributing to a 7% reduction in Sweden’s national emissions. SSAB aims to start the new mill by 2028. (High North News)

Take 1: The SEK 1.45 billion grant to SSAB for its green transformation in Luleå represents a significant shift for both the sub-Arctic and Arctic region, and for Sweden’s industrial and environmental landscapes. Northern Sweden—particularly Norrbotten—is a critical hub for iron and steel production, providing 90% of the EU’s iron ore. The transition to fossil-free steel production marks a major leap toward reducing the Arctic’s carbon footprint. Arctic regions are warming nearly four times faster than the global average, making reductions in local emissions critical for slowing ice melt and preserving biodiversity. From an industrial perspective, SSAB’s shift away from coal-intensive blast furnaces to electric arc furnaces strengthens the competitiveness of Sweden’s steel sector. The plant’s transformation, aligned with the broader Hybrit project of an entirely fossil-free production chain, positions Sweden as a leader in green steel, potentially boosting Scandinavian influence in global steel markets. Additionally, this transformation safeguards local employment by modernizing a key sector, while ensuring it remains viable in a decarbonizing global economy. Communities in the Arctic and sub-Arctic have generally relied on heavy industry and commodity extraction more than their non-Arctic counterparts, including bearing the heavy cost of pollution and environmental risks associated with these industries. Overall, this initiative supports Sweden’s climate goals and strengthens its industrial competitiveness. The transformation of the steel industry in Luleå emphasizes the Arctic’s dual importance as both a resource base and a frontline in climate action for Sweden and other Scandinavian countries. (Arctic Today, European Commission, High North News, High North News, Industry Decarbonization Newsletter, The Globe and Mail)

2024 Busiest Arctic Shipping Season to Date

The trade publication gCaptain reported on December 9 that in 2024, Arctic shipping along Russia’s Northern Sea Route (NSR) set new records with 97 transit voyages, transporting nearly 3 million tonnes of cargo—an almost 50% increase from 2023. The total cargo volume on the route reached approximately 40 million tonnes. Trade between Russia and China dominated, constituting over 95% of the transit traffic. Despite sea ice shortening the shipping season, 16 oil tankers and nine bulk carriers transported oil, iron ore, coal, and fertilizers. Container shipping also grew, and Russia expanded its nuclear icebreaker fleet. (gCaptain)

Take 2: The record-breaking Arctic shipping season along Russia’s NSRin 2024 highlights the clearly-increasing viability of Arctic shipping, but also raises complex issues regarding security, the environment, and geopolitical dynamics. The NSR’s 97 transit voyages and 40 million tonnes of cargo show that Arctic shipping is becoming an essential alternative to traditional commercial routes like the Suez Canal, particularly for Russian-Chinese trade, propelled mostly by Chinese demand for crude oil and the dependence of Russia’s economy on commodity exports. The introduction of the largest Panamax container ships—illustrative of the navigability of the NSR to vessels without ice classification—bolsters Russia’s ambitions to turn the NSR into a global shipping artery, potentially reshaping global trade patterns. However, the growing use of the NSR also exacerbates tensions around Arctic security. Russia’s expansion of its nuclear icebreaker fleet to maintain year-round access underscores its intent to militarize and secure dominance over Arctic waters. This could heighten tensions with NATO and other Arctic nations concerned about Russia’s expanding local presence. While the use of properly certified ice-class vessels mitigate some environmental risks, the threat of oil spills and other environmental hazards remains high. The growing frequency of transits, alongside industrial activities in fragile ecosystems, increases the likelihood of accidents, which could have a severe impact onArctic biodiversity. Finally, the deepening Russia-China shipping alliance, driven by trade along the NSR, strengthens their geopolitical ties. Both nations are leveraging the Arctic to bypass Western-dominated trade routes, solidifying their economic and strategic partnership without concern for rising global tensions or Western sanctions. (Arctic Review on Law and Politics, gCaptain, Harvard International Review, High North News, The Arctic Institute)

Kiruna Selected ase 2029 European Capital of Culture

High North News reported on December 9 that Kiruna, a Swedish mining town in the Arctic, was named European Capital of Culture for 2029. Competing with another Swedish city, Uppsala, for the title, Kiruna was recommended by the European Capitals of Culture Expert Panel on December 6, 2024. This marks the third time Sweden has held the title since the program began in 1985. (High North News)

Take 3: Kiruna’s designation as European Capital of Culture for 2029 could significantly impact the town’s economic diversification and bolster Arctic tourism. Known primarily for its iron ore mining, with the world’s largest underground iron mine operated by the state-owned LKAB, Kiruna has been economically dependent on this industry for over a century. This cultural recognition provides an opportunity to broaden its identity and attract new investments and visitors. Previous Swedish cities to hold the title were Stockholm (1998) and Umeå (2014), both of which saw boosts to tourism and cultural industries. For Kiruna, located north of the Arctic Circle and already a gateway for Arctic tourism, this designation aligns with ongoing efforts to diversify the economy and promote the region’s natural beauty, its Sámi culture, and unique Arctic experiences such as the Northern Lights. Another Arctic city, Bodø in Norway, is currently a Capital of Culture in 2024. The Capital of Culture title can attract new tourism markets, enabling expansion beyond seasonal tourism related to winter sports and nature excursions. Additionally, the title can facilitate cultural and creative projects focused on art, music, or design, engaging both local residents and international audiences. Leveraging this title for long-term economic benefits, however, will require strategic investment in infrastructure, accommodation, and cultural programming, ensuring Kiruna can sustain increased visitor interest beyond 2029. Overall, this recognition marks a pivotal moment for Kiruna to expand beyond resource extraction and to redefine itself as a cultural hub within the Arctic region. (European Commission, High North News, Swedish Lapland Visitors Board)

LNG Plant Outside Murmansk Appears to Close

As reported by the Barents Observer on December 11, the Belokamenka liquified natural gas (LNG) construction centre near Murmansk, once employing up to 15,000 workers, now appears largely abandoned.The plant’s output has dropped significantly, with lighting reduced to 25% of its previous level. Major contractors have left, and only around 500 workers remain to guard the site. Originally developed to support Novatek’s Arctic LNG projects, the plant’s future is uncertain due to ongoing Western sanctions on Russian LNG. (The Barents Observer)

Take 4: The near-abandonment of the Belokamenka LNG construction centre signals a major setback for Russia’s Arctic policy and economic ambitions, particularly in its efforts to become a global LNG superpower. As a cornerstone of Novatek’s Arctic LNG 2 project, Belokamenka was critical for constructing the massive gravity-based structures required to exploit Russia’s Arctic gas reserves. The facility’s effective shutdown following departure of contractors reveals the vulnerability of Russia’s Arctic energy strategy, which has been heavily reliant on international technology, expertise, and investment. Western sanctions, imposed in response to Russia’s invasion of Ukraine, have targeted key export sectors like LNG, crippling Russia’s ability to complete and operate Arctic energy projects. With Novatek’s Arctic LNG 2 project paralyzed, Russia faces significant economic losses, as LNG is central to its energy export strategy—particularly in securing markets in Asia, such as China and India. The inability to bring new Arctic LNG projects online will not only reduce future revenues but also undercut Russia’s influence in the global LNG market. This development further challenges Russia’s broader Arctic policy, which envisions the region as its key economic driver. Without access to necessary equipment and international financing, Russia’s plans to turn the Arctic into a hub for energy and shipping may falter. Additionally, the absence of foreign contractors and expertise weakens the infrastructure necessary for long-term development in the region. Overall, Belokamenka’s closure reflects how deeply Western sanctions have affected Russia’s Arctic strategy, limiting both its economic and geopolitical leverage. (Arctic Today, The Barents Observer, Bloomberg)

Canada Launches Arctic Foreign Policy

CBC reported on December 6 that Canada’s newly-announced Arctic Foreign Policy will focus on strengthening its presence and sovereignty in the Arctic. The policy includes opening consulates in Alaska and Greenland, appointing an Arctic ambassador, continuing negotiations with the US over the Beaufort Sea boundary, and finishing boundary implementation with Denmark. It emphasizes Arctic security, research collaboration, and responding to growing geopolitical challenges from Russia and China. Additionally, it highlights Canada’s intent to strengthen its diplomatic and military infrastructure in the North. The policy aims to enhance Indigenous self-determination and promote a more inclusive approach to Arctic governance. (CBC)

Take 5: Canada’s new Arctic Foreign Policy (AFP) represents a significant shift, aiming to enhance the country’s sovereignty and diplomatic presence in the region, especially in response to growing tensions with Russia and China. Canada has been criticized over the last several years for passivity and for not prioritizing its Arctic presence. By opening consulates in Alaska and Greenland, and appointing an Indigenous Arctic ambassador, Canada signals its intent to play a more active role in Arctic affairs. This approach aligns with the US’s increasing focus on Arctic security, and creates opportunities for closer collaboration on issues like boundary disputes, climate change, and regional defense. The policy also addresses Arctic militarization, particularly Russian activity. With the Canadian Forces station in Alert, Nunavut, located near key Russian bases, Canada’s policy underscores its commitment to securing its northern border while enhancing defense infrastructure. For Canada, its large geographic presence in the Arctic is both an opportunity and a possible security concern. On the international stage, Canada’s bolstered Arctic presence could strengthen its diplomatic leverage in multilateral forums like the Arctic Council. The policy’s focus on Indigenous self-determination and governance also emphasizes the need to centre Indigenous expertise in both sovereignty and foreign policy debates. Overall, this policy represents a pivotal step for Canada in focusing on its Arctic capabilities, balancing environmental protection with geopolitical defense, and expanding its international role in an increasingly contested region. (Global Affairs Canada, Nunatsiaq News, The Globe and Mail, The Guardian)