Metals News
Talvivaara's nickel mining unit to apply for bankruptcy
company news
Nov 7,2014
Thu, 6 Nov 14:32:00 GMT
* Miner fails to raise financing
* Parent company to continue processing ore for the time being
* One of largest corporate catastrophes, govt says
(Adds CEO, government comments, background)
By Jussi Rosendahl and Anna Ercanbrack
HELSINKI, Nov 6 (Reuters) - Finnish nickel company Talvivaara said a subsidiary that holds all of the group's mining assets will apply for bankruptcy protection after failing to raise financing.
Talvivaara last year halted operations at its sole mine in northern Finland and started a search for investors after a drop in nickel prices, repeated production disruptions and environmental damage.
The parent company said on Thursday it would continue to process ore for now while it aimed to secure new financing to buy back mining subsidiary Talvivaara Sotkamo.
Jan Vapaavuori, the Finnish minister of economic affairs, said, however, that if no private investor were found, the parent company would possibly file for bankruptcy as well and the mine and processing plant would have to close permanently.
"This is one of the largest corporate catastrophes of our times," he told a news conference.
Government policy does not call for rescuing distressed companies, but the state will help with the immediate costs of running the ore processing operations, which cannot be abruptly discontinued for environmental reasons, Vapaavuori said.
Talvivaara is a major employer in the rural Kainuu region, and 700 people in the area may lose their jobs if the site is completely closed, the minister said.
Zinc producer Nyrstar , Talvivaara's top creditor after paying 232 million euros in advance for deliveries of zinc in concentrate, said it would have to take an impairment on its books should the flow of zinc concentrate stop.
Talvivaara's debt restructuring administrator in September proposed that company debt of around 900 million euros be cut by 97 to 99 percent.
"I was confident until this morning that we would find the money" to continue operations at the mine, Talvivaara Chief Executive Pekka Pera said, citing a change in negotiations to find financing.
Talvivaara listed to great fanfare in London in 2007 when nickel peaked at around $51,000 per tonne. Nickel currently trades around $15,325 per tonne [MET/L].
Pera said in 2007 at the company's nickel mine would become Europe's biggest by pioneering an extraction process called bioheapleaching, which uses bacteria to leach metal from ore.
But repeated production problems were compounded in 2012 when the mine leaked large amounts of waste water, pushing up uranium and metal levels in nearby lakes and rivers.
In September, prosecutors instigated charges against four Talvivaara executives, including Pera, over the environmental damage.
Talvivaara shares, mainly owned by about 80,000 Finnish retail investors, have been suspended from trading in Helsinki.
(editing by Jane Baird)
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