Talvivaara write-downs some of the largest in Finnish history

YLE NewsEye on the Arctic

Finland’s Talvivaara mining company recently announced an astounding $873 million loss from the last quarter of 2013.

This one-quarter write-down is equivalent to the entire sum of money forest product giant Stora Enso lost in its famously unsuccessful bid to enter the North American market.

Giant piles of granite in Sotkamo are emblematic of the historic Talvivaara write-down, as the estimated value of their content has plummeted. The mining company’s quarterly loss is shocking for a company of its size: Talvivaara reported a total loss of $970 million in 2013.

Much bigger listed companies were built on similar unsustainable clouds in the early 2000s. Telecommunications Company Sonera was hit with a more than $5.5 billion loss after an exhausting depreciation of its universal mobile telecommunications system business in Europe in mid-2002.

Disappointing figures

The Sonera and Talvivaara cases are also similar in that the depreciated business activities applied to operations that never actually produced anything concrete.

Finnish forest giant Stora Enso paid an exorbitant price when it acquired U.S. papermaker Consolidated Paper at the start of the new millennium, declaring a $582 million depreciation in 2009, less than Talvivaara’s loss today. In retrospect, some say Stora Enso’s write-down should have been even greater.

Still, Talvivaara’s figures are exceptionally sad, as fourth-quarter operating losses totaled 50 times the company’s turnover last year.

Evli bank analyst Antti Kansanen has been following the Talvivaara situation and he is most concerned about the company’s income.

“The company’s operating loss was greater than its net sales. This is rare,” says Kansanen.

So even if the write-downs provide some relief, the fact is that Talvivaara’s mining operations made an annual loss of $151 million last year, more than the $109.5 million of income flowing into the company.

New permit granted and operations to continue

Despite its record of operating losses and environmental problems, Talvivaara plans to continue operations and has received a new permit to extract uranium.

The company was granted a new permit to extract uranium on Wednesday by the region of Northern Finland.

This is considered controversial by the public and politicians, as a series of toxic leaks at Talvivaara’s nickel mine started in 2012, and was followed by a suspension of operations and a filing for corporate reorganization.

Talvivaara CEO Pekka Perä speaks optimistically about the global demand for nickel and the future of the Sotkamo mine.

“Over-supply and weak demand on the nickel market in 2013 were replaced by signs of recovery in 2014, as the price of nickel has risen 30 percent since the start of the year,” he says.

This story is posted on Alaska Dispatch as part of Eye on the Arctic, a collaborative partnership between public and private circumpolar media organizations.