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DAILY NEWS Feb 19, 2010 3:30 PM - 0 comments

Finland delegation says the Nordic nation is a great place for mining

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By: Trish Saywell

In late December 2001 Inmet Mining (IMN-T) announced that it would acquire 100% of the Pyhasalmi underground copper and zinc mine in central Finland for about 60 million euros (US$83 million).

The transaction was completed in early 2002 -- a time that coincided with rising base metal prices. The rest, as they say, is history.

"We moved into production around the time we bought it, just as metal prices were going up, and we quickly paid back the capital and made a healthy profit," Joe Boaro, Inmet's senior mining manager told The Northern Miner during a coffee break at a recent seminar on mining opportunities in Finland hosted by law firm Miller Thomson in Toronto.

The Pyhäsalmi operation uses state-of-the art technology including a 1,450-metre, fully automated hoisting shaft and has just 200 workers on its payroll. The operation also uses a direct conveyor-to-skip loading system, as well as tele-remote loader operation.

"In many places this wouldn't be an underground mine -- it's a credit to Finland's advanced technology," Boaro said.

Pyhäsalmi produces three types of concentrates: copper, zinc and pyrite. Roughly 65% of its revenues stem from copper and 35% from zinc. The pyrite revenue stream is important to the viability of the operation, especially during times of low base metal prices.

Copper and zinc concentrates are sold under long-term contracts to smelters in Finland, while high-purity pyrite concentrate is primarily sold under long-term contracts to the country's fertilizer industry, providing steady cash flow.

This year the company expects Pyhäsalmi to mine 1.4 million tonnes of ore grading 1% copper and 2.5% zinc, producing 13,400 tonnes of copper and 31,200 tonnes of zinc. Last year it mined 1.39 million tonnes of ore grading 1.1% copper and 2.2% zinc.

Cash operating costs net of byproduct credits are currently about 53¢ per lb.

Like many other mining executives, Boaro sings the praises of the Nordic country, describing it as transparent and mining-friendly with excellent infrastructure, a world-class mining-equipment manufacturing industry, and a highly educated workforce "that embraces new technology." It also happens to be extremely efficient.

"I have worked as an expat in Finland and Turkey for about ten years," he told the group of government officials, mining executives and lawyers attending the seminar. "The process to obtain a work permit in Turkey is long and very bureaucratic whereas in Finland it took me about one hour to obtain a permit."

Finland, endowed with gold, copper, chrome, iron ore, nickel, platinum group metals and phosphates among other resources, is also close to major markets in Europe and Russia and has a vast network of road infrastructure -- a product of the country's extensive forestry industry.

"The Finnish authorities understand that good infrastructure is an important ingredient to attract and consolidate mining investment," says Louise Grondin, vice president environment and sustainable development at Agnico-Eagle Mines (AEM-T, AEM-N).

"For our Kittila project they stepped up to the plate with an improvement to the road leading to the mine during the construction period and more recently, by constructing a new road that effectively cuts the commuting time in half for the portion of our workforce living in the nearby town of Levi. The latter has made the prospect of working at the mine more attractive and will help us in recruitment and employee retention."

For the road improvement Agnico-Eagle paid for the work to get it done more quickly and the government reimbursed the company. For the new road, it was the Finland government's initiative to provide easy access to the Levi manpower pool, Grondin explains. Levi is a ski resort with only seasonal employment prospect. The government wanted to complement the manpower profile of the town with some year-round employment.

The Kittila mine in northern Finland's Lapland region is Agnico-Eagle's first overseas mine. overseas. Kittila is about 900 km north of Helsinki and 150 km north of the Arctic Circle. With proven and probable reserves of 3.2 million oz. gold (21.4 million tonnes grading 4.7 grams gold per tonne), it is one of the largest-known gold deposits in Europe.

Kittila poured its first gold on Jan. 14, 2009 and reached commercial production four months later. The 3,000-tonne-per-day operation is expected to average 150,000 oz. gold a year for at least 13 years. Open-pit mining there began in 2008 and underground mining to extract the deeper ore started this year.

Finland has come a long way since it opened its economy to foreign investment and gained membership in the European Union in 1995. Today 40%-50% of all companies operating in the country are foreign-owned.

"The business environment has changed dramatically in the last few decades from a very closed to a very open economy," Mauri Pekkarinen, Finland's minister of economic affairs, outlined. "In telecoms markets Finland and Sweden were the first in the world to open their markets. In mining we're growing very rapidly and our ambitions are very high and we will build very attractive mining legislation."

Since 2002 Finland has moved from producing between five and six million tonnes to 30 million tonnes annually and Mauri Pekkarinen, Finland's minister of economic affairs, forecasts the number should double in the next several years.

In its annual survey of mining jurisdictions, the Fraser Institute of Canada ranked Finland third after Chile and the Canadian province of Quebec in terms of "current mineral potential, assuming current regulations and land-use restrictions." The 2008-2009 survey also ranked Finland fifth in the top five for policy and mineral potential (assuming no land-use restrictions and based on best practices).

Finland's Geological Survey makes its extensive database and drill core archives available to all exploration companies. And the nation's mining-equipment manufacturing industry is one of the best in the world.

"If you build an underground mine anywhere in the world today, 70%-90% of the technology comes from Scandinavia-owned companies, some of them from Finland," notes Heikki Laurila, president of minerals processing in North America for Outotec. The Finnish company provides plants, equipment and services for the mining industry based largely on proprietary technologies and posted operating profits in 2008 of 120.2 million euros.

On the legislative front, a new mining law is being review by parliament and is expected to become law in early 2011. The current mining law was enacted in 1965 at a time when agriculture and forestry were Finland's biggest industries.

Alpo Kuparinen, the ministry of employment and economy's mineral policy division, told the seminar that changes to the old law won't be significant. What is new, he says, is that the law clarifies the responsibilities of companies against other stakeholders and communities. That means informing landowners, citizens and local organizations that a company has applied for exploration permits and giving them time to voice their concerns before permits are granted. In addition, mining companies will have to pay landowners 0.15% of their annual metal values.

Fees for exploration licences under the new law will be 20 euros per hectare for the first four years, 30 euros per hectare for the following three years; 40 euros per hectare for the next three years and 50 euros for the following four years. Exploration licences have been extended from eight years to a maximum of 15 years. Corporate taxes stand at 29%.

Currently ten of the forty foreign mining companies in Finland are Canadian. And according to Pekka Numri, research director of research and development at the Geological Survey of Finland, there are ten mining projects currently at the mining feasibility stage.

The list of mining companies Finland has attracted from all over the world include First Quantum Minerals (FM-T, FQM-L). In November last year First Quantum's board approved the development of its Kevitsa nickel-copper-PGE project with a start-up date targeted for mid-2012.

First Quantum acquired Kevitsa through its acquisition of Scandinavian Minerals for US$282 million in June 2008. The deposit, one of the world's major undeveloped sulphide nickel deposits, is also one of the largest mineral discoveries in Finland's history.

The mine will have an estimated lifespan of about 20 years and a life-of-mine cash operating cost of about US$2.50 per lb. nickel, net of byproduct credits. Capital costs are forecast to run to about US$400 million and process facilities will be designed for 5 million tonnes annually. Mineral reserves stand at 107 million tonnes grading 0.296% nickel; 0.272 nickel sulphide; 0.418% copper, using a nickel sulphide cut-off grade of 0.147%.

Another company active in Finland is Northland Resources (NAU-T), which is developing the Hannukainen iron oxide-copper-gold deposit in northern Finland's Kolari district. Hannukainen is a cluster of five deposits at various depths, two of which were mined as an open pit in the 1980s and reportedly produced 4.5 million tonnes grading 43% iron, 0.88% copper and 1 gram gold per tonne. The deposits are within 15 km of a rail line. Northland envisions a large mining operation producing iron ore pellet feed with a copper-gold concentrate byproduct.

Northland picked up Hannukainen in 2005 and started exploring for additional economic copper and gold mineralization within the magnetite. In mid-2007 the company defined a National Instrument 43-101 compliant resource. At a cut-off grade of 15% iron, the five deposits together host measured resources of 53.1 million tonnes grading 35.6% iron, 0.25% copper and 0.12 gram gold per tonne. In the indicated category Hannukainen has 31.5 million tonnes grading 32.9% iron, 0.11% copper and 0.04 gram gold, and inferred resources of 81.6 million tonnes grading 35.7% iron, 0.13% copper and 0.04 gram gold.

Belvedere Resources (BEL-V) owns the Hitura nickel mine and mill as well as some gold properties, while Mawson Resources (MAW-T) has four uranium properties. In November last year Mawson announced that it would start to define a National Instrument 43-101 compliant resource on its Nuottijärvi project, one of Finland's largest known uranium deposits with an historical resource of 2.9 million tonnes grading 0.044% U308 for 2.9 million pounds of U308. The mineralized body is 40 metres in thick, extends from surface to a vertical depth of 80 metres, trends over a strike length of more than 400 metres and remains open along strike and at depth.

Mawson notes on its website that the Finnish government is expanding its nuclear energy production and its building its fifth and the world's largest nuclear reactor. Currently the country imports all the uranium required by its four nuclear power plants, which account for 26% of the nation's electricity.

Nortec Minerals (NVT-V) owns a 100% interest in the LK palladium-platinum-gold-copper-nickel project in north-central Finland, and a 100% interest in the Tammela lithium-tin,tantalum-rare earth project in southwestern Finland. It also has the option to earn a 100% interest in the Seinajoki-Kaatiala gold-antimony-rare earth-lithium property in western Finland.

In early February 2010 Nortec released rock chip sample results from the Seinajoki project returning 69.8 grams gold per tonne from 0.5 metre rock chip line sample and 21.1 grams gold from 0.8 metre rock chip line sample. A pegmatite rock chip sample from its Kaliosalo prospect returning 1.47%.

Taranis Resources (TR)-V) is focused on Kettukuusikko, an advanced-stage gold exploration project In February 2009 it acquired two other gold properties, one called Naakenavaara, about 9 km south of Kettukuusikko and another, Marskinkuusikko, 5 km southwest of Agnico Eagle's Kittilä mine.

Goldfields (GFI-N) is developing its Arctic Platinum project, about 60 km south of the city of Rovaniemi in northern Finland. In 2007 a scoping study demonstrated a 20-year-mine life at 7.5 million tonnes per annum for two deposits in the Suhanko project area based on a measured and indicated resource of 152.5 million tonnes averaging 1.067 grams palladium per tonne; 0.245 grams platinum, 0.115 gram gold, 0.077% nickel and 0.187% copper.


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