In 1993, the state railways were losing money on the ore trains. In January 1994, SJ and NSB stated that they were going to merge the operations of the Iron Ore Line and the Ofoten Line. In May 1994, LKAB applied for traffic rights on the Ofoten Line. This was rejected in December 1994 by the Norwegian Ministry of Transport and Communications, who stated that the company did not meet the criteria in the law, including that the applicant had to have rail transport as their main activity. On 8 June 1995, LKAB established a Swedish and a Norwegian subsidiary dedicated to rail transport. This would bypass the rationale provided by the Ministry of Transport in denying them traffic rights, and LKAB stated that there was no way the Norwegian authorities now could deny them such rights, given EU Directive 91/440. At this time Norway was part of the European Economic Area (and Sweden of the EU) meaning EU directives were valid in both countries.