FEATURE-Profit eludes accident-prone Finnish nickel mine – by Terhi Kinnunen (Reuters U.S. – April 10, 2013)

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SOTKAMO, Finland, April 10 (Reuters) – Talvivaara CEO Pekka Pera still has the one euro coin he used to buy the rights to ore deposits at the company’s nickel mine in Sotkamo, eastern Finland, a decade ago.

While the previous owner saw no future for the site, Pera was so sure it would succeed with the help of a pioneering metals extraction process called bioheapleaching that he bought the coin back as a keepsake.

But after waste water leaked last year, pushing up uranium levels in nearby lakes and rivers, and repeated failures to meet production targets, the mine is now saddled with debt and burning through cash. Investors are uncertain whether they will ever see a profit from what is supposed to become Europe’s biggest nickel mine.

A new leak from its waste pond last Sunday was the latest in a series of troubles which analysts say show the company has overestimated the benefits of the rarely-used bioheapleaching method, and underestimated its risks.

“During the last three to four years, there have been so many problems and they haven’t had success in ramping up production,” said Pohjola analyst Jari Raisanen. “I think nobody really knows what the future is.”

On a recent Friday, Talvivaara opened the mine to several hundred mostly local people as part of a public relations drive following the spill last November. A harsh chemical odour hung in the air as they entered the snow-covered site.

Pera, a burly 48-year-old in an orange jacket and rubber boots, listened patiently to the visitors’ complaints and queries before replying to each.

“We have become more humble,” he said. The latest leak was contained in the mine by safety dams but last year’s accident sent 200,000 cubic metres of waste water downstream, raising uranium levels in nearby waters and prompting a public outcry. Uranium is extracted along with other metals from the ore at Sotkamo, and is currently treated as waste.

CONFIDENT DEMEANOUR

Pera founded the company a decade ago, using his confident demeanour and experience that includes stints in Ireland, Australia and at steel maker Outokumpu, to persuade international investors to back his plans.

Outokumpu, the previous owner of the site around 500 km (300 miles) northeast of Helsinki, didn’t see it as viable for mining and sold the rights for the symbolic euro.

But Pera believed it would be profitable with large-scale bioheapleaching. The company pitched this method as more cost-efficient and environmentally-friendly than traditional smelting as it takes advantage of natural microbial reactions to accelerate the process of separating metal from ore.

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