Terrafame is to build a EUR240m (US$274m) electric vehicle battery plant in Sotkamo, Finland and has entered into what it says are “major technology agreements” with equipment suppliers.

“Terrafame has reached the planned target level in the ramp-up of metals production,” said Terrafame chairman, Lauri Ratia.

“During ramp-up, net sales have also improved, along with profitability. The company’s board considers this a good time for making new decisions regarding the future.”

For his part, Terrafame CEO, Joni Lukkaroinen added: “We have taken the plant project forward with determination since the autumn of 2017, so the investment decision made by the board is an expected one.

“Our production technology enables low carbon footprint of nickel and cobalt sulphates needed for electric vehicle batteries. Our goal is to complete the plant by the end of 2020, with commercial production commencing at the start of 2021.”

A significant share of Terrafame’s nickel and cobalt sulphate production is already being allocated to manufacturing electric vehicle battery chemicals, although the further processing into chemicals is currently done outside Terrafame.

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“Our own battery chemicals plant takes us further in the value chain and closer to the end users,” noted Terrafame CCO, Janne Palosaari.

“It allows us to provide a large customer base with nickel and cobalt sulphates, which are produced in a process optimised for Terrafame’s ore.

“Simultaneously, Terrafame becomes a significant operator in an industry that advances the reduction of carbon dioxide emissions in transportation.”

The investment costs of the battery chemicals plant amount to around EUR240m. A financial package of US$200m on the funding of the plant project, agreed by Finnish Minerals Group (previously Terrafame Group), Galena Asset Management, Trafigura Group and Sampo was published in November, 2017.

In connection with the plant’s final investment decision on 24 October 2018, the parties have agreed a complementary financing package of around EUR100m, consisting of a EUR43m loan offered by Trafigura and an EUR60m equity investment obligation granted by Galena Private Equity Resources Fund and Finnish Minerals Group.

Finnish Minerals Group’s share of the funding will be carried out by reallocating EUR30m to the plant project from the EUR50m commitment granted to Terrafame in February 2017.

Finnish Minerals Group’s financial responsibility in Terrafame will not increase due to the new financial arrangement and no new funding has been required from the State of Finland.