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Criticism for Terrafame investor: Russian ties, suspected tax evasion and toxic waste scandals

STT reports that Trafigura, the new partial owner of Finland’s Terrafame nickel mine, has close connections to Russia, while Greens Party MP Pekka Haavisto expressed his concern about the commodity trader’s jaded environmental history.

Terrafamen tiedotustilaisuus.
Terrafame Executive Chairman Lauri Ratia, Trafigura CEO Jeremy Weir, interpreter Michael Jääskeläinen, Minister of Economic Affairs Mika Lintilä and Terrafame Group CEO Matti Hietanen held a press conference on Friday, February 10. Image: Roni Rekomaa / Lehtikuva

Friday’s top news in Finland was the announcement that Trafigura was the private investor that the state-owned Terrafame mine had long been searching for. Trafigura’s 75-million-euro investment through its fund management subsidiary, Galena Asset Management, wins the investor a 15.5 percent share in the Finnish nickel and zinc mine Terrafame’s business. 

But questionable business partners and past mistakes are now causing many in Finland to wonder if the partnership was a good deal after all.

Closer ties to Russia

Finnish news agency STT cites Bloomberg news from last autumn that says Trafigura joined with the Russian energy company Rosneft to buy a share in the Indian company Essar Oil.

As one of the world’s largest investors in physical commodities, Trafigura deals in the oil, minerals and metal markets. It buys, stores, delivers and sells raw materials around the world, and much of its business is cantered in Switzerland, where traders aren’t directly regulated.

In the past, Trafigura has been called out for its lack of disclosure. A new decision to transfer its operational base to Singapore has led others to accuse the firm of tax evasion.

Toxic waste in Africa

Trafigura was also sued for carrying out a toxic waste dump in the Ivory Coast in 2006 that led to a local health crisis. Trafigura agreed to a class action suit settlement of almost 40 million euros and paid an additional one-million-euro fine imposed by Dutch courts for the transit of the waste through Amsterdam before it was taken to Abidjan.

In 2007, an explosion of a Norwegian-owned tank carrying Trafigura waste occurred in Norway that had severe environmental and health consequences for people living nearby.

The company claims to have rectified its operations in this area since the incidents.

Haavisto: Talvivaara already plagued by environmental problems

Green Party MP and likely presidential candidate in 2018, Pekka Haavisto said in a Saturday morning interview at Yle that there are still many unanswered questions surrounding the deal to find a private owner for the ex-Talvivaara mine.

“When you look at the investing company’s background and environmental record, the question arises whether this really was the best know-how that they [Terrafame] said they were seeking. Environmental issues have been a core element of the Talvivaara history. And now this investor seems to have environmental sins of its own,” he said.

Back when it was still operating under the name Talvivaara, the mine reported numerous toxic leaks and senior Talvivaara-era managers have been convicted over environmental crimes.

Trafigura CEO Jeremy Weir emphasized the importance of good environmental practices in the Friday press conference, apologizing for his company’s past performance in this area.

Close operational monitoring

Haavisto said that he was still concerned about what he saw.

“There are plenty of reputable mining companies in the world that have managed their environmental affairs well. We have to monitor things closely now, to make sure that they take the environmental concerns brought up in Kainuu seriously,” the Greens MP told Yle.

Haavisto said on Saturday that he was also doubtful that Finland’s taxpayers would ever recoup the large amounts of state money that have been pumped into both the Talvivaara mine before it went bankrupt and the state-owned Terrafame operation that was established to revive the mine’s business.

“The environmental management costs have certainly been high. We don’t really know much about the nature of their agreement, but it will naturally depend on projected nickel prices and production growth. The taxpayers will end up paying most of the bill,” he said. 

Lintilä: Terrafame is still in charge

Finland’s Minister of Economic Affairs Mika Lintilä was closely involved in efforts to attract a private investor to the Sotkamo mine. In the online publication on Saturday, he replied to Haavisto’s criticism, saying that the background of Terrafame’s new shareholder Trafigura was carefully vetted before the decision was made. He had this to say about the firm’s environmental track record:

“It is my understanding that most of the incidents concerned actions of Trafigura subcontractors. We also have to remember that Trafigura is not becoming an operative player in the mine with this deal. Terrafame will still be the operator,” he said.

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