The story of the troubled Talvivaara nickel mine may soon come to an end. The new state-owned firm of Terrafame announced it is withdrawing from a term sheet signed in January 2016 on key terms and conditions regarding the sale and purchase of the mining company’s assets.
The parent company of Talvivaara Mining Company has been in debt restructuring since November 2013, but continues to sell services to Terrafame.
Still in January, it looked as though Terrafame would buy the mine's lime plant, laboratory business and geological data. In return, the Sotkamo-based Talvivaara Mining Company would have received a welcome cash injection and the opportunity to purchase at least 10 percent of Terrafame’s shares.
Terrafame Group, the owners of Terrafame, said that the terms of the January agreement no longer apply. It cited the recent decision by the state to wind down the mine’s operations, combined with a ruling by Vaasa Administrative Court to dismantle the discharge piping and limit permit durations. That followed a series of toxic leaks into nearby waterways over the course of several years.
Jobs at stake
The wholly state-owned Terrafame acquired the business operations and assets of Talvivaara Sotkamo from its bankruptcy estate last August in a bid to keep the beleaguered operation afloat and save local jobs.
The new owner absorbed Talvivaara’s receivables to Belgian zinc producer Nyrstar last December, considerably helping the Talvivaara parent company. Now Terrafame is demanding that Talvivaara pay the claims, amounting to close to 13 million euros in outstanding debts.
Talvivaara Mining says it doesn’t have sufficient cash reserves to make the required payment. It claims that the demand endangers ongoing corporate restructuring proceedings from its 2014 bankruptcy – and could lead to the company declaring bankruptcy all over again.