For the sake of a piddling 200 million bucks!

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Welcome to Finland 1999 gave readers an outline of the history of the ceded territory of Petsamo and of the massive environmental catastrophe that nickel mining and smelting there has caused. Several readers have contacted us to ask how much nickel is mined there and what it is worth. Getting hold of precise and reliable data has proved exceptionally difficult. For example, the Russian desk at the Foreign Ministry received no reply whatsoever from Norilsk Nikel to the enquiry that it made at our request. The Finnish company Outokumpu's London-based chief economist Michael Cook and the Foreign Ministry were our main sources of data for the following summary, which supplements the article published earlier.

The company called "Gorno-metallurgitcheskij kombinat Petchenganikel" has operations in the towns of Zapolyarnyi and Nikel. With a workforce of 8,200 it is the biggest employer in the Petsamo region, the total population of which is 46,200. Norilsk Nikel is part of the same group of companies.

Nickel prices on the world market have long been too low for mining in Petsamo to be economic. The 45,000 tonnes of the metal produced in 1998 was worth slightly in excess of $200 million. In spring and summer 1999 the market price rose to $7,000 per tonne, substantially above Petsamo's break-even level of $6,000. It is estimated that the total output for 1999 could bring in as much as $250 million.

The operations could be made more profitable by investing in new technology, something that would now be possible since the result has improved. On the other hand, the future development of the price of nickel is uncertain and the existing technology will allow operations to continue with any certainty only until 2007. Pechenganikel has been trying to find new sectors to substitute for its unprofitable nickel production. One example of this is its cooperation with the Norwegian company Dyno Industri to make explosives for underwater use. An agreement to modernise Pechenganikel's ore-concentration plant has been concluded with Outokumpu.

The bleak truth is that for the sake of only about $200 million Pechenganikel is being allowed to emit 250,000 tons of sulphur dioxide and 10,000 tonnes of particulates (i.e. dust) into the atmosphere each year. The Russian Government decided in 1995 to support a project to reduce emissions. The total budget would have been $275 million, of which Russia would have contributed about one-sixth, Norway roughly the same, Denmark one million and Norilsk Nikel the rest. In 1996, however, the Norwegian Government decided not to participate in the project and the situation is still open. If the modernisation of the enrichment plant had been carried out, it would have cut sulphur dioxide emissions to 12,000 tonnes and particulates to 2,500 tonnes.