Recast: Roundup: Finnish gov't eyes closing nickel mine in Finland

The Finnish government is eyeing the closure of a nickel mine after eight years of uncertainty over its future.

Finnish Prime Minister Juha Sipila said a seven-month window for finding private money for a bleach-based nickel production in Sotkamo, northern Finland still existed, but he said closing it was the primary option.

Many believed that strict Finnish environmental standards scared off possible private investors even though the economic prerequisites for continued nickel production in Finland apparently existed.

Economic Affairs Minister Olli Rehn said 144 million euros (161 million U.S. dollars) could still be used to maintain production until the end of 2016 as preparations for closure begin. The price tag for clearing the site and restoring the landscape could reach 500 million euros.

In April, a local administrative court in Vaasa was not willing to give the mine a permanent environmental permit and reduced the amount of permissible sulfite emissions. With the environmental permit of the mine in Sotkamo being limited to only two years, no private investor was willing to take a business risk.

A longer permit and higher levels of admissible sulfite emissions would have reduced the risk to a level acceptable to private investors. The current low level of world price for nickel makes mining unprofitable, analysts said.

Sipila underlined he did not want to criticize the court decision, but admitted a potential investor had been lost in the wake of the court outcome.

The Finnish Mining Association, representing the interests of the mining sector in Finland, said the government should have waited for a high court decision that could be less restrictive before it announced its preparation to shut down the mine.

The original Finnish operator of the mine, Sotkamo-Talvivaara, had a wide-based Finnish ownership. The company went into insolvency in 2014, however, and a state-owned company called Terraframe was established last year to continue mining. The government is now unwilling to spend more public money in maintaining the loss-making mine.

The operation in Sotkamo, near the town of Kajaani, has left huge land reservoirs of contaminated water to be dealt with. The amount exceeds 9 million cubic meters.

The operation in Sotkamo was contentious from the start with environmentalists warning against contamination, whereas most inhabitants of the region saw the mine as a way out of economic stagnation.

The Sotkamo mine was launched in 2008 amidst high hopes that a new economic revival would be possible in the area near the town of Kajaani, which had suffered from a major pull-out by the paper industry.

The mine was also welcomed as a new Finnish-owned mining venture. Most of Finnish traditional mining had been sold to foreign ownership in the years preceding the launch of the Talvivaara project.

Questions were raised earlier about the suitability of the bioheap bleaching method for a northern climate. Finnish experts said the method as such was not a reason for the failure, but the cost of production remained higher than the current price of nickel on the world market. The mine got bad publicity due to environmental neglect such as water leaks. (1 euro= 1.12 U.S. dollars) Endit