Sweden - a review of sovereign risk

I thought it might be useful to review the sovereign risk of Sweden in the context of mining, and particularly new mine applications.

It is clear that the process towards a successful mining application in Sweden is a lengthy one, but also a very comprehensive one where all the vested interest claims are reviewed in depth. Most of the mining activity takes place in the far North, in Norrbotten County. The population of Sweden is circa 10 million inhabitants, with Norrbotten at circa 250,000 inhabitants. Norrbotten County represents almost 22% of Sweden at 98,245 Km2. Norrbotten considers itself on the periphery of Swedish society, with different languages spoken and associated cultural outlook. Therefore what might apply to the other states in Sweden to the South might not necessarily apply in Norbotten, which has strong connections across the border with Finland in particular. The next elections in Sweden are scheduled for mid September 2022.

The main political trend evident in the last ten years has been a shift in the typical Scandinavian equalitarian outlook and associated open society from an immigration perspective towards significant support for the Sweden Democrats (SD). SD is to the far right in Sweden on the basis of a nationalist agenda along populist lines. The main complaint being unbridled immigration arising from the EU Schengen Agreement that has resulted in a strong Euro sceptical stance for closed borders and no further integration especially for the Swedish kroner that lies outside the Euro zone. SD is not part of either political alliance in Sweden, whether the centre left (Social Democrat Workers Party of Sweden (S), Left Party and the Greens) currently in government with 40% of the seats in parliament or the centre right (Moderates, Centre Party, Liberals and Christian Democrats) in opposition, also with circa 40%. SD attracted over 17.5% of the national vote in 2018, just under 16% in Norrbotten, but well over 19% in Kiruna district.

S are regarded as the architects of the Swedish equalitarian political model, but have been in decline over several election cycles with their lowest representation 2018 at just over 28%. Interestingly, S has been able to maintain well over 41% support in Norrbotten and 38% in the Kiruna district. The main opposition parties are the Moderates, best described as pragmatic liberal conservatives in alliance with the Centre party among others, more of which below. The Moderates attracted 20% of the vote nationally in 2018, but only just under 13% in Norrbotten and even less in Kiruna with under under 12%. The Centre party is best described as the agrarian party along the lines of the Australian National Party that has been in coalition with the Australian Liberal Party for many years. Support for Centre party is just under 9% nationally, interestingly barely 7% in Norrbotten and just over 5% in Kiruna where you would expect strong support from the Sami indigenous population.

The minor parties, the Left party and the Greens in the centre left Government with S and the Liberals and Christian Democrats in the opposition alliance are all a bit of a mixed bag. The Government minor parties, as their name implies, have their colours nailed to the mast. The opposition alliance minor parties have both seen support drift towards SD, such that the Christian Democrats, the most conservative of the two, may not be a force beyond the 2022 election. At a national level the Greens have 4.4%, only 2.8% in both Norrbotten and Kiruna; whilst the Left is the reverse, 8% nationally, just under 11% in Norrbotten and well over 13% in Kiruna. The opposition minor parties have significantly lower level support in Norrbotten and Kiruna.

I realise this is quite a long read, but I have tried to summarise as best I can. TLG have received strong support from mainstream Sweden in the form that their Vitangi deposit has been accredited of National importance. Norrbotten County and Kiruna still hold to Sweden's traditional values with support for centre left (S and the Left party). The rising support for SD appears to be associated with border immigration issues from outside the EU. None of the opposition parties are able to match the support for the SD individually.

My conclusion is that Norbotten and Kiruna are more conservative in the sense of strongly leaning towards Sweden's traditional values, but with an increasingly stronger view on immigration and a nationalist Sweden first attitude. We know about the proposed arrangements with Freyr across the border in Norway and the strong support from the UK backed by funding support for PFS. The last two announcements by TLG on 31 August and 1 September suggest in the strongest possible terms that Northvolt in Sweden and Tesla in Germany are absolutely well in the frame.

The key here is Northvolt, just imagine the headlines, nationally and locally, should TLG's permits be refused. Politically this would be a catastrophe for the Government Alliance, not only in Sweden but also in Norrbotten, where LKAB is the largest employer.

This analysis is my attempt to engage with the risks TLG faces near term, but as always please do your own research and draw your own conclusions.

I continue to hold