Since 2012, after the first spill, Talvivaara has been suffering from financial problems. Due to the first spill, the company has built multiple new dams to prevent the spread of the polluted waste water to the environment. Talvivaara has spent millions of euros in building its reputation and the company image to attract investors.
In addition to the first spill, another spill occurred in the spring 2014. The latest share issue had just ended. This spill forced Talvivaara to allow investors to cancel their participation in the latest share issue. Ilmarinen, at the time, the biggest share holder of the company canceled their share issue, and this created a situation where Solidium, a Finnish goverment owned company, to become the largest share holder.
According to Mr. Rauno Saarinen, a Finnish professor on environmental politics, the company didn’t provide enough resources to environmental and water purification technology. The skills were built around these aspects, but they were not taken seriously. Decision-makers in the company underestimated the need of environmental professionals. At the moment, the Finnish court is processing whether or not Talvivaara is guilty for environmental offenses.
Due to the mistrust in Talvivaaras board members, the company is suffering from serious financial problems. Investors are afraid and doubtful to invest in Talvivaara. As a consequence the stock prices start to fall.
However, as the Finnish government owns the largest share of the company, it will not allow Talvivaara to go bankrupt.
This causes a major conflict for the investors to trust their instincts on the investment. In my opinion, this forces the Finnish government to come forth in their investment, and to secure the position of Talvivaara in the Finnish mining industry.
Even though, Talvivaara has permanently damaged the image of the Finnish mining industry in the eyes of local investors; I believe that bold investors are willing to take the high risk Talvivaara for the high return of investment. In general, it is very rare for a large Finnish companies to go bankrupt. This is reflected in Talvivaara. It applied for bankruptcy at the end of 2013, and the district court suggested a bankruptcy reorganization over the course of 8 years. During this time, Talvivaara would be split into shares for smaller investors to purchase. The largest portion of the income would be used to pay the debt.
After the payback period, most likely Talvivaara would have paid back a major portion of its environmental debts. The ground on which Talvivaara is built, is very rich in minerals and in soil, and it creates a very unique position to compete with other major mining companies in the Finnish markets.
Due to the foundation of Talvivaara, it is able to compete with major Scandinavian mines. Because of the extremely low share price (0,040€ 08.10.2014) of Talvivaara, there is practically nothing to lose in investing to the company at the current situation. The Finnish government has a history in assisting companies in a bankrupt situation, and according to this history, the Finnish government will not allow for Talvivaara to go bankrupt.
Even though there is a StopTalvivaara community, it is only campaign against Talvivaara polluting the local Finnish water bases. Talvivaara is not endangered due to this campaign against pollution, because it holds environmental values and policies as mentioned earlier. However, the campaign is irrelevant for Talvivaaras’ business operation, due to its almost bankrupt state. The spill and dams are being rebuilt and taken care of, and the new investments will create an opportunity for Talvivaara to recreate its reputation as one of the leaders in Scandinavian mining industry.
If Talvivaara is able to attract investors with these matters, it would easily be able to get out of bankruptcy and rebuild its reputation as a leader in the field of mining industry. This rebuilding of the company would increase the share as well as create dividends for the investors as a return for their investment.
These are the reasons and history of why I believe Talvivaara will rebuild its reputation and its share price. Not only is the Finnish government willing to take a risk for Talvivaara, but now we need for the public investors to take the risk as well to push this Finnish company to prosper in its area of business instead of bringing it all down.
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