There was no need to because:

• Sweden already produced and sold iron ore.

• Shipping is by far the cheapest means of transportation. Kiruna (the place where most of the ore comes from) is nearer to Narvik than to any other navable port/waterway.

• Baltic sea tends to freeze.

In the end, it would have been a total waste of resources to invade Sweden when they already controlled the most efficient way of ore supply. An occupation wouldn't have changed this.

The ice free port of Narvik was vital for shipping Iron ore during the winter. Most of the time it was shipped from the town of Lulea, which lies at the bottom of the Gulf of Bothnia, which would often freeze over in the winter.

The Germans did not really have to worry about Sweden siding with their enemies before their occupation of Denmark and Sweden. They already had longstanding business ties, and the trade with German was vital for the Swedish economy, which is the main reason for their policy of neutrality.

Obviously, had Sweden declared war on Germany, all of their trade would have been extremely vulnerable to submarine warfare in the Baltic. For the same reason, it was not feaseble for the Allies to attempt invading Sweden.

So they never felt it necessary to occupy Sweden. Their interests there were already fairly secure.

That however was not the case with Narvik and the long western shore of Norway. Germany expected (correctly) that Churchill would make a move there. In WW1 Britain had laid a minefield in Norwegian waters.

A part of the reasoning why Churchill wanted to control Narvik was his hope that Sweden could be convinced to join the war on Germany. It probably was never reasonable, but in his thinking, control over Narvik might tilt Sweden towards the Allies.