Commodities firm takes 15 percent stake in Terrafame troubled mine
Mining firm Terrafame announced new investment from Trafigura Group on Friday, two years after Finland’s government established the new fully state-owned company to rescue the bankrupt Talvivaara mining operation.
The nickel and zinc mine in Sotkamo has been dogged by environmental problems and financial difficulties, and has required hundreds of millions of euros in state support over the years.
Commodity trading firm Trafigura has announced an investment in the Terrafame mine in Finland. The Sotkamo nickel and zinc mine currently owned by Terrafame has had a chequered history, but on Friday Trafigura Group announced that its investment arm Galena Asset Management has made a EUR 75 million equity investment in Terrafame, receiving a 15.5% equity stake in the mine with the Finnish state holding the rest of the shares.
That helps the state reduce its holding in the operation, in line with government targets.
It’s a big step forward for the mine, which has been dependent on injections of public cash since for the past two years. In total the state has provided about 700 million euros to Terrafame in taxpayers’ money since 2015, when the previous operating company, which was known as Talvivaara, went bust.
The new investment is at a level that would value the company at around 500 million euros.
Environmental and financial problems
The mine has suffered numerous leaks and senior managers from the Talvivaara era have been convicted over environmental crimes. They are appealing their verdicts, and the case will be heard at the appeals court this year.
When the government stepped in and assumed ownership of the company in 2015, it justified its move by saying that keeping the business and jobs in the Kainuu region was important. It assured taxpayers that the state-funding was a temporary situation, until a private investor could be found or the mine shut down. The goal was to secure an investor within 18 months.
The firm lost some 134 million euros last year, but managed to turn a profit in the final quarter of the year.
At the press conference announcing the new investment Friday, Economic Affairs Minister Mika Lintilä said that the environmental situation at the mine was now rectified and operations were looking promising. He said no new state-funded investment should be necessary in the mine’s future, but predicted that the state’s majority ownership now has the potential to create significant profits that will benefit the Finnish economy.
Related stories from around the North:
Canada: Canadian province of Quebec announces plan for northern development, Eye on the Arctic
Finland: No more state money for Terrafame mine, says Finland’s minister of economic affairs, Yle News
Greenland: Greenland pioneers Arctic tourism & mining, Cryopolitics Blog
Norway: Production uncertain beyond Q2 at iron-ore mine in Arctic Norway, Barents Observer
Russia: Mining accident death toll rises to 36, The Independent Barents Observer
Sweden: Relocation of Arctic town underway in Sweden, Radio Sweden
United States: Could good mining jobs actually hurt Bush villages?, Alaska Dispatch News
