Finnish Mining Boom Prompts Regulation Backlash on Polluters

Finnish Mining Boom Prompts Regulation Backlash on Polluters

By Kasper Viita

Bloomberg

16 May 2012

Finland's mining companies stand to face tougher rules as environmental damage prompts regulators to check the Nordic nation's mining boom.

Talvivaara Mining Co., whose nickel mine discharges are turning nearby lakes saline, will be slapped with tighter guidelines on emissions and Nordic Mines AB, a Swedish gold explorer, has endured calls by local residents for a temporary halt to its mining operations.

Finland's natural resources, including gold, copper and nickel, have become lucrative as global demand for metals drives up prices. More than 500 mining claims and 60 mining permits were being processed by Finnish authorities in September 2011, according to a government report.

"When mines are established, the initial hype around wealth and new jobs stifles critical voices," Heidi Hautala, the minister in charge of state shareholdings, told reporters in Helsinki yesterday. Still, environmental groups are getting their voices heard.

Talvivaara's emissions of sulfate, sodium and manganese into lakes near its Sotkamo nickel mine caused protests from conservation groups and local residents, adding to pressure on authorities to cut permitted emission levels. Environment Minister Ville Niinistoe has signaled the Espoo, Finland-based company ultimately faces losing its license to operate.

Mine Emissions

Nordic Mines, which runs the Laiva mine outside Raahe in central Finland, has also weathered demands from local citizens for temporary closing over waste water discharges. High aluminum and sulfate content at lakes near Dragon Mining Ltd.'s Orivesi gold mine in western Finland prompted the regional authority to investigate emissions by the Australian company.

Talvivaara shares fell for the third day, losing 2.5 percent to 147.60 pence at 12:48 p.m. in London. Nordic Mines slid 4.8 percent to 29.80 kronor.

Finland ranked second among 93 countries and states in a survey of the most attractive areas for mining companies, according to a Feb. 23 publication by the Vancouver, Canada- based Fraser Institute. The Nordic nation has been in the survey's top 10 for the last three years and came behind the Canadian province of New Brunswick.

Talvivaara's emissions into lakes around its mine caused the formation of saline layers on lake bottoms, potentially posing a threat to local wildlife.

"Some of the emission regulations will be tightened at the end of the year," said Sami Koivula, an environmental counselor at northern Finland's AVI, the regional authority responsible for setting the allowed pollution levels for Talvivaara's permit.

Permit Under Review

The review of Talvivaara's environment permit for the Sotkamo nickel mine in northern Finland starts at the end of the month, according to the regulator. The power to monitor compliance with the guidelines is vested in another local authority, the ELY Center. Mines flouting rules face the ultimate threat of closing, decided on by the ELY Center rather than ministers.

Finland's minerals industry had sales of about 3.6 billion euros ($4.6 billion) and employed about 12,000 people on average in 2008 to 2010, according to the government's minerals strategy. The volume of metallic ores mined in the country may increase to 70 million metric tons by 2020 from about 4 million tons in 2000, according to the report.
State Shareholdings

The Finnish state is a shareholder in Talvivaara through its holding company Solidium Oy, which has an 8.6 percent stake in the miner. The combined share of the nation's two largest pension funds, Varma Mutual Pension Insurance Co. and Ilmarinen Mutual Pension Insurance Co., is about 15 percent, according to Talvivaara's website.

Authorities must strike a balance between protecting the environment and meeting the needs of the industry.

"I expect the new emission rules will be sensible, taking into account the environment and the prerequisites of our operation," Pekka Perae, chairman of the board and founder of Talvivaara, said by phone yesterday. He declined to comment on how much the tighter regulations could cost the company and said he "isn't worried" about the threat of shutdown.

The Finnish Association of Nature Conservation asked the ELY Center to shut down Talvivaara's operations until pollution levels are brought under control. The authority declined, saying Talvivaara is able to adequately reduce the harmful water emissions, according to a ruling on May 9.
Faster Than Planned

The miner is spending 13 million euros to fix the emissions, including the installation of a water treatment system and a catalytic burning unit, according to a statement on April 24. It may achieve the lower permit limits proposed for 2015 two years earlier than planned, the company said.

"Talvivaara's current investments are not nearly enough to bring the emissions down to the level where they should be," Hanna Hakko, environmental policy officer at the conservation organization, said by phone. Talvivaara's shares have lost 26 percent this year, compared with an 8.5 percent drop for the Bloomberg World Mining Index. Nordic Mines slid 54 percent.

Environment Minister Niinistoe has also proposed a mining tax to compensate for the damage caused by excavation. Economy Minister Jyri Haekaemies has commissioned a review of tax models used by other countries, newspaper Helsingin Sanomat reported today.

"The revenue should benefit both the region where the environmentally burdening activity occurs and the nation whose natural resources are being utilized," Niinistoe said yesterday. "The tax should be linked to the volume excavated, creating an incentive for companies to reduce their environmental burden."