Finland has all it takes to become a top country in mining and batteries
Prime Minister Antti Rinne’s programme entails changes in the regulation and taxation of mining operations. The possibilities brought forth by the battery value chain call for further discussions.
18. July 2019
CEO, Finnish Minerals Group
Finland got a new government at the beginning of June. Prime Minister Antti Rinne’s government got a flying start, as the laborious EU presidency started at the beginning of July. The agenda is packed: dark clouds above the economic development, employment targets set high, tackling the climate change requires rapid actions, and the social and healthcare reform matters should be dealt with as well.
Environmental protection in mining to be improved
The Government Programme includes several entries on mining operations. The joint aim of the mining industry and the Government is to improve the environmental protection in mining, while the Government wants to safeguard the operating prerequisites for mines through the programme.
First of all, the Government has decided to renew the mining legislation. After the publication of the Government Programme, Doctor of Law Pekka Vihervuori assessed the need of revisions to the Mining Act and gave his report, not proposing any fundamental revisions. Subsequently, a citizens’ initiative to amend the Mining Act collected a sufficient number of signatures to proceed to the Parliament.
Mining is already subject to several permits and approvals by the authorities, but authority resourcing, the electronic notification and announcement procedure as well as the relationship between various laws with the Mining Act, among other things, should be developed. The Government Programme includes reforms to land-owners’ right of information, the rights of indigenous peoples, the co-ordination of mining and environmental permits as well as practices relating to exploration permit processes.
Tighter taxation on mining
Changes to taxation on mining operations have also been planned. The electricity tax category of mines will change, which increases the costs of mines and weakens the conditions of the mining industry to electrify its equipment.
The amount of the change in electricity taxation in euros corresponds by and large to estimates on the possible mining tax revenue presented before the election. Despite this, the Government Programme also includes an entry on examining the introduction of a new mining tax.
New tax burdens will shorten the operating periods of mines and could hinder new investments, so the total tax revenue would not increase with an amount equivalent to additional taxes in the long term.
Careful preparation is essential
When developing regulation and taxation related to mining operations, careful preparation and international comparison is paramount in order to ensure that Finland remains a viable mining country. In addition to the mining industry, this is also important to the raw materials processing industry and to the Finnish technology industry which is built on the mining industry. The merger of Metso Minerals and Outotec, announced in early July, reminds us of the significance of this.
One of the most important competitive advantages of Finnish mining in the global market is its strong approach on sustainability. Developing this aspect further is a priority to us at Finnish Minerals Group as well.
Capital required for investments under preparation
Mining got a lot of attention in the Government Programme. Hopefully, this will create the foundation for the development of the Finnish battery industry. Before the election, MPs of the Social Democratic Party published an initiative for government programme, in which they proposed allocating capital to Finnish Minerals Group. The Centre Party also took a positive stand in publicity. The Green Party, for example, will presumably support investments in the responsible production of lithium-ion batteries in Finland, which is necessary for preventing the climate change.
Finnish Minerals Group is currently working with industrial partners to invest in the different phases of the battery value chain: the production of precursors, cathode active materials and battery cells. These are significant investments, totalling to about EUR 1.5 billion. The minority share of Finnish Minerals Group would be in the league of EUR 200–300 million. The project would annually create 9,100 labour years during the operation and an annual tax revenue of approx. EUR 500 million.
Changes to plans – but progressing with confidence
Despite the challenges, we believe that solutions for building a Finnish battery value chain will be found in the discussions with the state-owner in the autumn. Here at Finnish Minerals Group, we are committed to continuing this work.
However, we will have to prioritise projects and, for the time being, we are unable to make investments in new Finnish mining projects. The ongoing preparations to invest in new mining projects are now on hold, and we are targeting our resources to our present portfolio companies and to preparing investments in the battery value chain.
Read more about the opportunities available to Finland:
18. July 2019