The residents of Sweden’s northernmost town are a hardy lot. At 90 miles inside the Arctic Circle, the sun never rises for weeks in winter, when temperatures hover at minus 4 degrees F. For two months each summer, the sun never sets.

But now Kiruna has taken its ability to cope to new extremes.

This is a sparsely populated land dotted with pretty lakes and forest half the year, traversed by dogsled and snowmobile when snow and ice cover it. Kiruna also happens to sit above the largest contiguous body of iron ore in the world.

And as the state-owned mining company drills deeper, as prices for iron ore have soared with demand from China, the earth underneath the townspeople is giving way. But instead of halting extraction, the company is taking an unprecedented step: moving the town instead.

Moving the city center 2 miles east has largely been accepted, at least for now. Kiruna itself exists because of the mine. But it is raising interesting questions, chief among them about who gains when companies go to drastic lengths in their search for minerals. Facing a radical urban transformation, Kiruna is also a testing ground for how easily a community can recreate itself – for better or worse – more than 100 years after it was originally settled.

Unprecedented move

The mine here, owned by LKAB, was founded at the turn of the 19th century after prospectors discovered iron. The discovery eventually turned Kiruna into the largest underground iron ore mine in the world. The iron ore body runs a 2.8-mile path, about 87 yards wide, and at least 1.2 miles underground. No one knows how deep it goes. The company has already drilled to 1,365 meters (0.84 miles), a depth reached last May.

Just as fracking for natural gas disrupts the ground above, believed to be behind mini-earthquakes, as drilling goes deeper here the earth has started to crack. Already a bridge linking the town to the company was closed, and a new road was built a mile away. A new sewage line was installed in 2009, as well as a new electricity supply system. The company moved the railway and plans to move the highway that links Kiruna, with its population of 18,000, to other towns in this province called Lapland.

But it is in the next few months when construction for a new city hall begins that the urban transformation officially kicks off.

The relocation project is unprecedented in scale. While homes have been moved when they sit on top of an oil field or in the way of a highway – or residents forcefully displaced for mega public works projects in some countries – this is the relocation of an entire town center. That includes 3,000 homes and 50 acres of commercial and office space, schools, and hotels.

The most-loved buildings, including the Church of Kiruna, will be relocated intact. Painted in Swedish falu red and topped with a gold rooster, the church that was built to invoke a typical cottage of Lapland will be dismantled piece-by-piece, trucked eastwards, and rebuilt. The current red-brick city hall will be torn down, but its iconic clock tower will make the move and be placed by the new building.

A company town

Remarkably, the transformation hasn’t produced a knee-jerk “no.” Partly that’s because it’s still abstract. The need to one day move the city was revealed 10 years ago, and while the new town hall should be done by 2017, the project is not expected to be finally completed for another generation. Some older people joke that they probably won’t be alive to see it.

But the collective shrug owes more to Kiruna’s role as a company town, where everyone knows somebody who works in the mine, or at least knows that the restaurants, hairdressers, and jobs at the airport are here only because the mine is. Since its founding, more than a billion tons of iron ore have been extracted, and 75,000 tons is mined per day, which LKAB says is roughly equivalent to the volume of a 12-story building.

A recent poll by the Swedish firm SIFO, commissioned by LKAB, showed that in 2013, 65 percent of the town views the project positively. Regardless of whether they like it or not, 97 percent accept it. “We see that as a sign of the strong symbiosis between the town and the mine,” says LKAB urban transformation officer Fredrik Björkenwall.

Indeed, most people share the view, at least publicly, of Ingeborg Wennberg, who seems to accept the move as part of her destiny. She lives above the craft store where she works, selling local art and reindeer skins from the indigenous Sami who live in northern Sweden. Both the store and her home are slated to move.

“I’m very comfortable here,” says Ms. Wennberg. “But I’ll be just as comfortable down the hill.”

Not all is harmonious. The company has said it will pay residential owners market price for their homes plus 25 percent, according to Swedish law, but the municipality says the current legislation doesn’t account for the unprecedented circumstances of tearing down an entire town, and how that impacts price. It has been negotiating with the company for a year to establish a pricing scheme, says Ann-Catrin Fredriksson, legal adviser for the municipality.

Beyond that are a host of social questions, as people are moved into a new context. Some might decide not to relocate to the new center. If they do, who will move where? The market and personal choice will largely decide that – so a lot of the new landscape will depend on individual choice, nothing that the municipality or company can control.

Which shop will get to be at the center of town? What will happen to bonds formed over time between neighbors? What happens to those who don't sit in the area that must relocate, like Lidia Waczynski, but who is elderly and has no car, and now will have her town center 2 miles away? Will she be a loser in all of this?

“I want the town to stay where it is,” Ms. Waczynski says.

Ore vs. people

No official price tag exists for the project, but the municipality and the mining company agree that the price of iron ore, at least at present value, is worth far more than the cost of moving a city – by ten times, according to city figures.

In the little white building that houses the Salvation Army and holds various religious ceremonies on Saturdays and Sundays, Johannes Lindell, whose grandfather was one of the first workers at the mine, says following the money is plain wrong.

“Is it worth it to demolish half the city because of some mine?” Mr. Lindell asks, his voice raising during coffee and cakes after a Saturday Catholic mass. “People don’t say much about it, because iron ore is so important to this town. But it’s not as important as its people. This is nonsense.”

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The mining company and planners say this is an opportunity for a second chance, to create a new urban space that is appealing to residents, especially women in the male-dominated mining town. “They don’t have culture, the [experience] of going downtown and hanging out with people to have a coffee and maybe see a movie,” says Viktoria Walldin, an anthropologist working with White Architecture, the Stockholm-based firm that won the competition to rebuild the city. "This is what’s been missing. This is a chance to get that.”

Still, a sense of nostalgia hangs in the air. “On an intellectual basis … people acknowledge the necessity to move,” says Ms. Fredriksson, the municipality’s legal adviser. “But it is a social trauma. Even if we know that the wise thing to do is move, as an individual, you lose the place where you were brought up or the park where for the first time you kissed a boy. You lose your roots.”