The battery chemicals plant would bring significant positive economic impacts to Kainuu and elsewhere in Finland 18.10.2018 10:08

Terrafame has advanced to the report phase of the EIA procedure for the planned battery chemicals plant, during which the plant’s regional economic effects in Kainuu and Finland have also been evaluated. The plant’s implementation options have been compared to a zero option, where the production of nickel, zinc, cobalt and copper sulphides currently produced is well underway.

With the new battery chemicals plant, the following regional economic impacts are estimated depending on the selected implementation option:

  • Total output will grow by EUR 260–320 million.
    Total output represents the value of the area's production and is comparable to net sales.
  • Employment will improve by 407–711 person-years.
    A person-year means the work load of a full-time employee over a year.
  • Value added will amount to EUR 202–209 million.
    Value added means the value generated by a unit participating in production. Value added as defined in financial accounting consists of operating margin and employee compensation.
  • Tax revenue will increase by EUR 88–90 million.
    The parafiscal effects comprise property, corporate, municipal, value added, product and production taxes.

With the battery chemicals plant in the detailed design phase, Terrafame aims at increasing the degree of processing of its current main product, nickel cobalt sulphide, at its industrial site in Sotkamo. The estimated production capacity of the new plant is around 170,000 tonnes of nickel sulphate and about 7,400 tonnes of cobalt sulphate per year. As a by-product, the plant would produce ammonium sulphate with a production capacity of 115,000 tonnes per year. Ammonium sulphate is used as fertiliser and in other process industries. Raising the main product's degree of processing will also increase the company's annual net sales by about EUR 200 million compared to the zero option.

Three implementation options are described in the EIA

The EIA report on the battery chemicals plant describes options 0–2, which have different regional economic effects.

Option VE0: Terrafame continues to produce metal sulphides – the battery chemicals plant will not be built
In option 0, the regional economic effects are the same as in the regional economic report published by Terrafame in 2016. According to the report, the importance of the Terrafame mine and the existing metals recovery plant for the vitality of Kainuu is very high. The company's industrial operations maintain and significantly increase economic activity in Kainuu and more widely in Finland. A link to the original report can be found at the end of this news release.

Option VE1: The battery chemicals plant is established – MVR technology is utilised in crystallisation, two sub-options for steam production fuel
Option 1 is divided into sub-options 1A and 1B, which differ from each other as regards the fuels used. In both sub-options, the need for steam is the same.

  • Option VE1A: The steam needed for crystallisation is produced by a new liquid gas boiler to be built at the industrial site.
  • Option VE1B: The steam needed for crystallisation is produced by a new solid fuel boiler based on grate or fluid bed technology, to be built at the industrial site.

Option VE2: The battery chemicals plant is established – crystallisation is implemented using traditional technology, steam production is greater than in Option 1
From a regional economic point of view, changes in Option 2 compared to Option 1 consist of the amount of fuels in the solid fuel boiler based on grate or fluid bed technology. In other respects, the quantities of raw materials used are the same, and the resulting regional economic impacts are also equal.

Regional economic comparison of the options

The table below summarises the overall economic effects of the various options, which can be considered very positive. In the table, the effects of the different implementation options are compared to Option 0. The most positive effect is highlighted.


Variable Option VE0 Option VE1A Option VE1B Option VE2
Total output EUR 1,100 M +EUR 260 M +EUR 280 M +EUR 320 M
Employment 4,300 person-years +407 person-years +509 person-years +711 person-years
Value added EUR 415 M +EUR 202 M +EUR 209 M +EUR 208 M
Tax revenue EUR 140 M +EUR 88 M +EUR 90 M +EUR 90 M


If the table is not properly displayed, click here.

The effects of the options on the regional economy per year (Ramboll Finland Oy, 2018).

"Over the past three years, we have developed Terrafame as planned, and the impacts of the company's current operations on the regional economy are in line with the regional economic report published in 2016. At the same time, we have stabilised the environmental situation of the mine and minimised, among other things, the sulphate emissions of discharge waters to a much lower level than previously. The newly completed regional economic report shows that the the battery chemicals plant will again bring significant economic benefits to both Kainuu region and Finland. The project will also have a significant impact on the profi¬tability of Terrafame. On this basis, we are very motivated to drive the project forward," says Joni Lukkaroinen, CEO of Terrafame.

Terrafame is preparing to apply for an environmental permit for the battery chemicals plant in early 2019. The ongoing EIA procedure is expected to lead to a reasoned conclusion from the Kainuu Centre for Economic Development, Transport and the Environment (ELY Centre) in December 2018.

Background information on the resource flow model used in the report

The impact of the battery chemicals plant on the regional economy was estimated by utilising the resource flow model developed by Ramboll Finland and Natural Resources Institute Finland on behalf of the Finnish Innovation Fund Sitra. The report on the regional economic effects of the Terrafame mine and the metals recovery plant, published in 2016, was also estimated using the same model. The report serves as Option 0.

The present assessment focuses on the direct regional economic effects of the battery chemicals plant and the multiplier effects of production and consumption arising from operations on total output, employment, value added and tax revenue. In addition to the direct effects of the battery chemicals plant, the assessment took into account production effects indirectly related to operations, as well as the changes in consumption arising from changed employee compensation and their effects.

The material of the resource flow model is based on national input-output data and regional accounts maintained by Statistics Finland. Statistics Finland's materials have been supplemented in the resource flow model with other data, such as statistics published by Customs, the Confederation of Finnish Industries, Finnvera, Finnish Entrepreneurs, Suomen Asiakastieto, the Ministry of Economic Affairs and Employment and the Ministry of Finance, and based on data provided by Terrafame.

Further information:

Production of Nickel and Cobalt Sulphates - Environmental Impact Assessment Report, 2018. Regional Economic Effects, Section 5. (pdf, 128 pages, in Finnish only)
Regional Economic Effects of the Terrafame Mine and Metals Recovery Plant, 2016. (pdf, 41 pages, in Finnish only)

Joni Lukkaroinen, Chief Executive Officer, joni.lukkaroinen(at)
Veli-Matti Hilla, Chief Sustainability Officer, veli-matti.hilla(at)


Terrafame Ltd is a Finnish multi-metal company producing nickel, zinc, cobalt and copper at its mine and metals production plant located in Sotkamo, Finland. We are now planning the processing of our main product, nickel-cobalt sulphide, into nickel and cobalt sulphates suitable for electric vehicle batteries. Our aim is to conduct environmentally sustainable, safe and profitable operations.

Article subjects: