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Terrafame quadruples profit, moves into car battery business

The majority-state-owned former Talvivaara mine is turning a profit after years of losses and environmental disasters.

Kaivosyhtiö Terrafamen tehdasalue
The former Talvivaara mine lies 30km from the Vuokatti ski resort. Image: Niko Mannonen / Yle

Metals company Terrafame announced record-high turnover and profits during the third quarter of this year, making up for losses earlier in 2018.

The firm produces nickel, zinc, cobalt and copper, and plans to open a facility producing chemicals for electric car batteries in 2021.

Terrafame was set up four years ago to take over the Talvivaara mining operation in Sotkamo, near Kajaani after a series of environmental disasters. The wholly state-owned Finnish Minerals Group owns 77 percent of Terrafame. The name is Latin for "Land of Hunger" ("Nälkämaa"), a traditional name for the hardscrabble Kainuu region.

Profits from July through September rose to 19.6 million euros, more than four times as large as the 4.7 million euros reaped during the same period of last year. Turnover was up more modestly, by about one fifth to over 100 million euros.

EVs spur global rise in nickel sales

Terrafame CEO Joni Lukkaroinen concedes that the rise in profits was mainly due to external factors, noting that the price of nickel in US dollars increased sharply in the third quarter, partly based on rising demand for nickel in electric vehicle (EV) batteries. The average price was 17 percent higher than in the corresponding period in 2018 and nearly 27 percent higher than this past spring.

"Supported by good production levels and the rise in the price of nickel in July–September 2019, the net sales in Q3 hit a record 102.4 million euros. The net sales in Q3 were nearly enough to compensate for the decrease in net sales in the first half of the year," Lukkaroinen said in a statement, calling it "an excellent result for an individual quarter".

Lukkaroinen says that the firm's key strategic goal is to be one of the world’s most cost-effective nickel producers.

Last autumn, the firm decided to build a battery chemicals plant, due to begin operations in 2021.

According to Lukkaroinen, construction work on the first production buildings is "proceeding well".

"Our new plant will be one of world’s largest production units for nickel and cobalt sulphates that are used in EV batteries," he said. The company applied for an environmental permit for the new facility last April with the Northern Finland Regional State Administrative Agency, which has been involved in tracking the environmental damage caused by Terrafame's predecessor, Talvivaara.

Last year former Talvivaara CEO Pekka Perä was found guilty of aggravated environmental degradation following a series of major toxic leaks between 2006 and 2013. Two other former Talvivaara executives were also convicted of environmental crimes.

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