November 7, 2013 / 4:31 PM / in 4 years

UPDATE 3-Finnish nickel miner Talvivaara faces bankruptcy threat

* Government confirms rescue talks, says private investors must join in

* Firm says no guarantee it can avoid bankruptcy

* Reports worse-than-expected Q3 operating loss

* Shares fall 8 pct

* CEO absent from conference call (Adds details on Norilsk, call with analysts)

By Ritsuko Ando

HELSINKI, Nov 7 (Reuters) - Loss-making Finnish nickel miner Talvivaara said it was in advanced rescue talks with the government on Thursday and warned it could face bankruptcy if negotiations failed.

The government, which is the company’s largest shareholder, said it wanted private investors to contribute to any financial support and there was no certainty a solution would be found.

Talvivaara’s troubles coincide with a decline in the country’s traditional export industries such as paper, shipping and industrial machinery, which have been hit by weak European demand and the emergence lower-cost competitors abroad.

Once hailed as a pioneer in cost-efficient mining, Talvivaara’s sole Sotkamo mine has been hit by a slew of production problems and a near 20-percent slump in the price of nickel this year, caused by a global glut of the metal.

The government owns 17 percent of Talvivaara through its Solidium investment fund.

Talvivaara, which last month warned it needed cash to keep its mine running, said on Thursday it would consider filing for a corporate restructuring or bankruptcy if it failed to raise funds. Analysts estimate the company needs around 200 million euros ($271 million).

“The requirement is a market-driven solution where private actors participate in funding in an equal way with the state,” Economic Affairs Minister Jan Vapaavuori said on Thursday.

Talvivaara Chief Financial Officer Saila Miettinen-Lahde declined to say how much money the company was seeking or who it was talking to besides the government. Solidium was not available for comment.

Norilsk Nickel, Talvivaara’s main customer which also owns a 0.64 percent stake in the company, has no plans to help, a source familiar with the Russian company’s plans said.

Finnish sources say the government is keen to keep Talvivaara afloat because bankruptcy would result in a costly dismantling and clean-up of the mine, which taxpayers would have to help pay for.

Vapaavuori said Talvivaara was an important economic force in the Kainuu region of northern Finland.


Talvivaara’s third-quarter results announced on Thursday, underscored the problems it faces. The company ended the quarter with 46.5 million euros in cash, down from 87.3 million a year earlier, and total liabilities of 866 million euros including 130 million in loans maturing in November next year.

Its operating loss widened to 29 million euros from 12 million a year ago. That was weaker than the average forecast for a loss of 26 million euros in a Reuters poll of analysts.

The company’s shares, which have fallen around 80 percent in the past year, shed a further 8 percent by 1610 GMT.

Founder and Chief Executive Pekka PeraPera was not on Thursday’s conference call to discuss the results, an absence a Miettinen-Lahde struggled to explain.

“We are under a reasonably busy period, having to deal with a number of issues,” she said. “All I can say is that he could not be available today.” ($1 = 0.7392 euros) (Additional reporting by Polina Devitt in Moscow; Editing by Erica Billingham)

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