LKAB said on Monday it would invest up to 400 billion Swedish kronor ($46.6 billion) to “achieve net-zero carbon emissions from its own processes and products by 2045”.

Investments of between 10 and 20 billion kronor would be made yearly over a period of 15 to 20 years, the company said.

“This is the biggest transformation in the company's 130-year history and could end up being the largest industrial investment ever made in Sweden,” Jan Moström, president and CEO of LKAB, said in a statement.

The strategy to reach net-zero emissions would focus on three branches, one being a new standard for mining and another the use of fossil-free technology to extract strategic minerals from today's mining waste.

Lastly the company would leverage green energy, likely using hydrogen, to produce another form of iron known as “sponge iron” rather than traditional iron ore pellets, greatly reducing emissions during the steel-making process.

“In switching from iron ore pellets to carbon-free sponge iron we are taking an important step forward in the value chain, increasing the value of our products and at the same time giving our customers direct access to carbon-free iron,” Moström said.

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In early November, the company announced it had created the world's first “fossil-free” iron ore pellets, with biofuel taking the place of oil and coal during the heating process.

The development of fossil-free “sponge iron” is part of a joint project between LKAB, steelmaker SSAB and state-owned utility Vattenfall with the aim of developing a fossil-free process for producing steel, which relies on the combination of iron ore and coal.

According to LKAB, their Swedish operations currently produce 700,000 tonnes of carbon emissions a year, or about four percent of Sweden's industrial emissions, making it Sweden's fourth largest emitter.

The mining giant added that global steel and iron production today accounted for about seven percent of the world's emissions, and that widespread use of “sponge iron” could greatly reduce global emissions.

LKAB also said the transition would mean the creation of 3,000 jobs but with the steel market “forecasted to grow by 50 percent by the year 2050”, LKAB also expected their carbon-free offering would also greatly increase its revenues.

During the transition, LKAB would continue to sell “iron ore pellets in parallel with developing carbon-free sponge iron”, the company said.

During a press conference on Monday, Moström however also pointed to a number of challenges that had to be overcome to achieve the transition, including the need for technological developments and large-scale production of green energy to power facilities.

Isadora Wronski, head of Greenpeace Sweden, said they welcomed LKAB's “ambition to remove fossil energy from their processes”. but added that the aim of going fossil-free was “not enough.”

“Industries first and foremost need to reduce their use of resources… and the energy used needs to be sustainable, eliminating any plans for large-scale bio energy use,” Wronski said in an emailed statement to AFP.