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UPDATE 3-Talvivaara founder returns as CEO to solve mine crisis
November 15, 2012 / 8:16 AM / 5 years ago

UPDATE 3-Talvivaara founder returns as CEO to solve mine crisis

* Waste water leak at mine found on Nov 4

* Pera founded Talvivaara, was CEO until April this year

* Pera was criticised for not taking active role in crisis (Recasts, adds cabinet ministers to discuss crisis on Friday)

By Jussi Rosendahl

HELSINKI, Nov 15 (Reuters) - Talvivaara’s founder returned to his role as chief executive, taking responsibility for an environmental disaster at its mine that is expected to cost millions of euros.

Pekka Pera, who was previously chairman of the board, was appointed interim CEO on Thursday, replacing Harri Natunen. Pera was the company’s CEO from 2003 until April 2012 when Natunen took over.

Officials in Finland’s government, which owns about 9 percent of Talvivaara shares, had criticised Pera for not taking a more active role in handling the waste water leakage at the mine in Sotkamo, eastern Finland.

The leak was discovered on Nov. 4 and has contaminated nearby waters with high levels of uranium.

Pera, who is expected to remain CEO until operations have stabilised, told local media that the disaster would cost the company “several million” euros.

Already the owner of about 20 percent of the company, Pera said he was willing to invest more of his money to ensure it had adequate funding, public broadcaster YLE said.

Talvivaara said on Wednesday that the leak had finally stopped. But it still faces massive clean-up costs and is awaiting permission from local authorities to restart the plant, which has been offline since the leak was found.

Prime Minister Jyrki Katainen and cabinet members are due to meet on Friday to discuss the Talvivaara crisis. Investors expect them to discuss the possibility of new regulations or more government investment.

The disaster has dominated headlines in Finland, as the country’s 187,888 lakes are interconnected and pollution in one area can flow into other rivers and lakes downstream.

It is also the latest in a series of production disruptions and environmental problems at the mine over the past year. A year ago, the company was found to have discharged waste water with high levels of sodium, sulphate and manganese into lakes near the mine.

The latest disaster is seen particularly costly, and analysts expect the company to seek more funding through a share issue.

A major share issue could dilute the value of existing shares, but many analysts expect large shareholders including Pera and the Finnish government, to pitch in.

Talvivaara said it appointed non-executive director Tapani Jarvinen as the new board chairman to replace Pera.

“Both appointments are of interim nature and in force until further notice and at least until the company’s operations have been stabilised following the recent events,” it said in a statement.

Talvivaara shares were flat at 105 pence in London and up 3.5 percent at 1.28 euros in Helsinki. They had risen sharply on both bourses on Wednesday after news that the leaking had stopped, but are down over 20 percent since the disaster started. (Writing by Ritsuko Ando; Editing by Jane Merriman and Helen Massy-Beresford)

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