Published on 04.03.2022 at 08.59
Terrafame's environmental provision to increase considerably – has a significant impact on the operating result for 2021
MEDIA RELEASE Terrafame estimates that it will receive a new environmental permit concerning all its operations from the Regional State Administrative Agency for Northern Finland in March 2022. The environmental permit will also stipulate the measures for the closure and rehabilitation of Terrafame’s production and waste areas as well as a euro-denominated collateral for environmental rehabilitation to ensure these measures. The collateral will secure the closure measures required by the permit in the event that the operator is unable to perform them.
In 2021, the Regional State Administrative Agency for Northern Finland granted a separate permit to Terrafame for the extension of the primary bioleaching area. In its decision, the Regional State Administrative Agency raised the area-based collateral set for the closure plan of the primary leaching area. Terrafame estimates that the increased collateral stipulated in this permit decision will also have an impact on the environmental permit concerning all its operations, estimated to be granted in March 2022, which is expected to increase the total amount of the collateral significantly.
Terrafame has prepared for the costs generated by the closure measures with an environmental provision, which is included in the balance sheet and updated annually. Where applicable, the provision complies with the collateral stipulated in the environmental permit as well as the area-based cost estimate for the closure issued by the Regional State Administrative Agency for Northern Finland.
Based on the previous permit decision described above, Terrafame assumes it is likely that the collateral for environmental restoration will increase in the new environmental permit. This has been, therefore, anticipated by the company in its 2021 Financial Statements by increasing the environmental provision from EUR 159.1 million to EUR 232 million. The impact of the increased provision on the operating result for 2021 is EUR -72,9 million.
“We consider the collateral specified in the current environmental permit to be sufficient to ensure the safe closure of the production and waste areas even in the event of a sudden cessation of operations, and we therefore see no need to increase the collateral. However, since the separate permit decision we have previously received for the primary leaching area anticipates a significant increase in the collateral in the new main permit as well, we deemed it necessary to increase the environmental provision in the company’s balance sheet accordingly,” says Joni Lukkaroinen, CEO of Terrafame.
Terrafame will publish the financial result for 2021 today on Friday 4 March 2022.
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