The Anglo-German Naval Agreement made it easier for the Kriegsmarine to control a major portion of the sea traffic traveling in and out of the Baltic, including sea traffic traveling through the Gulf of Bothnia. The majority of Germany's iron-ore imports originated from the Gulf of Bothnia and the Swedish port of Luleå. However, Luleå froze over during the winter, so the Norwegian port of Narvik was a vital port of shipping during the winter. An alternate ice-free winter port was available at Oxelösund, south of Stockholm, for the iron ore from the mines in Bergslagen.
With 50 percent of Germany's iron-ore imports coming from Sweden, iron-ore was of major importance to Germany, especially for the German military's attempts at rebuilding its war arsenal. Grand Admiral Raeder, head of the German navy, said himself that it would be "utterly impossible to make war should the navy not be able to secure the supplies of iron-ore from Sweden". By controlling the Baltic, as Gunnar Hägglöf has stated, "All the iron-ore needed by Germany could be shipped from the harbours of the Baltic".
Prior to the Second World War, Germany was able to supply itself with only a quarter of its total iron-ore consumption per year, with the rest being imported from other countries. Sweden provided up to almost 60 percent of the iron-ore that was imported into Germany. In 1940, iron-ore imports from Sweden, as well as Norway, constituted 11,550,000 of the 15,000,000 tons Germany consumed that year.
Germany's expanded power, as granted through the AGNA, posed a serious threat to the independence of nations that bordered on the Baltic, particularly Sweden and the Baltic states of Latvia, Lithuania and Estonia. It forced some of those nations to seriously reconsider their traditional policies up to that point, with Sweden being no exception.
The first was to send a British fleet into the Baltic Sea to stop shipping reaching Germany from the two Swedish iron ore ports, Luleå and Oxelösund. The project was called Project Catherine and was planned by Admiral of the Fleet William Boyle, 12th Earl of Cork. However, events overtook this project and it was canceled.
The second project, Operation Wilfred was the mining going on near the Norwegian Leads, the inland waterway along the coast of Norway used by ships transporting Swedish iron ore to Germany during winter months. This project was launched at the same time with the German invasion of Norway and it was quickly canceled.
Sweden supplied 10 million tons of iron ore per year to Germany from 1940-1943, as much as in the pre-war year 1938, in addition to vast numbers of manufactured ball bearings. In compensation Germany exported coal, fertilizer, and iron at affordable prices. The Swedish trade with Germany was terminated in the autumn 1944, without any Swedish deficit.