Following the UK’s referendum result on membership of the EU in June 2016, LKAB Minerals has been working to consider and mitigate the likely impacts of ‘Brexit’, both on ourselves and on those with whom we do business, given that there are a number of potential outcomes. This statement is provided to offer information to our customers and supply chain partners on our preparations.
Background LKAB Minerals
LKAB Minerals is a global business, with our Head Office located in Sweden. We have 12 manufacturing sites, of which 8 are located in the UK, and over 400 employees, with around 270 based in the UK.
Focus areas international business
In our risk assessment, we have identified several key areas of focus for a potential Brexit impact, including:
- Customer service and supply chain
- Import and Export trade, including the potential impact of tariffs and customs checks
- Inventory control
- Taxation and Currency risk
- Regulatory compliance
Our Brexit project team continually assesses each area in line with developments as they occur and the likely impacts that we need to consider. We are actively working with various Trade Associations and Government Departments to ensure we have the best advice at our disposal. We plan for the challenges and opportunities ahead.
We keep eagerly waiting for clarification from the Government on the longer term plans for the UK’s exit from the EU. Based on our understanding today, we believe that the potential risks that Brexit may generate are manageable for our business. We however confirm considerable uncertainty remains about the eventual political and legal outcome.
We are confident that our business model will be able to adapt and respond to the likely added complexities that may arise.
Customer service and supply chain
We are actively engaged with customers, suppliers, and other stakeholder groups to ensure that we have comprehensive knowledge. And we make sure to have the most up to date view of the likely impact of potential Brexit outcomes. This applies to both ourselves and those with whom we do business.
In many areas, we already have in place flexible production and inventory capacity, across the UK and Continental Europe. We have considerable in-house experience of handling distribution and shipping, both inside and outside the EU. Also, we are planning, as indeed we already do, to mitigate potential disruption and delays in customs clearance. To further minimise such risks, we are working toward attaining AEO (Authorised Economic Operator) status.
Additional inventory capacity available
At our Production facility at Moerdijk, in the Netherlands, we can provide the additional inventory capacity to protect our European customer base from any short term issues that might arise. If required, a timetable for implementing that inventory is being formulated. Through our Sales offices in Moerdijk, Essen, and elsewhere across continental Europe, we can provide the additional customer service that may be needed in planning and mitigating against short term impacts. We are confident that a transition period allows us time to put in place contingency procedures to minimise further disruption.
In the light of Brexit, LKAB Minerals Ltd will comply with both the EU and UK Regulatory Frameworks introduced as a result of this process. In addition we are considering the transfer of existing EU registrations to our Continental Europe based sister companies to aid with this process and undertake UK registrations if required.
Summary LKAB Minerals’ Brexit statement
While the final settlement between the UK and EU remains to be agreed, LKAB Minerals will continue to work with customers and supply chain partners actively. Over the coming weeks and months, we prepare and monitor developments. This allows us to continue to operate effectively throughout the Brexit period and beyond.