July 2, 2013 / 8:41 AM / 6 years ago

UPDATE 1-Nickel miner Talvivaara may cut up to 250 jobs

* Shares fall sharply

* Market looks for production run-rate recovery -analyst (Adds share reaction, background on finances)

HELSINKI, July 2 (Reuters) - Finnish nickel miner Talvivaara said it would start talks towards cutting or temporarily laying off up to 250 people, around 40 percent of its staff, to help cope with weak nickel prices by reducing operating costs.

Talvivaara shares fell sharply after it said on Tuesday it needed to change its organisation.

Production glitches and weak nickel prices have raised doubts over the future of its Sotkamo mine, which was initially hailed for pioneering a cost-efficient extraction process called bioheapleaching and has since been plagued with a major waste water leak and halts to production.

“Cost cutting measures will be welcomed by the market, however the biggest driver to shares remains Talvivaara’s ability to get back to a 30,000 annual production run-rate in H2 following dewatering,” Liberum Capital wrote in its daily mining review.

The mine must now drain away waste water from previous leaks to reach full production. Talvivaara has estimated it will produce 18,000 tonnes of nickel this year.

Its shares fell almost 8 percent in London and around 6 percent in Helsinki in early trading.

Talvivaara was forced to raise 261 million euros ($340.2 million) from shareholders in a rights issue earlier this year to help keep the mine running.

In the first quarter of this year, it made an operating loss of 20 million euros.

$1 = 0.7671 euros Reporting by Terhi Kinnunen; editing by Jane Baird

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