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.
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.