Boliden — Annual Report 2007

Apr 17, 2008

This is Boliden

Boliden is a leading European metals company whose core competence is in the fields of exploration, mining, smelting and recycling.

Boliden's main metals are zinc and copper.

Other important metals extracted and refined include lead, gold and silver.

The operations are conducted in three Business Areas: Market, Smelters and Mines. Boliden has approximately 4,500 employees.

Boliden's BUSINESS CONCEPT

is to extract minerals and produce high-quality metals in a cost-effective and environmentally friendly way, and to exploit the commercial oppor- tunities that the market offers, thereby creating value for the shareholders.

BOLIDEN'S METALS

Cu	Zn	Pb	Au	Ag
Boliden is the second largest copper supplier in Europe. In 2007, copper accounted for 42 per cent of Boliden's revenues. All the copper concentrate from the Group's own mines is refined in the Group's smelters. The finished copper metal is mainly sold to European manu facturers of semi-finished goods, such as wire rod. The main end users of copper are the construc tion, electrical and electronics industries.	Boliden is the third largest zinc supplier in Europe. In 2007, zinc accounted for 40 per cent of Boliden's revenues. The bulk of the zinc concentrate from the Group's own mines is refined in the Group's smelters. The fin ished zinc metal is mainly sold to the northern European steel industry. The main end-users of zinc are the construction and transport industries.	Boliden produces approximately 70,000 tonnes of lead and lead alloys every year, of which 63 per cent originates from recycled lead batteries. In 2007, lead accounted for 5 per cent of Boliden's revenues. Some 80 per cent of all lead produced globally is used in the battery industry. Approximately 75 per cent of Boliden's production goes to bat teries, with around 15 per cent going to the construction indus try and 10 per cent to other users.	Boliden produces around 15,000 kilos of gold every year. In 2007, gold accounted for 6 per cent of Boliden's revenues. The jewellery industry accounts for almost 60 per cent of global gold consumption. One fifth of Boliden's gold production comes from its own copper and zinc mines, with the remainder mainly derived from electronic scrap recycling.	In 2007, silver accounted for 3 per cent of Boliden's revenues. Silver production totals approxi mately 400,000 kilos per year, with a significant percentage of the silver produced as a by product in zinc and copper mines. The electrical and elec tronics industries are important users of silver and the silver price is, therefore, linked to global economic performance.

2007 in brief

KEY RATIOS, THE GROUP
	2007	2006
Revenues, SEK m	33,204	35,213
Operating profit (EBIT), SEK m	5,428	8,522
Cash flow from operating activities, SEK m	3,730	8,010
Earnings per share before and after dilution, SEK	13.37	21.66
Return on capital employed (ROCE), %	29	52
Net debt, SEK m	5,524	–195
Net debt/equity ratio, %	43	–1
Production Smelters (tonnes	)
Zinc	462,570	442,908
Copper	314,881	356,392
Lead	69,730	70,239
Gold, kg	14,876	19,693
Silver, kg	379,749	414,402
Sulphuric acid	1,100,919	1,183,452
Production Mines (tonnes	)
Zinc	333,293	327,643
Copper	62,803	86,824
Lead	54,166	48,778
Gold, kg	2,834	4,510
Silver, kg	241,701	211,640

IMPORTANT EVENTS

■ Lennart Evrell was appointed as the new President & ceo, taking over the position on 1st January 2008.

■ Continued successes within mine-site exploration contributed to an increase in total ore reserves and mineral resources in all mining areas, except Tara.

■ Record production levels at Garpenberg and Kokkola.

• The Harjavalta expansion project was concluded.
• Permit granted for the Hötjärn tailings pond in the Boliden Area.
• Permit granted to expand Aitik's production capacity to 36 million tonnes of ore.
• The profit was negatively affected by a weaker dollar.
• The Board proposes a dividend of sek 4 (sek 4).

BOLIDEN ANNUAL REPORT, 2007

• 2 The President's Statement
• 4 About the Operations
• 8 Goals and Strategies
• 10 Metal Markets and the Outside World
• 16 Business Area Market
• 22 Business Area Smelters
• 30 Business Area Mines
• 40 Sustainable Development
• 44 Corporate Governance
• 48 Boliden's Board of Directors
• 50 Boliden's Group Management

• 52 The Boliden Share

• 55 Directors' Report

• 64 Consolidated Income Statements
• 66 Consolidated Balance Sheets
• 68 Changes in Shareholders' Equity – the Group
• 69 Consolidated Statements of Cash Flow
• 70 Income Statements – Parent Company
• 70 Balance Sheets – Parent Company

• 71 Changes in Shareholders' Equity – Parent Company

• 71 Statements of Cash Flow – Parent Company

• 72 Accounting Principles
• 76 Notes
• 94 Audit Report
• 95 Ore Reserves and Mineral Resources
• 98 Five-year Overview
• 102 Glossary
• 103 Definitions
• 104 Addresses

" The link between Boliden's profit performance and changes in metal prices, exchange rates and treatment and refining charges will continue. This volatility is part of who we are – it makes the Boliden share an option for investors looking for exposure to the metals market.

Lennart Evrell, President and CEO

Firm foundation in a changing world

y new job, as President & ceo of Boliden, has had an eventful start. I have spent a good deal of time at the various operational sites and two of my most lasting impressions are the huge commitment demonstrated by Boliden's employees and the high standard that distinguishes the methodologies, technical standards and environmental performance at our mines and smelters. M

THE PAST YEAR

Boliden's sensitivity to changes in zinc price and dollar was made very apparent when the results for the fourth quarter of 2007 were presented.

Revenues for 2007 as a whole totalled sek 33,204 million (sek 35,213 m), while the operating profit totalled sek 5,428 million (sek 8,522 m), corresponding to an operating profit margin of 16 per cent (24%). The return on capital employed was 29 per cent (52%). A good production level at several of the units helped moderate the negative price effects on the profit. The Garpenberg zinc mine and the Kokkola zinc smelter both achieved record production levels while other units reported lower production levels.

Our investments in exploration yielded positive results in the form of ore reserves and mineral resources and laid the foundations for new investments in several areas.

The strong Balance Sheet enabled sek 6,832 million to be reversed to Boliden's shareholders last year in the form of a regular dividend, redemption of shares, and buy-backs of the company's own shares.

THE SHARE'S LINK TO THE METALS MARKET

I find the metals market fascinating for a number of reasons. Demand for base metals is growing strongly, with per capita gdp ranging from usd 5,000 to usd 15,000 as nations progress from agricultural to industrial societies. For several decades in the past, the world's countries could be divided into two categories, with the West above this interesting range and the rest of the world below. We are now in a situation whereby important countries, such as China, are in between. These countries are undergoing intensive development and modernisation, and this requires large quantities of metals. We can see a fundamentally demand with good growth. There is every indication that demand for Boliden's metals will remain substantial for many years to come.

We have no control over metal prices and exchange rates, and the link between these elements and Boliden's profit performance will, therefore, continue. We can, on the other hand, affect our production volumes, costs and operating capital. Stability in these areas will make the development of Boliden's operations easier both to follow and to predict.

CUTTING-EDGE OPERATIONAL SKILLS

Sweden is a mining nation with long-standing traditions, and Boliden has built up its extensive knowledge of mining operations over the years. This is an important explanation for Boliden's ability to extract minerals from relatively low head grade mines, often with complex ores, so cost-effectively.

Boliden's smelters refine large material flows to produce high-quality metals. A constant programme of improvements, with smelters swapping experience gained, means our smelters' processes are constantly becoming more efficient. In addition to the production of our main metals, zinc and copper, Boliden's profitability is boosted to a substantial degree by by-products such as lead, gold, silver, nickel, sulphuric acid and aluminium fluoride. The flexibility of the smelting processes also enables large-scale, profitable production of metals extracted from electronic scrap and other recycling materials.

MORE THAN BASE METALS

We are continuing our efforts to develop partnerships with our customers. Flexible logistics solutions and product customisations that

Our investments in exploration yielded positive results in the form of ore reserves and mineral resources and laid the foundations for new investments in several areas.

increase the efficiency of the customers' processes will ensure that Boliden's deliveries comprise a lot more than just high-quality metals.

Our efforts to achieve high standards of environmental and safety performance are important to every aspect of the operations. They increase our efficiency and make Boliden the first sustainable link in our customers' – and their customers' – operational chain. And they are just as important in terms of our attractiveness as an employer.

FOCUSING ON GREATER STABILITY…

Continuing to be a competitive partner for our customers demands investments in projects that improve the efficiency of our units and increase production. But working in accordance with a shared production philosophy is just as important; we must have a common view of the way in which Boliden generates value and the ways in which this value should be measured.

High level ambitions with regard to sustainability efforts are a natural element of our production philosophy. Efforts to increase safety awareness among employees continued in 2007, and largely involved changing attitudes. The certification of the environmental management systems at the Rönnskär copper smelter and the Tara zinc mine mean that six of our nine units are now environmentally certified in accordance with iso 14001. We are well on the way towards our goal of achieving certified environmental management systems at all units by the end of 2008. Our goal is also for all of Boliden's mines and smelters to have certified energy management systems by that date.

…AND GROWTH

The supply of raw materials from our mines is vital to our continued growth. Our exploration organisation, which conducts its work both in the vicinity of existing mines and in new areas, plays a key role. Important progress was made on a number of fronts in 2007, including in the Boliden Area and at Garpenberg. We are currently Europe's biggest player in the field of base metals exploration and are also currently evaluating interesting opportunities for acquisitions and long-term partnerships.

The potential for producing metals from electronic scrap and other recycling materials is an important part of Boliden's focus on growth.

Our ability to handle and process many different types of minerals and complex concentrates, good cost control, and the willingness to improve our operations on an ongoing basis, mean that Boliden has the prerequisites in place for generating substantial value. We are increasing our efforts to exploit the full range of know-how and experience present within the Group, not least with regard to our ongoing growth projects, including the expansion of the Aitik copper mine. Today we are Europe's second largest supplier of copper cathodes, but we are hugely dependent on external supplies of concentrate to our smelters – only 20 per cent comes from Boliden's mines. Our expansion project will double the capacity in Aitik, which is already one of Europe's biggest copper mines. This project is the largest one Boliden has ever undertaken, and production in the new plants will start in 2010.

It is with great pleasure and a very real sense of commitment that I am looking forward to working with customers, suppliers, employees and owners alike to progress Boliden's development.

Stockholm, March 2008

Lennart Evrell President & ceo

One of the European leaders in zinc and copper

Boliden is one of the leading European metals industry companies, with cutting-edge competence in exploration, mining, smelting and recycling. Its main metals are zinc and copper. Other important metals produced include lead, gold and silver.

Boliden is one of Europe's biggest suppliers of zinc and copper. The operations are based in Sweden, Finland, Norway and Ireland and are reported under the segment headings of Smelters and Mines. Zinc metal is sold primarily to the northern European steel industry while European manufacturers of semifinished goods are the main customers for Boliden's copper. The Group has approximately 4,500 employees.

Boliden's revenues in 2007 totalled sek 33,204 million (sek 35,213 m) and its operating profit was sek 5,428 million (sek 8,522 m). The fall in profit is primarily due to a weaker us dollar, lower production levels, and changes to prices and terms since last year.

BUSINESS CONCEPT

Boliden's business concept is to extract minerals and produce high-quality metals in a cost-effective and environmentally friendly way, and to exploit the commercial opportunities that the market offers, thereby creating value for shareholders.

METALS FOR MODERN society

Boliden produces metals that make modern life work. The high-quality base and precious metals produced through our exploration, mining operations, smelting activities and recycling must meet the metal needs of the public, industrial and private consumption.

Contemporary society endeavours to

achieve sustainable development. Producing and delivering our products responsibly with regard both to people and to the environment are therefore key issues for Boliden.

WORLD-CLASS METALS PARTNER

Boliden's vision is to be a world-class metals partner. This means being one of the industry leaders with regard to:

■ responsibility in terms of ethics and the long-term sustainable management of environmental, personnel and societal issues.

■ reliability towards our customers and suppliers in terms of the quality of the way we work. ■ customer satisfaction, which means living up to or exceeding our customers' expectations.

AN ATTRACTIVE COMPANY IN THE METALS INDUSTRY

Boliden is positioned in the early stages of the metals chain. Our core competence, coupled with our mining and smelting assets, creates substantial scope for value-generating activities in the metals industry. We generate sustainable growth in value for our shareholders through:

STRONGER GROWTH

Global demand for base metals is considerable and the ongoing structural transformations in densely populated countries such as China and India are expected to continue. Boliden's main metals, zinc and copper, are important input goods in the construction, electrical, electronics and transport industries.

It is against this background that we are keen to secure long-term growth for the Group, making a good supply of metal raw materials vital. Our growth focus is on: ■ expanding exploration in the vicinity of existing mines in combination with field exploration in new areas.

■ acquisitions of and/or partnerships with mining projects. ■ increased recycling capacity for producing metals from electronic scrap, metal ashes and other recycling materials.

WORLD-CLASS EFFICIENCY

For metal operations to be competitive in the long-term, they must be run at high productivity and efficiency levels.

Boliden's mines are already among the most productive in the world, and our mining competence means that we can continue to hone both extraction methods and refining processes. This will ensure that our mining operations are profitable, even when conditions become more testing, e.g. with lower head grades, complex ores and lower metal prices.

Our smelters are characterised by a high degree of flexibility in the smelting processes, i.e. by an ability to extract metals from different types of metal concentrate and recycling materials while maintaining good profitability. This means that the smelters can not only process our main metals, zinc and copper, but also process valuable by-products, such as lead, gold, silver and sulphur dioxide.

For many years now, Boliden has been investing in improving the environmental performance of its mining, smelting and recycling operations. This has resulted in both high levels of energy efficiency and a stronger competitive position as a responsible metals partner.

CUSTOMER AND BUSINESS DEVELOPMENT

Boliden operates in an industry that primarily produces bulk goods with limited potential for differentiation. We endeavour to offer our customers more than just highquality zinc and copper metals. Examples of such added value include:

■ efficient logistics solutions that help reduce customers' capital tied up.

■ product customisation that increases the efficiency of the customers' processes and improves the product's properties.

■ responsibility for people and the environment, forging a sustainable value chain from exploration to finished metal.

OPTIMISING INTERNAL AND EXTERNAL FLOWS

Efficient control of material flows, both those between our own mines and smelters and those from external suppliers, ensures a high and consistent level of resource utilisation in the smelters. In order to secure the smelters' material supply, Boliden endeavours to conclude multi-year agreements both with external mines for deliveries of metal concentrates and with suppliers of electronic and metal scrap.

Good control over the material flows also helps enhance the efficiency of Boliden's stock keeping and management of accounts receivable.

Boliden's operations are conducted through three Business Areas, each of which possesses cutting-edge skills and assets vital to running a competitive metals industry business. The operations are reported under two segment headings, Smelters and Mines. Business Area Market is included in the Smelters segment.

SEGMENT SMELTERS

Boliden's sales of zinc and copper metals as well as of other products are managed by Business Area Market. The Business Area is also responsible for the sale of raw materials to Boliden's smelters and handles the flows between mines, smelters and customers. The Business Area's 93 members of staff are based at the Head Office in Stockholm, the sales offices in Germany and the UK, and at the Group's smelters.

Boliden's smelting, refining and recycling operations are conducted within Business Area Smelters. We have the Kokkola and Odda zinc smelters in Finland and Norway, respectively, and the Rönnskär and Harjavalta copper smelters in Sweden and Finland, respectively, plus the Bergsöe lead smelter in Sweden. The smelters refine metal concentrates, primarily into zinc and copper metals, and into by-products such as lead, gold, silver and sulphuric acid. In addition, we produce aluminium fluoride and refine nickel concentrate. Rönnskär also recycles large amounts of metal and electronic scrap, and other secondary materials. The Business Area has 2,360 employees.

SEGMENT MINES

Boliden's exploration, mining and concentration – the first stages in producing metals – are conducted by Business Area Mines. We operate in four mining areas: Aitik, Garpenberg and the Boliden Area in Sweden, and Tara in Ireland, and have a total of seven mines operational. The main metals are zinc and copper, but the ores mined also contain lead, gold and silver. Exploration, the scope of which has increased substantially in recent years, is conducted both in the vicinity of existing mines and in new areas. After being mined, crushed and milled, the ores are transported to the mining areas' concentrators where they are refined into metal concentrates. The Business Area has 1,989 employees.

STRENGTH FACTORS VALUE BOOSTERS

■ Efficient and integrating organisation. The Business Area handles and optimises concentrate and metals flows within Boliden.

■ In-depth technical expertise. Boliden's employees combine in-depth technical expertise with a good understanding of both their customers' and their customers' customers' needs, enabling customer-driven product development, among other things.

■ Price premiums. The customer pays a premium, over and above the LME price. The premium reflects the regional supply and demand situation and takes into account transport costs and import duties, etc.

■ Relationships with suppliers and customers. Long-term relationships with suppliers and customers secure the smelters' access to metal concentrates and a market for metal products.

■ Efficient material flows. Efficient control of the physical flows contributes to more efficient stock-keeping and handling of accounts receivable, thereby reducing the amount of capital tied up.

■ Flexible and efficient hi-tech processes. Boliden's smelters have flexible production processes and competitive technology, resulting in cost-effectiveness and the ability to process complex metal concentrates, electronic scrap and other secondary materials. They can also extract valuable by-products such as gold, silver and sulphuric acid. Over and above the chargeable content from the mines, a high extraction level leads to a significant quantity of free metals.

■ Advantageous environmental profile. All smelters are environmentally certified and are engaged in ongoing improvement efforts in accordance with ISO 14001.

■ Cost-effective transport systems. The smelters have access to efficient transport solutions for external incoming and outgoing deliveries, e.g. in the form of our own rail systems and ports.

■ Ongoing exchange of know-how and experience. Boliden's employees have in-depth experience of benchmarking the various aspects of the smelters' processes, enabling the ongoing identification of new areas for improvement.

■ TC/RC and price escalators. The availability of metal concentrates affects the TC/RC; good availability means higher TC/RC, and vice versa. Boliden's balance between the smelters' capacity and its in-house mine production of primarily zinc limits the Group's sensitivity to changes in zinc TC/RC. The agreements with the mines may include price escalators, whereby mines and smelters share changes in the LME prices.

■ Flexibility and efficiency. The flexibility of their processes determines the smelters' ability to efficiently process complex and/or impure metal concentrates that command higher TC/RC.

■ Capacity utilisation and raw materials supply. In common with the rest of the process industry, smelters are reliant on a high and consistent level of capacity utilisation, making the raw materials supply vital.

■ Energy prices. Metal production, and that of the zinc smelters in particular, is energy-intensive, and energy costs consequently have a significant effect on profitability.

■ The US dollar exchange rate. Metal prices and TC/RC are priced in US dollars. Changes in the US dollar exchange rate affect income and profits.

■ High level of technical expertise, degree of automation and accessibility. The low metal grades in several of Boliden's mines have given rise to the mines developing efficient mining methods and to concentrators with a high degree of process automation, resulting in a very competitive productivity level. Thanks to good proximity to transport routes, the metal concentrates are delivered to our smelters at frequent intervals using efficient transport structures.

■ Wide-ranging expertise and in-depth experience. Automation of several stages of the mining operations, such as ore mining, is difficult. The expertise and experience of Boliden's employees are, therefore, very important assets.

■ Vigorous exploration strategy. The doubling of our exploration investments in 2007 has meant recruitment and organisational expansions as well as increased ore reserves and mineral resources. Our aim over time is for all our mining areas to have mining production secured for at least ten years ahead.

■ Metal head grades. The metal head grades in the ores mined affect the amount of metal produced. This, in turn, affects both income and expenses per unit produced.

■ Zinc and copper prices. The LME prices are affected by supply and demand and by the actions of financial players. Boliden's policy is to leave its main metals unhedged. Around two thirds of the copper production for 2008 to 2009 has, however, been hedged as a result of the Aitik expansion, thereby limiting the sensitivity to fluctuations in copper prices.

■ Productivity and efficiency. The productivity and efficiency of the mining operations affect the cost per unit produced and, as a result, profitability.

■ Ore reserves. Ore reserves and mineral resources determine the production-based lifespan of a mine and, therefore, its longterm growth potential.

■ The US dollar exchange rate. Metal prices and TC/RC are priced in US dollars. Changes in the US dollar exchange rate affect income and profits.

A world-class metals partner

Boliden's overall goals and strategies focus on increasing the Group's mining assets, deepening its partnerships, recycling secondary materials and operating indisputably world-class mines and smelters.

■ To be Europe's leading supplier of zinc and copper in terms of volume and customer satisfaction.

■ To be the world-leading recycler of electronic scrap and to develop the potential of other secondary materials.

■ To constantly increase mining assets.

market goals goal fulfilment, 2007

■ As the third largest supplier of zinc and the second largest supplier of copper, Boliden retained its position as a leading European supplier. We held an 18 per cent (18%) share of the European zinc market and a 13 per cent (14%) share of the European copper market.

■ Boliden was the second largest recycler of electronic scrap in the world, and the world-leader in terms of efficient energy consumption and high standards of environmental performance.

■During the year, Boliden has reported increased ore reserves in the Boliden Area and Garpenberg, among other places. We are currently the biggest player in Europe in terms of copper and zinc exploration.

■ To be one of the world's most cost-effective metal producers and thereby to be ranked in the top third of the sector with regard to cash cost.

operational goals goal fulfilment, 2007

■ Half of our mines and smelters were, with regard to cash cost, ranked among the best third of sector companies worldwide.

■ To generate a return on capital employed of over 10 per cent over a business cycle.

■ To achieve a net debt/equity ratio of approximately 40 per cent.

■ To pay a dividend corresponding to approximately one third of the net profit over a business cycle.

financial goals goal fulfilment, 2007

■The return on capital employed was 29 per cent (52%).

■The net debt/equity ratio was 43 per cent (–1%).

■The Board proposes a dividend of sek 4 per share (sek 4/share), corresponding to 30 per cent of the net profit.

strategy implementation

ply and profitability of the smelters.

■ To continuously improve operational efficiency. ■ To implement organic growth projects. ■ To expand exploration activities. ■ To participate in industrial consolidation. ■ To develop and expand recycling activities. ■ Productivity and cost-effectiveness are primarily boosted through continuous process improvements that focus on the interaction between technology, processes and people. Ongoing internal and external benchmarking establishes efficient methodologies and processes. ■The Business Areas Smelters and Mines continuously evaluate their operations to ensure that, given their respective assets and core competencies, they make use of opportunities offered by the metals market and of economies of scale in production. ■ Intensified exploration and cooperation with exploration partners ensure an ore reserve that secures mined production for at least ten years ahead. ■The position in the mining and metals market is used to exploit attractive consolidation opportunities with industrial logic and at a reasonable value over a business cycle. ■ Boliden's technology and know-how in the recycling field help ensure the long-term material sup-

Continued huge demand for base metals

The price of zinc fell sharply during the latter part of 2007 but the aver- age price for the year as a whole remained on a par with that for 2006. Other metal prices continued to rise with the sharpest increase reported in the price of lead.

Boliden is a player in both the mining market and the market for finished metals. The pricing in these markets is largely global, although some differences do exist between different regions. As a result, Boliden is very much affected by the global supply and demand trend for concentrates, metals and recycling materials, despite its operations and customers being located exclusively within Europe.

PRODUCTION/CONSUMPTION BALANCE, IN 2007

When demand for copper began to pick up in mid-2003, companies in the metals industry were substantially underinvested. The increased demand from both the West and from China and other Asian growth countries exceeded metal production, and as a result, global copper stocks shrank and prices rose. The global stocks and pricing trend for zinc, whose demand cycle has historically speaking lagged behind that of copper, began to show similar patterns in 2005.

The price rises seen in recent years have

boosted the metals industry's willingness to invest, thereby boosting production capacity too. In 2007, the copper market essentially achieved a balance between production and consumption. Zinc production was somewhat higher than consumption and the global stocks of zinc grew during the latter half of the year, resulting in a downturn in the price of zinc.

DEMAND CONTROLled by CYCLIC AND STRUCTURAL FACTORS

Demand for base metals such as zinc and copper has a clearly cyclic nature. The growth in the global economy as a whole, and in industrial production in particular, affects the metals' price trends.

A global economic upturn often makes its mark on copper prices first, because copper is an important metal in the development and renovation of fundamental infrastructure. Zinc metals are in demand slightly later in the business cycle and development phase – when construction of buildings and roads, for example, picks up. Demand for consumer products, such as cars, increases at an even later stage in the cycle, further boosting demand for zinc and copper.

The global economy is currently undergoing a powerful structural transformation. The modernisation of densely populated countries such as China and India is behind much of the current huge demand for base metals. China and India plus the countries of eastern Europe and South America, however, are still consuming only small quantities of base metals per capita, with consumption levels of between 2 and 5 kilos in contrast with approximately 10 kilos per capita in the West. Global demand for base metals is, therefore, expected to remain strong for the next 20 to 30 years.

According to the International Monetary Fund (imf), global industrial production increased by 4.9 per cent in 2007. The imf predicts growth of around 4.1 per cent in 2008.

WHAT AFFECTS BASE METAL PRICES?

Base metals are traded daily on the London Metal Exchange (lme), setting the basis for the pricing of metal concentrates and finished metals all over the world.

The mines' and smelters' production costs have a significant long-term effect on pricing. Cost levels have increased in recent years, and prices must therefore rise in order to sustain profitable mined and metal production. This development has also made cost control an even more important competitive weapon.

In the shorter term, the prices are affected by financial players' actions in the market and by temporary disruptions to supply as a result of strikes, extreme weather conditions and energy shortages, for example.

The levels of the lme's official metal stocks in different parts of the world act as a gauge of regional and global demand. Stock levels are published daily and changes have a direct impact on the lme prices. 2007 has seen relatively large fluctuations in lme stocks of zinc, primarily due to China alternating between being a net exporter and a net importer.

THE ZINC AND COPPER MARKET, 2007

The majority of the world's production of finished metals occurs in countries and regions with high levels of metal consumption.

China is the biggest producer of zinc metals, with a market share of 33 per cent, fol-

Source: Brook Hunt

■ GLOBAL MINED PRODUCTION Zinc 11.2 million tonnes Copper 15.6 million tonnes

■ GLOBAL METAL PRODUCTION Zinc 11.3 million tonnes Copper 18.2 million tonnes

■ GLOBAL METAL CONSUMPTION Zinc 11.6 million tonnes Copper 18.2 million tonnes

Pricing in the metals chain

Base metal prices are set daily on the London Metal Exchange (lme). The trading on this international market lays the foundations for mining and smelting companies' pricing worldwide.

SMELTERS' INCOME

Smelters' pricing of metal deliveries to customers is based on the lme prices. A pricing premium that reflects regional transport and financing costs as well as any customs costs is added to this price when selling the finished metal to customers. The value of the premium for the individual metal suppliers is affected by their respective ability to handle transport and financing solutions in a cost-effective way.

The smelters' income for refining concentrates into chargeable metals comprises several components. The purchase prices for raw materials are based on the concentrates' metal content multiplied by a standard estimate of the metal content that the smelter will, in practice, produce by refining the concentrate. This means that smelters with advanced technical ability can generate some of their revenues from free metal, i.e. the metal produced without incurring raw material costs. tc/rc refer to the smelting and refining processes and are negotiated between the mine and the smelter. When metal concentrate availability is good, tc/rc rise, and vice versa. The agreements may include a price escalator clause, as they are known, which shares any changes in the lme prices between the parties.

lowed by Australia, Canada, Japan and South Korea. Collectively, these countries account for 56 per cent of the global production of zinc metals. Europe produces 21 per cent of the world's zinc metals – a figure that is insufficient to meet the region's needs and which, as a consequence, necessitates substantial net imports.

China alone consumes almost 30 per cent of all zinc metals and Asia as a whole accounts for just over half of global consumption. In the West, the usa and Germany are the biggest zinc consumers. Smelter capacity expansion over the next few years is expected to occur mainly in China and the rest of Asia, and in the former Soviet Union.

Production of copper metals – copper cathodes – largely occurs in the immediate vicinity of European, Asian, and North American semi-finished goods and component manufacturers. The exception to this is Chile, which is second only to China globally speaking in terms of copper cathode production and which is a major net exporter to both Asia and Europe. Asia, which consumes half of all global cathode production, is showing the fastest increase in both consumption and production. Europe uses approximately 23 per cent of global production. With a selfsufficiency level of only 50 per cent, Europe is heavily dependent on copper imports, primarily from Chile.

Stocks and price trends

The market for zinc metals achieved a balance between supply and demand in 2007. Global consumption increased by 4 per cent to 11.6 million tonnes, with continued strong demand coming from China. Production rose during the same period by 7 per cent to 11.3 million tonnes, with a big contribution to the rise coming from new smelters in China and India. Substantial quantities of zinc were periodically exported from China. By the end of 2007, there were approximately 143,000 tonnes in the lme stocks, corresponding to 4.5 days' global zinc consumption, so despite an increase from the 2006 levels, zinc stocks remained at historically low levels.

The rise in the lme zinc prices seen in 2006 switched in late 2007 to a fall, but the average price remained unchanged from one year to the next.

Global consumption of copper cathodes was on a par with production in 2007. Consumption increased by 4.0 per cent to 18.2 million tonnes in comparison with an increase in production of 5 per cent to 18.2 million tonnes. This includes, in addition to production from mined concentrates, production from scrap copper and direct leaching (SxEw). By the end of the year, the lme stocks contained approximately 238,000 tonnes of copper cathodes, corresponding to 4.8 days' global consumption. The increase from the 2006 levels notwithstanding, stocks should still be regarded as low from an historic viewpoint. The average lme price of copper rose in 2007 by 6 per cent to usd 7,126 per tonne.

Any price escalators

THE MINING MARKET, 2007

Unlike the finished metals, zinc and copper concentrates, when necessary, are transported all over the world for refining in smelters.

The biggest zinc concentrate producing countries are China, Australia and Peru with a combined market share of 53 per cent. The biggest of these three is China, which has a 28 per cent market share. Europe, with only 8 per cent of the world's mined production of zinc, continues to be a net importer of zinc concentrate.

Mined production of copper is concentrated in South America, North America and South East Asia, but there are also large deposits in Africa. Chile, with a market share of 36 per cent, is the biggest copper mining nation

The mines' income is based on the concentrates' metal grades – the chargeable metal content – multiplied by the lme price. The smelters' payment for refining the concentrate into metal is deducted

MINING COMPANIES' INCOME

from that price.

in the world. Europe only produces 6 per cent of the global production of copper concentrates and is, consequently, a major net importer.

Metal concentrates availability and treatment charges

Recent years' rises in base metal prices have stimulated investment in both existing mines and in exploration for new deposits. Global mined production of zinc increased by 8 per cent in 2007, with mines in China, Peru and Kazakhstan accounting for a substantial percentage of the increase.

Competition for copper concentrates continued to increase, particularly from China.

Technical problems and strikes, primarily in Chile, hampered mined production of copper in 2007. Copper concentrate production increased by around 3 per cent overall, but this was insufficient to meet global demand and the shortage of concentrates will mean continued downward pressure on payments to copper smelters.

METAL RECYCLING – A FAST-GROWING RAW MATERIAL BASE

Interest in metal recycling is increasing apace

with the general increase in global consumption, and a simultaneous rise in environmental awareness. Secondary materials, such as scrap metal and ashes from the steel and metals industries, have long been recycled by smelters. Tighter regulations and legislation, coupled with shorter product lifecycles, have contributed to making electronic scrap the fastest growing recycling segment.

Since mid-2005, when the so-called weee (Waste Electrical and Electronic Equipment) Directive came into force, the eu member states have been introducing or adapting legislation to regulate the way in which discarded electrical and electronic products are processed in an environmentally acceptable way. 17–20 kilos of electronic waste per capita is produced every year within the eu, and this figure is expected to increase by some 3 per cent per annum. For smelters with the technology to effectively process and recycle electronic scrap, this development offers opportunities to establish a source of materials that is not steered by cyclic factors. Electronic waste is particularly important in terms of the extraction of precious metals.

Lead battery recycling levels have been high for many years now – at over 90 per cent in the West. Recycled lead currently accounts for almost 50 per cent of global lead consumption.

THE METAL MARKET'S PLAYERS

The base metals market embraces a great many different types of players, both in terms of metal mix and of their position in the refinement chain.

The improved profitability of both mining and smelting players and the pursuit of additional economies of scale are the driving forces behind the wave of consolidation that began in the first few years of the new millennium. Companies' desire to diversify their product range and to ensure future growth and delivery capability are also promoting this trend.

The trend continued in 2007 with a number of major structural transactions taking place. Freeport McMoRan's acquisition of Phelps Dodge is one example of this trend on the copper side. On the zinc side, Umicore and Zinifex hived off their zinc smelters to the newly formed and subsequently listed company, Nyrstar.

Smelting players

The metals market is dominated by a few large

BOLIDEN IS ONE OF EUROPE'S BIGGEST ZINC AND COPPER PLAYERS

Biggest zinc players	Metal production in Europe, 2006
Xstrata	627,000
Nyrstar	627,000
Boliden	443,000
Biggest copper players	Metal production in Europe, 2006
Norddeutsche Affinerie (NA)	567,000
KGHM	515,000
Cumerio	408,000
Boliden	356,000
Atlantic Copper	235,000

ZINC APPLICATIONS

PER CENT

Source: Brook Hunt

ZINC

COPPER

PRICE AND STOCKS TREND (LME) USD/TONNE TONNES

copper APPLICATIONS PER CENT

Interest in metal recycling is growing on a par with increased global consumption and environmental awareness. Boliden is one of the world leaders in the recycling of electronic scrap.

smelting players, who often have some form of connection with the major mining companies. There are also a number of relatively small smelters.

Proximity to suppliers is becoming increasingly important for metal consuming companies, i.e. manufacturers of semi-finished goods and components. Smaller and more frequent deliveries – and close relationships with suppliers – reduce stock build-ups and unnecessary tie-up of capital. Unlike the mining companies, the smelters primarily compete at a regional level.

Boliden, with a market share of 18 per cent, is the third biggest producer by volume of zinc metals in Europe. Xstrata is the biggest player, followed by Nyrstar.

On the copper cathode front, Boliden, with a market share of 14 per cent, is Europe's fourth biggest producer. Norddeutsche Affinerie (na) is the biggest European player, followed by kghm and Cumerio. All three companies are, however, integrated further down the value chain, and much of their production is consequently used in their own operations and is not, therefore, in direct competition with Boliden's. Based on the volume of copper cathodes that reach the market, we are the biggest supplier in the world after the Chilean firm, Codelco.

Recycling players

Only a few smelters worldwide have the technology and processes needed to handle the recycling of electronic scrap in an environmentally acceptable way. By volume, Boliden is the second largest recycler of electronic scrap in the world, and the market leader in terms of environmental performance. The Canadian company, Xstrata, is the biggest. Boliden's main competitors in the European market are Norddeutsche Affinerie and Umicore.

Other important recycling niches include zinc and copper ashes, and steelworks dust, and these are areas in which Boliden's Rönnskär copper smelter has a technological head start on its competitors.

Mining players

As with the market for finished metals, the mining market is dominated by a few very big players. The zinc concentrate market is, however, more fragmented than the copper market. The five biggest players – Xstrata, Teck Cominco, Zinifex, Hindustan Zinc and Anglo American – account for just over 30 per cent of global production. Boliden is the seventh biggest player, with a market share of 3 per cent. Our share of zinc concentrates produced in Europe is 34 per cent, making us the biggest European player.

The six biggest copper concentrate producers – Codelco, Freeport McMoRan, bhp Billiton, Xstrata, Rio Tinto and Anglo American – have a market share of around 45 per cent. Boliden's share of the global market is approximately 0.5 per cent, while its corresponding share of the European market is 9 per cent.

THE MARKET FOR BOLIDEN'S OTHER PRODUCTS

Lead

Over three quarters of global lead production is used in the battery industry. China, Australia, the usa and Peru are some of the major mining producers, while refining is primarily based in China, the usa and Germany.

The price of lead rose sharply in 2007 as a result of continued high levels of demand and low stock levels. The average lme price rose by 102 per cent to usd 2,595 per tonne.

Lead concentrate availability improved in Europe, partly as a result of a reduction in China's imports, and payments to smelters consequently rose in 2007.

Gold

The jewellery industry accounts for almost 60 per cent of global gold consumption. The biggest gold producing countries are South Africa, the usa, China, Australia, Peru and Russia. The price of gold is not steered primarily by supply and demand for the physical product, but by investors who use gold as a safer investment alternative in times of inflation and geopolitical unrest.

The average price of gold rose by 15 per cent in 2007 to usd 696 per troy ounce. Gold is sold by the London Bullion Market Association (lbma).

Silver

The silver industry is more fragmented than gold production. Peru, Mexico, China, Australia, Chile and Poland are the biggest producing countries. By-products from copper and zinc mines also make up a substantial percentage of total global silver production. Unlike gold, silver's price trend is primarily determined by supply and demand from industrial processes, within the electrical and electronics industry, among others, and is consequently more closely linked to global economic trends than gold.

In 2007, the average price of silver rose by 16 per cent to usd 13.38 per troy ounce in lbma trading.

Sulphur products

Sulphur is present in the metal concentrates processed in smelters. The refining process releases the sulphur and forms sulphur dioxide which, after purification, can become sulphuric acid and liquid sulphur dioxide. Sulphuric acid is, by volume, the world's most widely used chemical, and is primarily used in the paper and pulp industry, the chemicals industry, in the production of artificial fertilisers and during direct leaching in the mining industry. Liquid sulphur dioxide is mainly used by the paper and pulp industry.

Aluminium fluoride

Aluminium flouride is a vital chemical additive in the production of aluminium metals. It is produced in the form of a powder through a drying process where sulphuric acid is one of the most important input goods.

BUSINESS AREA MARKET

ulf söderström – Head of Business Area Market

Bildtext? " Business Area Market was created to improve Boliden's exploitation of its potential to be a leading supplier of base metals. During our first year as a separate Business Area, we have established the new organisation and introduced new methodologies. The launch of ZiNiGal – our newly devel- oped zinc and nickel alloy – is a very good example of our ability to translate an understanding of our customers into value-generating products and services. Just like Boliden's other two Business Areas, we are constantly working to improve what we do. One of Market's important tasks is to exploit the advantages of coop- eration between mining, smelt- ing and recycling. Efficient management of the Group's flows helps Boliden reduce the amount of capital tied up.

Added value at every stage

Business Area Market is responsi- ble for Boliden's metal sales and the Group's raw material flows. Reliable deliveries of high-quality products make us the customer's supplier of choice.

OPERATIONS

Business Area Market's primary task is to sell Boliden's metals within the framework of long-term customer relationships. Reliable deliveries of high-quality metals with supplementary service in the form of flexible logistics solutions, customised products and technical customer support, establish and strengthen relationships with financially strong customers.

We also secure the smelters' supplies of metal concentrates and recycling materials by buying in from external suppliers.

By ensuring efficient flow management, and thereby efficient flows of operating capital, stock levels can be kept low. Our responsibilities also include managing the currency and metal price risks that arise when dealing in metals.

Business Area Market has a total of 93 employees.

IMPORTANT STEPS IN 2007

The establishment of Market as a separate Business Area at the beginning of the year was primarily implemented with a view to generating better conditions for Boliden to increase efficiency and improve its service to customers and suppliers. The new organisation has been assembled in Stockholm in order to bring together the Business Area's collective knowhow and to enhance the efficiency of Market's methodologies. Boliden also has sales offices in the UK and Germany in order to secure our geographic market presence in Europe.

Boliden's technical customer support continued to develop during the year. Our technically expert employees spend a lot of time at customer sites, enabling them to contribute to the development of customers' processes. June 2007 saw the launch of ZiNiGal, Boliden's new zinc and nickel alloy, which meets the increased efficiency requirements of customers operating in the general galvanising industry.

Our ambition of reducing Boliden's dependence on a few large customers and of expanding the customer base to markets outside the Nordic region, e.g. in central and eastern Europe, led to the establishment of new customer relationships on both the zinc and copper fronts during the year.

CUSTOMER, BUSINESS AND PRODUCT DEVELOPMENT

Taking the customer's needs as our permanent starting point, we are moving towards becoming a partner that offers more than just base metals.

Boliden's products in general, and its copper in particular, are and will continue to be bulk products, making customer loyalty particularly important. The principal tools we use to reinforce links with our copper customers are flexible logistics solutions and technical customer support.

The scope for customised products is, however, greater on the zinc side. Boliden's smelters and technical customer support team are working in close cooperation with customers to develop zinc metals with new properties that facilitate the customers' processes.

SALES

The prices of Boliden's main products, zinc and copper, are based on the base metal prices set daily on the London Metal Exchange (lme). Business Area Market endeavours at all times to sell 100 per cent of the Group's metal production directly to customers, which means receiving higher prices than when supplying lme's stocks. The pricing premium is negotiated with the customers and principally reflects regional supply and demand, transport costs for imported materials, and customs duties. Making full use of Boliden's strengths enables us to boost the value of market-determined pricing premiums by adding new value to our products and services. Boliden's strengths include:

■ high and consistent product quality.

■ reliable deliveries due to our integrated business model.

■ logistics solutions that ensure customer deliveries "just-in-time", thereby reducing tied-up capital.

■ product adaptations that enhance the efficiency of customers' processes and improve the properties of the end products.

■ wide-ranging sustainability efforts that lay the foundations, both for Boliden and for its customers, of a responsible value chain for metals, from exploration to finished metals.

PURCHASING

Business Area Market is responsible for purchasing concentrates and secondary materials from external suppliers in order to secure a high and consistent level of capacity utilisation at Boliden's smelters.

Boliden's zinc concentrate production covers much of the requirement of the Group's own zinc smelters, thereby securing both capacity utilisation and the reliability of deliveries to customers.

Boliden's own production of copper concentrate corresponded to approximately 20 per cent (25%) of the copper smelters' require-

ments in 2007. Boliden bought in substantial amounts of concentrate from external mines, the majority of which comes from long-term contracts with large mines in South America. In order to secure the raw materials supply for Boliden's copper smelters, we endeavour to cover around 85 per cent of the copper concentrate requirement through multi-year supplier agreements, including with Boliden's own mines. The remainder of the copper concentrate purchases is made through shortterm contracts, thereby creating the potential for exploiting any temporary availability of complex concentrates on what are, at times, extremely advantageous terms.

The recycling of electronic scrap and other secondary materials is an important source of raw materials, particularly for the Rönnskär copper smelter. Secondary materials, much of which comprises electronic scrap, is primarily bought from European suppliers.

EFFICIENT TRANSPORTS

The metal supplier usually defrays the transport costs. Logistics are consequently a major cost item within Boliden. Efficient logistics solutions not only cut costs, they also improve our ability to create customer solutions with added value.

The Copper Shuttle, as it is known, is a rail solution designed to transport copper from Rönnskär to Boliden's customers in southern Sweden with a high degree of cost-effectiveness. On the return trip, the trains carry electronic scrap and other input goods for recycling at Rönnskär. In 2008, the Copper Shuttle's route will be extended to mainland Europe and will also be developed to handle transportation of sulphuric acid and liquid sulphur dioxide.

The operations' locations – close to coastlines – are ideal for marine transportation. The Odda and Rönnskär smelters have their own ports, while Kokkola and Harjavalta are located close to port areas on the coast of Finland. Boliden has long-term freight agreements that ensure Boliden's deliveries of metal can be coordinated efficiently.

MANAGING CASH FLOWS AND BUSINESS RISKS

A substantial percentage of the cash flows within Boliden is managed by Business Area Market, which consequently manages a considerable share of the Group's business risks.

We endeavour at all times to maintain a sales mix of volume products and customised products that maximise profitability. Our focus is on long-term business relationships and contracts with financially strong customers that lay the foundations for Boliden's earnings.

ALTERNATIVES TO BOLIDEN'S MAIN METALS

A degree of base metal substitution has been common for many years now, but recent years' high price levels and metal shortages have increased consumers' incentives to seek out alternative materials, and this may result in more tangible substitution effects.

The alloy industry, which can use aluminium and local rust-proofing treatments in the form of spray painting, for example, is one of the areas more sensitive to zinc substitution. The current relatively high demand for zinc in Europe means that the effects of any substitution have not, however, been apparent to date.

In some cases, copper can be replaced by aluminium and plastic, etc. The currently high price difference between copper and aluminium has accelerated this substitution, but the fact that copper has considerably better properties than the alternatives does limit the risk of substitution. Boliden's copper is primarily used for fine wire, conduit wire, cabling, and electronic components – all areas in which the threat posed by replacement products is small. Less than 5 per cent of Boliden's copper production is used for products where there is substantial competition from other materials.

BOLIDEN'S BIGGEST CUSTOMERS
Zinc customers
Arcelor
Corus
Rautaruuki
SSAB
Thyssen Krupp Stahl
Copper customers
Elektrokoppar
Luvata
MKM
Norddeutsche Affinerie (NA)
Wieland Werke

Working to expand the customer base

Boliden is Europe's biggest supplier of zinc to steelworks. The majority of our copper metal is delivered to a few large manufacturers of semi-finished goods. Our customers are currently located in northern Europe. We are endeavouring to reduce our dependence on a limited number of customers and to increase our market presence in central and eastern Europe.

ZINC

Around half of Boliden's zinc metal is sold to a few European steelworks, who buy large volumes for use in the continuous galvanisation method of rust-proofing. Relationships with our steelworks customers are strengthened through improved service, flexible logistics solutions and technical support. The western European steelworks have a relatively low growth rate, with growth primarily coming from players in eastern Europe as the car manufacturing industry, among others, shifts some of its manufacturing operations eastwards.

Companies that galvanise piece goods – so-called general galvanisers – are Boliden's second biggest customer category when it comes to zinc, and account for approximately 25 per cent of sales. The players are numerous and relatively small in comparison with the steel industry. Our ability to develop new zinc products in cooperation with these customers is important to them.

COPPER

Boliden's copper metal is mainly sold to customers who demand high-quality products. Our high-quality copper is primarily used by manufacturers of copper products that demand high ductility, such as winding wire. The five biggest customers buy almost 90 per cent of Boliden's total copper production.

In order to limit its reliance on a few customers, Boliden is endeavouring to grow in new markets, primarily in central and eastern Europe.

LEAD

Around 65 per cent of Boliden's lead products are sold to the European battery industry. Lead sheet manufacturers buy around 25 per cent, with the remainder used in smaller products such as boat keels and radiation shields.

OTHER PRODUCTS

Most of Boliden's ores contain varying levels of gold and silver, which are important and profitable by-products for the Rönnskär and Harjavalta smelters. A significant percentage of these precious metals also comes from Rönnskär's recycling of electronic scrap. The gold is sold to a number of larger industrial companies and banks, while the silver is sold directly to the end-consumer.

Boliden is Europe's second largest producer of sulphuric acid which is used in the paper and pulp industry, among others. Sales of sulphuric acid are primarily made in the Nordic market, but large volumes are also supplied to the UK, the Benelux countries and South America.

ZiNiGal – a textbook example of product development in close cooperation with the customer

Boliden's goal is to become Europe's leading supplier of zinc and copper. Product development in close cooperation with the customers is an important strategic piece of the puzzle when it comes to achieving this goal.

2007 saw the launch of ZiNiGal, the new zinc-nickel alloy developed to meet customer demands in the so-called general galvanising industry.

"Customers are constantly demanding more of galvanised steel. ZiNiGal is a product that can very definitely live up to these requirements," says Patrick Ammerlaan, Head of Metals, Business Area Market.

ZiNiGal improves most of the properties of galvanised products. The surface of the end-customers' steel products is even, bright and shiny, and their abrasion properties, adhesion and ductility also improve. The addition of nickel to the zinc also enables a reduction in the coating thickness of the galvanised steel products while simultaneously making the surface durable and resistant. One concrete example of this comes from the production of galvanised steel, where ZiNiGal has helped enable a customer to reduce the amount of zinc used by approximately 900 kilos per 25 tonnes of galvanised goods. And because ZiNiGal helps reduce zinc consumption, it also has a positive effect on customers' finances.

The groundwork was carried out at the Kokkola zinc smelter in 2004 and involved a series of preliminary tests requested by a variety of customers. The experience gained was passed on to the Odda zinc smelter, where a project group was formed in partnership with the Norwegian University of Science and Technology (NTNU) in Trondheim. At that time, this was a completely new way of working on product development for Boliden.

"Well, the whole initiative is really customer-driven. Requests

for improved properties come directly from the customers and we have met those requests using our know-how and our resources," says Lars Ole Hammersland, a process engineer at Boliden Odda.

Work environment and process stability questions were key throughout the entire development process. Several of the customers who carried out tests in their galvanisation product lines have also provided feedback. Lars Ole Hammersland reports that working closely with the customer in this way on ZiNiGal has been extremely successful.

"Absolutely! And it's something we're going to be seeing more of in future."

In conjunction with the work on ZiNiGal, Boliden has also set up a technical support and service function within Business Area Market, headed by Dr Roger Pankert. Boliden's customers can turn to this function for expert technical assistance with both their day-to-day work and their future development projects.

"This is a relatively new product, so our customers have a lot of questions. We can explain how it works and how the product can best be used, e.g. when it comes to adapting nickel content levels," says Roger Pankert. "But we can also help with the actual 'business cases', which means we can provide support pretty much across the board, become a partner for our customers."

And the customers' reactions to the support function have been unanimously positive.

"Oh yes. It helps the customers to feel that we are taking good care of them, that we're not just leaving them to their own devices with this new product," says Roger Pankert.

Boliden currently has around 100 ZiNiGal customers. Just over 10,000 tonnes of ZiNiGal were produced in 2007 and Boliden expects the product to become increasingly important in the future.

BUSINESS AREA SMELTERS

svante nilsson – Head of Business Area Smelters

" 2007 has seen Business Area Smelters put considerable effort into implementing internal growth and efficiency enhancing projects. Production capacity increased at four of our smelters – Harjavalta, Rönnskär, Kokkola and Bergsöe. Rönnskär's profitable and eco-efficient metal recycling technique offers very real potential for growth in an interesting and high-growth area, while simultaneously helping us make a contribution to establishing a long-term sustainable metal cycle. Energy, material and equipment costs look likely to remain high in the metals industry. If we are to boost our competitiveness, which depends very heavily on technically advanced smelters, we must use all of our combined know-how and experience to identify and implement new improvement projects on an ongoing basis. Flexible technology allows us to refine complex and impure mining concentrates and recycling materials more profitably – materials that competing smelters have difficulty in handling.

Flexible processes boost profitability

Boliden's smelters are characterised by flexibility, efficient material flows and high environmental performance. Technically advanced facilities enable us to handle complex metal concentrates and a range of recycling materials, thereby boosting profitability.

PROFIT PERFORMANCE, 2007

The operating profit of the Smelters segment in 2007 was sek 2,297 million (sek 5,652 m). The fall in the profit in comparison with 2006 is due to lower realised tc/rc, a lower us dollar exchange rate, a negative stock revaluation result, and the effects of a change in internal pricing.

GROWTH PROJECTS

The expansion and efficiency enhancing project at the Harjavalta copper smelter was completed during the fourth quarter of 2007. Full production capacity was achieved in early 2008, resulting in increases in the production of copper anodes and cathodes of 30 per cent and 20 per cent, respectively, in comparison with previous capacity levels. In addition to the capacity increases, the project will also mean reduced energy consumption and improved cash costs.

The investment begun in 2006 at the Rönnskär copper smelter was completed in 2007, yielding an annual capacity increase of 15,000 tonnes of finished copper cathodes and an improvement of some sek 40 million in the smelter's profits.

The implementation of the first phase of the expansion investment at the Kokkola zinc smelter increased production capacity by 3.5 per cent during the third quarter of 2007. The concluding phase, which is scheduled for completion in q3 2008, will increase capacity by a further 3.5 per cent.

EXPERTISE AND TECHNOLOGY ARE OUR MAIN STRENGTHS

Boliden's smelters have advanced technology and a high degree of flexibility. This enables us to refine different types of raw material of varying degrees of purity in processes which, in addition to our main metals, allow us to exploit all of the valuable by-products. Ongoing technological development, conducted both internally and in cooperation with external partners, means that both the zinc and the copper smelters use the best available technology. The Kokkola and Odda zinc smelters are, for example, still the only smelters in the world to use the direct leaching method (the dl method). The dl method enables the roasting stage of the zinc smelting process to be partially eliminated, resulting in substantially enhanced efficiency and enabling the processing of complex concentrates that are cheaper to buy.

The Harjavalta copper smelter has developed the so-called flash smelting method used when producing copper and nickel. The incineration by the flash furnace of the concentrates' iron and sulphur content generates the energy needed in the smelting process. The method offers a substantial reduction in both energy consumption and emissions to air and water.

In Rönnskär, Boliden uses the unique and patented development of the Kaldo technology to recycle electronic scrap. The method eliminates the need to remove the plastic from the scrap entirely, rather, the plastic is used to smelt the materials, and as a result, no additional energy is required in the process. The smelting is followed by a very eco-friendly gas cleaning process.

Having multiple zinc and copper smelters allows Boliden to steer the material flows in ways that optimise the smelters' capacity utilisation and their competitive advantages.

The cooperation between the smelters is a very important part of Boliden's process and product development. Improvement measures are identified through careful mapping of the smelters' production processes and benchmarking between the facilities.

BROAD INCOME BASE

The smelters' ability to refine many different types of raw material creates a broad income base. The high level of efficiency simultaneously enables the smelters to extract a very high percentage of the concentrates' metal content, resulting in substantial income from free metals. Taken together, these factors help reduce Boliden's exposure to tc/rc for its main metals, zinc and copper.

Base treatment charges, including price escalators, accounted for around half of the zinc smelters' revenues in 2007. This was a smaller percentage than in 2006, due to the negative effects of the price escalators contained in the zinc treatment charge agreements. The percentage of revenues generated by zinc premiums increased to around one quarter as a result of higher benchmark levels in 2007, while the percentage of revenues derived from free metals remained largely unchanged.

The flexibility of Boliden's copper smelters means that a substantial percentage of the tc/ rc derives from metals other than copper. In 2007, copper tc/rc accounted for approximately one third of revenues. tc/rc for other metals, principally lead, gold, nickel and electronic scrap, accounted for just over one quarter of revenues. Other products, principally sulphur products, made up around one tenth of revenues.

THE ZINC SMELTERS' REVENUE BREAKDOWN, 2007

THE COPPER SMELTERS' REVENUE BREAKDOWN, 2007

THE COPPER SMELTERS' REVENUE BREAKDOWN, 2006

ZINC TC BENCHMARK 1997–2007

DOLLAR/TONNE CONCENTRATE

COPPER TC/RC BENCHMARK 1997–2007 USc/lb PAYABLE COPPER

Long-term energy cost management

As is the case for other types of basic industry, operating mines – and in particular, smelters – requires large amounts of energy. Energy price trends are therefore significant in terms of Boliden's long-term profit performance.

Energy accounts for 17 per cent of the Group's total costs, making it the second biggest individual cost item. In 2007, the cost for energy amounted to sek 1,628 million (sek 1,520m).

Boliden has a number of programmes and measures in place which aim to increase energy efficiency and competitiveness. The operations have a common energy policy and the aim is for all units to have energy management systems in place by the end of 2008.

Europe's energy markets have become increasingly complex, and gaining an overview of the price trend is difficult.

Energy procurement takes place centrally but energy supply and costs differ from one country to another. We try to conclude longterm fixed agreements for all of our production facilities in an effort to ensure predictability.

Boliden works at both national and European level to secure its long-term energy supply. The majority of the Group's Swedish energy requirements are currently met through fixed price supply contracts, complemented on an ongoing basis with electricity derivatives with a five-year horizon.

In 2007, Boliden's Finnish operations joined a consortium, Fennovoima, with the aim of investigating the potential for securing some of its long-term electricity supply through the use of nuclear power. In Norway, Boliden is almost completely dependent on hydroelectric power. To date, the Group has been a joint owner of Norwegian hydroelectricity suppliers, but ongoing political discussions of ownership issues mean that Odda's energy supply conditions may now change.

Boliden works through the BasEl organisation to consolidate energy supply and competitiveness for the basic industries in the Nordic region. Discussions have been initiated with ibec (The Irish Business and Employers Confederation) regarding the creation of an Irish equivalent of BasEl. Energy supplies in Ireland have not been adapted to meet the requirements of industrial operations to the same degree as elsewhere in Europe and, as a result, cost levels are higher.

Production and safety

record at Kokkola Case 2 Kokkola

2007 was a record year for the Kokkola zinc smelter in Finland in terms both of production and safety. Over 300,000 tonnes of zinc metal were produced during the year in an increase of approximately 8 per cent in comparison with 2006.

The main reason for Boliden Kokkola's new record is excellent production stability throughout 2007.

"Not a single production stoppage is exceptionally good," says Harri Natunen, President of Kokkola. "The factors for success include a disciplined, orderly approach and cost control. This has enabled Kokkola to take advantage of several so-called bottleneck investments made during the year. The expansion of the direct leaching capacity is one example of this. Higher casting capacity is another. These bottleneck investments and other ongoing improvements are strategically very important.

"2007 was also a record year in terms of safety, which is very good news. The number of accidents leading to absences due to sickness in 2007 was as low as five, in comparison with 2006 when the corresponding figure was 17. None of the cases was serious."

Kokkola has prioritised safety over the past recent years and the

goal is, of course, to be able to eliminate accidents completely.

Good results were also achieved on the environmental front. Emissions from production are now at a level well below the emissions thresholds imposed by the Finnish authorities.

Kokkola, in common with many of Boliden's other units, is facing the loss of a great many employees through retirement in the next few years. Preparations to deal with this began several years ago in the form of in-house training programmes, among other things.

"We've been working for several years now to adjust staffing levels in relation to factors such as production, the economic climate, and costs," says Harri Natunen.

And just as a matter of interest, it is also worth noting that the smelter was named the most popular and attractive workplace in the town of Kokkola, according to a survey of the town's population!

"It's particular pleasing, of course, that the area's young people and students feel that way," says Harri Natunen. The same survey showed that Boliden Kokkola is also ranked first in an assessment of the way in which environmental issues are managed.

Five smelters

KOKKOLA – ONE OF THE WORLD'S BIGGEST ZINC SMELTERS

Kokkola, located in the town of Kokkola on the west coast of Finland, is Europe's second largest zinc smelter and the fifth largest in the world. The smelter's main product is a CGG (Continuous Galvanizing Grade) alloy which is used in the galvanisation of thin steel. Kokkola also produces SHG (Special High Grade) zinc which is 99.995 per cent pure.

The zinc concentrates are delivered to Kokkola by ship from Boliden's mines and other mining producers. The application of the in-house developed direct leaching method (the DL method) enables Kokkola to process complex and less pure metal concentrates that competing smelters find hard to handle. This makes Kokkola one of Europe's most cost-effective zinc smelters. The majority of the finished zinc metals are delivered to European steel companies.

ODDA – MODERN TECHNOLOGY MEANS HIGH COST-EFFECTIVENESS

The Odda zinc smelter is located on the west coast of Norway, just under 170 km from Bergen. Odda has its own port used for inward deliveries of zinc concentrates and other raw materials, and outward deliveries of finished metals. The smelter's main product is zinc metal, but Odda also produces large amounts of aluminium fluoride. The zinc concentrates mainly come from Boliden's Tara and Boliden Area mines. Odda, like Kokkola, uses the DL method, which also gives Odda technology-based advantages in terms of costs. Over 90 per cent of Odda's zinc metal is delivered to steel customers in the Nordic region, Germany and the UK. The aluminium fluoride is mainly sold to Norwegian aluminium smelters.

RÖNNSKÄR – A WORLD LEADER IN ELECTRONIC RECYCLING

The Rönnskär copper smelter is located in Skelleftehamn in northern Sweden. The facility has its own port and well-developed logistics solutions, including the so-called Copper Shuttle, a rail link that delivers finished copper metal to customers in southern Sweden. The trains return to the smelter carrying recycling materials. The smelter's main products are copper, zinc clinker, lead and precious metals, and its by-products include sulphuric acid and sulphur dioxide.

Over half of the copper and lead concentrates come from Boliden's own mines. Concentrates from the Aitik mine are carried by rail to Rönnskär. Approximately 20 per cent of the input goods come from the recycling of electronic scrap and waste products from brass foundries and steelworks. Rönnskär has multiple smelting units and a process that can be adapted to handle numerous different kinds of raw material, giving the facility a high degree of flexibility and ensuring economies of scale. The combination of kaldo and fuming plants is ideally suited for the recycling of metals from electronic scrap and other secondary materials. The majority of the production is delivered to Elektrokoppar.

HARJAVALTA – HIGH ENERGY EFFICIENCY AND ENVIRONMENTAL PERFORMANCE

The Harjavalta copper smelter, which is located on the west coast of Finland, comprises two units located about 30 km apart. The actual smelter produces copper anodes, most of which are shipped by rail to the coppery refinery in Pori for refining into copper cathodes. The option of sending anodes to Rönnskär for conversion increases the efficiency of the capacity utilisation at both the Boliden copper smelters. Harjavalta also produces gold, silver and sulphuric acid and smelts nickel concentrate on behalf of external customers.

The concentrates mainly come from copper mines in South America and South East Asia, and from the Portuguese mine, Neves Corvo. Harjavalta uses the in-house developed flash smelting method which is nowadays the most commonly used method of refining copper and nickel concentrates. It uses the energy generated within the smelting process and constantly reuses waste from earlier process stages. The majority of Harjavalta's copper cathodes are delivered to Luvata in Pori.

BERGSÖE – MAJOR EUROPEAN PLAYER IN LEAD RECYCLING

The Bergsöe lead smelter, which is located outside Landskrona in southern Sweden, is one of Europe's four biggest players in the recycling of lead products. Every year it takes delivery of between 4 and 5 million scrap car batteries for recycling. Bergsöe is also the Nordic region's market leader in the production of tin solder for the electronics, manufacturing and automotive industries.

The refining process produces 99.97 per cent pure lead – a grade registered on the LME. Approximately 60 per cent of Bergsöe's lead is supplied to the European battery industry, with the remainder sold for the manufacture of lead sheeting, boat keels, radiation shields and weights.

Operations

Segment SMELTERS	2007	2006
Revenues, SEK m	34,704	37,514
Operating profit (EBIT), SEK m	2,297	5,652
Investments, SEK m	1,008	782
Return on capital employed (ROCE), %	15	39
No. employees	2,297	2,475

COPPER PRODUCTION

SMELTERS

ZINC PRODUCTION SMELTERS

KOKKOLA

Kokkola's zinc production increased by 8 per cent in 2007 to 305,543 tonnes, which is the smelter's highest yearly production figure to date. The increase is due to measures designed to address bottlenecks in production, among other things.

ODDA

Odda's production has stabilised at a high level since the modernisation process was completed in 2006. Production of zinc metal in 2007 remained largely unchanged from 2006 at 157,027 tonnes.

RÖNNSKÄR

Rönnskär implemented the most comprehensive planned maintenance shut-down for ten years during q3 2007, and this had a negative impact on production. Production of copper metal fell by 7 per cent to 213,894 tonnes, while lead production remained largely unchanged at 25,865 tonnes. Rönnskär's smelting and recycling capacity had returned to normal levels by the end of the year.

Around 20 per cent of copper production in 2007 came from recycling, while the corresponding percentages for gold and zinc were 55 per cent and 75 per cent, respectively.

HARJAVALTA

Harjavalta's production of copper metal fell by 21 per cent in 2007 to 100,987 tonnes as a result of start-up problems after completion of the expansion and efficiency enhancing project. By early 2008, Harjavalta had achieved its new production capacity, corresponding to increases of 30 per cent and 20 per cent, respectively, of annual anode and cathode production.

Nickel smelting, which is carried out on behalf of Norilsk Nickel and Vale Inco Ltd., increased by approximately 28 per cent in comparison with 2006.

BERGSÖE

Bergsöe's lead production totalled 43,865 tonnes in 2007, remaining largely unchanged since 2006.

BUSINESS AREA MINES

jan moström – Head of Business Area Mines

" 2007 was an eventful year and, in many ways, a successful one for Business Area Mines. The doubling of our investments in exploration has already yielded results, not least in connection with our existing mines. Most of the mining areas extended their production base, thanks to increased ore reserves and mineral resources. We have continued to work on increasing our mines' productivity, which is vital if we are to retain and strengthen Boliden's competitiveness in the European metals market. The ongoing expansion of the Aitik copper mine is an excellent illustration of how world-class productivity ensures that our operations remain profitable, even in mines with low metal grades.

High productivity that can be even higher

Boliden has long experience of the mining business. The constantly ongoing development of methodologies and technology explains why several of our mines are among the most cost-effective in the world.

PROFIT PERFORMANCE, 2007

The operating profit of Business Area Mines totalled sek 3,135 million (sek 3,010 m) in 2007. The improvement in the profit was mainly due to a higher realised copper price, taking into account copper price hedging, lower treatment charges, and changes to internal pricing. At the same time, the weaker us dollar and lower production volumes had a negative effect on the operating profit. Costs increased in comparison with 2006 as a result of, among other things, the additional investment in exploration.

GROWTH PROJECTS

The project involving a doubling of the production capacity of the Aitik copper mine from 18 to 36 million tonnes of ore proceeded according to plan with regard both to time and to costs. In October 2007, Boliden received the Environmental Court's permission to start the expansion work. The Environmental Court's ruling with regard to terms governing emissions, noise and other environmental impact, and with regard to financial guarantees for reclamation costs, was issued in January 2008 and means that the expansion of Aitik can continue as planned.

A decision to invest sek 250 million in a circuit for autogenous grinding at the Tara zinc mine, thereby halving the operating costs for grinding at the concentrator, was also taken during the year. Boliden calculates that the investment, in combination with previous investments in more efficient dewatering etc., will reduce the total costs at Tara's concentrator by 30 per cent.

Exploration in the Boliden Area yielded good results. The exploration activities in new areas, known as field exploration, were intensified during the year in order to secure the Group's ore reserves in the longer term.

The delay in the granting of the environmental permit for the new tailings pond, Hötjärnsmagasinet, will mean a reduction in production in the Boliden Area in 2008 and 2009. The rate of concentration will be halved as of q2 2008, which will mean changing the mining plans for the Boliden Area's mines. Production of zinc and copper concentrate will fall by 45 per cent and 38 per cent, respectively, in 2008 in comparison with 2007. The figures in the mining plan for 2009 are on a similar level. The Boliden Area is expected to return to full production in 2010.

EXPERTISE AND TECHNOLOGY ARE OUR MAIN STRENGTHS

The metal grades of the ore reserves and mineral resources in many of Boliden's mining areas are, from an international perspective, low. These low grades have imparted an urgency to our efforts to develop the mines' extraction methods and the concentrators' process automation, and it is partly this urgency that has helped bring about today's high levels of productivity and cost-effectiveness in Boliden's four mining areas.

Boliden's long-standing and close cooperation with leading suppliers of machinery and other equipment has also helped us in our development of efficient methodologies and processes.

In the mines themselves, Boliden employs both production control designed to improve productivity, and technical improvements designed to further enhance the efficiency of the mines' permanent installations and to keep energy and transport costs low.

Boliden's concentrators generally enjoy a high level of automation. We work continuously to develop the concentrators' metallurgical processes in order to ensure the highest possible metal content in the concentrates produced. Technical improvements to equipment and process control improve cost-effectiveness.

Boliden works closely with Luleå University of Technology, primarily with the aim of ensuring a long-term supply of civil engineers and in order to be involved in research in the mining sphere. Exploration, mining and mineral technology, metallurgy and environmental impact are just some of the eight research programmes we have helped launch and which are expected to yield useful results. Boliden will be allocating sek 50 million over the next five years to help establish world-class research at Luleå University of Technology.

EUROPE'S BIGGEST IN BASE METAL EXPLORATION

Successful exploration is vital to long-term mining operations and metal production. Boliden has increased its exploration activities in recent years and is now Europe's biggest

player in exploration for base metals. The exploration department increased its workforce from 60 to almost 90 in 2007. The recruitments were an important success that gave us an organisation with a carefully balanced mix of geologists, geophysicists and engineers from several different countries.

The primary focus of Boliden's exploration work is on zinc-, copper-, and precious metalbearing ores. Our aim is to ensure an ore reserve that secures mining for at least ten years into the future in all mining areas. Exploration work is conducted both in the vicinity of existing mines (mine-site exploration) and in new areas (field exploration). Work in 2007 focused primarily on mine-site exploration, which means lower costs and a shorter lead-time from discovery to production in comparison with exploration in new areas. The new exploration organisation will enable a successive expansion of the field exploration activities, and a shift from a clear focus on existing areas to a more even distribution between mine-site exploration and field exploration had already begun during 2007.

SUCCESSFUL EXPLORATION ACTIVITIES, 2007

Boliden is engaged in exploration in all four mining areas. The focus in 2007 was on the Boliden Area, where we found positive signs of ore reserves in Kristineberg, Renström, Maurliden and Åkulla.

A wide new ore section with high zinc grades was discovered at Garpenberg. In Aitik, where large sections of the mineral resources were converted into ore reserves in early 2007, the exploration work focused on increasing the mineral resources in the existing mine. Work on discovering interesting new areas continued at Tara.

The successes of the mine-site exploration had a positive effect on mineral resources in all of the Swedish mining areas.

Boliden's field exploration is currently focusing on some 20 areas in Sweden and Ireland. Drilling took place at a number of sites in Sweden and resulted in several positive indications. Diamond drilling in the Skellefte field resulted in, among other things, discovery of a deposit in Maurliden Östra. An interesting new area was detected in Norrbotten, to the south of Aitik, and will be further investigated by some 15,000 metres of core drilling in 2008. In Ireland, exploration data previously collected at Limerick, Wexford and Longford was processed.

Increased ore reserves and mineral resources

Ore reserve calculations on 31st December 2007 showed the reserves in the Aitik copper mine totalled 610 million (625 m) tonnes. This corresponds to a lifespan of over 18 years at current production levels. The average copper grade of the ore reserves is 0.28 per cent (0.28%).

THE BOLIDEN AREA

KTONNES

Ore reserve calculations on 31st December 2007 showed an increase in the Boliden Area's reserves, which contain zinc, copper, lead, gold and silver, from 4.5 million tonnes to 7.0 million tonnes. This corresponds to a production lifespan of approximately 5.5 years. The average zinc and copper grades of the ore reserve are 3.6 per cent (5.0%) and 0.9 per cent (1.0%), respectively.

garpenberg

Ore reserve calculations on 31st December 2007 showed an increase in Garpenberg's reserves, which primarily contain zinc, lead and silver, from 17.2 million tonnes to 20.8 million tonnes. This corresponds to a production lifespan of approximately 15 years. The average zinc grade of the ore reserve is 5.2 per cent (5.7%).

tara

Ore reserve calculations on 31st December 2007 showed an increase in the Tara zinc mine's reserves from 16.7 million tonnes to 17.8 million tonnes. This corresponds to a production lifespan of approximately 7 years. The average zinc grade of the ore reserve is 7.7 per cent (8.4%).

L-zone very promising

Intensive exploration has been carried out at the Kristineberg mine in the Boliden Area over the last two years. The main reason is the so-called L-zone.

"We've obtained some very interesting results and found more ore than we expected. The mineralisations we have analysed from the L-zone have good zinc, copper and gold grades," says Stig Abrahamsson, Chief Geologist for Boliden's mine-site exploration.

From a geophysical perspective, the area in question is a large one at around two kilometres long. The field further to the west is also open, but Stig Abrahamsson is, as yet, unable to say with any certainty how far the ore body might extend. This means continuing to drill in that direction is on the agenda.

"It will take some time, because the surface bed rock looks different further west. It blocks the geophysical surveys, so more in-depth studies and drilling are required."

Boliden's ore reserve calculations for 2007 showed an increase in the Kristineberg mine's total ore reserve to 4.4 million tonnes, from 3.8 million tonnes at the end of 2006. The indicated mineral resources also increased from 260,000 tonnes to a massive 2.1 million tonnes. These increases can, by and large, be attributed to the L-zone.

Case 3 Exploration

"We will be continuing to focus on this area now with further drilling and survey work," says Stig Abrahamsson.

If everything goes according to plan, extraction of the new mineral deposits can begin in a few years' time.

In addition to its continued mine-site exploration, Boliden will be increasing its investments in field exploration in the surrounding area. Toby Wellman is a field geologist and is heading the field exploration with the goal of finding a new Kristineberg mineral deposit. In order to be able to identify areas of particular interest, he has studied and looked for patterns in the exploration results from the Kristineberg mine.

"It's about finding areas with similar structures and transformations in the bed rock and which might, as a result, contain mineralisations. There's no question that it looks promising and we are now entering an exciting phase," says Toby Wellman.

A complete summary of Boliden's ore reserves and mineral resources can be found on pages 95 to 97.

The Lappberget deposits and the new discoveries in the Kvarnberget and Dammsjön areas mean that Garpenberg can now count on ore reserves for the next 15 years or so. The successes are a result of the mine-site exploration.

Full speed ahead at Garpenberg

With record-high production in 2007 and ore reserves that are continuing to increase, it might be hard to believe that mining operations at Garpenberg have been in progress since the 13th century. Boliden took over ownership of the mine in 1957. Previous owners include none other than King Gustav Vasa.

A massive 1,255 million tonnes of ore were concentrated at Garpenberg in 2007. The majority of the metal concentrate produced is zinc, but the ore also contains viable amounts of lead and silver. Gold and copper are also present.

"We exceeded our production goal in 2007 by 55,000 tonnes," says Bengt Sundelin, Site Manager at Garpenberg.

One explanation for this superb performance is the very high metal grades in the Lappberget deposits, discovered in 2004. The high metal grades have enabled the ore to be mined using a different technique, known as large-scale sub-level stoping.

"This means that we can extract larger quantities of ore at a time. In somewhat simplified terms, it means we can make more efficient use of the rock's geometry so that we can effectively extract 100 per cent of the high-grade ore," says Bengt Sundelin.

The technique is based on drilling the ore in large stopes down at the 1,000 m depth level. Pillars of ore are left intact in the stopes to support the roof of the mine. But these pillars also contain ore which – because the metal grades are so high – are also worth mining. And they can now be exploited by backfilling the large stopes with a special paste made of binding agents and mine waste, etc. The pillars can then be mined and the ore transported to the Garpenberg area's concentrator.

"It takes slightly longer and the backfill material does mean

some extra costs, but the ore here is so rich in metals that it's worth it," says Bengt Sundelin.

Boliden's goal is for all of the mining areas to have an ore reserve that secures mined production for at least ten years into the future. The Lappberget deposits and new discoveries in the Kvarnberget and Dammsjön areas, mean that Garpenberg can now count on ore reserves for the next 15 years or so. The successes are a result of the mine-site exploration.

"Well, it's an ongoing process. Mined production is a longterm operation so it's vital to think a long way ahead. We carry out exploration work in all of our areas as a matter of course, and the new mineralisation in Lappberget makes that work particularly interesting," says Bengt Sundelin.

Garpenberg has just over 300 employees and around 100 contractors. With a view to ensuring a supply of employees for the future, Garpenberg is actively involved in both practical and theoretical training in mining work in cooperation with local schools. Technology and production facilities are placed at the disposal of the students, along with specific mining expertise.

"I can't stress enough what a fantastic resource we have in our personnel," says Bengt Sundelin. Safety is a top priority issue at Garpenberg and 2007 saw the lowest number of reported accidents ever in Garpenberg's long history.

"Only three accidents in total, and only one underground. That's a fantastic result," says Bengt Sundelin. "But we won't be completely satisfied, of course, until we can report zero accidents. We will now be investing even more in getting our contractors fully on board with our focus on safety. The goal is, of course, to achieve equally good results there.

Four mining areas

AITIK – WORLD-CLASS PRODUCTIVITY

The Aitik mine outside Gällivare in Sweden is an almost three kilometre long and 330 metre deep open-pit mine. The ore mainly contains copper, gold and silver, but also contains metals such as molybdenum. Approximately 18 million tonnes of ore are currently mined and concentrated there every year. The metal concentrates are transported daily by rail the 400 kilometres to the Rönnskär smelter. The ongoing expansion project – Aitik 36 – will see capacity doubled to 36 million tonnes in early 2014, with the first stage, 33 million tonnes, achieved in 2010.

From an international perspective, Aitik, with an average copper grade of approximately 0.29 per cent, is regarded as a low-grade mine. The low grades are, however, compensated for by highly efficient mining methods coupled with refined concentration processes, making Aitik one of the world's most productive copper mines. The ongoing expansion will increase production capacity in both the mine and the smelter, which will in turn mean increased cost-effectiveness.

THE BOLIDEN AREA – BIG GEOLOGICAL POTENTIAL

The Boliden Area comprises the underground mines, Kristineberg and Renström, and the Maurliden open-pit mine. All of the mines in the area extract complex polymetallic ores containing zinc, copper, lead, gold and silver. The geological potential in the area is very good and exploration work has consequently been intensified in recent years. The area is also home to a concentrator and a gold leaching plant that process the ore from all mines in the Boliden Area.

Zinc is the main metal in the area and the substantial percentage of by-products in the form of copper, lead, gold and silver means an extremely competitive cost position, measured as cash cost. Much of the zinc concentrates from the concentrator are delivered to Boliden's Kokkola zinc smelter in Finland and the Odda smelter in Norway. A smaller percentage of the zinc and lead concentrate is sold to smelters throughout Europe. The copper, lead, gold and silver concentrates are sent to the Rönnskär copper smelter for processing.

GARPENBERG – PRECONDITIONS RIGHT FOR CONTINUED EXPANSION

Complex ores that primarily contain zinc, lead and silver, but also contain smaller amounts of copper and gold, are mined in the Garpenberg mines. The area has very good geological potential and the mine-site exploration continued to yield good results in 2007. The confirmed ore section underneath the Dammsjö ore, which contains high zinc grades, was one of the exploration's biggest successes.

The ore from the Garpenberg mines is processed in the area's concentrator. The main products are zinc and lead concentrate, but copper concentrate that also contains precious metals is also produced. The zinc concentrates are delivered to Boliden's Kokkola smelter in Finland and the Odda smelter in Norway, while the concentrates containing copper, lead and precious metals are sent on to the Rönnskär copper smelter.

TARA – ENVIRONMENTALLY CERTIFIED EUROPEAN GIANT MINE

Tara is an underground mine located close to the town of Navan in Ireland. The Tara ore, which contains zinc and lead, has been successfully augmented through both exploration and acquisitions, and is now Europe's biggest zinc and lead mine. Mine-site exploration is being carried out to ensure an ore reserve that secures mining in the future. The proximity to urban development obliges the mine to obtain extensive environmental permits, and this is partly why Tara has become the first Boliden mine whose environmental work is certified in accordance with ISO 14001.

The zinc concentrates from Tara's concentrator are freighted by rail to the port in Dublin for delivery to Boliden's Kokkola zinc smelter in Finland and the Odda smelter in Norway. Tara's zinc concentrates are comparatively pure and can be sold very profitably to external customers in Europe. Tara's concentrator has made a number of investments in recent years and implemented efficiency enhancing programmes aimed at improving productivity and the cost position.

Operations

Segment MINES	2007	2006
Revenues, SEK m	7,567	7,261
Operating profit (EBIT), SEK m	3,135	3,010
Investments, SEK m	1,503	1,065
Return on capital employed (ROCE), %	65	70
No. employees	1,989	1,960

THE MINES' zinc PRODUCTION

AITIK

Aitik's production of copper concentrate fell in 2007 by 24 per cent to 50,487 tonnes. The fall was due to lower average head grades in the mined ore, according to plan, and a lower amount of concentrated tonnage during the third quarter due to harder ore with lower levels of grindability.

Gold concentrate production fell considerably due to lower head grades. Higher silver grades led to increased silver production.

THE BOLIDEN AREA

The ore mix in the Boliden Area changed in 2007, partly as a result of more ore from the Maurliden and Renström mines, changes to the mining plan at Kristineberg, smaller quantities of ore from Storliden, and the closure of the Petiknäs mine. Zinc concentrate production consequently remained essentially unchanged at 70,913 tonnes, at the same time as production of lead and silver increased, while the production of copper and gold concentrate fell substantially.

Mine-site exploration yielded very good indications. This was particularly true in Kristineberg but was also the case at other mines. The successes entailed a revision of the ore reserves and mineral resources in the Boliden Area, as of 31st December 2007, thereby extending the area's production lifespan.

Mining at Storliden, which Boliden has operated as a turnkey contractor, will cease at the end of q1 2008, when the mine reaches the end of its production lifespan.

GARPENBERG

Measures designed to increase the efficiency of Garpenberg's concentrator continued in 2007, enabling an increase in capacity from 1.2 million tonnes of concentrated ore to 1.4 million tonnes. Production of concentrated ore achieved record high levels, with zinc concentrate production increasing by 17 per cent to the record level of 71,464 tonnes. Production of lead and silver also increased due to an efficient ore throughput in the concentrator and higher metal grades.

TARA

Tara produced 190,916 tonnes of zinc in 2007, corresponding to a fall of 2 per cent in comparison with 2006. The decline is due to lower metal grades.

Tara's concentrator has invested and implemented efficiency enhancing programmes in recent years in order to improve cost-effectiveness. The dewatering system was made more efficient in 2007 and a decision was taken to invest sek 250 million in a new circuit for autogenous grinding that will improve the amount of zinc yielded by the concentration process, the cash cost, and the work environment.

Metals for a sustainable society

Boliden's efforts to become a world-class metals partner do not just involve meeting our customers' metal requirements. It is equally impor- tant to manage resources in a sustainable and respectful way, whether the resources are people, the environment, or society in general.

Boliden's responsibility for people and the environment extend to every aspect of our operations, from exploration to finished metal deliveries. A summary of the Group's sustainability work follows. For more detailed information, please see Boliden's separate Sustainability Report 2007 and Boliden's website at www.boliden.com.

SUSTAINABILITY FOR BOLIDEN

Boliden's vision is to be a world-class metals partner, which presupposes good relationships with customers, suppliers, employees, shareholders and other people affected by our operations. It is fundamental to our sustainability efforts that every aspect of the Group's operations is conducted in accordance with applicable environmental permits and legislation in the country in question, and that our employees have a safe work environment. If our products are to be the natural products of choice in our markets, Boliden must also endeavour at all times to reduce the operations' environmental impact in terms both of resource consumption and of emissions.

Consistent and proactive sustainability efforts also facilitate adaptation in line with future legislation and the expectations of various stakeholders.

CLEAR MANAGEMENT at EVERY UNIT

The day-to-day work on environmental, health, safety and quality issues (ehsq), hr issues, and society issues are conducted within each Business Area's line organisations. The aim is to use small Group-wide staffs and a network format to establish optimal preconditions for responsibility on the part of Boliden's individual units. The individuals responsible for the respective networks report regularly to the Group management.

Every unit undergoes an internal audit every other year, based on Boliden's strategic platform, The New Boliden Way, the Operational Policy, and the Group-wide goals and management systems. Internal audits were carried out at the Aitik and Garpenberg mines and at the Bergsöe and Odda smelters in 2007.

RESPONSIBILITY FOR EMPLOYEES

Boliden's competitiveness presupposes a firstrate ability on the part of the Group to develop, attract and retain employees who can ensure we maintain our core expertise in the fields of exploration, mining, concentration, smelting and recycling, and our knowledge of our customers' operations and requirements, in the long-term.

Responsibility for employees starts with good management. Over the last two years, we have implemented a number of management, skill development and skill supply programmes. This will continue to be a prioritised area and the High Potentials Program was consequently launched in early 2008. Longer-running programmes include Young Professionals and Training for International Operations.

Systematic health and safety work

As part of Boliden's efforts to operate the industry's safest facilities, we have adopted a zero accident philosophy in the workplace. Achieving this goal demands systematic safety and work environment activities, aided by work environment management systems and local goals and action plans. The goal is for the Group's accident frequency to be fewer than five cases per one million hours worked by the end of 2011.

Development of machinery and equipment is an important part of our safety work, but most accidents have to do with attitudes, routines and behaviour. Many accidents occur when duties are carried out without following safety instructions or using the right equipment in an effort to save time, for example, or because "we've always done it this way".

Absence due to sickness and ill health on the part of employees is not primarily a result of the employee's work environment but of their lifestyle. Every Boliden facility has an action programme designed to promote employees' health and thereby minimise absence due to sickness. Health surveys and training days on such subjects as diet and lifestyle are part of our efforts to improve the health of our employees. The goal for the Group's combined sick-leave rate is to be no higher than 4.0 per cent by the end of 2012.

Equal opportunities and diversity

An equal opportunities work environment and organisation in every respect are important factors if we are to offer our employees a dynamic and motivational workplace. Diversity is also very important in generating dynamism.

Metal production is traditionally a maledominated industry. In recent years, we have attempted to reinforce our focus on attracting women to work at Boliden. By the end of 2007, 13 per cent (13%) of the Group's employees were female.

2007 also saw Boliden investing in increasing the number of nationalities represented among our employees, in an attempt to further boost its competitiveness. Examples include the new recruits to the exploration organisation and the investments in Business Area Market.

The annual employee opinion survey, My Opinion, which is carried out throughout the entire Group, is an important tool for finding out employees' opinions of Boliden as an employer. The results also provide important source data for a continued and structured programme of improvements in the units.

RESPONSIBILITY FOR THE ENVIRONMENT

Metal production is, by its very nature, resource-intensive, and its effects on the environment include emissions to air and water, noise, and changes to the landscape. Boliden has been working for a number of years now to reduce both its resource consumption and the operations' environmental impact. The most important environmental aspects of Boliden's operations include emissions of metals and waste that must be sent to landfills.

Conserving resources, investments in cleaner technology and constant improvements to the operations' environmental per-

To ensure that our products are the natural first choice for our customers, Boliden must also endeavour at all times to reduce the operations' environmental impact in terms both of resource consumption and of emissions.

Our employees and their families can even constitute the critical mass for the supply of fundamental social services and facilities. It is estimated that for every one Boliden employee, between four and six more job opportunities are created locally.

formance are helping to strengthen Boliden's competitiveness in the form both of costeffectiveness and a strong brand name, as a supplier, customer and employer.

Environmental excellence boosts competitiveness

The environmental performance of Boliden's mines and smelters is good, thanks to several decades of efforts to enhance the efficiency of processes and cleaning methods. Better technology and new methods of waste management, and of reclaiming land and tailings ponds, have reduced the environmental impact of our mines. The smelters use techniques – such as the flash smelting method for copper and the direct leaching method for zinc – which reduce both energy consumption and emissions.

Metal production in general, and zinc smelters in particular, are energy-intensive operations. All our mines and smelters operate in accordance with an energy policy and the goal is for all units to have an environmental management system in place by the end of 2008. At the end of 2007, the Tara zinc mine received the "Sustainable Energy Ireland (sei) Award" for its project to install a new ventilation system resulting in annual energy savings of 4.5 per cent.

Environmental certification according to plan

Boliden's goal is for all units to have implemented environmental management systems in accordance with the iso 14001 standard by the end of 2008. Rönnskär was certified in accordance with iso 14001 in 2007, which means that all Boliden smelters now have certified environmental management systems. Tara was also certified during the year, making it the first environmentally certified mine in the Boliden Group.

IMPORTANT ROLE IN THE IMMEDIATE AREA

Boliden often has a prominent role in the communities in which the operations are located. Not only are we an employer, we also buy local products and service, we commission infrastructure and sponsor cultural and sporting activities. Our employees and their families can even constitute the critical mass for the supply of fundamental social services and facilities. It is estimated that for every one Boliden employee, between four and six more job opportunities are created locally.

A SAFER WORK ENVIRONMENT

Safety in the work environment is a good measuring stick for how well the operations as a whole are working. Serious accidents not only mean personal injuries and a loss of public confidence in us, they can also result in production interruptions and the closure of units.

Boliden has operated a zero vision approach to accidents at work since 2006. Our goal is for the Group's combined accident frequency to be fewer than five accidents per one million hours worked by the end of 2011.

ACCIDENT FREQUENCY, 2003–2007

HEALTH

Boliden's efforts to reduce ill health and absence due to sickness on the part of its employees have yielded good results. Every unit has an action programme designed to promote employees' health and thereby reduce absence due to sickness.

The Group-wide goal of a sick-leave rate less than 4.8 per cent was achieved in 2007. The new goal means that the Group's sick-leave rate shall be no higher than 4.0 per cent by the end of 2012.

sick-leave rate, 2003–2007

REDUCED METALS EMISSIONS TO AIR AND WATER

Over the last five years, Boliden has reduced its metals emissions by means of more efficient cleaning methods, better methodologies, and the reuse of water. In 2007, Odda exceeded its threshold value for zinc emissions into the nearby fjord during exceptionally heavy rainfall. The incident has been investigated by the Norwegian Pollution Control Authority, and the Odda smelter has also

carried out internal investigations. The zinc smelter has implemented measures designed to prevent any recurrence and based on the conclusions of these investigations. The goal is for the Group's specific metals emissions to air and water to have fallen by 20 per cent each by the end of 2008, compared with 2004.

METALS EMISSIONS TO AIR AND WATER

REDUCED CARBON DIOXIDE EMISSIONS

Carbon dioxide emissions occur in conjunction with the use of fossil fuels in the mines and smelters. The Rönnskär copper smelter and the Bergsöe lead smelter operate combustion stations and have, as a result, been actively involved in the trade in emission rights since 2004.

The goal is for the Group's specific carbon dioxide emissions to have fallen by at least 5 per cent by the end of 2008, compared with 2004.

SOURCES OF CARBON DIOXIDE EMISSIONS, 2007 PER CENT

Corporate Governance Report, 2007

Boliden applies the Swedish Code of Corporate Governance. The operations are governed via General Meetings of shareholders in the company, the Board of Directors and the President. The company's Auditors, who are appointed by the Annual General Meeting, audit the company accounting records and the Board of Directors' and President's administration of the company. The Nomination Committee prepares proposals for submission to General Meetings regarding the election of and remuneration payable to the Board of Directors and Auditors, for example. The following report summarises Boliden's corporate governance in 2007 and also includes a report on internal controls. The report has not been subjected to review by the company's Auditors.

SHAREHOLDERS' MEETINGS

The shareholders' meeting is the supreme governing body of the company. The ordinary annual shareholders' meeting, known as the Annual General Meeting, elects Board Members and, where relevant, Auditors, determines fees and adopts the Income Statements and Balance Sheets for the Parent Company and the Group.

The Annual General Meeting of the shareholders in Boliden was held on 3rd May 2007 in the Aitik mine's industrial park area in Gällivare. The Meeting resolved to re-elect Board Members Carl Bennet, Marie Berglund, Jan Johansson, Ulla Litzén, Leif Rönnbäck, Matti Sundberg, Anders Sundström and Anders Ullberg. Staffan Bohman was elected as a new Board Member. Anders Ullberg was re-elected as Chairman of the Board.

The Meeting further resolved:

■ that the Nomination Committee shall comprise representatives of the five largest shareholders, one representative of the smaller shareholders, and the Chairman of the Board, who is also the Convener.

■ that Directors' fees of sek 850,000 shall be paid to the Chairman and sek 325,000 to Members who are not Boliden employees. Fees of sek 100,000 shall also be paid to the Chairman of the Audit Committee and of sek 50,000 each to the two members of the Audit Committee. No fees shall be paid to members of the Remuneration Committee. Auditors' fees shall be payable in accordance with approved invoices received.

■ that remuneration payable to the members of Group management shall comprise a fixed salary, any variable remuneration, other benefits and pensions. The variable remuneration

For the Minutes of the 2007 Annual General Meeting, please see www.boliden.com

shall be maximised to 50 per cent of the fixed salary and shall be based on result in relation to targets set. The variable remuneration shall not comprise pensionable income.

■ on the redemption of shares and buy-back of shares.

NOMINATION COMMITTEE AHEAD OF

THE 2008 ANNUAL GENERAL MEETING The 2008 Annual General Meeting will be held on 8th May 2008. In accordance with the resolution by the 2007 Annual General Meeting, the Chairman of the Board has convened a Nomination Committee comprising: Mats Guldbrand, amf, Chairman, Anders Algotsson, afa, Lars-Erik Forsgårdh, Björn Franzon, Fjärde ap-fonden, Björn Lind, seb Fonder, Åsa Nisell, Swedbank Robur fonder, and Anders Ullberg, Chairman of the Board.

The names of the Nomination Committee members were published on the company's website in October 2007, together with information about how shareholders may submit proposals to the Nomination Committee. The Nomination Committee has held four meetings. The proposals by the Nomination Committee regarding the election of Board members were presented on 5th March 2008. The proposal entails the re-election of all Board members. In addition, it is proposed that Boliden's President and ceo, Lennart Evrell, will be elected as a new member of the Board. The Nomination Committee's full proposals will be presented in the notice convening the Annual General Meeting and in information provided on the company's website.

THE BOARD OF DIRECTORS AND ITS WORK IN 2007

The Board of Directors formerly comprised twelve members elected by the Annual General Meeting, of whom the union organisations appointed three members. Three deputy members of the Board representing the union organisations normally also attend Board meetings. Since the resignation of the departing President from the Board on 1st November 2007, the Board now comprises eleven members. Members of Group management also attend and present reports at the meetings as required. The company's Senior Vice President of Legal Affairs serves as the Board's secretary.

The current members of the Board are all to be regarded as independent in relation to the company, major shareholders and corporate management.

For a more detailed presentation of the Board Members, please refer to the Annual Report, page 49.

The Board bears ultimate responsibility for the organisation of the company and management of the company's affairs. Information on the operations and their economic and financial status is provided regularly at Board Meetings and in the form of monthly reports to the Board, and additionally as required. The President and the Chairman of the Board hold an ongoing dialogue concerning the operations. The Board also monitors the functioning of internal controls.

The division of labour between the Board, the Chairman of the Board and the President is clarified in written instructions to the President adopted annually by the Board at the statutory Board meeting following election.

An evaluation of the work of the Board of Directors was carried out in the autumn of 2007 – this year with the assistance of an external consultant. The evaluation was based both on the Members' responses to 88 questions regarding the company, the Board of Directors and its methodology, and on interviews. It was apparent from the evaluation that the Board, in its current composition, meets the company's need for expertise and experience.

During 2007, the Board held eleven Meetings. Three of these were occasioned by the departure of the former President and the appointment of a new one during the year. Board Meetings were held both in Stockholm and in Aitik (Gällivare), Boliden and Garpenberg, all of which are locations where the company has operating units. The Board was afforded the opportunity of a guided tour and review of the operations visited.

The Board has discussed the company's capital structure and these discussions resulted in the Board's proposal submitted to the Annual General Meeting in 2007 regarding the redemption and buy-back of shares. The Board has also monitored the billion kronor investment in the Aitik copper mine approved in 2006 on an ongoing basis throughout the year, and has also discussed a number of alternatives for the Boliden mining area. A decision has been taken regarding a partnership agreement in connection with a Finnish nuclear power project, with a view to securing future energy requirements. In the beginning of September, a search process was initiated as a result of the announcement by the President of his resignation from the company, and in mid-December, the Board was able to present the new President, Lennart Evrell. The entire Board met with the company's Auditors on two occasions and has also met with the Auditors without the President being present. The Board has, as in previous years, appointed a Remuneration Committee and an Audit Committee to prepare certain issues.

REMUNERATION COMMITTEE

The Board's Remuneration Committee submits proposals to the Board concerning such things as remuneration to the President, drafts proposals to the Annual General Meeting regarding remuneration principles and other employment terms for Group management, and approves remunerations etc. payable to Group management, as proposed by the President. The Committee has held four meetings during the year. The Remuneration Committee comprises Anders Ullberg (Chairman) and Carl Bennet.

For more information about the terms and conditions governing remuneration in 2007, please refer to the Annual Report, Note 1, pages 76–77.

AUDIT COMMITTEE

The work of the Audit Committee is designed to assure the quality of the company's financial reporting. The internal review function has reported on its work to the Committee on an ongoing basis, addressing such issues as risk mapping, methodologies and prioritised areas. The Committee holds regular meetings before the publication of every financial report and has also held an additional meeting focusing specifically on internal control issues. The Audit Committee comprises Ulla Litzén (Chairwoman), Anders Sundström and Anders Ullberg.

BUSINESS MANAGEMENT

Boliden works on the basis of the company's strategic platform The New Boliden Way (tnbw), which was initially adopted in 2005 and which is updated annually as part of the work on the business plan.

Boliden works with active management objectives in a chain running from the Board of Directors, via the Group management, to the operating units. A decentralised organisation facilitates an ongoing and intense dialogue between units and management in each Business Area and between the Business Areas and the staff functions. The company's senior managers and specialists meet at management meetings twice yearly to agree on common goals and strategies, which are then passed down through the organisation.

The company's units are subject, every other year, to an internal review, particularly addressing the issues of health, the environment, safety and quality (ehsq). The Aitik and Garpenberg mines and the Bergsöe and Odda smelters were audited in 2007.

GROUP MANAGEMENT

In addition to the President, Group management in 2007 included the Deputy ceo, the Presidents of the Group's three Business Areas, Mines, Smelters and Market, and the Senior

Name	Elected		Present Committee work	Present	Remuneration, Board, SEK	Remuneration, Audit Committee, SEK	Indep endent
Anders Ullberg (Chairman)	2005	11/11	Remuneration Committee/	4/4	850,000		Yes
			Audit Committee	5/5		50,000
Carl Bennet	2001		11/11 Remuneration Committee	4/4	325,000		Yes
Marie Berglund	2003	11/11			325,000		Yes
Staffan Bohman	2007	6/8			325,000		Yes
Jan Johansson	2001	6/9			–		No
Ulla Litzén	2005		11/11 Audit Committee	5/5	325,000	100,000	Yes
Leif Rönnbäck	2005	11/11			325,000		Yes
Matti Sundberg	2005	11/11			325,000		Yes
Anders Sundström	2001		10/11 Audit Committee	4/5	325,000	50,000	Yes
Bo Karlsson	2001	11/11
Alf Lindén	2001	10/11
Lars Sundström	2001	11/11

BOLIDEN'S BOARD OF DIRECTORS

Vice Presidents of the Group Divisions for Treasury and Finance, Legal Affairs, Communication, Strategy, and Human Resources. After the resignation of the former President and ceo, the President of Business Area Smelters was appointed Acting President until such time as Lennart Evrell took over as the new President and ceo on 1st January 2008. The Vice President and Head of Treasury and Finance resigned during the year. The Senior Controller was appointed Acting President of Treasury and Finance and the post of Vice President was not re-filled.

Group management is responsible for drawing up and implementing the Group's strategies and meets on average twice every month to review the operations. The Business Areas are then responsible for implementing strategies and measures within their respective Areas. The entire company's production can be followed on-line by Group management. The company has an internal system that includes annual planning and follow-up procedures via monthly reports from each Business Area. In addition to the monthly management meetings, Group management group holds scheduled meetings that involve a more in-depth review of the company's strategic issues.

For a presentation of Group management, please refer to the Annual Report, page 51.

INTERNAL CONTROL

The purpose of internal control with regard to financial reporting is to provide reasonable assurance with regard to the reliability of the same and to ensure that the financial reports are produced in accordance with generally accepted accounting principles, applicable legislation and statutes, and with the other requirements imposed on listed companies.

The Board of Directors has overall responsibility for ensuring that an efficient internal control system exists within the Group. The President is responsible for the existence of a process and organisation that ensures internal control and the quality of the financial reporting to the Board of Directors and the market.

Special review function

Boliden has a special audit function (internal audits) within the Treasury and Finance Group function, responsible for reviewing internal control and monitoring the quality of the financial reporting. This function reports to the Head of the Treasury and Finance function and presents reports on issues relating to internal control at the Audit Committee's meetings.

Control environment

The control environment within the Group is characterised by being an organisation with relatively few but large operating units that have carried out their operations for many years, using well-established processes and control activities.

A structure of steering documents that provide guidance and specify the organisational guidelines has been established in order to ensure a collective attitude and methodology within the Group.

The starting point is the strategic platform The New Boliden Way, together with the associated Code of Conduct and Operational Policy. These documents are complemented by a number of Group-wide steering documents that address both financial reporting and the Group's decision-making and authorisation instructions, its financial policy, investment manual and accounting and reporting handbook.

Local management systems and policies have also been set up at unit level, and contain more detailed instructions and descriptions of the most important processes.

Work on updating manuals and instructions and on documenting processes and control activities has been carried out at both unit level and Group level in 2007.

The market organisation was also restructured in 2007 with regard to methodology and geographic location. The former Zinc Market and Copper Market units were merged, for example, into a single organisation, and the seat of the new organisation's management is the Head Office in Stockholm.

Risk analysis

A risk analysis process and working model for financial reporting has been implemented during the year. In practice, this means that all operating units are asked to map and evaluate risks in the various accounting and reporting systems. Improvement measures have then been drawn up in conjunction with this exercise in areas where it was deemed necessary.

Feedback on the result of the units' risk mapping and their development of improvement measures has been submitted to the ceo and the Audit Committee.

Control activities

Various types of control activities are carried out at every level within the Group and within every different aspect of the accounting and reporting process on an ongoing basis. The control activities are carried out in order to manage known risks and to detect and rectify any errors and discrepancies in the financial reporting. Systems, processes and controls within the Group are followed up, improved and developed continuously.

Information and communication

Internal information on policies, guidelines and manuals are available on the intranet. Information on updates and changes to reporting and accounting principles is issued by email and at the regular treasury and controller meetings.

All external information must be provided in accordance with the Group's communication policy. All information must be communicated in a discerning, open and transparent manner.

Follow-ups

All operating units studied self-evaluation material addressing such issues as internal control of financial reporting in autumn 2006. This self-evaluation resulted in a number of improvement measures. A follow-up activity was carried out in 2007 to ensure that these activities had been implemented according to plan.

A number of other follow-up activities were also carried out in 2007, both internally and with the assistance of external resources. The units' control structure with regard to authorisation has been among the issues tested, as has the way in which the introduction of a new it and security policy has been implemented.

The results of the review activities have been reported to Group management and the Audit Committee on a rolling basis and these bodies have, in turn, reported to the Board of Directors on the findings.

AUDITORS

At the 2005 Annual General Meeting, Hans Pihl and Björn Sundkvist, both authorised public accountants, were elected as the company's auditors until the Annual General Meeting in 2009. Jan-Hugo Nihlén and Richard Peters, also both authorised public accountants, were elected as deputy auditors. All four are employed by Deloitte.

In addition to Boliden, Hans Pihl performs auditing duties for Sigma and Industrifonden. Björn Sundkvist performs auditing duties for Green Cargo, Alimak Hek and A-Train.

Following the agreement reached to this effect, remuneration to the company's auditors is payable as invoiced.

For information about remuneration during 2007, please refer to page 77 of the Annual Report.

BOLIDEN'S BOARD OF DIRECTORS

Anders Ullberg Carl Bennet Marie Berglund Staffan Bohman

Union representatives

Ulla Litzén Leif Rönnbäck Matti Sundberg Anders Sundström

Bo Karlsson Alf Lindén Lars Sundström

Deputy members, Union representatives

Marie Holmberg Hans-Göran Ölvebo

Boliden's Board of Directors

BOLIDEN'S BOARD OF DIRECTORS

Anders Ullberg Born: 1946 M.Sc. (Business Administration and Economics) Chairman of the Board since 2005 Directorships: Chairman of the Boards of Eneqvistbolagen and Studsvik Deputy Chairman of the Board of TietoEnator Member of the Boards of Atlas Copco, Sapa Holding and Beijer Alma Shareholding: 20,000

Carl Bennet

Born: 1951 B.Sc. (Economics), Honorary Doctor of Technology Member of the Board since 2001 Deputy Chairman of the Board since 2003 Directorships: Chairman of the Boards of Elanders, Getinge, Gothenburg University and Lifco Member of the Board of SSAB and Member of the Swedish Government Research Advisory Board Shareholding: 300,000

Marie Berglund

Born: 1958 M.Sc. (Biology) Member of the Board since 2003 Environmental Manager of Botniabanan Directorships: Member of the Boards of the Swedish National Board of Forestry, wwf in Sweden, the Water Delegation of the Gulf of Bothnia's Water District, the Björn Carlson Foundation for the Baltic Sea 2020, Eurocon Consulting (publ), and MoDo Hockey Shareholding: 1,000

Staffan Bohman

Born: 1949 B.Sc. (Economics) Member of the Board since 2007 Directorships: Deputy Chairman of the Boards of edb Business Partner and Swedfund International. Member of the Boards of Atlas Copco, Inter-ikea, Ratos, Scania, Trelleborg et al. Shareholding: 25,000

Ulla Litzén

Born: 1956 M.Sc. (Economics) and mba Member of the Board since 2005 Directorships: Member of the Boards of Alfa Laval, Atlas Copco, skf, Karo Bio and Rezidor Hotel Group Shareholding: 8,400

Leif Rönnbäck

Born: 1945 B.Sc. (Natural Sciences) Member of the Board since 2005 Shareholding: 1,000

Matti Sundberg

Born: 1942 Mining Counsellor Master of Economics, Honorary Doctor of Economics Member of the Board since 2005 Regional Director of Scania Directorships: Chairman of the Boards of Chempolis Oy, Scania Sverige, Oy Scan-Auto ab, Finland, Norsk Scania and Scania Danmark Member of the Boards of ssab and Skanska Shareholding: 5,000

Anders Sundström

Born: 1952 University graduate – Urban planning Member of the Board since 2001 President & ceo of Folksam Directorships: Chairman of the Board of Luleå University of Technology and kpa Member of the Board of Vattenfall Member of the Boards of alka and Falck as/ Falck Danmark as Shareholding: 2,000

Union representatives

Bo Karlsson Born: 1955 Member of the Board since 2005 Deputy Member of the Board 2001– 2005 Process Operator, Boliden Area Representative of if Metall (the Swedish Metal Workers' Union) Shareholding: 500

Alf Lindén

Born: 1944 Member of the Board since 2001 Superintendent, Electrical Department, Boliden Area Representative of ptk (the Swedish Federation of Salaried Employees in Industry and Services) and Chairman of the local club of Unionen Shareholding: 75

Lars Sundström

Born: 1964 Mechanical Engineer Member of the Board since 2001 Process Operator, Rönnskär Representative of if Metall (the Swedish Metal Workers' Union) Other positions: Chairman of the if Metall club, Rönnskär. Member of the Board of if Metall Branch 3 Shareholding: 90

Deputy members, Union representatives Marie Holmberg

Born: 1963 Deputy Member of the Board since 2005 Department Manager, Process Development, Rönnskär, Representative of ptk (the Swedish Federation of Salaried Employees in Industry and Services) Rönnskär and the local club of the Swedish Association of Graduate Engineers Shareholding: 50

Hans-Göran Ölvebo

Born: 1955 Deputy Member of the Board since 2005 Member of the Board, 2001 – 2005 Production Worker, Aitik Representative of if Metall (the Swedish Metal Workers' Union) Shareholding: 50

Jan Johansson

President & ceo, was a member of the Board up to and including 30th October 2007.

Reijo Salminen

Deputy Member of the Board since 2005. Representative of Tjänstemannaunionen tu (the Finnish Union of White-collar Workers) up to and including 31st January 2008.

Marianne Lindholm

Svante Nilsson Ulf Söderström

Sune Lundin Jan Moström

Lennart Evrell Eva Kaijser Bengt Lindahl

Carina Wång

Boliden's Group management

Lennart Evrell

M.Sc. Engineering, Economics President & ceo Born: 1954 Employed: 2007 Shareholding: 25,000

Eva Kaijser

B.Sc. Economics Senior Vice President – Investor Relations and Group Communications Born: 1972 Employed: 1998 Shareholding: 1,500

Bengt Lindahl

Master of Laws Senior Vice President – Group Human Resources Born: 1949 Employed: 2001 Shareholding: 1,500

Marianne Lindholm

Master of Laws Senior Vice President – Legal Affairs, Secretary to the Board Born: 1950 Employed: 2002 Shareholding: 2,500

Sune Lundin

B.Sc. Engineering Senior Vice President – Strategy and Business Development Born: 1951 Employed: 2005 Shareholding: 280

Jan Moström

B.Sc. Engineering President – Business Area Mines Born: 1959 Employed: 2000 Shareholding:1,000

Svante Nilsson

M.Sc. Engineering President – Business Area Smelters Born: 1956 Employed: 2003 Shareholding: 1,000

Ulf Söderström

B.Sc. Economics, mba President – Business Area Market Born: 1964 Employed: 2001 Shareholding: 2,500

Carina Wång

B.Sc. Economics Acting cfo Born: 1966 Employed: 2002 Shareholding: 2,000

Share performance

The Boliden share fell by 50 per cent and was quoted at sek 81.25 at the end of 2007. The turnover rate was 490 per cent, making the share the tenth most traded on the omx Nordic Exchange in Stockholm.

The Boliden share is listed on the omx Nordic Exchange in Stockholm in the Large Cap segment. The share is also traded on the Toronto Stock Exchange, where it has a secondary listing. In addition to omx' indices, the share is included in several international indices.

TRADING AND PRICE TREND, 2007

The Boliden share was the tenth most traded on the omx Nordic Exchange in Stockholm. A total of 1,419 million (1,993 m) Boliden shares were traded with a combined value of sek 190 billion (sek 261 b), corresponding to 3.0 per cent of the total share turnover on the omx Nordic Exchange in Stockholm. The turnover rate in the Boliden share was 500 per cent (685%) and an average of 5.7 million (7.9 m) shares were traded per trading day.

318,000 shares were traded on the Toronto Stock Exchange in 2007.

At the end of 2007, the Boliden share was quoted at sek 81.25, corresponding to a market capitalisation of sek 22.2 billion (sek 50.9 b) and to a fall in the share price of 50.0 per cent in comparison with the omx Stockholm pi index, which fell by 6.0 per cent in 2007. The industry index, omx Stockholm Materials, in which Boliden is included, fell by 17.3 per cent over the same period.

DIVIDEND

The Board of Directors resolved to propose to the Annual General Meeting of the shareholders in the company that an ordinary dividend of sek 4 (sek 4) per share be paid for 2007. The proposed dividend corresponds to 29.9 per cent (18%) of the earnings per share for the year and to a dividend yield of 4.9 per cent (2.3%), calculated on the basis of the Boliden share price at the end of 2007.

Boliden's goal is to pay approximately one third of the net profit over a business cycle in dividends.

THE SHARE IN BRIEF

Marketplace	OMX Nordic Exchange
Trading code	BOL
Full lot	100 shares
ISIN code	SE 0000869646
GICS code	15104020
Highest price paid, 2007	SEK 165.00
Lowest price paid, 2007	SEK 79.00
Closing price, 28th December 2007	SEK 81.25
Market capitalisation, 28th December	SEK 22.2 billion
Turnover rate, 2007	490%
Beta value*	1.79
* The beta value shows the share's covariance relative to the average performance on the OMX Nordic Exchange in Stockholm

The calculation is based on the performance of the Boliden share and the OMX Stockholm PI Index over the last five years.

SHARE CAPITAL

Boliden's share capital comprises a class of share in which every share has the same voting power and grants the same entitlement to dividends. The share capital totals sek 578.9 million, distributed over a total of 289,457,169 shares, of which 15,946,000 shares are owned by the company.

The 2007 Annual General Meeting authorised Boliden's Board of Directors to buy back a maximum of 10 per cent of the outstanding common stock during the period up to the 2008 Annual General Meeting. During the period from 16th May to 9th November 2007, Boliden bought back 15,946,000 shares, corresponding to 5.509 per cent of the total number of shares and votes.

OWNERSHIP STRUCTURE

On 31st December 2007, approximately 44.5 per cent of Boliden's total share capital was owned by Swedish institutions, approximately 41.99 per cent by foreign investors, and the remaining 13.51 per cent by Swedish private individuals. Foreign-registered ownership fell from the figure at the beginning of the year to around 42 per cent (48%), 12.5 percentage points of which were owned in the uk and 10.1 percentage points in the usa.

SHAREHOLDER INFORMATION ON THE WEBSITE

Boliden's website, www.boliden.com, provides constantly updated information on Boliden, the performance of the Boliden share, metal prices and currencies, and financial information, along with details of how to contact Boliden.

KEY RATIOS PER SHARE, 2003–2007
SEK (unless otherwise indicated)	2007	2006	2005	2004	2003
Shareholders' equity
– Before dilution	47.28	55.58	35.55	31.51	36.25
– After dilution	47.28	55.59	35.50	31.46	36.16
Earnings
– Before dilution	13.37	21.66	7.07	4.98	0.12
– After dilution	13.37	21.66	7.06	4.97	0.12
Cash flow	–8.18	5.80	2.23	–2.06	5.67
Dividend	4.00	4.00	2.00	–	–
P/E ratio, multiple	6.07	8.13	9.19	5.70	258.00

BANKS AND INVESTMENT BANKS WHO MONITOR BOLIDEN

ABG Sundal Collier	Evli Bank	Kaupthing Bank Sverige
Carnegie	Goldman Sachs	Lehman Brothers
Cheuvreux	HQ Bank	SEB Enskilda
Credit Suisse First Boston	Handelsbanken Capital Markets	Swedbank Markets
Deutsche Bank	HSBC	UBS
Erik Penser Fondkommission	JPMorgan	Öhman Fondkommission

BOLIDEN'S LARGEST OWNERS ON 31ST DECEMBER 2007

	Number of shares	% of share capital and votes
Foreign nominee accounts	60,965,857	21.1
AFA Försäkring	18,293,712	6.3
Swedbank Robur fonder	9,411,259	3.2
AMF Pension	7,261,500	2.5
Skandia	6,801,251	2.3
Skagen AS	6,755,100	2.3
Handelsbanken fonder excl. XACT	6,598,921	2.3
SEB fonder	5,445,654	1.9
Odingruppen	3,413,075	1.2
Andra AP-fonden	3,339,698	1.2
Folksam – KPA – Förenade Liv	2,971,469	1.0
Tredje AP-fonden	2,516,860	0.9
Total largest shareholders:	133,774,356	46.2
Other shareholders excl. Boliden AB	139,736,813	48.3
Boliden AB	15,946,000	5.5
Total	289,457,169	100.0

DISTRIBUTION OF BOLIDEN SHARES ON 31ST DECEMBER 2007
Shareholding	No. of shareholders	% of shareholders	Total no. of shares owned	% of share capital
1 – 1,000	72,241	88.75	17,783,538	6.14
1,001 – 5,000	7,198	8.85	16,757,230	5.79
5,001 – 10,000	880	1.08	6,757,194	2.33
10,001 – 50,000	665	0.82	14,315,573	4.95
50,001 – 100,000	134	0.16	9,871,108	3.41
100,001 –	278	0.34	223,972,526	77.38
Total	81,396	100	289,457,169	100

Directors' Report

BOLIDEN'S OPERATIONS

Boliden is a leading European metals company whose core expertise is in the fields of exploration, mining, smelting and recycling. The Group's main metals are zinc and copper. Lead, gold and silver are other important metals produced by Boliden.

The operations are conducted in Sweden, Finland, Ireland and Norway. Since 1st January 2007, the operations are organised into the Business Areas Market, Smelters and Mines.

Business Area Market is responsible for all purchasing and sales of concentrates and sales of metals.

Business Area Smelters comprises the operations of the Group's five smelters: the Kokkola and Odda zinc smelters in Finland and Norway, respectively, the latter of which also produces aluminium fluoride, and the Rönnskär and Harjavalta copper smelters in Sweden and Finland, respectively. The production of the copper smelters comprises copper, gold, silver, lead and sulphuric acid. Rönnskär also recycles electronic scrap and Harjavalta conducts nickel smelting. The Business Area also includes the Bergsöe lead smelter in Sweden.

Business Area Mines comprises the operations of the Group's four mining areas. In Sweden, these operations are Aitik, Garpenberg and the four mines in the Boliden Area, and in Ireland, Tara. Production at Aitik primarily comprises copper concentrate but also includes gold and silver. Production at the other Swedish mines comprises zinc, copper and lead concentrate, and gold and silver. Tara produces zinc and lead concentrates.

ACCOUNTING SEGMENT

Boliden's operations are reported under the segment headings of Smelters, Mines and Other. Business Area Market is included in the Smelters segment.

The Other segment contains the accounts for Group staff functions, Group-wide functions, and the elimination of intra-Group sales. Market valuations of financial derivative instruments, which are used to manage currency and metal price risks, are reported under Other until such time as the underlying flows are reported in the Income Statement.

Transactions between the accounting segments, which primarily comprise metal concentrates delivered from the mines to the smelters, are settled on market terms.

IMPORTANT EVENTS, 2007

New President and CEO

On 12th December 2007, the Board of Directors appointed Lennart Evrell as the new President and ceo, effective as of 1st January 2008. The former President and ceo, Jan Johansson, left his post on 14th September 2007. Svante Nilsson, President of Business Area Smelters, was the Acting President and ceo during the period from 14th September to 31st December 2007.

Permit for the Hötjärn tailings pond in the Boliden Area

On 19th December 2007, the Environmental Court ruled on the terms of Boliden's operation and reclamation of the new Hötjärn tailings pond, where tailings from the Boliden Area will be deposited in future. As a result of the delay in the granting of the environmental permit for the construction of the new tailings pond, Boliden is forced to halve production at the Boliden Area's concentrator, starting on 1st April 2008. In February 2008, Boliden decided to invest sek 345 million in the new tailings pond and in a new push-back in order to increase the lifespan of the Maurliden mine. As a result of the investment decision, the company expects to be back at full production in 2010.

Long-term electricity supply agreements and partnerships

On 20th November 2007, Boliden signed an agreement with Vattenfall with a view to securing electricity supplies to the Aitik copper mine starting in 2010, and electricity supplies to the Harjavalta copper smelter, starting in 2008.

Boliden also signed a letter of intent in 2007 to form the Finnish consortium, Fennovoima, in order to investigate, in partnership with other base industry companies, the potential for building a new Finnish nuclear power station.

Spanish court ruling on insolvency proceedings for Boliden Apirsa

The local Commercial Court in Seville, within the framework of the insolvency proceedings for Boliden's Spanish subsidiary, Apirsa, issued a preliminary injunction for the seizure of eur 141 million in June, as security for alleged claims arising from the dam breach accident in Spain in 1998.

Boliden has appealed the ruling. Boliden's overall view continues to be that the company will not suffer any substantial financial damage as a result of the legal proceedings. (See Note 22).

IMPORTANT EVENTS AFTER 31ST DECEMBER 2007 Environmental Court permit for Aitik expansion

On 25th January 2008, the Environmental Court granted Boliden permission to double the Aitik copper mine's production capacity from 18 to 36 million tonnes of ore per year.

FINANCIAL GOALS AND GOAL FULFILMENT

Boliden's long-term financial goals were set with regard to the base metal industry's cyclic nature and its capital intensity. The return on capital employed must exceed 10 per cent over a business cycle and the required net debt/equity ratio is approximately 40 per cent.

Boliden's return on capital employed for the full year 2007 was 29 per cent (52%). The net debt/equity ratio had increased by the end of the year to 43 per cent (–1%).

THE MARKET

Demand for zinc and copper – Boliden's main metals – has a clearly cyclic nature. Global economic growth in general, and a growth in industrial production in particular, affects the price trend for these base metals.

Global economic growth continued healthy in 2007, albeit not as strong as in 2006. The rate of growth in industrial production totalled 4.9 per cent (5.1%), according to the latest available figures from the imf, ensuring continued good demand for zinc and copper.

The willingness to invest among mining players and producers of finished metals has increased as a result of several successive years of price increases which, in turn, has led to global increases in both mining and smelting capacity. This resulted in global production of both zinc and copper metals being on a par with metal consumption in 2007.

Metals supply and demand

Global consumption of zinc metal increased by 4 per cent to 11.6 million tonnes, while production increased by 7.0 per cent to 11.3 million tonnes. Consumption continued to grow strongly in China, which accounted for some 31 per cent of global consumption. Europe's zinc consumption increased marginally, while demand in the usa fell in the wake of turbulence in the credit market and concerns about economic trends.

Global consumption of copper metal increased by 4.0 per cent to 18.2 million tonnes, while production increased by 5.0 per cent to 18.2 million tonnes. China accounted for the majority of the increase in consumption, while demand in the West levelled off. Asia as a whole accounted for approximately 49 per cent of consumption, with China alone accounting for around 25 per cent.

With production increasing faster than consumption, the official zinc stocks held by the London Metal Exchange (lme) and the Shanghai Futures Exchange (shfe) rose to a total of 143,000 tonnes (90,000 t) by the end of the year, corresponding to 4.5 days' (2.9 days') global consumption.

Copper stocks held at the lme, shfe and the American Comex also increased, reaching a combined total of 238,000 tonnes (191,000 tonnes) by the end of 2007, corresponding to 4.8 days' (4.0 days') global consumption.

Treatment charges and metal prices

A market surplus of zinc concentrate notwithstanding, the realised zinc treatment charges, including price escalators, were lower in 2007. The average benchmark for realised treatment charges, including price escalators, was usd 285/tonne for 2007, in comparison with usd 390/ tonne in 2006. The copper concentrate shortage continued, despite the increased mine capacity, primarily as a result of the expansion of smelter capacity in China. Chinese imports of copper concentrate and copper scrap increased during the year by 25 per cent and 13 per cent, respectively. This meant continued pressure on copper treatment and refining charges in 2007 and also led to lower negotiated benchmark levels for 2008. The shortage of copper concentrate, combined with increased smelter capacity, has resulted in copper treatment charges benchmarks being set without price escalators since 2007.

China's reduced imports of lead concentrate, and the resulting increased availability of lead concentrate in Europe, made lead treatment charges rise. By the end of 2007, spot treatment charges totalled approximately usd 400/tonne, excluding price escalators, in comparison with approximately usd 50/tonne at the beginning of the year.

The average zinc metal price on the lme in 2007 remained largely unchanged in comparison with 2006, the steep price falls during the fourth quarter notwithstanding. The average copper metal price on the lme rose by 5.9 per cent in comparison with 2006.

The lme lead price rose to historically high levels as a result of the massive reduction in lead exports from China. The average price for 2007 rose by 102 per cent in comparison with 2006.

Treatment and refining charges, copper1)	2007	2006
Treatment charge (TC) USD/tonne	60	95
Refining charge (RC) USc/lb	6.0	9.5

Treatment and refining charges, zinc1)	2007	2006
Treatment charge (TC) base
1,400 USD/tonne +14/–12%		128
Treatment charge (TC) base
3,500 USD/tonne +8/ –6%	300

1) Benchmark conditions

Treatment and refining charges, lead1)	2007	2006
Treatment charge (TC) base
750 USD/tonne +15%		149
Treatment charge (TC) base
1,500 USD/tonne +7/–5%	158

Metal prices			Change
(average LME/LBMA)	2007	2006	(%)
Copper (USD/tonne)	7,126	6,731	6
Zinc (USD/tonne)	3,250	3,273	–1
Lead (USD/tonne)	2,595	1,287	102
Gold (USD/troy oz)	696	604	15
Silver (USD/troy oz)	13.38	11.55	16

PROFIT PERFORMANCE

Revenues and operating profit

Boliden's revenues fell by 6 per cent to sek 33,204 million (sek35,213m) in 2007. The fall was primarily due to a weaker us dollar than in 2006.

The operating profit (ebit) fell by 36 per cent to sek 5,428 million (sek 8,522 m). The fall is primarily due to the weakening of the us dollar, revaluations of process stocks, lower production volumes, and lower realised treatment charges as a result of the negative effects of price escalators.

Costs increased by 4 per cent including increased investments in exploration. The most significant cost increase comprised external services, followed by costs arising from energy, consumables and human resources.

Deviation analysis, EBIT, SEK m	Full year
EBIT 2006	8,522
Exchange rate effects	–1,299
Metal prices and terms	–552
Volume change, Mines	–689
Volume change, Smelters	–78
Costs	–422
Other	–54
EBIT 2007	5,428

PER CENT

Profit after financial items

The profit after financial items fell by 37 per cent to sek 5,196 million (sek 8,313 m). Net financial items totalled sek –232 million (sek –209 m) as a result of higher net debt.

Taxes

The reported tax expense totalled sek 1,409 million (sek 2,045 m), corresponding to a tax rate of 27 per cent (25%). Tax paid totalled sek 1,426 million (sek 328 m).

Profit for the period

The profit for the period was sek 3,787 million (sek 6,268 m), corresponding to earnings per share of sek 13.37 (sek 21.66), before and after dilution.

REVENUES, OPERATING PROFIT AND PRODUCTION PER SEGMENT

Segment Smelters

Revenues within Smelters fell by 7 per cent to sek 34,704 million (sek 37,514 m).

The operating profit (ebit) fell by 59 per cent to sek 2,297 million (sek 5,652 m). This sharp drop was primarily due to delayed copper treatment charges and to lower realised zinc treatment charges, due to the negative effects of price escalators outweighing the positive effects of higher base treatment charges. The revaluation of process stocks of zinc and copper at lower prices, the weakening of the us dollar, and the changes to internal pricing of metal concentrates also had a negative effect on the profits. Higher pricing premiums for both zinc and copper than in 2006 had a positive effect on the profit.

Costs increased by 2 per cent to sek 32,407 million (sek 31,862 m).

Investments totalled sek 1,008 million (sek 782 m). The increase was due to the expansion projects at Harjavalta and Kokkola.

Revenues, profit
and investments, SEK m	2007	2006	Change (%)
Revenues	34,704	37,514	–7
EBIT	2,297	5,652	–59
Investments	1,008	782	29
Capital employed	16,738	14,474	16

Production of zinc metal increased by 4 per cent in 2007, mainly as a result of record-high and stable production levels at Kokkola. Odda's zinc production remained largely unchanged in comparison with 2006.

Production of copper metal fell by 12 per cent. The decline in production is primarily due to a delayed start-up at Harjavalta after completion of the expansion project and to lower copper grades in concentrates. Harjavalta's production was also negatively affected by variable quality in the copper concentrates received.

Bergsöe's production of lead alloys fell by 2 per cent in comparison with 2006.

Gold production fell by 24 per cent and silver production by 8 per cent, due to lower metal grades in concentrates.

Production	2007	2006	Change (%)
Zinc, tonnes	462,570	442,908	4
Copper, tonnes	314,881	356,392	–12
Gold, kg	14,876	19,693	–24
Silver, kg	379,749	414,402	–8
Lead, tonnes	25,865	25,548	1
Lead alloys, tonnes (Bergsöe)	43,865	44,691	–2
Sulphuric acid, tonnes	1,100,919	1,183,452	–7
Aluminium fluoride, tonnes	34,833	28,762	21

Segment Mines

Mines' revenues rose by 4 per cent to sek 7,567 million (sek 7,261 m).

The operating profit (ebit) increased by 4 per cent to sek 3,135 million (sek 3,010 m). The rise is primarily due to a higher realised copper price, lower treatment charges and changes to the internal pricing of metal concentrates. The improvement in the profit was offset by the weaker us dollar.

Starting in 2007, Boliden applies the same pricing mechanisms for concentrate deliveries from its own mines as to deliveries from external mines, which is an average price in the month after arrival at the smelters. In 2006, the company applied a metal price based on the yearly average for concentrate deliveries from its own mines.

The full-year effect on the operating result of the amended pricing model is a fall of approximately sek 900 million in Mines compared to 2006, which should be taken into account during comparisons between the years, but which has no effect on the Group as a whole.

Costs increased by 4 per cent to sek 4,432 million (sek 4,251 m). The additional investments in exploration accounted for approximately sek 100 million of the increase.

Investments totalled sek 1,503 million (sek 1,065 m), of which the expansion of Aitik accounted for sek 302 million.

Revenues, profit
and investments, SEK m	2007	2006	Change (%)
Revenues	7,567	7,261	4
EBIT	3,135	3,010	4
Investments	1,503	1,065	41
Capital employed	4,970	4,392	13

Production of zinc improved and the metal content was 2 per cent higher in 2007 than in the previous year. The increase is due to increased production at Garpenberg. Zinc production in the Boliden Area remained largely unchanged, while Tara's production level fell slightly in comparison with 2006 due to lower metal grades.

Production of copper fell, with the metal content 28 per cent lower in 2007 than in the previous year. The decline is due to planned lower metal grades at Aitik, which also experienced a deterioration in throughput at the concentrator, due to ore that proved difficult to mill, and to a steep fall in copper production in the Boliden Area.

Production of lead concentrate increased by 11 per cent as a result of higher production levels both at Garpenberg and in the Boliden Area.

Gold production fell by 37 per cent, principally as a result of substantially lower gold grades at Aitik and a planned change in the ore mix in the Boliden Area.

Silver production increased by 14 per cent as a result of higher production levels at Aitik and Garpenberg, and in the Boliden Area.

Metal production	2007	2006	Change (%)
Zinc, tonnes	333,293	327,643	2
Copper, tonnes	62,803	86,824	–28
Lead, tonnes	54,166	48,778	11
Gold, kg	2,834	4,510	–37
Silver, kg	241,701	211,640	14

Segment Other

The operating profit (ebit) was sek –4 million (sek –140 m).

Capital employed, which refers primarily to market valuations of currency and metal price hedging, totalled sek –1,563 million (sek –1,199 m).

EXPLORATION

Investments in exploration increased in 2007 to sek 267 million (sek 162 m). Boliden applied for 26 (62) new exploration permits and was granted 17 (52) new permits by the relevant authorities in Sweden and Ireland during the year.

Successes in mine-site exploration contributed to an increase in the ore base in all mining areas, with the exception of Tara. Particularly significant progress was made in the exploration work at Garpenberg and at Kristineberg in the Boliden Area.

Approximately sek 100 million of the exploration investments was spent on field exploration. In Sweden, field exploration is concentrated on base metal and gold exploration in the Skellefte field and on base metals in Dorotea, Norrbotten and Bergslagen. Some 20 projects were under investigation in these areas at the end of 2007.

In Ireland, exploration is in progress in the Limerick and Wexford areas.

CASH FLOW AND INVESTMENTS

The cash flow from the operating activities fell to sek 3,730 million (sek 8,010 m). The fall was primarily due to the lower operating profit, and to a higher amount of final tax paid as well as higher amounts of preliminary tax paid in Ireland.

The cash flow from changes in operating capital tied up totalled sek 1,043 million (sek –1,636 m) primarily as a result of changes to inventories.

Investments totalled sek 2,512 million (sek 1,847 m), of which expansion investments and bottleneck investments accounted for sek 1,165 million (sek 468 m), and maintenance investments accounted for sek 1,347 million (sek 1,379 m). The expansion projects at Aitik and Harjavalta accounted for the majority of the increase.

Boliden reversed sek 6,832 million to its shareholders in 2007: sek 1,158 million in the form of ordinary dividends, sek 3,464 million in the form of share redemption, and sek 2,210 million in the form of buy-backs of the company's own shares.

FINANCIAL POSITION

Boliden's assets on 31st December 2007 totalled sek 27,231 million, corresponding to an increase of sek 302 million in comparison with the figure on the corresponding date in 2006.

The cash flow after investments of sek 1,212 million and combined capital reversal to the shareholders of sek 6,832 million resulted in an increase in Boliden's net debt to sek 5,524 million during the year. The net debt/equity ratio was 43 per cent at the end of 2007. At the corresponding point in 2006, Boliden had a negative net debt/equity ratio, with short-term investments and cash and bank balances exceeding interest-bearing liabilities by sek 195 million.

On 31st December 2007, the average term of Boliden's debt portfolio was 5.0 years (6.64 years). The average interest rate at the same juncture was 5.17 per cent (4.09%). Boliden's liquidity, in the form of liquid assets and unused binding credits, totalled sek 4,027 million (sek 8,826 m).

Shareholders' equity totalled sek 12,932 million on 31st December 2007. The market valuation of currency and metal price hedging, after fiscal effects, were included in shareholders' equity in a net sum of sek –762 million (sek 658 m).

Capital structure at the end of 2007

SEK m	31st December 2007	31st December 2006
Balance Sheet total	27,231	26,929
Capital employed	20,145	17,667
Shareholders' equity	12,932	16,089
Net debt	5,524	–195
Net debt/equity ratio (%)	43	–1
Equity/assets ratio (%)	47	60

Risk management

Risk taking and risk management are natural elements of all business activities. Boliden's metal operations, which include exploration, mining, smelting and recycling, entail exposure to a range of different market and external risks, financial risks, and operational and commercial risks.

Boliden has a centralised treasury function whose primary duties involve identifying, evaluating and efficiently managing the Group's financial risks and supporting the Group management and operating units.

The operations- and business-related risks are mainly handled at the operating units, in accordance with the guidelines and instructions laid down for each Business Area and at Group level. The management is coordinated at Business Area or Group level, depending on the nature of the risk in question.

MARKET AND EXTERNAL RISKS

Cyclic metals markets

Economic trends in general and global industrial production in particular have, historically speaking, always affected the price trends for zinc, copper and other base materials. Boliden's customers are primarily located in northern Europe, but price trends are affected by global supply and demand for zinc and copper. A levelling off in demand in China, for example, can lead to an increased supply and lower metal prices in Europe. Equally, increases in global mining and/or smelting capacity can lead to an excess supply of zinc and copper metal in Europe.

Boliden works single-mindedly on establishing and strengthening long-term customer relationships in order to secure a market for the Group's metals.

Massive energy requirement

Mining, smelting and recycling operations, and zinc smelters in particular, are energy-intensive. Europe's energy markets are complex and predicting long-term price trends is difficult. Boliden endeavours to conclude long-term supply contracts in all countries in which it operates, and has successfully managed, thereby, to secure the majority of its energy requirements in the form of long-term contracts. These long-term contracts are complemented with financial electricity price hedging with terms of up to five years. Energy price changes will, to the extent that Boliden's energy requirement is not hedged through supply contracts or electricity price hedging, have a direct impact on the Group's profit performance.

Boliden implements an ongoing programme of measures designed to improve its energy efficiency, in order to limit its energy costs and boost competitiveness. The Group has a collective energy policy and its goal is for all units to have implemented energy management systems by the end of 2008.

Energy costs account for 17 per cent of the Group's total costs.

Extensive environmental requirements

Mining, smelting and recycling operations are, by their very nature, resource intensive and affect their surroundings. Not only do mining operations affect the surrounding landscape, they also give rise to noise and vibrations, waste in the form of waste rock and tailings sand, and emissions of metals to air and water. Smelting and recycling operations entail emissions to air and water and generate a range of waste products. Boliden's production units are subject to environmental legislation and applicable environmental permits in Sweden, Finland, Norway and Ireland, and to requirements imposed by the eu.

Boliden works with Group-wide and local goals, guidelines and management systems in order to reduce its operations' environmental impact. Emissions from the mines and smelters are reduced by means of improved processing and cleaning techniques, efficient waste management, and reclamation of land and capping of tailings ponds.

All of the Group's smelters and the Irish zinc mine, Tara, have environmental management systems certified in accordance with the international iso 14001 standard. The goal is for the other three mining areas to have implemented certified environmental management systems by the end of 2008.

Examples of the more stringent regulations now applied within the eu include the Mining Waste Directive, which came into force in 2006 and which must be incorporated into national legislation by May 2008. Boliden is working to ensure that its plans for managing mine waste, including financial undertakings, are fully adapted in line with the new regulations.

The ongoing implementation of the eu's Water Framework Directive from 2000 is tightening up regulations governing facilities that give rise to emissions to water. Boliden has reviewed the watercourses affected by the operations to ensure that the proposed emissions levels are reasonable and is continuing to monitor the implementation of the legislation.

Boliden has only been allocated small quantities of emission rights, due to its limited amounts of carbon dioxide emissions. Only two of the Group's production units, the Bergsöe lead smelter and the Rönnskär copper smelter, are covered by the emission rights system. For further information on Boliden's sustainability work in 2007, please refer to page 40, the Group's separate Sustainability Report and www.boliden.com.

Alternatives to base metals

The use of substitutes for zinc, copper and other base metals has been around for many years, but to date, has occurred on a limited scale. High metal prices and metal shortages have led to some increase in substitution – a trend that may gain in strength if the high base metal prices continue.

Copper can, in some cases, be replaced with substances such as aluminium or plastic. Substitution has been most widespread, by volume, in western Europe, North America and China and the spheres of use where it has been most common are piping, roof coatings, telecom cabling and vehicle radiators.

The rise in the price of zinc has persuaded some zinc consumers to switch from using pure zinc to using zinc alloys and thinner zinc coatings. The most sensitive spheres of use for substitution is the alloys industry, such as die casting, where aluminium can be a cheaper alternative and local rust-proofing can be replaced by spray painting.

FINANCIAL RISKS

Boliden's operations are exposed to a number of financial risks. Changes in exchange rates, metal prices, treatment and refining charges and interest levels affect the Group's profit performance and cash flows. Detailed information on Boliden's exposure to these risks is provided in Note 18 on page 86.

Boliden has a centralised treasury function whose primary duties involve identifying, evaluating and efficiently managing the Group's financial risks and supporting the Group management and operating units. The work is conducted in accordance with the financial policy adopted by the Board of Directors. This centralisation facilitates good internal risk control and offers financial and administrative economies of scale.

Business Area Market handles the majority of Boliden's internal and external materials and cash flows and is responsible for providing the treasury function with ongoing information on the current metal and currency exposure situation. The treasury function is then responsible for managing the operations-related flows in accordance with the financial policy established by the Board of Directors, and with minimising the risks of negative effects resulting from changes in metal prices, treatment and refining charges and exchange rates.

Currencies

Boliden's revenues are primarily denominated in us dollars, while its costs are primarily denominated in Swedish kronor, euro, and Norwegian kroner. The trend in the us dollar exchange rate therefore has a critical impact on the Group's profits.

For further information on Boliden's currency futures and currency option hedging on 31st December 2007, please see Note 20 on page 87.

Metal prices, treatment and refining charges

Changes in metal prices and in treatment and refining charges have a significant impact on Boliden's profits.

Base metal prices are set daily on the London Metal Exchange (lme). The prices of Boliden's base metals – zinc, copper and lead – are essentially affected by changes in industrial supply and demand for the metals, but the activities of financial players also have a major impact on the price, particularly in the short-term.

The price of precious metals is set daily by the London Bullion Market Association (lbma). Political factors have a greater effect on the pricing of gold and silver than is the case with base metals.

Boliden's policy is not to hedge its main metals, zinc and copper. Around two thirds of copper production has, however, been hedged for 2008–2009 in order to secure the Group's investments in the expansion of the Aitik copper mine. This limits the Group's sensitivity to changes in copper prices during this period. For further information on Boliden's metal price hedging, please see Note 20 on page 87.

Treatment and refining charges are the primary components of the remuneration received by smelters for refining metal concentrates into finished base metals. These treatment and refining charges are negotiated annually by the major players in the mining and smelting industries. The results of these negotiations serve as benchmarks for smaller players, while some of the concentrate transactions are conducted at spot treatment charges. Boliden is one of the world's biggest players in the zinc smelter sector, giving it considerable influence in conjunction with the negotiation of zinc treatment charges.

Boliden is a smaller smelter player in the copper sector, and tends largely to follow the benchmark levels established by the biggest players. Boliden implements a type of "brick system" whereby the treatment and refining charges for approximately 50 per cent of copper production are renegotiated every year, with the residual volume remaining at the benchmark level negotiated in the previous year.

The treatment and refining charges agreements often include socalled price escalators, whereby mines and smelters share the effects of changes in metal prices on a certain scale. The global shortage of copper concentrate in recent years has strengthened the copper mines' negotiating position in relation to the smelters, resulting in the removal of price escalation clauses.

Approximately 72 per cent of Boliden's capacity in the zinc smelters

is covered by zinc concentrate from the Group's own mines, and the Group's sensitivity to changes in zinc treatment charges is, therefore, limited.

The copper concentrates from Boliden's own mines only cover around 20 per cent of the copper smelters' capacity, and changes in treatment and refining charges consequently have a significant impact on the Group's profits.

Boliden applies preliminary pricing to the closing day price of internal concentrate deliveries. The definitive price is set at the average price in the month following delivery. Price adjustment has a direct impact on profits.

The time-lag between purchases of raw materials and deliveries of metals to customers gives rise to ongoing price differentials. The prices of metals in the process stocks at Boliden's smelters are not hedged and changes in these metal prices consequently have an impact on the Group's profits. The volumes in the process stocks are maintained at a constant risk level.

OPERATIONAL AND COMMERCIAL RISKS

The importance of high productivity and cost-effectiveness

Long-term competitive strength in the metals industry requires high productivity and cost-effectiveness. Conducting maintenance and efficiency enhancing programmes, technological development, and methodology development on an ongoing basis is, therefore, vital.

Boliden carries out ongoing maintenance work at all units and implements planned, large-scale maintenance shutdowns every year. The Business Areas Smelters and Mines have been working with internal benchmarking processes and knowledge exchanges between the production units for a number of years now.

Relationships with customers and suppliers

Boliden endeavours, in accordance with the financial policy, to establish relationships with customers with a high credit rating, in order to reduce counterparty risks.

The Code of Conduct and the Operational Policy specify guidelines detailing how Boliden's employees shall treat suppliers and customers, and the ethical, social and environmental requirements to be made of them.

Boliden works actively to forge closer relationships with customers, in order to secure a market for the company's metals. Boliden aims to further boost its competitiveness by having an in-depth familiarity with the customers' processes and by providing technical support for customers.

The smelters rely on maintaining a high and consistent level of capacity utilisation, and the supply of raw materials is consequently of great importance. On the copper front, where Boliden's self-sufficiency level is considerably lower than for zinc, Boliden endeavours to conclude long-term agreements with external suppliers of metal concentrates and recycling materials.

Customer exposure

Boliden's customers are located exclusively in northern Europe, with the majority based in the Nordic region. A number of large customers account for a significant percentage of Boliden's base metal sales.

Boliden is working to establish a broader customer base, in particular with regard to copper metals, which are currently sold to a few very large customers. Our market presence is substantial in the Nordic countries and Boliden is consequently endeavouring primarily to increase its market presence in central and eastern Europe.

Skill requirements

Long-term competitiveness presupposes the ability to develop, attract and retain employees in different professional categories and skill groupings. Almost one third of Boliden's current workforce will be retiring over the next ten years and this fact, coupled with the fact that our operations are often conducted in less densely populated areas, makes it particularly important that we secure our competitiveness as an employer and have a solid foundation for the future in terms of skill supply.

Boliden's investment in management development is important in creating a good working climate. Boliden is working with educational establishments, among others, in all of the countries in which it operates, in order to facilitate a talent pool.

Safety in the workplace

Safety in the production units is very important. Serious accidents can not only mean personal injuries and a loss of public confidence in us, they can also result in production stoppages and the closure of units.

Boliden adopted a zero accidents at work philosophy in 2006 and is, in addition to its investments in safer machinery and other equipment, endeavouring to establish a strong sense of safety awareness among its employees. For further information on Boliden's sustainability work in 2007, please see page 40.

For information on Boliden's legal proceedings and disputes, please refer to Note 22, page 89.

corporate social responsibility Responsibility for employees

The average number of employees in 2007 was 4,524, 2,340 of which are employed in Sweden, 1,091 in Finland, 678 in Ireland, 389 in Norway and 26 in other countries. This corresponds to an increase of 5 in comparison with 2006, when the average number of employees was 4,519.

Absence due to sickness during the year was 4.6 per cent, corresponding to a decrease of 0.4 percentage points on the full year of 2006. Boliden accordingly revised its goal for absence due to sickness in 2007, which shall now not exceed 4.0 per cent by the end of 2012.

The accident frequency fell to 9.7 cases per one million hours worked, from 11.2 in 2006. Boliden has a zero accidents at work philosophy, with an initial subsidiary goal of reducing the frequency to below 5.0 cases per one million hours worked by the end of 2011. The Odda and Kokkola zinc smelters, i.e. two of the Group's nine production units, reported an accident rate in 2007 below this subsidiary goal figure.

Boliden's goal is for all production units to be certified in accordance with the OHSAS 18001 or ISRS standards by the end of 2008. Five of the nine units were certified by the end of 2007.

Responsibility for the environment

The operations of all of Boliden's production units are subject to licensing. The Group's strategy of exploiting organic growth projects led to a number of applications being submitted for new environmental permits, primarily within Segment Mines.

Boliden's operations are subject to and conducted in accordance with environmental legislation and regulations in Sweden, Finland, Norway and Ireland, and with eu-wide regulations regarding such matters as waste management, chemicals and carbon dioxide emissions. An incident did, however, occur at the Odda zinc smelter in Norway in May 2007, whereby the unit exceeded its threshold value for zinc emissions into water as a result of inadequate routines in conjunction with heavy precipitation. The incident was investigated by the Norwegian Pollution Control Authority (sft) and Odda also carried out internal investigations. The zinc smelter has implemented measures designed to prevent any recurrence and based on the conclusions of these investigations. sft's report on the incident is complete and a police investigation of the course of events has begun. Since 2008, the unit has augmented its water treatment capacity.

The environmental management systems at the Rönnskär copper smelter and the Tara zinc mine were certified in accordance with the iso 14001 standard in 2007, and six of Boliden's nine production units are consequently now environmentally certified. The goal is for the remaining three production units to have environmental management systems certified in accordance with iso 14001 in place by the end of 2008.

On 19th December 2007, the Environmental Court announced the terms governing the operation and reclamation of the Hötjärn tailings pond for future deposits of tailings sand from the Boliden Area's concentrator. The Environmental Court took Boliden's line on emission terms, reclamation methods and the size of the financial guarantee. The terms governing the reclamation method and the financial guarantee were, however, appealed by the Swedish Environmental Protection Agency. The Swedish Environmental Protection Agency's proposal regarding so-called qualified dry capping, rather than Boliden's tried and trusted method of water capping, would entail a cost increase of some sek 160 million for the reclamation work. On 1st February 2008, Boliden decided to invest in the new tailings pond.

THE PARENT COMPANY

The Parent Company conducts no operations and has no employees.

GUIDELINES FOR REMUNERATION TO THE COMPANY MANAGEMENT

The 2007 Annual General Meeting resolved, in accordance with a proposal submitted by the Board of Directors, that remuneration payable to the President and other members of Boliden's company management shall comprise a basic salary, any variable remuneration, other benefits, and pensions. The combined remuneration shall be in line with market rates and shall be competitive.

The fixed salary shall be related to the employee's responsibility and authority. Variable remuneration shall comprise a maximum of 50 per cent of the fixed salary and shall be based on results in relation to goals set. A notice period of six to twelve months shall, in normal cases, apply in the event of notice of termination being issued by the company, and a period of three to six months in the event of notice being given by the individual employee. Any severance pay disbursed should not exceed 18 months' salary and only be payable when notice of termination is issued by the company. Pension benefits shall be defined benefit or defined benefit plans, or a combination thereof, and shall entitle the employee to a pension at no younger than 60 years of age. The variable remuneration shall not constitute a basis for pension calculations.

The Board proposes, ahead of the 2008 Annual General Meeting, principles for remuneration and other terms and conditions of employment for the Group management.

For further information on remuneration paid to the President and other senior executives, and to Boliden's Board of Directors, please see Note 1 on pages 76–77.

THE BOARD'S PROPOSED ALLOCATION OF PROFITS FOR 2007

Boliden has a dividend policy whereby approximately one third of the profit after tax is to be distributed over a single business cycle. Boliden's Board of Directors will propose to the Annual General Meeting that a dividend be paid in the amount of sek 4 (sek 4) per share, or sek 1,094 million (sek 1,158 m), corresponding to 30 per cent of the profit after tax for 2007.

In its proposal for a distribution of the profits, the Board of Directors has taken into account the cyclical nature of the industry and the risks associated with the company's operations.

The non-restricted shareholders' equity

SEK	2 351 612 502
The remainder to be carried forward	1 257 567 826
of SEK 4 per share	1 094 044 676
A dividend payment to shareholders
The Board proposes:
SEK	2 351 612 502
Profit for the year	2 350 200 000
Profits brought forward from previous years	1 412 502
in the Parent Company comprises:

INFORMATION ABOUT THE SHARE

The Boliden share is listed on the Large Cap list of the Stockholm Stock Exchange and is also traded on the Toronto Stock Exchange in Canada, where it has a secondary listing. There are a total of 289,457,169 shares. Every share has a nominal value of sek 2 and the share capital totals sek 578,914,338. There is only one class of share. One share grants entitlement to one vote at General Meetings of the Company and there are no limitations on the number of votes that may be cast by a shareholder at a General Meeting. There is no provision in Boliden's Articles of Association limiting the right to transfer shares. The company has neither transferred any of its own shares, nor issued any new shares during the year. The company is unaware of any agreement between shareholders that may result in restrictions on the right to transfer shares in the company. The company is not party to any significant agreement that could be affected by any public sector buy-out offer.

Boliden has no shareholders who, either directly or indirectly, represent at least one tenth of the votes for all shares in the company. Boliden's employees have no shares for which the voting right cannot be directly exercised.

The Board's elected Members are appointed at the Annual General Meeting. The Articles of Association contain no provisions regarding the appointment and dismissal of Members of the Board.

For further information on trading in the Boliden share and the ownership structure in 2007, please see pages 52–54.

Buy-back of the company's own shares

The 2007 Annual General Meeting mandated the Board of Directors to acquire a maximum of 10 per cent of the company's own shares before the 2008 Annual General Meeting. The company holds 15,946,000 of its own shares, all acquired in 2007, each with a nominal value of sek 2. Payment made for the shares acquired totals approximately sek 2,210 million. The number of the company's own shares held corresponds to 5.509 per cent of the total number of outstanding shares. The company aimed, through the buy-back of its own shares, to adjust the company's capital structure in relation to cash flow and investment requirements, and it was made clear that the intention was for the bought-back shares to be subject to withdrawal at the next Annual General Meeting. The Board intends to propose to the 2008 Annual General Meeting withdrawal of the shares acquired.

A redemption process by means of which approximately sek 3,464 million has since been disbursed to the shareholders was approved at the 2007 Annual General Meeting.

Consolidated Income Statements – the Group

Revenues 24 33,204 Cost of goods sold 3 –26,711 Gross profit 6,493 Selling expenses 3 –406 Administrative expenses 2, 3 –452 Research and development costs 3 –322 Other operating income 4 118 Other operating expenses –9 Profits from participations in associated companies 11 6 Operating profit 1–4, 7–9, 24 5,428 Profit from financial items Interest income and other similar items 5 79 Interest expenses and other similar items 6 –311 Profit after financial items 5,196 Taxes 12 –1,409 Net profit 3,787 Attributable to:	2006
	35,213
	–25,831
	9,382
	–404
	–409
	–215
	169
	–18
	17
	8,522
	85
	–294
	8,313
	–2,045
	6,268
The Parent Company's shareholders 3,787	6,268
Minority owners –	–
Earnings per share, SEK 15 13,37	21,66
No dilution effect exists due to the absence of any potential shares
Number of shares
Opening number of shares 289,457,169 289,387,169
New rights issue, May 2006 –	70,000
Buy-back of own shares –15,946,000	–
Closing number of shares 273,511,169 289,457,169
Average number of shares, before and after dilution 283,276,511 289,429,169
Number of own shares held
Opening number of own shares held –	–
Buy-back of own shares during the year 15,946,000	–
Closing number of own shares held 15,946,000	–

Revenues

Boliden's revenues totalled SEK 33,204 million (SEK 35,213 m). Revenues were negatively affected primarily by a lower US dollar exchange rate.

Operating profit

The operating profit (EBIT) for the full year was SEK 5,428 million (SEK 8,522 m). A weaker US dollar, lower production levels and higher costs had a negative effect on the operating profit.

The total effect on the operating profit of metal price hedging in 2007 was SEK –1,674 million (SEK –2,301 m). The level of copper price hedging improved substantially during the year resulting in a positive improvement on the 2006 figures.

The stock profit for 2007 was SEK 878 million down on the figure for 2006, due to a revaluation of process stocks at lower zinc and copper prices. The stock result is defined as price changes to the smelters' normal stocks (constant quantities) not hedged.

Profit after financial items

The profit after financial items fell to SEK 5,196 million (SEK 8,313 m). Net financial items totalled SEK –232 million (SEK –209 m). Interest expenses were negatively affected by a higher level of debt and higher interest rates. Boliden's average interest rate on the debt portfolio on 31st December 2007 was 5.17 per cent (4.09%).

Net profit and taxes

The Group's net profit totalled SEK 3,787 million (SEK 6,268 m). The tax expense for the year was SEK 1,409 million (SEK 2,045 m), corresponding to 27 per cent (25%) of the profit before tax. Tax paid totalled SEK 1,426 million (SEK 328 m).

Key ratios	2007	2006
Return on capital employed, %	29	52
Return on shareholders' equity, %	26	51
Equity/assets ratio, %	47	60
Net debt/shareholders' equity, %	43	–1
Depreciation, SEK m	1,377	1,309
Investments, SEK m	2,512	1,847
Capital employed, SEK m	20,145	17,667
Net debt, SEK m	5,524	–195

Consolidated Balance Sheets – the Group

Amount in SEK million	Note	2007-12-31	2006-12-31
ASSETS	24
Fixed assets
Intangible fixed assets	7	3,197	3,077
Tangible fixed assets	8
Buildings and land		2,618	2,547
Deferred mining costs		2,216	1,927
Machinery and other technical facilities		7,638	7,172
Equipment, tools, fixtures and fittings		166	185
New construction work in progress		828	231
		13,466	12,062
Other fixed assets
Participations in associated companies	11	43	45
Other shares and participations		12	18
Financial investments		2	3
Long-term receivables		3	2
		60	68
Total fixed assets		16,723	15,207
Current assets
Inventories	13	6,904	5,351
Current receivables
Accounts receivable		1,528	2,107
Tax receivables		143	–
Interest-bearing receivables		7	–
Derivative instruments		278	379
Other current receivables	14	770	689
		2,726	3,175
Liquid assets	23	878	3,196
Total current assets		10,508	11,722
TOTAL ASSETS		27,231	26,929

Amount in SEK million	Note	2007-12-31	2006-12-31
SHAREHOLDERS' EQUITY AND LIABILITIES	24
Shareholders' equity	15
Share capital		579	579
Other capital injected		8,076	8,078
Translation reserve		–43	–35
Hedging reserve		–762	–658
Profit carried forward		1,295	1,857
Net profit for the year		3,787	6,268
Shareholders' equity attributable to the Parent Company's shareholders		12,932	16,089
Long-term liabilities
Liabilities to credit institutions	19	4,434	2,301
Provisions for pensions and similar undertakings	16	506	493
Deferred tax liabilities	12	1,649	1,277
Other provisions	17	926	965
		7,515	5,036
Current liabilities
Liabilities to credit institutions	19	1,483	228
Accounts payable		2,857	2,788
Provisions	17	105	53
Current tax liabilities		183	500
Derivative instruments		1,157	1,110
Other current liabilities	21	999	1,125
		6,784	5,804
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		27,231	26,929
Pledged assets	22	None	None
Contingent liabilities	22	471	321

Financial position

Boliden's cash flow after investments totalled SEK 1,212 million and the capital reversal to the shareholders totalled SEK 6,832 million, resulting in an increase in the net debt in 2007 from SEK –195 million to SEK 5,524 million. Boliden's net debt/equity ratio at the end of the year was 43 per cent (–1%).

The net market valuation of currency and raw material derivatives, after the fiscal effect, made a total negative contribution to shareholders' equity of SEK 762 million (SEK 658 m) at the end of 2007.

2007	2006
5,524	–195
12,932	16,089
43	–1
47	60

Net debt, SEK million	2007	2006
Liabilities to credit institutions	5,892	2,488
Other interest-bearing liabilities	25	41
Pension liabilities	506	493
Other shares and participations	–12	–18
Other long-term securities holdings	–2	–3
Short-term interest-bearing assets	–7	–
Short term investments	–325	–896
Cash and bank balances	–553	–2,300
	5,524	–195

Assets and capital employed

The Group's total assets have increased from SEK 26,929 million at the start of the year to SEK 27,231 million at the end of the year. On 31st December, capital employed totalled SEK 20,145 million (SEK 17,667 m).

Capital employed, SEK million	2007	2006
Intangible assets	3,197	3,077
Tangible assets	13,466	12,062
Participations in associated companies	43	45
Inventories	6,904	5,351
Accounts receivable	1,528	2,107
Other receivables	1,051	1,067
Provisions other than for pensions and tax	–1,031	–1,016
Accounts payable	–2,857	–2,788
Other liabilities	–2,156	–2,238
	20,145	17,667
Age analysis of accounts receivable	2007	2006
Not due	1,395	1,929
Overdue 0–30 days	129	170
Overdue 30–60 days	2	5
Overdue 60–90 days	1	1
Overdue 90+ days	2	3

Accounts receivable are only written down in small amounts.

1,528 2,107

Changes in shareholders' equity – the Group

Shareholders' equity is attributable in its entirety to the Parent Company's shareholders.

Note 15	Share capital	Other capital injected	Translation reserve	Hedging reserve	Profit carried forward	Total share holders' equity
Closing balance on Balance Sheet, 31st Dec. 2005	579	8,076	–20	–782	2,436	10,289
Market valuation of financial instruments	–	–	–	–711	–	–711
Fiscal effect on financial instruments	–	–	–	199	–	199
Transfers to the Income Statement	–	–	–	883	–	883
Tax on transfers to the Income Statement	–	–	–	–247	–	–247
Year's exchange rate differences on hedging instruments	–	–	101	–	–	101
Year's translation difference when converting overseas operations	–	–	–116	–	–	–116
Total changes in net wealth reported directly against shareholders'
equity, excluding transactions with the company's owners	–	–	–15	124	–	109
Net profit for the year	–	–	–	–	6,268	6,268
Total changes in wealth, excluding transactions with the company's owners	–	–	–15	124	6,268	6,377
New rights issue	0	2	–	–	–	2
Dividend	–	–	–	–	–579	–579
Closing balance on Balance Sheet, 31st Dec. 2006	579	8,078	–35	–658	8,125	16,089
Market valuation of financial instruments	–	–	–	–1,229	–	–1,229
Fiscal effect on financial instruments	–	–	–	344	–	344
Transfers to the Income Statement	–	–	–	1,085	–	1,085
Tax on transfers to the Income Statement	–	–	–	–304	–	–304
Year's exchange rate differences on hedging instruments	–	–	–185	–	–	–185
Year's translation difference when converting overseas operations	–	–	177	–	–	177
Total changes in net wealth reported directly against shareholders'
equity, excluding transactions with the company's owners	–	–	–8	–104	–	–112
Net profit for the year	–	–	–	–	3,787	3,787
Total changes in net wealth, excluding transactions with the company's owners	–	–	–8	–104	3,787	3,675
Dividend	–	–2	–	–	–1,156	–1,158
Share redemption	–	–	–	–	–3,464	–3,464
Buy-back of company's own shares	–	–	–	–	–2,210	–2,210
Closing balance on Balance Sheet, 31st Dec. 2007	579	8,076	–43	–762	5,082	12,932

Other capital injected

Refers to shareholders' equity injected by the owners. When shares are issued at a premium, an amount corresponding to the amount received in excess of the nominal value of the shares shall be transferred to the share premium reserve.

Translation reserve

The current method is used to convert the Income Statements and Balance Sheets of overseas subsidiaries. Any exchange rate differences that arise are booked directly to shareholders' equity. Boliden hedges its net investments in overseas subsidiaries by adopting the opposite position in the relevant foreign currency. The exchange rate difference on hedging instruments is, after the fiscal effect, booked directly to shareholders' equity.

Hedging reserve

Boliden applies hedge accounting to all financial derivatives acquired with a view to hedging part of forecast currency, metal and interest flows. Changes in the market value of hedging instruments are reported against shareholders' equity until such time as the underlying flows are reflected in the Income Statement.

Consolidated Statements of Cash Flow – the Group

Amount in SEK million	Note	2007	2006
	23
Operating activities
Profit after financial items		5,196	8,313
Adjustments for items not included in the cash flow:
Depreciation, amortisation and write-down of assets	7, 8	1,385	1,452
Other		–382	209
		6,199	9,974
Tax paid		–1,426	–328
Cash flow from operating activities before changes in operating capital
		4,773	9,646
Cash flow from changes in operating capital
Increase(–)/Decrease(+) in inventories		–1,502	–1,412
Increase(–)/Decrease(+) in operating receivables		615	–1,323
Increase(+)/Decrease(–) in operating liabilities		–156	1,099
Cash flow from operating activities		3,730	8,010
Investment activities
Acquisition of intangible fixed assets		–1	–4
Acquisition of tangible fixed assets	8	–2,511	–1,843
Sale of tangible fixed assets		–	108
Sale of financial assets		–6	–
Cash flow from investment activities		–2,518	–1,739
Financing activities
Dividend		–1,158	–579
Share redemption		–3,464	–
Buy-back of own shares		–2,210	–
New rights issue		–	2
Loans raised		10,866	3,708
Amortisation of loans		–7,566	–7,724
Cash flow from financing activities		–3,532	–4,593
Cash flow for the year		–2,320	1,678
Opening liquid assets		3,196	1,520
Exchange rate difference, liquid assets		2	–2
Closing liquid assets	23	878	3,196

The cash flow from operating activities totalled SEK 3,730 million (SEK 8,010 m). The deterioration is primarily due to the lower operating profit and a higher amount of tax paid.

Boliden reversed SEK 6,832 million to the shareholders during the year in the form of an ordinary dividend payment of SEK 1,158 million, a share redemption at a total cost of SEK 3,464 million, and share buy-backs for a total of SEK 2,210 million.

Investments for the year totalled SEK 2,512 million (SEK 1,847 m). The majority of the increase is attributable to the expansion projects at Aitik and Harjavalta.

Net borrowing during the period totalled SEK 3,300 million (SEK –4,016 m).

Income Statements – Parent Company

Amount in SEK million	Note	2007	2006
Dividends from subsidiaries	10	2,350	6,531
Profit after financial items		2,350	6,531
Profit before tax		2,350	6,531
Tax on the profit for the year		–	–
Net profit for the year		2,350	6,531

The operations of Boliden AB are, by mutual agreement, conducted on its behalf by Boliden Mineral AB, which means that the profit is reported as part of Boliden Mineral AB.

Balance Sheets – Parent Company

Amount in SEK million	Note	2007-12-31	2006-12-31
ASSETS
Fixed assets
Financial fixed assets
Participations in Group companies	10	3,911	3,911
Other long-term receivables from Group companies		1,922	4,219
Total fixed assets		5,833	8,130
Current receivables
Current receivables from Group companies		3,829	4,733
Total current assets		3,829	4,733
TOTAL ASSETS		9,662	12,863
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	15
Restricted equity
Share capital		579	579
Statutory reserve		5,252	5,252
		5,831	5,831
Non-restricted equity
Share premium reserve		–	2
Profit brought forward		2	300
Net profit for the year		2,350	6,531
		2,352	6,833
Total shareholders' equity		8,183	12,664
Current liabilities
Liabilities to credit institutions		1,479	199
		1,479	199
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		9,662	12,863
Pledged assets	22	None	None
Contingent liabilities	22	308	318

Contingent liabilities refer to guarantees made for subsidiaries.

Changes in shareholders' equity

	Share capital	Statutory reserve	Non-restricted reserves	Total shareholders' equity
Closing balance, 31st Dec. 2005	579	5,252	879	6,710
Dividend	–	–	–579	–579
New rights issue	0	–	2	2
Net profit for the year	–	–	6,531	6,531
Closing balance, 31st Dec. 2006	579	5,252	6,833	12,664
Dividend	–	–	–1,158	–1,158
Share redemption	–	–	–3,464	–3,464
Buy-back of own shares	–	–	–2,210	–2,210
Net profit for the year	–	–	2,350	2,350
Closing balance, 31st Dec. 2007	579	5,252	2,352	8,183

Statutory reserve

The statutory reserve also includes amounts which, prior to 1st January 2006, were transferred to the share premium reserve. The statutory reserve is a restricted reserve that may not be reduced by means of profit dividends.

Non-restricted reserves

Last year's non-restricted shareholders' equity, together with the net profit for the year and the share premium reserve, comprise the total non-restricted reserves. The non restricted shareholders' equity in the Parent Company is available for distribution to the shareholders.

Statements of Cash Flow – Parent Company

Amount in SEK million	Note	2007-12-31	2006-12-31
Cash flow from operating activities		–	–
Financing activities
Loans raised		1,479	199
Dividend		–1,158	–579
Share redemption		–3,464	–
Buy-back of own shares		–2,210	–
Dividend received		4,534	1,997
Loans to/from Group companies		819	–1,619
New rights issue		–	2
Cash flow from financing activities		–	–
Cash flow for the year		–	–
Opening liquid assets		–	–
Closing liquid assets		–	–

General accounting principles

Boliden AB (publ.), Swedish corporate ID number 556051-4142, is a limited liability company registered in Sweden. The company's registered office is in Stockholm. The Boliden share is listed on the Stockholm Stock Exchange's Large Cap list. The company's shares are also traded on the Toronto Stock Exchange in Canada, where they have a secondary listing.

Boliden AB is the Group's Parent Company and its principal operations involve the mining and production of metals and operations compatible therewith.

The Consolidated Statements have been compiled in accordance with EU-approved International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) extant on 1st January 2007. In addition, the Group applies the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary accounting regulations for corporate conglomerates specifying the supplements to IFRS required pursuant to the stipulations of the Swedish Annual Accounts Act.

As of 1st January 2007, Boliden applies IFRS 7, Financial Instruments: disclosures, together with the instructions and the amendments and addenda made in IAS 1, Presentation of Financial Statements, with regard to asset management. IFRIC 7, 8, 9 and 10 are also applicable, as a complement to the above, as of 1st January 2007. It is not felt that these recommendations and interpretations will have any effect on Boliden's consolidated accounts, other than in terms of the structure and scope of the supplementary information presented.

The Parent Company's functional currency is the Swedish krona and this is also the reporting currency for both the Group and the Parent Company. All amounts in the financial reports are stated in millions of Swedish kronor (SEK million) unless otherwise specified.

In the Annual Report, the items reported have been valued at their acquisition value except when valuing certain financial assets that can be sold, as well as financial assets and liabilities (including derivative instruments) valued at their fair value.

The Parent Company's accounting principles follow those of the Group, with the exception of the mandatory regulations stipulated in the Swedish Financial Reporting Board's recommendation, RFR 2, Accounting for legal entities. The Parent Company's accounting principles are specified under the heading "The Parent Company's accounting principles".

The most important accounting principles that have been applied are described below. These principles have been applied consistently for all years presented unless otherwise specified.

Estimates and assessments

In order to compile Financial Statements in accordance with the IFRS accounting principles, assessments and assumptions must be made that impact the reported asset and liability amounts, the income and expense amounts as well as other information provided in the Financial Statements. The estimates and assessments of the Board of Directors and the company's management are based on historical experience and forecast future trends. The actual outcome may differ from these assessments.

For a more detailed description of the areas in which estimates and evaluations are of critical importance, please see Notes 8 Impairment testing – Intangible and tangible fixed assets, 12 Taxes, 16 Pensions, and 17 Other provisions.

Consolidated statements

The Consolidated Statements cover the Parent Company and all companies over which the Parent Company through ownership, directly or indirectly, exercises a controlling influence. The term "controlling influence" refers to companies in which Boliden has the right to formulate financial and operative strategies. This is generally achieved by ensuring that its ownership share, or share of the votes, exceeds 50 per cent. The existence and effect of potential voting rights that can currently be utilised or converted are taken into account when assessing whether the Group is capable of exercising a controlling influence over another company. Subsidiaries are included in the Consolidated Statements as of the point in time at which a controlling influence was attained, while companies that have been sold are included in the Consolidated Statements up to and including the time of the sale, which is considered to be as of the point in time when the controlling influence ceased to be exercised.

The Consolidated Statements have been compiled in accordance with the acquisition accounting method, which means that the acquisition value of a company comprises the fair value of the payment made (including the fair value of any assets, liabilities and equity instruments issued) plus costs directly associated with the acquisition of the operations. The identifiable assets, liabilities and contingent liabilities acquired and which meet the criteria for reporting in accordance with IFRS 3 are reported at their fair value on the acquisition date. When required, the subsidiaries' accounts are adjusted to ensure that they follow the same principles applied by other Group companies. All internal transactions between Group companies and intra-Group affairs are eliminated when the Consolidated Statements are compiled.

Unrealised losses are also eliminated except for transactions where there is a clear need for a write-down.

Associated companies

Shareholdings in associated companies, in which the Group has a minimum of 20 per cent and a maximum of 50 per cent of the votes, or otherwise has a significant influence over operational and financial management, are reported in accordance with the equity method. Under the equity method, the consolidated book value of the shares in the associated companies corresponds to the Group's share of the associated companies' shareholders' equity and any residual values from consolidated surplus values. Shares in associated companies' results are reported in the Consolidated Income Statement as part of the operating profit and comprise the Group's share in the associated companies' net results. Shares in profits accumulated after the acquisition of associated companies but not yet realised through dividends constitute part of the Group's restricted equity.

Conversion of foreign subsidiaries and other overseas operations

The current method is applied to convert the Income Statements and Balance Sheets of independent overseas operations. Under the current method, all assets, provisions and liabilities are converted at the rate of exchange applying on the closing day, while all items in the Income Statement are converted at the average exchange rate. Any exchange rate differences that arise are booked directly to equity. Accumulated translation differences arising in connection with the conversion of subsidiaries' results are reported as of 2004.

Boliden hedges its net investments in foreign subsidiaries by adopting the opposite position in the relevant foreign currency. Any exchange rate differences on the hedging measures are booked directly to the Group's shareholders' equity after adjustment for the fiscal effects.

In conjunction with the sale of overseas operations whose functional currency is different from the Group's reporting currency, the accumulated translation differences attributable to the operations are realised in the Consolidated Income Statement, after deductions for any currency hedging activities.

Financial instruments

Financial assets or liabilities are booked in the Balance Sheet when the company officially becomes a party to the instrument's contractual terms and conditions. Financial assets are removed from the Balance Sheet when the rights in the agreement either mature or are realised, or when the company loses control of them. Financial liabilities are removed from the Balance Sheet when the agreement's obligations are fulfilled or otherwise rendered void.

With regard to financial derivatives, settlement date accounting is applied.

On each reporting occasion, the company performs an impairment test to determine whether objective indications exist of the need to write down a financial asset or group of financial assets.

Financial instruments are reported using the accumulated acquisi-

tion value or the fair value depending on the initial categorisation under IAS 39.

Calculating the fair value of financial instruments

When determining the fair value of short-term investments, derivative instruments and loan liabilities, the official market listings on the Balance Sheet date and generally accepted calculation methods are used. Items in foreign currencies are converted into Swedish kronor using the official exchange rate on the Balance Sheet date.

Accumulated acquisition value

The accumulated acquisition value is calculated using the effective interest method. This means that any premiums or discounts, as well as expenses or income directly attributable to them, are distributed over the duration of the contract using the estimated effective interest rate. The effective interest rate is the rate that results in the instrument's acquisition value when a present-value computation of future cash flows is performed.

Offsetting financial assets against financial liabilities

Financial assets and liabilities are used to offset each other and are reported in a net amount in the Balance Sheet whenever a legal right of offset exists, or when it is intended for the items to be settled using a net amount, or when the intention is to realise the asset and settle the liability simultaneously.

Receivables

Receivables are reported according to their expected recoverability, i.e. after deductions for bad debts assessed on an individual basis. The anticipated duration of accounts receivable and other current receivables is short, which is why the value is reported as the nominal amount with no discounting in accordance with the accumulated acquisition value method.

Receivables and liabilities in foreign currencies

Receivables and liabilities in foreign currencies are converted at the exchange rate applying on the Balance Sheet date. Exchange rate differences on operating receivables and operating liabilities are included in the operating profit, while exchange rate differences on financial receivables and liabilities are reported under financial items.

Interest-bearing current receivables

Holdings of securities or other investments that are not fixed assets and are not designated as liquid assets are reported as interest-bearing current receivables. Interest-bearing current receivables are categorised as "Commercial holdings" and are valued at their fair value with value changes as reported in the Income Statement.

Liquid assets

Short term investments with a duration of three months or less that can easily be converted into cash are classified as liquid assets, as are cash and bank balances. Liquid assets are exposed to no more than a negligible risk of fluctuation in value and are reported using the nominal amount.

Liabilities

Financial liabilities primarily comprise liabilities to credit institutions and accounts receivable. These liabilities are categorised as other liabilities and reported using their accumulated acquisition value. The anticipated duration of accounts payable is short, which is why the value is reported as the nominal amount with no discounting in accordance with the accumulated acquisition value method. Interest expenses are distributed over a fixed period and are reported on an ongoing basis in the Income Statement.

Derivatives

Currency and metal derivatives

All derivatives are reported at their market value in the Balance Sheet.

For financial derivatives relating to the hedging of forecast flows, hedge accounting is applied, which means that the effective share of unrealised changes in value (market values) is reported under shareholders' equity up to the point in time when the underlying flows are realised and thus reported in the Income Statement. The changes in value of outstanding derivatives that do not meet the criteria for hedge accounting are reported on an ongoing basis in the Income Statement.

Premiums paid for currency options are reported as assets in the Balance Sheet. The change in the real value of the option is reported under shareholders' equity up to the point in time when the underlying flows are realised and thus reported in the Income Statement. The option's change in value over time from the time at which the transaction is entered into (which will always tend towards zero over the duration of the option but may lead to momentary effects on the result) is reported on an ongoing basis in revenues.

Interest derivatives

The results of interest derivatives are reported as an interest expense while hedge accounting is applied to the change in the fair value in accordance with the method for cash flow hedging.

Revenue recognition

Sales of metal concentrates, metals and by-products are reported at the time of delivery to the customer in accordance with the terms and conditions of the sale, i.e. revenue is recognized whenever significant rights and obligations associated with the title transfer to the purchaser. These sales are reported net after VAT, discounts and exchange rate differences when sales are made in foreign currencies.

The mines' metal concentrates are invoiced to the smelters at the time of delivery. Preliminary invoices for metal content are issued after deductions for treatment and refining charges (TC/RC), impurity compensation and smelting deductions. The smelting deduction is intended to compensate for losses in the smelting process. The smelting deduction normally exceeds the actual losses and the smelters hence receive an overrun (free metals). The definitive invoice for the metal concentrate delivery is issued when all component parameters (concentrate quantity, metal content, impurity content, and the metal price for the agreed pricing period – normally, the average price on the LME in the month after delivery) have been established.

The smelters' metals are invoiced to the customers at the time of delivery. The smelters eliminate the price risk in conjunction with the sale and purchase of metals by hedging the imbalance between quantities purchased and sold on a daily basis. The smelters' income comprises TC/RC, free metals, compensation for impurities in the raw materials, and the worth of by-products.

Income from activities outside the sphere of the regular operations is reported as other operating income.

Exploration, research and development

Boliden's R&D primarily comprises exploration i.e. searching for new deposits of base metals. Boliden is involved, to a limited extent, in developing mining and smelting processes. Expenses associated with research and development are primarily booked as costs when they arise. When the financial potential for the exploitation of a mine deposit has been confirmed, the expenses are booked as costs up to that date. After that date, the expenses are capitalised as deferred mining costs, the governing principle of which is described under the heading "Tangible fixed assets".

Intangible fixed assets

Intangible fixed assets include patents, licenses and similar rights and are booked at their acquisition value as well as goodwill. Goodwill comprises the amount by which the acquisition value exceeds the fair value of the Group's share of the acquired subsidiary's identifiable net assets as well as any obligations at the time of the acquisition. Goodwill is reported in the Balance Sheet at the value in conjunction with the acquisition, converted, where relevant, at the closing day rate, after deduction for accumulated write-downs. Calculations of the profit or loss on the sale of a unit include any remaining reported goodwill value ascribed to the operations sold.

Goodwill has been assessed as having an indefinable useful life. Goodwill is allocated to the smallest possible unit or groups of units that generate cash where separate cash flows can be identified, and an impairment test is performed on the reported value at least once a year to determine whether there is any need of a write-down. Such impairment tests are however performed more frequently if there are indications that the value may have fallen during the year.

Other intangible fixed assets are amortised over their anticipated useful lives.

Tangible fixed assets

Land, plants and equipment, and capitalised costs associated therewith for development and pre-production measures are booked at the acquisition value. Interest expenses attributable to development financing and completion of significant tangible fixed assets are included in the acquisition value. Repair and maintenance expenses are booked as costs, while substantial improvements and replacements are capitalised. Deferred mining costs at mines comprise both the waste rock excavation required to access the ore body, plus work relating to infrastructural facilities, roads, tunnels, shafts and inclined drifts, as well as service, electricity and air distribution facilities. Deferred mining costs arising from capacity expansion of the mining operation, the development of new ore bodies and the preparation of mining areas for future production are capitalised and written off concurrently with production. Mining costs associated with waste rock removal from open pit sites are capitalised and booked as costs in the operations based on the average percentage of waste rock per mine. The average percentage of waste rock is calculated as the estimated number of tonnes of waste rock and ore that must be mined divided by the estimated number of tonnes of ore that the deposit is believed to contain. When the percentage of waste rock for the mines remains relatively constant over the useful life of the mines, the costs are normally reported when they arise.

Depreciation and write-down principles for fixed assets

Depreciation according to plan is based on the original acquisition value and the estimated economic lifespan. The company normally depreciates plants and equipment used in the mining operations linearly over whichever is the lower of their anticipated useful life and the useful life of the mine to which they relate. Smelters and production plants are depreciated linearly over their anticipated useful lives. The following depreciation periods are applied to tangible fixed assets:

Buildings	20–50 years
Land improvements	20 years
Deferred mining costs	Concurrently with ore depletion
Machinery and other technical facilities
Machinery	3–10 years
Processing plants	10–25 years
Equipment, tools and fixtures and fittings	3–10 years

Boliden applies component depreciation to certain processing plants, which means that larger processing facilities are broken down into component parts with different useful lives and thus different depreciation periods.

When events or changes in prevailing conditions indicate that the book value of fixed assets exceeds the recovery value, this value is written down to this lower recovery value.

Write-downs

On each reporting occasion, an assessment is performed to determine whether there is any indication that the value of the Group's assets has depreciated or been impaired. Should this be the case, a calculation is performed of the recovery value of the asset in question. Goodwill is allocated to cash-generating units or groups of cash-generating units and together with any intangible assets with an indefinable useful life, it is subjected to annual impairment tests even if there are no indications of a fall in its value. Impairment tests are however performed more frequently if indications exist of a decline in value. The recovery value comprises whichever is highest of the value in use of the asset in the operations and the value that would result if the asset were sold to an independent party, fair value minus selling expenses. The value in use comprises the present value of all incoming and outgoing payments attributable to the asset over the period that it is expected to be used in the operations, plus the present value of the net sales value at the end of the asset's useful life. If the estimated recovery value is lower than the reported value, the latter is written down to the former.

Write-downs are reported in the Income Statement. Any write-downs performed are reversed if changes in the assumptions leading to the original write-down mean that the write-down is no longer warranted. Write-downs that have been performed are not reversed in such a way that the reported value exceeds the amount that would, following deductions for amortisation according to plan, have been reported if no write-down had been performed. Reversals of write-downs performed are reported in the Income Statement. Goodwill write-downs are not reversed.

Leasing

A financial leasing agreement is an agreement whereby the financial risks and benefits associated with a title are, in all significant respects, transferred from the lessor to the lessee. Leasing agreements that are not classified as financial leasing agreements are classified as operational leasing agreements.

Assets held in accordance with financial leasing agreements are reported as fixed assets in the Consolidated Balance Sheet at the lower of the market value of the assets or the present value of the future lease payments. The Group's liability in relation to the lessor is reported in the Balance Sheet under the heading "Liabilities to credit institutions", broken down into current and long-term components.

Lease payments are broken down into interest and amortisation of the liability. The interest is distributed over the leasing period so that an amount corresponding to the fixed interest amount payable on the liability reported in each period is charged to each reporting period. The leased asset is depreciated according to the same principles as those that apply to other assets of the same type.

The leasing charges for operational leasing agreements are booked as costs on a linear basis over the leasing period.

Inventories

Inventories are valued at whichever is the lower of the acquisition value in accordance with the so-called first-in-first-out principle and the fair value, taking into account the risk of obsolescence. The acquisition value of inventories of metals from the company's mines and of semi-finished and finished products manufactured in-house comprises the direct manufacturing costs plus a reasonable surcharge for indirect manufacturing costs. Supplies inventories are valued at whichever is the lower of the average acquisition value and the replacement value.

Taxes

The tax expense (income) for the period comprises current tax and deferred tax. Taxes are reported in the Income Statement except when the underlying transaction is reported directly against shareholders' equity, in which case the associated fiscal effect is also reported against shareholders' equity.

Current tax is the tax calculated on the tax-liable result for each period. The year's tax-liable result differs from the year's reported result before tax in that it has been adjusted for non-taxable and non-deductible items. The Group's current tax liability is calculated in accordance with the taxation rates stipulated or announced on the Balance Sheet date.

Deferred tax is reported using the Balance Sheet method. This method stipulates that deferred tax liabilities are reported in the Balance Sheet for all tax-liable temporary differences between reported and fiscal values of assets and liabilities. Deferred tax receivables are reported in the Balance Sheet in respect of deficit deductions and all deductible temporary differences to the extent that it is likely that the amounts can be used to offset future tax-liable surpluses. The reported value of deferred tax receivables is checked at the end of each accounting period and reduced to the extent that it is no longer likely that sufficient tax surpluses will be available for its use. Deferred tax is calculated in accordance with the taxation rates that are expected to apply to the period in which the asset is recovered or the liability is settled.

Both deferred and current tax receivables and tax liabilities are offset when they relate to income tax levied by the same tax authority and when the Group intends to settle the tax in the form of a net amount.

Provisions

Provisions are reported when the Group has, or may be considered to have, an obligation as a result of events that have occurred and it is likely that payments will be required in order to fulfil this obligation. In addition, one of the prerequisites is that it should be possible to make a reliable estimate of the amount to be paid.

Provisions are made for the estimated reclamation costs that are expected to arise when the operations are decommissioned and are reported as costs over the total estimated operating period. The cost is reported as part of the cost of goods sold. Provisions are broken down into short and long-term components.

Remuneration to employees

Pension undertakings

The Group's companies have a variety of pension systems in accordance with local conditions and practice in the countries in which they operate. They are generally financed through payments made to insurance companies or through own provisions determined through periodic actuarial calculations. The Group's provisions for pension undertakings are calculated in accordance with IAS 19, Employee benefits.

For pension systems where the employer is committed to premiumbased solutions, the undertaking in relation to the employee ceases when the agreed premiums have been paid. Premiums paid are booked as costs on an ongoing basis.

For other pension systems where a defined benefit pension has been contractually agreed, the undertaking does not cease until the agreed pensions have been paid out. Boliden commissions independent actuaries to calculate pension undertakings relating to defined benefit pension plan arrangements in each country. These calculations take account of future salary increases, the discount rate and the return on assets held for investment purposes, as well as other significant actuarial assumptions.

The pension cost for the year comprises the present value of pensions earned during the year, plus interest on the undertaking at the start of the year, less deductions for the return on each pension plan's assets held for investment purposes. Amortisation of actuarial profits/ losses and for changes to plans is additional. Accumulated profits and/ or losses totalling less than 10 per cent of whichever is the higher of the pension undertaking and the fair value of the assets held for investment purposes are not amortised. When the accumulated profit or loss exceeds this 10 per cent limit, the excess amount is amortised over the average remaining period of employment of each pension plan's employees.

Remuneration may be payable in the event of notice being given if an employee is given notice prior to the end of the normal retirement date or when an employee resigns voluntarily. The Group reports a liability and a cost in connection with a redundancy when Boliden can be proven either to have been compelled to give the employee in question notice prior to the normal point in time for employment cessation, or to be obligated to provide remuneration on a voluntary basis with a view to encouraging early retirement.

Share capital

Ordinary shares are classified as share capital. Transaction costs connected with a new share issue are reported as a net amount after tax for deduction from the issue proceeds received.

Buy-back of own shares

Boliden's holdings of its own shares are reported as a reduction in shareholders' equity. Transaction costs are reported directly against shareholders' equity.

Dividend

A dividend payment proposed by the Board of Directors does not reduce the shareholders' equity until it has been approved by the Annual General Meeting. Anticipated dividends are reported in those cases when the Parent Company has the sole right to determine the size of the dividend and has ensured that the dividend does not exceed the subsidiary company's dividend payment capacity.

Information per segment

The Group is organised into three business areas: Market, Smelters and Mines.

Business Area Mines comprises the operations of the mines at Aitik, in the Boliden Area, at Garpenberg and at Tara. Production at Aitik primarily comprises copper concentrate with some gold and silver content. Production at the other mines comprises zinc, copper and lead concentrate. The copper and lead concentrate also contains some gold and silver.

Business Area Smelters comprises the Rönnskär and Harjavalta copper smelters and the Bergsöe lead smelter. Production primarily comprises copper, gold, silver, lead and lead alloys. The Business Area also comprises the Kokkola and Odda zinc smelters. Production there primarily comprises zinc, but Odda also produces aluminium fluoride.

Business Area Market is responsible for all of the commercial aspects of Boliden's operations and for internal and external flows, which include both cash flows and flows of smelting materials and finished metals. Business Area Market's operations are reported under Business Area Smelters segment because the Group's external flows can, in every significant respect, be attributed to this Business Area.

Transactions between the Business Areas, primarily involving metal concentrates, are settled on market terms. The segment, Other, comprises, in addition to Group staff functions and Group-wide functions not allocated to Mines or Smelters, the elimination of intra-Group sales. The market valuation of financial derivatives used to manage currency risks and metal price risks are reported under Other until such time as the underlying flows are reflected in the Income Statement.

The complementary information provided for geographical markets in Note 24 shows the location of the external clients, for revenue purposes. Assets and investments are reported in each asset's location.

The Parent Company's accounting principles

The Parent Company's annual accounts are compiled in accordance with the Swedish Annual Accounts Act, the Swedish Financial Reporting Board's recommendation, RFR 2, Accounting for legal entities, and the statements issued by the Swedish Financial Reporting Board. RFR 2 means that the Parent Company shall, in the annual accounts for the legal entity, apply all EU-approved International Financial Reporting Standards (IFRS) and statements to the extent that this is possible within the framework of the Swedish Annual Accounts Act and while taking into account the connection between reporting and taxation. The recommendation specifies the exceptions and additions to be made in relation to IFRS. The differences between the Group's and the Parent Company's accounting principles are described below.

Reporting Group contributions

Boliden reports Group contributions and shareholders' contributions in accordance with the statements issued by the Swedish Financial Reporting Board, UFR 1. Shareholders' contributions are booked directly against non-restricted equity by the recipient and as an increase in the item "Participations in Group companies" by the contributor.

Group contributions provided and received for the purpose of minimising the Group's tax payments are reported as a decrease or increase in non-restricted equity, respectively. Their fiscal effect is also reported directly against shareholders' equity and therefore has no impact on the result.

Notes

All amounts are in SEK million unless otherwise stated. All notes refer to the Group unless otherwise stated.

Note 1 Employees and personnel costs

The Parent Company has no employees. The Group management is employed by Boliden Mineral AB.

Average number of employees	2007	of whom women	of whom men	2006	of whom women	of whom men
Subsidiaries
Sweden	2,340	348	1,992	2,291	324	1,967
Finland	1,091	154	937	1,138	164	974
Norway	389	61	328	385	59	326
Ireland	678	32	646	678	30	648
Other	26	9	17	27	10	17
Total in subsidiaries/Group	4,524	604	3,920	4,519	587	3,932

Percentage of women at corporate management level	2007	2006
Board of Directors	25%	25%
Other senior executives	33%	20%

		2007	2006
Salaries, other remunerations and social security expenses	Salaries and remunerations	Social security expenses	Salaries and remunerations	Social security expenses
Subsidiaries (of which pension expenses)	2,021	732 (350)	1,909	695 (336)
The Group as a whole (of which pension expenses)	2,021	732 (350)	1,909	695 (336)

		2007	2006
Salaries and other remunerations broken down by country and between Board Members etc. and other employees	Board of Directors and President	Other employees	Board of Directors and President	Other employees
Subsidiaries in Sweden	9	992	12	898
Subsidiaries abroad
Finland	4	436	4	435
Norway	2	182	6	177
Ireland	4	384	3	359
Other	–	8	–	15
Group total	19	2,002	25	1,884

Profit-sharing system

A new profit-sharing system was introduced for all employees of the Boliden Group in 2007. A profit share is payable when the return on capital employed reaches 10 per cent, and the maximum profit share (SEK 25,000/full-time employee) is payable when the return on capital employed reaches 20 per cent. The annual maximum allocation must never, however, exceed one third of the dividend paid to shareholders. The funds cannot be disbursed to employees for 3 years. Provisions, comprising SEK 126 million, including statutory social security expenses, have been made in the 2007 annual accounts for the allocation to be disbursed to the profit-sharing foundations after the Annual General Meeting held on 8th May 2008. Provisions, comprising SEK 114 million, including statutory social security expenses, have been made in the 2006 accounts in the form of a bonus payable to all employees.

Remunerations to the Board of Directors and senior executives Principles

Fees as approved by the Annual General Meeting are payable to the Chairman of the Board and to members of the Board. Employee representatives receive no directors' fees.

Remuneration paid to the President and senior executives comprises the basic salary, variable remuneration and other benefits, as well as pensions. The term "other senior executives" refers to the nine people who, together with the President, comprise the Group management.

The breakdown between basic salary and variable remuneration shall be proportional to the executive's responsibilities and authority. The variable remuneration is maximised to 50 per cent of the basic salary for the President, while for other senior executives, it is maximised to 30–40 per cent of the basic salary.

Pension benefits and other benefits payable to the President and other members of the Group management are included in the total

Remunerations and other benefits during the year

Specification of employee benefits paid to the Board Members and senior executives

SEK	Directors' fees/ Basic salary	Variable remuneration	Other benefits	Pension benefits
The Board
Anders Ullberg, Chairman of the Board	900,000
Carl Bennet	325,000
Marie Berglund	325,000
Staffan Bohman	325,000
Ulla Litzén	425,000
Leif Rönnbäck	325,000
Matti Sundberg	325,000
Anders Sundström	375,000
Group Management
Jan Johansson, President, 1st Jan.–31st Oct.	4,400,000	1,100,000	152,441	2,945,110
Svante Nilsson, Acting President, 14th Sept.–31st Dec.	826,000
Other members of the Group management (9 people)	13,812,000	2,665,000	848,332	4,547,892

Directors' fees also include remuneration for work on the Audit Committee work. The Audit Committee comprises Ulla Litzén (Chair), Anders Sundström and Anders Ullberg.

The term "Variable remuneration" refers to variable remuneration carried as expenses in 2007 and paid out in 2008. Other benefits refer primarily to company cars.

Variable remuneration

The variable remuneration paid to the President in 2007 was based on the Group's results in terms of non-restricted cash flow and return on shareholders' equity. The amount corresponds to 25 per cent of the basic salary.

For other members of the Group management, 50 per cent of the variable remuneration for 2007 was based on the Group targets and 50 per cent on their personal sphere of responsibility and individual goals. The remunerations for other members of the Group management in 2007 corresponded to 15–22,5 per cent of the basic salary.

Pensions

The new President has a defined contribution pension plan to which the company allocates 35 per cent of the fixed monthly salary on a rolling basis. The President decides for himself the level of the survivor annuity, indemnity for medical treatment or disability, etc. component of his insurance solution. The President's retirement age is 65.

The retirement age varies between 60 and 65 for other members of the Group management. Where relevant, the pension will be paid between the ages of 60 and 65 at a rate of 70 per cent of the basic salary up to the age of 65, when the normal retirement pension will be paid.

Severance pay

The Acting President and the company shall give six and twelve months' notice of the termination of the Acting President's position respectively. If notice is given by the company, severance pay corresponding to twelve months' salary is payable, over and above the notice period pay. Other income shall be offset against the severance pay. No severance pay is payable in the event of notice being given by the Acting President.

Other members of the Group management have notice periods of three months if they give notice themselves. If notice of termination is given by the company, the period of notice is six months. In addition, severance pay corresponding to 18 months' salary is payable. Other income shall be offset against the severance pay. No severance pay is payable in the event of notice being given by members of the Group management.

Preparation and decision-making process

See Corporate Governance Report, 2007, Compensation Committee, pages 44–46.

Note 2 Auditors' fees and reimbursement of expenses

	2007	2006
Deloitte AB
Audit assignments	6	6
Other assignments	1	1
	7	7

The term "Audit assignments" refers to the auditing of the Annual Report and book-keeping, and the administration by the Board of Directors and the President, as well as to other duties incumbent on the company's auditors, and to the provision of advice or other assistance occasioned by observations made in conjunction with audits or the carrying out of such duties. Everything else is classified as "Other assignments".

Note 3 Key expense items

	2007	2006
Raw materials costs inc. inventory changes	18,196	17,591
Personnel costs	2,877	2,722
Energy costs	1,628	1,520
Other external costs	3,813	3,717
Depreciation and amortisation according to plan	1,377	1,309
	27,891	26,859

The specification of key expense items relates to the following Income Statement items: "Costs of goods sold", "Selling expenses", "Administrative expenses" and "Research and development costs".

Depreciation is included in the following amounts: SEK 1,365 million (SEK 1,298 m) in the cost of goods sold, SEK 1 million (SEK 1 m) in insurance costs, and SEK 11 million (SEK 10 m) in administration costs.

Note 4 Other operating income

	2007	2006
Compensation for sludge deliveries	20	24
Compensation for disputes	–	36
Rental income from industrial premises in Finland	28	29
Other	70	80
	118	169

Note 6 Interest expenses and other similar items

	2007	2006
Interest on loans at accrued acquisition value	173	142
Interest on currency futures	79	66
Other interest expenses	11	19
Exchange rate differences	–	15
Cash flow hedging ineffectiveness	34	–
Other	14	52
	311	294

Note 5 Interest income and other similar items

	2007	2006
Interest income	75	71
Exchange rate differences	–	6
Other	4	8
	79	85

Interest expenses were negatively affected by higher debts and higher interest rates. Boliden's average interest rate on the debt portfolio on 31st December 2007 was 5.17 per cent (4.09%).

Note 7 Intangible fixed assets

			Total
	Patents, licenses		intangible
	and similar rights	Goodwill	fixed assets
Acquisition values
Beginning of year	43	3,049	3,092
Investments	1	–	1
Reclassifications	–	–	–
Year's translation differences	3	124	127
Year-end	47	3,173	3,220
Amortisation according to plan
Beginning of year	15	–	–15
Year's amortisation	–6	–	–6
Year's translation differences	–2	–	–2
Year-end	–23	–	–23
Closing balance	24	3,173	3,197
Amortisation according to plan, included in the operating profit
2007	–6	–	–6
2006	–6	–	–6

The company's goodwill item primarily relates to the synergy effects that arose in conjunction with the acquisition of the operations from Outokumpu at the end of December 2003. The consolidated goodwill has been allocated in its entirety to the Group's Smelters segment.

Impairment tests have been carried out on the value of the goodwill in the manner described in Note 8 under Impairment testing – Intangible and tangible fixed assets.

Note 8 Tangible fixed assets

	Buildings and land	Deferred mining costs	Machinery and other technical facilities	Equipment, tools, fixtures and fittings	New construction in progress and, advances fixed assets	Total tangible fixed assets
Acquisition values
Beginning of year	4,910	3,041	17,788	1,200	231	27,170
Investments	133	424	1,169	10	775	2,511
Sales and retirements	–12	–37	–333	–16	–	–398
Reclassifications	29	–	166	–1	–194	0
Year's translation differences	152	32	438	94	16	732
Year-end	5,212	3,460	19,228	1,287	828	30,015
Amortisation according to plan
Beginning of year	–2,363	–1,114	–10,616	–1,015	–	–15,108
Year's amortisation	–164	–161	–1,006	–40	–	–1,371
Sales and retirements	7	37	326	15		385
Reclassifications	–	–	–	–	–	0
Year's translation differences	–74	–6	–294	–81	–	–455
Year-end	–2,594	–1,244	–11,590	–1,121	–	–16,549
Closing balance	2,618	2,216	7,638	166	828	13,466
Amortisation according to plan, included in the operating profit
2007	–164	–161	–1,006	–40	–	–1,371
2006	–164	–162	–938	–39	–	–1,303

The combined rateable value of the Group's Swedish real estate is SEK 1,201 million (SEK 1,427 m), of which buildings account for SEK 1,058 million (SEK 1,302 m).

and SEK 4 million (SEK 26 m) in accumulated depreciation for machinery held under financial leasing agreements.

The figures include SEK 21 million (SEK 92 m) in acquisition value

Future payments in respect of financial leasing have been taken into account under the Group's current and long-term liabilities.

Interest expenses carried forward included in the residual value according to plan

	2007		2006
	Residual value SEK m	Interest rate per cent	Residual value SEK m	Interest rate per cent
Rönnskär's expansion, completed 2000	58	6,8	61	6,8
Odda's expansion, completed 2004	14	4,0	14	4,0
Aitik's expansion, ongoing project	5	4,5	–	–

Impairment tests – Intangible and tangible fixed assets

The impairment tests are based on the Group's annual budget and strategic planning work, which are based on the assessed useful life of each of the mines. The smelters and their associated goodwill have been assigned an indefinite useful life and the cash flow forecasts therefore include an indeterminate period of time.

According to IFRS 3, goodwill is to be regarded as an asset with an indefinable useful life and should therefore not be amortised. Instead, impairment tests must be performed as soon as there are indications of the need for a write-down, and additionally at least once a year.

The present value of estimated future cash flows is based on the budget and price forecasts adopted by the Board of Directors. The price forecasts are shown in 2008 monetary values and neither income nor expenses are adjusted for inflation during the forecast period. The long-term price forecasts consist of an anticipated average price over a single business cycle, generally 10 years. The long-term price forecasts are currently as listed in the table below.

	Metal prices	Treatment/refining charges	Exchange rates
Copper	USD 4,000/tonne	USD 80/tonne/USc 8.0/lb	USD/SEK 7.50
Zinc	USD 2,000/tonne	USD 315 base USD 3,500	USD/NOK 6.43
Lead	USD 1,200/tonne	USD 200 base USD 1,000	EUR/USD 1.21
Gold	USD 550/oz
Silver	USD 8.0/oz

The current weighted cost of capital, 12 per cent, is used as the discount rate. The discounted cash flows are compared with the book value.

The impairment tests performed show that there was no need for a write-down at the end of the 2007 financial year and that the impairment test would tolerate a 10 per cent deterioration in the input price parameters in Swedish kronor without any need for a write-down arising. The closing day prices in Swedish kronor for copper and zinc exceed the long-term price forecasts by 43 per cent and 1 per cent, respectively.

Note 9 Operational leasing charges

	2007	2006
The Group
Assets held via operational leasing agreements
Leasing charges paid during the financial year	31	44
Contracted future leasing charges
Maturity within one year	22	29
Maturity later than one year, but within five years	23	31
Maturity later than five years	3	4

Note 10 Participations in Group companies

Specification of the Parent Company's and the Group's holdings of participations in Group companies

Subsidiary/Co. reg. no./Registered office	Shares/ participations	Percentage share	Book value
Boliden Limited, 3977366, Toronto, Canada	85,811,638	100.0	–
Boliden Power Ltd, Canada			–
Ontario Inc, Canada			–
Boliden BV, 18048775, Drunen, Netherlands			–
Boliden Apirsa S.L. under liquidation, ESB–41518028, Aznalcóllar (Sevilla), Spain			–
Boliden Mineral AB, 556231–6850, Skellefteå	1,650,000	100.0	3,911
Mineral Holding Finland OY, 1749578–3, Finland			–
Mineral Holding Sweden AB, 556610–2918, Skellefteå			–
Boliden Harjavalta OY, 1591739–9, Harjavalta, Finland			–
Nickel og Olivin A/S, 946255459, Ballangen, Norway			–
Boliden Kokkola OY, 455.720, Kokkola, Finland			–
Boliden Zinc Commercial BV, 24191971, Rotterdam, Netherlands			–
Boliden Commercial AB, 556158–2205, Skellefteå			–
Boliden Commercial UK Ltd, 5723781, Warwickshire, UK			–
Tara Mines Holding Ltd, 60135, Navan, Ireland			–
Boliden Tara Mines Ltd, 33148, Navan, Ireland			–
APC Properties Ltd, 361022, Navan, Ireland			–
Irish Mine Development Ltd, 174811, Navan, Ireland			–
Tara Prospecting Ltd, 34434, Navan, Ireland			–
Tara Exploration and Development Company Ltd, E1292, Navan, Ireland			–
Dowth Investment Holdings Ltd, 338698, Toronto, Canada			–
Motet Investments Ltd, E3093, Navan, Ireland			–
Mineral Holding Norway A/S, 986009183, Norway			–
Boliden Odda AS, 911177870, Odda, Norway			–
Hardanger Byggeselskap A/S, 930238821, Odda, Norway			–
Boliden Bergsöe AB, 556041–8823, Landskrona			–
Boliden Bergsoe A/S, 244629, Glostrup, Denmark			–
Boliden Bergsöe OY, 411.259, Vantaa, Finland			–
Boliden International AB, 556040–1399, Skellefteå			–
Boliden France Sarl, B 612 050 13800082, Boutervilliers, France			–
Other subsidiaries, dormant or of lesser significance			–

3,911

The Parent Company, Boliden AB, has accounted for a dividend totalling SEK 2,350 million (SEK 6,531 m) from Boliden Mineral AB during the year, SEK 2,350 million (SEK 4,534 m) of which refers to anticipated dividends.

Note 11 Participations in associated companies

	2007	2006
Book value at beginning of year	45	49
Purchase price received for sale	–	–5
Profit from sale	–	3
Share in associated companies' profits for the year	6	14
Dividend	–12	–13
Translation differences	4	–3
Book value at year-end	43	45

	Co. reg. no.	Registered office	Number of participations	Percentage participations	Value of equity share in Group
Indirectly owned
Tyssefaldene A/S	916958900	Tyssedal, Norway	20,937	40%	43
Aitik EcoBallast AB	556726–2299	Gällivare	500	50%	0
KB Aitik EcoBallast	969731–9748	Gällivare		50%	0
					43

Note 12 Taxes

Current tax expenses (–)/income (+)	2007	2006
Tax expenses for the period	–923	–674
Adjustment of tax attributable to previous years	–24	–9
	–947	–683
Deferred tax expenses (–)/tax income (+)
Deferred tax expenses in respect of temporary differences	–370	–477
Deferred tax income attributable to value of tax losses carried forward capitalised during the year	–	106
Deferred tax expense resulting from the utilisation of previously capitalised tax losses carried forward	–92	–991
	–462	–1,362
Total reported tax expenses (–)/tax income (+)	–1,409	–2,045
Reconciliation of effective tax
Reported profit before tax	5,196	8,313
Tax according to current taxation rate	–1,373	–2,230
Fiscal effect of deductible participation loss	–	57
Correction of previous capitalised tax losses carried forward in respect of previous years	–	19
Fiscal effect of non-deductible expenses	–17	–11
Fiscal effect of non-taxable income	5	23
Adjustment of tax attributable to previous years	–24	–9
Fiscal effect of capitalised tax losses carried forward, net	–	106
Total reported tax expenses (–)/tax income (+)	–1,409	–2,045

Tax expenses account for 27.1 per cent of the Group's result before tax. The anticipated tax expenses for 2007, 26.4 per cent, are calculated on the basis of the current Group structure and current taxation rates in each country.

Deferred tax receivable/tax liability

The receivable reported in the Balance Sheet and the provision for deferred tax come from the following assets and liabilities.

		2007			2006
	Deferred	Deferred		Deferred	Deferred
The Group	tax receivable	tax liability	Net	tax receivable	tax liability	Net
Intangible assets	–	–	–	–	–1	–1
Buildings and land	38	–133	–95	39	–124	–85
Machinery and fixtures and fittings	12	–1,432	–1,420	19	–922	–903
Deferred mining costs	–	–146	–146	–	–125	–125
Other tangible fixed assets	–	–11	–11	–	–11	–11
Inventories	1	–265	–264	2	–313	–311
Long-term liabilities	159	–	159	159	–	159
Current liabilities	315	–187	128	280	–372	–92
Tax losses carried forward	–	–	–	92	–	92
Total	525	–2,174	–1,649	591	–1,868	–1,277
Offset within companies	–525	525	–	–591	591	–
Total deferred tax receivable/tax liability	–	–1,649	–1,649	–	–1,277	–1,277

Change in deferred tax in respect of temporary differences and tax losses carried forward

The Group, 2007	Amount at beginning of year	Reported in the Income Statement	Reported in shareholders' equity	Translation difference	Amount at end of year
Intangible assets	–1	1	–	–	–
Buildings and land	–85	–12	–	2	–95
Machinery and fixtures and fittings	–903	–495	–	–22	–1,420
Deferred mining costs	–125	–15	–	–6	–146
Other tangible fixed assets	–11	1	–	–1	–11
Inventories	–311	47	–	–	–264
Long-term liabilities	159	–77	72	5	159
Current liabilities	–92	180	40	–	128
Tax losses carried forward	92	–92	–	–	–
Total	–1,277	–462	112	–22	–1,649

The Group, 2006	Amount at beginning of year	Reported in the Income Statement	Reported in shareholders' equity	Translation difference	Amount at end of year
Intangible assets	–2	1	–	–	–1
Buildings and land	–153	70	–	–2	–85
Machinery and fixtures and fittings	–913	–9	–	19	–903
Deferred mining costs	–121	–9	–	5	–125
Other tangible fixed assets	–	–11	–	–	–11
Inventories	–125	–187	–	1	–311
Current receivables	–1	1	–	–	–
Long-term liabilities	180	22	–39	–4	159
Current liabilities	321	–364	–49	–	–92
Tax losses carried forward	977	–876	–	–9	92
Total	163	–1,362	–88	10	–1,277

Tax losses carried forward

Tax lawsuits

Unutilised tax losses carried forward for which a deferred tax receivable has not been reported totalled SEK 65 million in Canada on 31st December 2007.

See Note 22, page 89 for further details.

Note 13 Inventories

	2007	2006
Raw materials and consumables	3,365	1,839
Goods under manufacture	2,362	2,480
Finished goods and tradable goods	1,177	1,032
	6,904	5,351

Note 14 Other current receivables

	2007	2006
Other prepaid expenses and accrued income	59	92
VAT recoverable	662	578
Other current receivables	49	19
	770	689

Note 15 Shareholders' equity

		2007		2006
Share capital	Number of shares	Nominal value, SEK	Number of shares	Nominal value, SEK
Opening balance New rights issue, May 2006	289,457,169 –	578,914,338 –	289,387,169 70,000	578,774,338 140,000
Closing balance	289,457,169	578,914,338	289,457,169	578,914,338

The Articles of Association for Boliden AB state that the share capital shall comprise a minimum of SEK 150,000,000 and a maximum of SEK 600,000,000. The nominal value is SEK 2 per share.

Buy-back of own shares	Number of shares	Nominal value, SEK	Percentage of number of shares	Reported value, SEK m
Opening number of own shares held	–	–	–	–
Buy-back of own shares during the year	15,946,000	31,892,000	5.51	2,210
Closing number of own shares held	15,946,000	31,892,000	5.51	2,210

The Board of Directors was authorised by the Annual General Meeting held in May 2007 to approve the buy-back of the company's own shares, up to a maximum of one tenth of all shares in the company, within the limits of the non-restricted equity in Boliden AB. The authorisation is valid until the Annual General Meeting to be held on 8th May 2008.

Shares bought back entail acquisition costs for the company's own shares held by the Parent Company and which are reported under the shareholders' equity item, Profit brought forward.

Shareholders' equity, SEK m	2007	2006
Share capital	579	579
Other reserves	7,271	7,385
Profit carried forward, including profit for the year	5,082	8,125
Total shareholders' equity attributable to
the Parent Company's shareholders	12,932	16,089
Shareholders' equity per share, SEK	47,28	55,58

Earnings per share 2007 2006 Profit for the year attributable to the Parent Company's shareholders, SEK m 3,787 6,268 Opening number of shares 289,457,169 289,387,169 New rights issue, May 2006, for redemption of convertible debenture – 70,000 Buy-back of the company's own shares –15,946,000 – Closing number of shares 273,511,169 289,457,169 Average number of shares 283,276,511 289,429,169 Earnings per share, SEK 13.37 21.66

Earnings per share are calculated by dividing the profit for the period by the average number of shares. The average number of shares is the weighted number of outstanding shares during the year after the buyback of the company's own shares

No instruments exist that could give rise to a dilution effect, and the calculation is, therefore, the same for earnings per share before and after dilution.

On 8th May 2008, Boliden's Board of Directors will propose to the Annual General Meeting that a dividend of SEK 4 (SEK 4) per share be paid, equivalent to a total of SEK 1,094,044,676.

According to Boliden's dividend policy, approximately one third of the profit after tax is to be distributed to the shareholders over a single business cycle. The Board must take the company's developmental and investment requirements into account in its annual dividend proposal.

Note 16 Provisions for pensions and similar undertakings

Boliden has defined benefit pension plans in Sweden, Norway and Ireland that may or may not be placed in funds. Pension undertakings in Sweden are covered by the Swedish PRI/FPG system and by insurance companies. The majority of the pension undertakings for salaried employees in Sweden are administered via Alecta. Alecta is unable to supply sufficient information for the ITP plan (supplementary pensions for salaried employees) to be reported as a defined benefit plan, and it is subsequently reported in accordance with URA 42 as a defined contribution plan. A surplus in Alecta can be allocated to the policyholders and/or those insured. At the end of the year, Alecta's collective consolidation

level was 152 per cent (143%). The collective consolidation level comprises the market value of Alecta's assets as a percentage of the insurance undertakings calculated in accordance with Alecta's actuarial calculation assumptions, which do not correspond with those of IAS 19. Pension arrangements outside Sweden are adapted to local conditions and are a function of the number of years worked and the final salary. They are generally coordinated with national pension schemes. Defined contribution pension plans have been established in Sweden and Finland.

		Sweden	Norway		Ireland
Significant actuarial assumptions (weighted averages)	2007	2006	2007	2006	2007	2006
Discount rate, per cent	4.75	4.5	5.0	4.4	5.5	4.7
Assumed return on assets held for investment purposes, per cent	–	–	5.5	5.4	7.3	7.1
Future pay increases, per cent	3.0	3.0	4.5	3.1	2.5	2.5
Future pension increases, per cent	2.0	2.0	3.3	0.6	1.5	1.5
Assumption concerning remaining working years for employees	14.0	13.4	13.0	12.0	16.0	17.0
Provisions					2007	2006
PRI/FPG undertakings					50	37
Undertakings for underground workers in Sweden					228	218
Undertakings in Norway					53	66
Undertakings in Ireland					168	165
Other undertakings					7	7
					506	493
Reconciliation of value according to the Balance Sheet					2007	2006
Book value at beginning of year					493	503
Reported in the Income Statement					64	68
Payments					–63	–71
Translation difference					12	–7
Book value at year-end					506	493
Specification of provisions for pensions					2007	2006
Present value of undertakings placed in funds					1,881	1,744
Present value of undertakings not placed in funds					415	353
Market valuation of assets held for investment purposes					–1,677	–1,571
Unrealised actuarial profits					–113	–33
					506	493
Specification of costs					2007	2006
Benefits earned over the period					70	59
Interest on undertaking					97	92
Anticipated return on assets held for investment purposes					–108	–84
Actuarial profits/losses					1	1
Total cost of defined benefit plans					60	68
Cost of defined contribution plans					290	268
					350	336
Actual return on assets held for investment purposes					108	159
The assets held for investment purposes primarily comprise shares and interest-bearing securities					2007	2006
Shares and participations					1,222	1,169
Interest-bearing securities, etc.					455	402
					1,677	1,571

Note 17 Other provisions

	2007	2006
Provision for cost of restructuring measures	36	13
Reclamation costs	604	591
Provision for fines relating to the copper cartel	297	297
Undertaking for operations sold	39	50
Other	55	67
	1,031	1,018
Of which:
Long-term	926	965
Short-term	105	53
	1,031	1,018

For the provision for fines relating to the copper cartel, please refer to Note 22, page 89.

The Group, 2007	Reclamation costs	Copper cartel	Other	Total
Book value at beginning of year	591	297	130	1,018
Additions to existing provisions	30	–	24	54
Reversal of existing provisions	–	–	–24	–24
Payments	–30	–	–	–30
Translation difference	13	–	–	13
Book value at year-end	604	297	130	1,031
Anticipated date of outflow of resources:
2008	50	–	55	105
2009	55	297	18	370
2010 and 2011	100	–	–	100
2012 and later	399	–	57	456
	604	297	130	1,031
The Group, 2006	Reclamation costs	Copper cartel	Other	Total
Book value at beginning of year	527	297	133	957
Additions to existing provisions	112	–	7	119
Reversal of existing provisions	–	–	–1	–1
Reclassifications	4	–	–4	–
Payments	–36	–	–4	–40
Translation difference	–16	–	–1	–17
Book value at year-end	591	297	130	1,018
Anticipated date of outflow of resources:
2007	49	–	4	53
2008	40	297	4	341
2009 and 2010	80	–	8	88
2011 and later	422	–	114	536
	591	297	130	1,018

Provisions for reclamation costs are made on the basis of an assessment of future costs based on current technology and other conditions. Provisions are made for the estimated reclamation costs and are booked as costs over the total estimated operating period. Gradual reclamation is preferable, although most of the reclamation work is done after a decision concerning decommissioning which, given the current state of information with regard to mineral assets, for example, is expected to occur in appr. 15 years. In historical terms, Boliden has succeeded in extending the useful life of its mining assets compared with the original plans. Reclamation provisions are reviewed on an ongoing basis.

Note 18 Financial risk management

The Group is exposed to a number of financial risks. Changes in metal prices, treatment charges, exchange rates and interest rates affect the Group's profits and cash flows. The pricing terms for Boliden's products are largely determined on free financial markets, such as the London Metal Exchange (LME), and the currency and money markets.

Boliden is also exposed to refinancing and liquidity risks and energy price risk, as well as credit and counterparty risks.

Boliden has a centralised treasury function primarily tasked with managing financial risks and providing support to the management and operative units. The treasury function is also responsible for identifying and efficiently limiting the Group's financial risks in line with the finance policy adopted by the Board of Directors. This centralisation leads to healthy internal risk control, as well as financial and administrative economies of scale.

Currency rate and metal price risks

Through its operations, Boliden is exposed to both currency rate risks and metal price risks, in that changes in exchange rates and metal prices affect the Group's profits and cash flow. The Group's currency rate and metal price exposure covers transaction exposure, structural exposure and translation exposure.

Transaction exposure – contracted

This exposure arises when Boliden undertakes to participate in a transaction at a fixed value and which is not compensated for by a simultaneous opposite transaction of a corresponding size and nature. The Group buys metals in the form of raw materials which it processes into refined metals, but the raw materials prices and exchange rates (the acquisition value) may differ from the final sales value. Such differences arise as a result of variations in size, purchasing date, processing and/or selling.

Furthermore, some customers demand fixed prices in different currencies that are sometimes set well in advance of delivery.

Boliden's policy stipulates that these risks must always be hedged in full. The Group uses futures contracts to ensure that the sale price and currency correspond to those applicable in conjunction with the purchase of the input raw material.

The Group's smelters have process stocks which are maintained at a constant size level. The process stocks are re-valued on a monthly basis at whichever is the lower of the average monthly price or the closing day price for these metals. Boliden's policy is not to hedge this price exposure and changes in the market prices of these metals consequently impact the Group's profits.

The exposure to price changes in any process stocks above or below the constant level is, however, always hedged.

Structural exposure – forecast

This structural exposure arises from the fact that a substantial percentage of the Group's future income – primarily that relating to extracted metals and to treatment and refining charges – is affected by fluctuations in metal prices and exchange rates.

The Group can use financial derivative contracts, such as futures and option agreements, to hedge against metal price and/or exchange rate fluctuations in relation to forecast metal sales.

Translation exposure

When the net assets (shareholders' equity and surplus values allocated Group-wise to overseas subsidiaries) of foreign Group companies are converted into Swedish kronor, a translation difference arises in conjunction with exchange rate fluctuations, and this has an impact on the Group's shareholders' equity. The finance policy stipulates that the effect of this exposure is to be eliminated by utilising currency futures and external borrowing in the corresponding foreign currency.

Interest risk

Fluctuations in the market interest rates affect the Group's profits and cash flows. The speed with which a lasting change in interest rates impacts on the Group's net financial items depends on the fixed interest term of the loans. On 31st December 2007, the Group's loan portfolio had a weighted average fixed interest term of 2.1 months. On an annual basis, a change of one percentage point in the market interest rate entails an effect on the result of SEK +/– 55 million, calculated on the basis of the net debt on 31st December 2007. The effect on shareholders' equity is +/– SEK 40 million.

Energy price risk

Boliden conducts energy-intensive operations and is thus vulnerable to the long-term energy price trend. Boliden endeavours to use long-term hedging and has, in this way, secured the majority of its energy requirements in the form of supplier contracts at fixed prices. The hedging is also complemented on an ongoing basis with electricity derivatives over a five-year horizon.

Refinancing risk and current liquidity

The term "refinancing and liquidity risk" refers to the risk that Boliden will be unable to extend existing loans or meet its payment undertakings due to insufficient liquidity. Boliden limits its refinancing risk by ensuring that its gross loan liability has a healthy counterparty spread and length. Boliden works actively to ensure satisfactory current liquidity by making appropriate use of unutilised credit facilities. At the turn of the year, Boliden's unutilised binding credit facilities amounted to SEK 4,027 million. Boliden has established a cash pool structure that enables it to maintain a central overview of liquidity flows and ensure efficient management of the Group's overall liquidity.

Credit and counterparty risk

The term "credit and counterparty risk" refers to the risk that a counterparty in a transaction may fail to fulfil their obligation, thus causing the Group to incur a loss. In order to limit counterparty risk, only highly creditworthy counterparties are accepted in accordance with Boliden's finance policy, and wherever possible, the commitment per counterparty is limited.

Boliden's exposure to counterparty risk mainly occurs when trading in derivative instruments. In order to limit this exposure, netting agreements have been signed in accordance with the stipulations of the International Swaps and Derivatives Association (ISDA). On 31st December 2007, the total counterparty exposure in derivative instruments was SEK –1,012 million (net liability to banks and metal brokers).

Risk Management and insurance

The objective of the Risk Management function at Boliden is to minimise the total cost of the Group's damage and injury risks. This is achieved both by continuously enhancing the damage and injury prevention and control work conducted within the operations, and by introducing and developing Group-wide insurance solutions.

Note 19 Liabilities to credit institutions

	Liabilities to credit institutions				Maturity structure
SEK m	Currency	Interest rate, %	Reported value	Within 1 year	More than 1 year but within 5 years	More than 5 years
Credit facility	EUR	5.00	1,232		1,232
Credit facility	SEK	4.96	500		500
Credit facility	NOK	6.20	356		356
Debenture loan	SEK	5.46	1,469		839	630
Debenture loan	EUR	5.39	853		378	475
Commercial paper	SEK	4.66	1,479	1,479
Financial leasing, other	SEK		28	5	23
Total, Boliden			5,917	1,484	3,328	1,105

Credit facilities

In order to limit its refinancing risk and ensure that it has a liquidity reserve, Boliden has arranged a syndicated credit facility of EUR 600 million. This facility runs until 2012 and has an option to extend by up to a further one year. The outstanding loan liability in this credit facility on 31st December 2007 was SEK 2,088 million.

Boliden has issued a number of directed debenture loans to Swedish and Nordic institutions as part of its efforts to extend the maturity structure of its debt portfolio, and as a result, by 31st December 2007, the Group had a total of SEK 2,322 million in outstanding bonds with a term of between 5 and 8 years.

In addition, Boliden has confirmed bilateral credit facilities with a total value of SEK 200 million. At the turn of the year, these had not been utilised.

Boliden's short-term borrowing consists of a Swedish commercial papers programme with a framework amount of SEK 1,500 million. On 31st December 2007, a total of SEK 1,479 million was outstanding.

The average contractual term of the loan liability on 31st December 2007 was 5.0 years. The average interest rate in the debt portfolio was 5.17%. Boliden's current liquidity, in the form of liquid assets and unutilised credit facilities, totalled SEK 4,027 million.

Note 20 Financial derivative instruments

Boliden uses financial derivative instruments to manage currency rate risks and metal price risks arising within its operations. Financial derivative instruments used to hedge structural exposure are reported as hedge accounting, which means that unrealised profits (market values) are reported under shareholders' equity until such time as the underlying flows are reflected in the Income Statement.

Outstanding financial derivate instruments, SEK m	Nominal amount	Reported value
Transaction exposure
Currency futures	718	–14
Currency options	–	–
Raw materials derivatives	566	–10
Structural exposure
Currency futures	–	–
Currency options	5,795	212
Raw materials derivatives	5,770	–1,157
Translation exposure
Currency futures	10,146	–43
Currency options	–	–
Raw materials derivatives	–	–
Total	22,995	–1,012

The reported value corresponds to the fair value and has been calculated on the basis of official market quotations and in accordance with customary calculation methods.

Currency breakdown, outstanding
derivative instruments, SEK m	2007
USD	15,431
EUR	5,430
NOK	2,162
CAD	–78
GBP	35
DKK	15
Total	22,995

Maturity structure, derivative
instruments, nominal amounts, SEK m	2008	2009
Currency futures	10,864	–
Currency options	2,871	2,924
Raw materials derivatives	3,753	2,583
Total	17,488	5,507

Currency derivatives in respect of the hedging of structural exposure – forecast commercial payment flows

Currency contracts in respect of the hedging of forecast currency exposure in USD/SEK, on 31st December 2007, are shown in summary form in the table below. Boliden's other currency risks in respect of forecast exposure are, essentially, unhedged.

		Currency options	Forecast exposure	Percentage
USD m		Floor	Budget	hedged
Maturity, 2008	amount, sold	444	1,057	42%
	rate¹	6.70
Maturity, 2009	amount, sold	452	1,093	41%
	rate¹	6.00
Total, unrealised contracts		896	2,150	41%
Market value of unrealised contracts, SEK m		212

1) Refers to the average strike for currency options. The floors in the options portfolio are in the USD/SEK 6.00–7.00 range.

Raw material derivatives in respect of metal price hedging of structural exposure – forecast payment flows

The table below provides a summary of Boliden's metal price hedging for copper, lead, gold and silver on 31st December 2007 in respect of forecast metal price exposure. Boliden's other metal price risks in respect of forecast exposure are, in every significant respect, unhedged.

		Copper	Lead	Gold	Silver
Maturity, 2008	Hedged share of price exposure,	64%	50%	85%	84%
	price¹	6,394	1,315	665	13
Maturity, 2009	Hedged share of price exposure,	71%	48%	80%	81%
	price¹	5,920	1,252	702	15
Market value of outstanding contracts, SEK m		–257	–552	–232	–116

1) Price, USD/tonne for copper and lead, USD/troy oz for gold and silver.

Sensitivity analysis – operating profit

The following table contains an estimation of the effect on the result of changes in market conditions for the next year, calculated from 31st December 2007. The estimate is based on planned production volumes.

	Effect on	Effect on profit	Change in	Effect on	Change in	Effect on
Change in metal prices, +10%	profit, SEK m	incl. hedge, SEK m	USD, +10%	profit, SEK m	TC/RC, +10%	profit, SEK m
Copper	270	100	USD/SEK	690	TC/RC Copper	75
Zinc	500	500	EUR/USD	430	TC Zinc	60
Lead	120	60	USD/NOK	100	TC Lead	–10
Gold	60	10
Silver	65	10

Sensitivity – shareholders' equity

The following table contains an estimation of the effect on shareholders' equity in 2008, based on closing day prices on 31st December 2007 and on planned production volumes. Shareholders' equity is affected not only by the effect on the profit described in the sensitivity analysis above, but by market valuations of outstanding derivative instruments and taxes.

Change in metal prices, +10%	Effect on shareholders' equity incl. hedge, SEK m	Change in USD, +10%	Effect on shareholders' equity, SEK m	Change in TC/RC, +10%	Effect on shareholders' equity, SEK m
Copper	–59	USD/SEK	504	TC/RC Copper	55
Zinc	365	EUR/USD	314	TC Zinc	44
Lead	2	USD/NOK	73	TC Lead	–7
Gold	–35
Silver	–35

Financial assets and liabilities

	Holdings valued at fair value	Loan receivables and accounts receivable	Financial assets available for sale	Derivatives used in hedging accounting	Other financial liabilities	Total reported value	Fair value
ASSETS
Financial fixed assets
Other shares and participations			12			12	12
Financial investments		2				2	2
Current assets
Current receivables
Accounts receivable		1,528				1,528	1,528
Interest-bearing receivables		7				7	7
Financial instruments	178			100		278	278
Liquid assets
Cash and bank balances		878				878	878
Total financial assets	178	2,415	12	100	–	2,705	2,705
SHAREHOLDERS' EQUITY
AND LIABILITIES
Long-term liabilities
Liabilities to credit institutions					4,434	4,434	4,434
Current liabilities
Liabilities to credit institutions					1,483	1,483	1,483
Accounts payable					2,857	2,857	2,857
Financial instruments				1,157		1,157	1,157
Total financial liabilities	–	–	–	1,157	8,774	9,931	9,931

Note 21 Other current liabilities

	2007	2006
Accrued salaries and social security expenses	416	460
Accrued interest expenses	31	15
Other accrued costs and prepaid income	433	337
Other operating liabilities	119	313
	999	1,125

Note 22 Pledged assets

	2007	2006
Pledged assets
For own liabilities and provisions	None	None
Contingent liabilities
Other sureties and guarantees	447	292
Agreed residual values according to leasing contracts	24	29
	471	321

In addition to the above specifications under the heading of contingent liabilities and the details included in the financial information, it is possible that the Group may incur environmentally related contingent liabilities or contingent liabilities attributable to legal proceedings which cannot currently be calculated although they may in the future entail costs or investments.

Legal proceedings

Overview

Boliden conducts extensive domestic and international operations and is occasionally involved in disputes and legal proceedings arising in the course of these operations. These disputes and legal proceedings are not expected, either individually or together, to have any significant negative impact on Boliden's operating profits, profitability or financial position, over and above that detailed below.

Disputes

Copper tubing cartel

In September 2004, the European Commission fined Boliden AB and its two former subsidiaries, Boliden Cuivre et Zinc SA ("BCZ") and its parent company, Boliden Fabrication AB. The fine totalled EUR 32.6 million (approximately SEK 300 m). At the same time, seven other companies were fined. Boliden has made a provision for the fine. According to the European Commission, BCZ and the other companies have engaged in activities designed to restrict competition in the European market for sanitary copper tubing during the period from 1988 to 2001. In all significant respects, Boliden has acknowledged the European Commission's description of the factual circumstances but has, in its appeal against the Commission's ruling, requested a reduction in the amount of the fine.

During 2005, Boliden and its two former subsidiaries received summonses as part of three class actions that have been brought in the USA against all the companies covered by the European Commission's ruling. The plaintiffs are persons who claim to be buyers of sanitary copper tubing and also claim to represent all other such buyers. In all cases, the plaintiffs' suit is based on the infringements identified in the European Commission's ruling and in all cases, the plaintiffs are requesting triple damages, as well as other compensation, the amount of which

remains unspecified. Boliden argues that the US courts lack the competence to deal with the suits in question, as brought against Boliden and its subsidiaries. One of the cases has been dismissed. Apart from the two remaining cases in which summonses have been received, there are two other similar cases that have been brought, one of which has been dismissed by the competent court. Boliden is at present unable to judge the outcome of either the class actions or of potential other measures taken by individuals or authorities on the basis of the European Commission's ruling and the alleged infringements. The company, however, intends to dispute all such measures vigorously.

BCZ and Boliden Fabrication AB have been transferred to Outokumpu. Boliden has undertaken to indemnify Outokumpu for any and all claims that may arise relating to the period up to the transfer of the companies to Outokumpu.

Disputes arising from the dam breach accident in Spain

In April 1998, a dam breach occurred in a tailings pond at the Los Frailes mine in Spain, which was then owned by Boliden's subsidiary, Boliden Apirsa S.L. ("Apirsa").

Following the dam breach, criminal proceedings were initiated against Apirsa and its representatives. In December 2000, the prosecutor withdrew the proceedings. The ruling was appealed but finally ratified in November 2001. The criminal proceedings determined that the accident was caused by design and construction errors in the dam, not by Apirsa's operations at the mine.

Notwithstanding the outcome of the criminal proceedings, the Spanish Ministry of the Environment has declared Apirsa liable to pay an amount corresponding to approximately EUR 45 million (approximately SEK 408 m) in clean-up costs, damages and fines. The Spanish Ministry of the Environment has demanded payment from Apirsa and this has resulted in Apirsa initiating so-called insolvency proceedings in January 2005 in order to ensure a coordinated and orderly closure of the company. Within the framework of the insolvency proceedings, the receivers in bankruptcy have requested that Apirsa's parent company, Boliden BV, together with Boliden Mineral AB and Boliden AB, shall be held liable for Apirsa's insolvency. The local Commercial Court in Seville has, within the framework of the insolvency proceedings, issued an interim sequestration order on property belonging to Boliden AB and Boliden Mineral AB to a total value of EUR 141 million as security for alleged claims arising from the dam breach accident. The ruling has not been served on Boliden AB. Boliden Mineral AB has appealed the ruling. The insolvency proceedings notwithstanding, Apirsa is continuing to pursue the suit mentioned below against the companies responsible for the design and construction of the dam at which the accident occurred.

As a result of the dam breach, the local government (the Junta de Andalucia) sued Apirsa, Boliden BV and Boliden AB in a civil court for damages totalling approximately EUR 89 million (approximately SEK 806 m). The suit was dismissed on formal legal grounds. The ruling was appealed, but the appeal was rejected by a higher court in the autumn of 2003. Since the dismissal of the suit in the civil court, the local government in Andalusia has initiated administrative proceedings against Apirsa, Boliden BV and Boliden AB in respect of the same claim. In these proceedings, the Junta de Andalucia has itself imposed an obligation on the three Boliden companies to pay the amount claimed. Apirsa, Boliden BV and Boliden AB have appealed the decision to the Administrative Court. In November 2007, the Court declared that it was not competent to rule on the suit brought by the Junta de Andalucia. The Junta de Andalucia has appealed the ruling.

Based on the legal advice and opinions given by the company's Spanish legal counsel, Boliden's overall view is that the company will not suffer any substantial financial damage as a result of the legal proceedings described. The company has made no provision pending a final ruling.

During 2002, following the determination in the criminal proceedings that the dam breach was caused by design and construction errors, Apirsa initiated proceedings in civil court against the companies responsible for the dam's design and construction and against their insurance companies. The court rejected Apirsa's case in November 2006. Apirsa has appealed the ruling.

Tax issues

Write-down of receivables

As a result of the 2002 audit of Boliden Mineral's tax returns for the 1998–2002 financial years, the Swedish National Tax Board has disallowed the deductions made for write-downs of receivables from associated companies totalling SEK 2,043 million and has imposed a tax surcharge of SEK 29 million on the company. The company appealed the ruling to the County Administrative Court and was granted a payment respite for the tax surcharge until such time as the case is settled. The County Administrative Court rejected the appeal. The company has appealed this ruling to the Administrative Court of Appeal who held the initial proceedings in the case in January 2008. The questioned tax loss carried forward has not been valued and is not included in deferred tax receivables. The company has made no provisions while awaiting the final ruling.

Odda

The Norwegian tax authority has questioned some of the circumstances surrounding a zinc reprocessing agreement between Boliden Odda AS and Boliden Zink Commercial BV. The written exchange between Boliden Odda and the Norwegian tax authority indicates that the tax authority believes that it has grounds for asserting that the agreement was not concluded on market terms. The company takes the view that the outlook is good for showing that the agreement was concluded on market terms. The company has made no provisions.

Not 23 Supplementary information to the statements of cashflow

The Statements of Cash Flow are drawn up in accordance with the indirect method.

Interest paid	2007	2006
Interest received	77	71
Interest paid
Interest on external loans	–157	–159
Interest on currency futures	–81	–63
Other interest expenses	–2	–6
	–240	–228
Liquid assets
The following items are included in liquid assets:
Cash and bank balances	553	2,300
Short-term investments	325	896

878	3,196

The short-term investments included in liquid assets comprise investments with a term of three months or less and which can be easily converted into liquid assets.

Not 24 Information per business line and geographical market

For additional information, please refer to "Accounting principles" for segment reporting on page 72.

Primary segments – Business Areas

2007	Mines	Smelters	Other, incl. eliminations	The Group
External revenues	2	34,852	1	34,855
Effect on profit of metal price and currency hedging	–1,508	–166	23	–1,651
Internal revenues	9,073	18	–9,091	–
Net sales	7,567	34,704	–9,067	33,204
Share in associated companies' profits	–	6	–	6
Operating profit	3,135	2,297	–4	5,428
Net financial items				–232
Profit after net financial items				5,196
Taxes				–1,409
Net profit for the year				3,787
Intangible assets	93	3,104	–	3,197
Tangible assets	5,390	7,998	78	13,466
Share of equity	–	43	–	43
Inventories	282	6,680	–58	6,904
Other receivables	450	2,310	–181	2,579
Assets	6,215	20,135	–161	26,189
Provisions, other than for pensions and tax	260	255	516	1,031
Other liabilities	985	3,142	886	5,013
Liabilities	1,245	3,397	1,402	6,044
Capital employed	4,970	16,738	–1,563	20,145
Depreciation	605	771	1	1,377
Investments	1,503	1,008	1	2,512
Significant expenses as yet unpaid	–	–	–	–

2006	Mines	Smelters	Other, incl. eliminations	The Group
External revenues	2	37,537	–1	37,538
Effect on profit of metal price and currency hedging	–2,259	–42	–24	–2,325
Internal revenues	9,518	19	–9,537	–
Net sales	7,261	37,514	–9,562	35,213
Share in associated companies' profits	–	14	3	17
Operating profit	3,010	5,652	–140	8,522
Net financial items				–209
Profit after net financial items				8,313
Taxes				–2,045
Net profit for the year				6,268
Intangible assets	89	2,988	–	3,077
Tangible assets	4,416	7,569	77	12,062
Share of equity	–	45	–	45
Inventories	254	5,096	1	5,351
Other receivables	921	2,716	–462	3,175
Assets	5,680	18,414	–384	23,710
Provisions, other than for pensions and tax	278	257	483	1,018
Other liabilities	1,010	3,683	332	5,025
Liabilities	1,288	3,940	815	6,043
Capital employed	4,392	14,474	–1,199	17,667
Depreciation	543	765	1	1,309
Investments	1,065	782	–	1,847
Significant expenses as yet unpaid	25	50	–	75

Secondary segments – geographical areas

Sales figures are based on the country in which the customer is located. Assets and investments are reported in the location of the asset.

Revenues	2007	2006
Sweden	7,373	6,733
Rest of the Nordic region	5,726	6,311
Rest of Europe	19,278	21,245
North America	146	111
Other markets	681	813
	33,204	35,213
Assets in capital employed	2007	2006
Sweden	19,052	16,750
Finland	3,217	3,075
Norway	1,784	1,655
Ireland	2,083	2,157
Other countries	53	73
	26,189	23,710
Investments in tangible and intangible assets	2007	2006

Sweden	1,464	1,173
Finland	602	306
Norway	168	103
Ireland	277	265
Other countries	1	–
	2,512	1,847

Not 25 Transactions with affiliates

No Member of the Board or senior executive at the company participates or has participated, either directly or indirectly, in any business transactions occurring during the current or previous financial year between themselves and the company which are or were unusual by nature in respect of their terms. Nor has the Group granted loans, issued guarantees or provided sureties to any of the Members of the Board or senior executives of the company.

The Board of Directors and the President hereby attest that the financial reports have been prepared in accordance with generally accepted accounting principles for listed companies in Sweden. Details presented are consistent with actual circumstances and nothing of major significance that might affect the image of the Group and the Parent Company presented in the financial reports has been omitted. The Consolidated financial reports and the Parent Company's financial reports will be submitted for adoption to the Annual General Meeting on 8th May 2008.

Stockholm, 11th March 2008

Anders Ullberg Chairman

Carl Bennet Marie Berglund Staffan Bohman Deputy Chairman of the Board

Lennart Evrell Bo Karlsson Alf Lindén President & ceo

Ulla Litzén Leif Rönnbäck Matti Sundberg

Anders Sundström Lars Sundström

Our Audit Report was submitted on 11th March 2008.

Authorised Public Accountant Authorised Public Accountant

Hans Pihl Björn Sundkvist

Audit Report

To the annual meeting of the shareholders of Boliden AB Corporate identity number 556051-4142

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of Boliden AB for the financial year 2007. The annual accounts and the consolidated accounts are presented in the printed version of this document on pages 55–93. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards ifrs as adopted by the eu and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards ifrs as adopted by the eu and the Annual

Accounts Act and give a true and fair view of the group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts. We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.

Stockholm, 11th March 2008

Hans Pihl Björn Sundkvist Authorised Public Accountant Authorised Public Accountant

Ore reserves and mineral resources

Ore reserves and mineral resources have been calculated and compiled in accordance with the Australasian Institute of Mining and Metallurgy's jorc code. This is comparable with, and equivalent to, "cim Standards on Mineral Resources and Mineral Reserves, Definitions and Guidelines" adopted by cim on 20th August 2000, which constitutes that part of the Ontario Securities Commission (osc) rules and regulations, National Instrument 43–101, that regulates how ore reserves and mineral resources should be reported.

Boliden complies with and reports in accordance with NI 43–101 and the recommendations accepted by SveMin, which, wherever applicable, are identical to the Canadian rules.

The mineral resources and ore reserves have been compiled under the supervision of Mati Sallert, a "Qualified Person" according to NI 43–101 and registered as a "Qualified Person" by SveMin. Mati Sallert is a member of the Ausimm, and has more than 35 years' experience in the mining and minerals industry.

Calculations for the Swedish operations have been carried out under the supervision of Gunnar Agmalm, Ore Reserves and Project Evaluation Manager. Gunnar Agmalm is registered as a "Qualified Person" by SveMin and has more than 20 years' experience in the mining and minerals industry.

Calculations for Tara have been carried out under the supervision of John Ashton, Chief Mine Geologist, Tara Mines Ltd. John Ashton is a "Qualified Person" and a member of the Institute of Materials, Minerals and Mining and of the Institute of Geologists of Ireland, and has more than 25 years' experience in the mining and minerals industry.

MINERAL RESOURCES

A mineral resource is a concentration of minerals in the bedrock that may become commercially extractable. Mineral resources are divided into the following categories:

– inferred mineral resource

a mineral resource identified through drilling, sampling and geoscientific interpretations with information so sparse that the geology and grade continuity cannot be confirmed and where the basic technical data consists of reasonable assumptions. This means that continued investigations will not, with any degree of certainty, enable the entire inferred mineral resource, or parts of it, to be moved to a higher category.

– indicated mineral resource

a mineral resource identified through drilling and sampling with an information density that is too sparse to confirm continuity, but which, together with geoscientific interpretations, nevertheless provides a reasonable idea of the geology and grade continuity that is sufficient to enable technical and economic calculations to be performed to assess the project's profitability.

– measured mineral resource

a mineral resource identified through drilling and sampling with an information density sufficient to confirm geology and grade continuity. The basic technical data has been studied thoroughly, permitting mining plans to be drawn up as a basis for technical and economic analyses to determine the project's profitability.

ORE RESERVES

Ore reserves are those parts of a mineral resource that can be mined and processed in accordance with the company's demands on profitability. In this context, waste rock dilution, pillar offset and process recoveries, among other things, are taken into account. Ore reserves are divided into the following categories:

– probable ore reserves

a probable ore reserve is those parts of a measured and indicated mineral resource where mining-engineering and profitability studies show that it is technically and economically feasible to mine and process the deposit.

– proven ore reserves

a proven ore reserve is those parts of a measured mineral resource where mining-engineering and profitability studies show that it is technically and economically feasible to mine and process the deposit.

BASIC REQUIREMENTS

Cut-off grade: the lowest grade that should be mined is calculated separately for each deposit depending on its characteristics i.e. the direct costs for mining, ore haulage, milling, concentrate haulage and administration. The costs are compared with the value of the product, taking into account the relevant payment terms for treatment charges.

Metal prices: long-term price forecasts are utilised when calculating ore reserves, and are an expression of the anticipated average prices over the forthcoming economic cycle. Current long-term price forecasts are shown in the table below:

Copper	USD 4,000/tonne	USD/SEK 7,50
Zinc	USD 2,000/tonne
Lead	USD 1,200/tonne
Gold	USD 550/oz
Silver	USD 8.0/oz

Minimum ore width: the minimum horizontal ore width is determined by the mining method and the equipment used in each respective mine. This means that the grades of ore zones narrower than the minimum ore width are recalculated to give an average for the full minimum ore width.

Waste rock dilution: mining usually incurs some waste rock dilution that varies depending on the mining method used, the ore's geometry and other geological factors. Waste rock dilution is taken into account in all ore reserve calculations.

Ore losses: depending on the mining method used, the ore's geometry and other technical factors, some of may have to be left unextracted. Based on the information available when the calculations were made, all the ore reserve calculations have taken these factors into account.

Density: a formula based on head grades is utilised for large polymetallic ores. In other cases, density measurements are made for the various ore types.

Boliden holds the required environmental permits and exploitation concessions for the mines currently in operation. The mineral resources are protected by exploitation concessions or prospecting permits.

Ore reserves and mineral resources are reported separately in Boliden's financial reports. Mineral resources are thus in addition to the ore reserves.

ORE RESERVES ON 31ST DECEMBER 2007

			Au	Ag	Cu	Zn	Pb	Mo
		Ktonnes	g/t	g/t	%	%	%	g/t
Boliden Area
Kristineberg	Proven
	Probable	4,430	1.0	27	1.2	2.5	0.1
Renström	Proven
	Probable	1,160	3.0	167	0.7	8.2	1.6
Maurliden	Proven	1,430	1.3	51	0.2	3.6	0.4
	Probable
Total	Proven	1,430	1.3	51	0.2	3.6	0.4
	Probable	5,590	1.5	56	1.1	3.6	0.4
Aitik
Aitik	Proven	389,000	0.2	2	0.29			32
	Probable	221,000	0.1	2	0.28			36
Garpenberg
Garpenberg	Proven	17,300	0.3	104	0.1	5.6	2.3
	Probable	3,500	0.4	175	0.1	3.4	1.4
Tara
Tara	Proven	4,600				8.9	2.0
	Probable	13,200				7.3	1.6

Figures may be rounded up or down.

MINERAL RESOURCE ON 31ST DECEMBER 2007

		Ktonnes	Au g/t	Ag g/t	Cu %	Zn %	Pb %	Mo g/t
The Boliden Area
Polymetallic mineralisations
Kristineberg	Measured	50	0.7	45	1.3	4.2	0.2
	Indicated	2,070	0.4	14	0.7	4.0	0.1
	Inferred	4,840	0.7	51	0.5	6.6	0.5
Petiknäs N	Measured	310	8.1	73	1.8	3.1	0.3
	Indicated	1,200	2.7	52	0.6	1.8	0.3
	Inferred	720	3.3	33	0.5	1.2	0.2
Renström	Measured
	Indicated	420	3.0	199	0.4	7.9	1.7
	Inferred	1,640	2.2	149	0.6	6.9	1.6
Maurliden	Measured	1,050	1.3	40	0.4	3.3	0.2
	Indicated	360	0.9	45	0.7	2.9	0.2
	Inferred
Maurliden Östra	Measured
	Indicated
	Inferred	1,600	0.6	18	0.9	0.7
Gold mineralisations
Åkulla Östra	Measured
	Indicated	2,600	4.3	15
	Inferred	200	8.1	9
Älgträsk	Measured
	Indicated
	Inferred	1,600	3.1	6		0.2
Total	Measured	1,410	2.8	47	0.7	3.3	0.2
Polymetallic mineralisations	Indicated	4,050	1.4	48	0.6	3.6	0.3
	Inferred	8,800	1.2	61	0.6	5.1	0.6
Total	Measured
Gold mineralisations	Indicated	2,600	4.3	15
	Inferred	1,800	3.6	6		0.2
Aitik
Aitik	Measured	445,000	0.1	1	0.20			22
	Indicated	523,000	0.1	1	0.20			23
	Inferred	80,000	0.1	1	0.21			24
Garpenberg
Garpenberg	Measured	5,800	0.2	134	0.0	4.6	1.8
	Indicated	500	0.2	78	0.0	6.5	2.0
	Inferred	24,400	0.5	137	0.1	4.2	2.3
Tara
Tara	Measured	500				6.7	2.4
	Indicated	4,700				6.5	2.6
	Inferred	8,300				7.7	1.8

Figures may be rounded up or down.

Five-year overview

The five-year overview below presents figures for the operative units included in each segment. Figures relating to items common to the entire segment or to the Group as a whole are not reported in the fiveyear overview. Examples of items not reported in this five-year overview are results of currency and metal price hedging, results of stock valuations and exploration costs.

For 2004–2007, the information under Financial Performance is reported in accordance with IFRS. No recalculation has been performed for 2003. A recalculation in accordance with IFRS would not have any tangible impact on the results reported for the units other than possible marginal goodwill amortisation.

MINES

AITIK	2007	2006	2005	2004	2003
Milled ore, ktonnes	18,178	18,481	16,674	17,663	18,022
Head grades
Cu (%)	0.32	0.40	0.44	0.41	0.37
Au (g/tonne)	0.14	0.25	0.22	0.22	0.16
Ag (g/tonne)	3.67	2.72	3.61	3.77	4,25
Concentrate production
Cu (t)	185,302	240,054	237,179	230,554	210,789
Concentrate grade
Cu (%)	27.2	27.5	27.7	28.0	27.8
Metal content
Cu (t)	50,487	66,133	65,619	64,498	58,687
Au (kg)	1,178	2,342	1,840	1,985	1,383
Ag (kg)	42,301	35,730	41,297	44,946	55,176
Financial performance
EBITDA (SEK m)	1,388	2,207	900	619	128
EBIT (SEK m)	1,217	2,073	793	522	34
Cash cost USc/lb Cu	129	85	76	64	64
Investments (SEK m)	760	420	325	242	175
Proven and probable ore reserves
Ktonnes	610,000	625,000	219,000	232,000	244,000
Cu (%)	0.29	0.28	0.31	0.33	0.35
Au (g/t)	0.2	0.2	0.2	0.2	0.2
THE BOLIDEN AREA	2007	2006	2005	2004	2003
Milled ore, ktonnes	1,848	1,679	1,782	1,774	1,759
Head grades
Zn (%)	4.8	5.6	6.1	5.7	5.6
Cu (%)	0.8	1.6	1.5	1.3	1.7
Pb (%)	0.5	0.5	0.6	0.6	0.6
Au (g/tonne)	1.6	1.8	2.1	2.7	2.5
Ag (g/tonne)	66	66	78	80	73
Concentrate production
Zn (t)	131,395	131,393	161,613	149,999	143,396
Cu (t)	41,885	72,021	75,542	63,984	91,265
Pb (t)	10,804	6,755	10,516	12,347	9,790
Precious metals (t)	385	354	347	358	368
Gold doré bullion, kg	1,466	3,246	2,480	3,960	3,057
Concentrate grade
Zn (%)	54.0	54.5	54.0	53.7	53.6
Cu (%)	27.8	27.9	27.5	27.0	26.1
Pb (%)	31.6	31.1	28.9	30.1	27.1
Metal content
Zn (t)	70,913	71,650	87,276	80,481	76,910
Cu (t)	11,633	20,098	20,746	17,287	23,801
Pb (t)	3,409	2,099	3,040	3,720	2,656
Au (kg)	1,412	1,900	2,428	3,026	2,677
Ag (kg)	79,753	67,828	87,212	77,091	71,207

Cont. The Boliden Area	2007	2006	2005	2004	2003
Financial performance
EBITDA (SEK m)	976	1,129	476	309	162
EBIT (SEK m)	849	981	350	180	38
Cash cost USc/lb Zn	30	31	22	18	22
Investments (SEK m)	144	107	98	95	128
Proven and probable ore reserves
Polymetallic ores, ktonnes	7,020	4,450	2,920	2,860	2,500
Zn (%)	3.6	5.0	6.7	6.8	8.1
Cu (%)	0.9	1.0	0.9	0.8	0.6
Gold ores, ktonnes		530	400	180	450
Au (g/t)		3.2	4.0	7.3	7.2
Cu (%)		1.4	1.5	1.2	1.4
GARPENBERG	2007	2006	2005	2004	2003
Milled ore, ktonnes	1,255	1,182	1,102	1,074	1,062
Head grades
Zn (%)	6.3	5.7	5.8	5.6	4.6
Cu (%)	0.1	0.1	0.1	0.1	0.1
Pb (%)	2.5	2.2	2.3	2.2	1.9
Au (g/tonne)	0.3	0.4	0.3	0.3	0.4
Ag (g/tonne)	125	123	117	124	151
Concentrate production
Zn (t)	132,125	112,625	106,238	99,922	80,748
Cu (t)	3,086	2,572	2,576	2,610	2,563
Pb (t)	35,849	29,498	27,934	26,378	22,257
Precious metals (t)	40		10	23	38
Concentrate grade
Zn (%)	54.1	54.2	55.0	55.0	54.9
Cu (%)	22.1	23.1	21.9	21.1	20.7
Pb (%)	70.1	71.5	74.2	72.6	71.9
Metal content
Zn (t)	71,464	60,992	58,413	54,914	44,314
Cu (t)	682	593	565	550	531
Pb (t)	25,139	21,099	20,720	19,148	16,002
Au (kg)	244	269	203	217	216
Ag (kg) Financial performance	117,798	108,082	97,605	105,533	123,278
EBITDA (SEK m)	1,195	927	257	167	32
EBIT (SEK m)	1,095	850	194	113	–15
Cash cost USc/lb Zn	6	37	31	25	33
Investments (SEK m)	323	273	230	135	78
Proven and probable ore reserves
Ktonnes	20,800	17,200	10,600	3,640	2,205
Zn (%)	5.2	5.7	5.7	5.5	4.0
Ag (g/t)	116	123	121	100	141
TARA	2007	2006	2005	2004	2003
Milled ore, ktonnes	2,658	2,751	2,551	2,522	2,548
Head grades
Zn (%)	7.7	7.7	8.4	9.2	7.9
Pb (%)	1.5	1.4	1.6	1.8	1.7
Concentrate production
Zn (t)	350,511	355,671	358,563	381,280	335,314
Pb (t)	42,036	43,525	44,528	52,260	47,378
Concentrate grade
Zn (%)	54.5	54.8	54.6	55.9	56.2
Pb (%)	60.9	58.8	57.6	60.5	62.3
Metal content
Zn (t)	190,916	195,001	195,843	213,150	188,367
Pb (t)	25,618	25,580	25,653	31,590	29,502
Financial performance
EBITDA (SEK m)	1,989	1,887	453	498	–4
EBIT (SEK m)	1,796	1,722	294	344	–192
Cash cost USc/lb Zn	65	76	48	38	37
Investments (SEK m)	277	265	278	186	310
Proven and probable ore reserves
Ktonnes	17,800	16,700	15,900	16,300	16,900
Zn (%)	7.7	8.4	8.5	8.7	9.3
Pb (%)	1.7	1.8	1.8	1.9	2.0

SMELTERS

RÖNNSKÄR	2007	2006	2005	2004	2003
Smelting material, tonnes
Copper, tonnes
Primary	598,240	587,168	606,410	598,054	605,976
Secondary	159,792	159,257	137,394	146,770	128,217
Total	758,032	746,425	743,804	744,824	734,193
Lead, tonnes
Primary	38,011	35,530	40,200	40,556	35,998
Secondary	2,077	3,841	3,510	4,241	2,283
Total	40,088	39,371	43,710	44,797	38,281
Production
Cathode copper (t)	213,894	229,241	223,482	235,620	214,181
Lead (t)	25,865	25,548	26,922	27,962	24,208
Zinc clinker (t)	36,418	33,285	35,017	34,531	33,549
Gold (kg)	12,086	15,726	16,994	15,045	12,275
Silver (kg)	346,574	373,981	433,823	438,941	456,565
Sulphuric acid (t)	543,524	551,301	580,363	568,912	551,946
Liquid sulphur dioxide (t)	50,493	36,646	35,375	38,661	40,674
Palladium concentrate (kg)	3,028	2,826	2,876	2,434	1,956
Financial performance
EBITDA (SEK m)	846	1,075	564	415	164
EBIT (SEK m)	615	861	364	214	–39
Investments (SEK m)	228	318	153	85	53
HARJAVALTA/PORI	2007	2006	2005	2004	2003
Smelting material, tonnes
Copper concentrate	450,870	537,763	521,209	539,507	548,536
Nickel concentrate	261,648	205,005	156,043	204,638	205,300
Production, tonnes
Primary copper	118,911	164,306	157,933	151,647	160,596
Cathode copper	100,987	127,151	124,225	124,367	125,635
Gold (kg)	2,790	3,967	3,445	4,854	5,564
Silver (kg)	33,175	40,421	34,807	35,786	33,959
Sulphuric acid (t)	557,395	632,151	566,425	617,675	611,987
Liquid sulphur dioxide (t)	41,779	42,542	41,102	48,308	47,670
Palladium concentrate (kg)	461	711	924	705
Financial performance
EBITDA (SEK m)	289	976	511	390	283
EBIT (SEK m)	149	820	357	239	110
Investments (SEK m)	366	211	91	67	82
BERGSÖE	2007	2006	2005	2004	2003
Production, tonnes
Lead alloys	43,865	44,691	45,838	45,586	49,132
Tin alloys	701	841	878	804	921
Financial performance
EBITDA (SEK m)	344	149	104	119	59
EBIT (SEK m)	330	138	94	110	51
Investments (SEK m)	10	55	25	16	14
KOKKOLA	2007	2006	2005	2004	2003
Smelting material, tonnes
Zinc concentrate	581,229	548,245	547,380	548,054	500,813
Production, tonnes
Zinc	305,543	282,238	281,904	284,525	265,853
Mercury	45	23	34	24	25
Financial performance
EBITDA (SEK m)	1,434	1,722	409	127	237
EBIT (SEK m)	1,273	1,563	246	–33	73
Investments (SEK m)	236	95	53	75	91

ODDA	2007	2006	2005	2004	2003
Smelting material, tonnes
Zinc concentrate (incl. zinc clinker)	291,745	290,556	275,787	263,555	256,318
Production, tonnes
Zinc	157,027	160,670	151,285	140,901	143,627
of which reprocessed zinc	1,629	2,231
Cadmium	269	125	153	141	323
Aluminium fluoride	34,833	28,762	30,484	29,740	27,500
Financial performance
EBITDA (SEK m)	576	783	160	36	59
EBIT (SEK m)	439	652	22	–53	–26
Investments (SEK m)	168	103	80	592	475

Glossary

Alloy. Substance with metallic properties which is composed of two or more chemical elements, at least one of which is a metal.

Anode copper. Unrefined copper with a purity of 98–99 per cent.

Base metals. The main industrial, non-ferrous metals (excluding precious metals and minor metals) notably copper, lead, zinc, nickel and primary aluminium.

Cash cost. Direct costs affecting cash flow, such as production and transportation costs, as well as treatment and refining charges, less deductions for by-metal credits, converted into US dollars (average exchange rate).

Cash pools. Group account structure in which the main part of the Group's liquidity is administered.

Cathode copper. 99.99% pure copper plates.

Complex ore. Ore that contains several metals, e.g. copper, zinc, lead, gold and silver.

Concentrate. The product that results from the separation (e.g. by milling and flotation) of the economically valuable minerals in an ore from those with no economic value, so that the proportion of contained valuable minerals is considerably increased.

Concentrator. A plant in which ore is processed mechanically and/ or chemically to extract and produce a concentrate of the valuable minerals.

Copper Shuttle. Fast and environmentally friendly rail transport between Rönnskär and Helsingborg. The train runs five days a week, carrying cathode copper and lead to customers in southern Sweden. On the return trip, it carries recyclable material and other smelting materials.

Galvanising. A process whereby zinc is applied to steel to protect it against corrosion.

Gold leaching plant. Hydrometallurgical plant for extracting gold from ores or concentrate. The leaching is achieved with the aid of cyanide.

ISO. International Organisation for Standardisation. The organisation's standards apply, among other things, to environmental management (ISO 14001) and quality (ISO 9001).

ISRS. International Safety Rating System, a work environment management system.

LBMA. The London Bullion Market Association is responsible for pricing precious metals.

LME. The London Metal Exchange: the international market where non-ferrous metals are bought and sold. Trading on the LME is used as the basis for the daily pricing of metals worldwide. The LME also maintains warehouse stocks of the metals traded.

Metal ashes. Pulverised slag from metal foundries and brass manufacturers.

Metal content. The quantities of copper, zinc, lead, gold and silver contained in concentrates, for example.

Metal premium. The price agreed in advance, over and above the LME price, and paid by customers, for specifically adapted metal that is supplied to them.

Mineralisation. A concentration of minerals in the bedrock where some or all of the minerals may have potential economic value.

Mineral resource. A mineral resource is a concentration of minerals in the bedrock that may become commercially extractable.

OHSAS. Occupational Health and Safety Assessment Series, work environment management systems.

Open pit. A method of mining mineral deposits located near the surface which involves stripping the overburden to expose the ore and excavating and transporting the ore on the surface.

Ore grade. The average quantities of valuable metals in a tonne of ore, expressed in grams per tonne for precious metals and as a percentage for other metals.

Ore reserves. Ore reserves are those parts of a mineral resource that can be mined and processed in accordance with the company's demands on profitability and taking into account factors such as waste rock dilution, pillar offset and the percentage of metal in an ore that can be extracted in the concentration process.

Precious metals. Rare, high-value metals such as gold, silver, platinum and palladium.

Price escalators. (pp) Price distribution clauses in the agreements for zinc treatment charges that distribute the effect of changes in metal prices.

REACH. Registration, Evaluation and Authorisation of Chemicals, the EU's proposal for a new chemicals directive. In brief, this proposal entails the imposition of requirements with regard to tests performed to assess the impact on health and the environment of many chemicals available in the market.

Secondary raw materials. Various types of materials from which metals can be recovered, e.g. electronic and other types of scrap metal, metal ashes, slag, dust, and scrap lead batteries.

Slag. Product generated in conjunction with various types of metallurgical reactions and which primarily consists of oxides.

Smelter and electronic refinery. A plant in which metal raw materials are processed to separate metals from impurities by means of high-temperature reactions and electrochemical processes.

Smelting material. Raw materials for smelters, primarily comprising metal concentrate, but also including scrap, ashes and other recyclable materials.

Treatment and refining charges. (TC/RC) The remuneration received by a smelter for processing smelting material and extracting metals.

Recovery. The percentage portion of the quantity of a given metal in an ore extracted during the concentration process.

Zinc clinker. A refined zinc raw material for producing pure zinc.

Definitions of key ratios

Return on shareholders' equity

Profit for the year as a percentage of average shareholders' equity.

Return on capital employed

Operating profit divided by average capital employed. The average capital employed each year consists of an average of the closing figures for capital employed in the last thirteen months.

Capital employed

Balance Sheet total less interest-bearing investments and non-interest bearing operating liabilities, and excluding tax receivables, tax liabilities and pension liabilities.

Net debt

Interest-bearing current and long-term liabilities (including pension liabilities) less financial assets including liquid assets.

Equity/assets ratio

Shareholders' equity as a percentage of the Balance Sheet total.

Percentage venture capital

The sum of shareholders' equity and deferred tax liabilities (including minorities) divided by the Balance Sheet total.

Net debt/equity ratio

The net of interest-bearing provisions and liabilities less financial assets including liquid assets divided by shareholders' equity.

Interest cover

Result after net financial items plus financial costs divided by financial costs.

Average number of employees

The average number of employees during the year, converted into fulltime positions.

Earnings per share (EPS)

Result for the year divided by the average number of outstanding shares.

Cash flow per share

Cash flow divided by the average number of outstanding shares.

Shareholders' equity per share

Shareholders' equity divided by the number of outstanding shares.

Dividend yield

Dividend per share as a percentage of the share price.

P/E ratio

Share price divided by earnings per share.

Abbreviations

lb = pound = 0.4536 kg oz = ounce = troy ounce = 31.104 grams USD = US dollars USc = US cent CAD = Canadian dollars Kronor = Swedish kronor SEK = Swedish kronor NOK = Norwegian kroner EUR = euro Ag = silver Au = gold Cu = copper Pb = lead

Zn = zinc

Boliden locations

THE GROUP

Boliden ab p.o. Box 44 se-101 20 Stockholm Sweden Visiting address: Klarabergsviadukten 90 Tel +46 8 610 15 00 Fax +46 8 31 55 45 Fax +46 8 30 95 36 (Legal Affairs)

BUSINESS AREA MINES

Boliden Mineral ab se-936 81 Boliden Sweden Tel +46 910 77 40 00 Fax +46 910 77 42 34

The Boliden Area

Boliden Mineral ab se-936 81 Boliden Sweden Tel +46 910 77 40 00 Fax +46 910 77 42 25

Aitik

Boliden Mineral ab p.o. Box 85 se-982 21 Gällivare Sweden Tel +46 970 735 00 Fax +46 970 735 01

Garpenberg

Boliden Mineral ab se-776 98 Garpenberg Sweden Tel +46 225 360 00 Fax +46 225 360 01

Tara

Boliden Tara Mines Ltd Knockumber navan Co. Meath Ireland Tel +353 46 908 2000 Fax +353 46 908 2581

BUSINESS AREA SMELTERS Kokkola Boliden Kokkola Oy

p.o. Box 26 fi-67101 Kokkola Finland Tel +358 6 828 6111 Fax +358 6 828 6005

Odda

Boliden Odda as Eitrheim no-5750 Odda Norway Tel +47 53 64 91 00 Fax +47 53 64 33 77

Harjavalta

Boliden Harjavalta Oy fi-29200 Harjavalta Finland Tel +358 2 535 8111 Fax +358 2 535 8239

Boliden Harjavalta Oy Copper refinery p.o. Box 60 fi-28101 Pori Finland Tel +358 2 535 8111 Fax +358 2 535 8181

Rönnskärsverken

Boliden Mineral ab se-932 81 Skelleftehamn Sweden Tel +46 910 77 30 00 Fax +46 910 77 32 15

Bergsöe

Boliden Bergsöe ab p.o. Box 132 se-261 22 Landskrona Sweden Tel +46 418 572 00 Fax +46 418 572 05

BUSINESS AREA MARKET Stockholm

Boliden Commercial ab p.o. Box 750 se-101 35 Stockholm Sweden Visiting address: Klarabergsviadukten 90 Tel +46 8 610 15 00 Fax +46 8 610 15 50

Skelleftehamn

Boliden Commercial ab se-932 81 Skelleftehamn Sweden Tel +46 910 77 30 00 Fax +46 910 77 31 38

Leamington Spa

Boliden Commercial (uk) Ltd. 7, Clarendon Place Leamington Spa Warwickshire cv32 5ql United Kingdom Tel +44 1926 833 010 Fax +44 1926 450 084

Neuss

Boliden Commercial Deutschland GmbH c/o Outokumpu, Att: Manfred Stranz Stresemannallee 4c d-41460 Neuss Germany Tel +49 2131 523 28 50 Fax +49 2131 523 28 54

Information about the Annual General Meeting

Boliden's ordinary Annual General Meeting will be held on 8th May 2008 at 2.00 p.m., immediately adjacent to the Garpenberg mine in Garpenberg.

PARTICIPATION

Shareholders wishing to participate in the Annual General Meeting must both be registered in the shareholders' register kept by vpc ab on Friday, 2nd May 2008 (for details of the re-registration process for nominee shareholders, please see below) and have notified the company of their intention to participate, by either writing to Boliden ab, Legal Affairs, Box 44, se-101 20 Stockholm, Sweden, or calling +46 8 32 94 29 on weekdays from 9 a.m. to 11.30 a.m. and from 1.30 p.m. to 4 p.m., or faxing +46 8 30 95 36, or visiting the Boliden website at www.boliden.com.

All such notifications must be received by the company no later than 2nd May 2008 at 4 p.m.

NOMINEE SHAREHOLDERS

In order to be entitled to participate in the Annual General Meeting, nominee shareholders must, no later than 2nd May 2008, have their shares temporarily re-registered in their own names with vpc ab. All such requests for registration should be submitted to the relevant trustee well ahead of this date.

COMPLETE INVITATION TO ATTEND

A complete invitation to attend the Annual General Meeting, as well as financial and other information, may be accessed via the company's website at www.boliden.com. Printed financial information may also be ordered via the Boliden website or from Boliden ab, Box 44, se-101 20 Stockholm, Sweden.

FINANCIAL CALENDAR FOR 2008

8th May Interim Report, January–March 2008

21st July Interim Report, January–June 2008

28th October Interim Report, January–September 2008

QUESTIONS

Any questions concerning Boliden's financial information can be submitted to: Investor Relations at Boliden Tel: +46 8 610 15 00 or e-mail: investorrelations@boliden.com

Boliden AB, Box 44, SE-101 20 Stockholm Visiting address: Klarabergsviadukten 90 Tel +46 8-610 15 00, fax +46 8-31 55 45 www.boliden.com