Terrafame has a significant impact on the Kainuu and Finnish economy
A report on Terrafame's economic impact on the area was published in 2016. The report reviewed the company's direct economic impact and the multiplier effects of production and consumption in Kainuu and elsewhere in Finland.
The consulting company Ramboll Finland carried out a survey of Terrafame's impact on the regional economy in autumn 2016. The conclusion was that Terrafame's multi-metal mine and metals production plant are highly important to the vitality of the Kainuu region in Finland. In addition, the impacts on employment and economy extend widely to other parts of Finland and to various industries.
The report evaluated the annual impact of Terrafame's activities during 2019–2023 with the assumption that the company will be operating at full capacity in accordance with its strategy. The effects were compared to a situation in which Terrafame's mine and metals production plant did not exist.
The estimate did not include the possible battery chemicals plant investment, which would produce extensive economic and employment impact. The company secured financing for the battery chemicals plant investment in 2017. The report also did not include the commissioning of the uranium recovery plant, which would contribute to the area’s economy, employment and competence development.
Significant increase in the total output of Kainuu and Finland
According to the report, the total production value (total output) of Terrafame's mine and metals production plant, together with the relevant multiplier effects, will rise to around EUR 1.1 billion per year.
Together with the multiplier effects, the impact on the total output of Kainuu will amount to approximately EUR 600 million per year. Compared to the 2013 figures, this is approximately 16.7% of the total output of the Kainuu region. Regarding the total output of other parts of Finland, Terrafame's impact was estimated to be approximately EUR 510 million.
The multiplier effects of production are estimated to be EUR 77 million in Kainuu and EUR 415 million elsewhere in Finland. The multiplier effects of consumption are estimated to be EUR 43 million in Kainuu and approximately 93 million elsewhere in Finland.
Nearly 11 per cent of Kainuu's gross domestic product
The Terrafame mine and metals production plant have a major impact on the GDP of Kainuu and Finland as a whole. According to the report, Terrafame's impact on Finland's GDP will amount to approximately EUR 430 million. Of this, EUR 225 million will be generated in Kainuu, which is equal to 10.9% of Kainuu's GDP compared to the 2013 level. Approximately EUR 210 million will be generated elsewhere in Finland. In total, compared with the 2015 level, this corresponds to 0.2% of Finland's GDP.
Employment impact of about 4,300 person-years
The employment effects of Terrafame's operation are substantial both for Kainuu and the entire country. According to the report, in a production situation that is in line with the company's strategy, and with the multiplier effects included, Terrafame's mine and metal production plant will employ approximately 1,500 people in Kainuu. Elsewhere in Finland, including the entire supply chain, the employment effects will amount to approximately 2,800 person-years. Consequently, operations in accordance with Terrafame's strategy will create employment amounting to more than 4,300 person-years in total.
Almost EUR 140 million in various tax revenues
The report states that operations in accordance with Terrafame's strategy will generate, on an annual basis, a total of nearly EUR 140 million in tax revenue from real estate tax, corporate tax, local income tax, value-added tax, product tax and tax linked to production.
In Kainuu, the amount of annual local taxes will be approximately EUR 11 million. Elsewhere in Finland, local taxes will amount to around EUR 16 million. As for value-added tax, the total amount will be around EUR 91 million. With their multiplier effects, product and production-related taxes will amount to approximately EUR 11 million in Kainuu. Elsewhere in Finland, product and production-related taxes will amount to approximately EUR 8 million.
Kainuu's exports more than tripled
The default applied in the report is the year 2016 situation, where 75% of nickel and 100% of zinc produced by Terrafame are exported. Based on the autumn 2016 price forecasts, the annual value of Terrafame's exports is estimated to be approximately EUR 380 million. This would result in Kainuu's overseas exports increasing to approximately EUR 475 million. If mining operations continue in accordance with the autumn 2016 plans, Kainuu's exports will increase by approximately 230%.
In addition, if mining operations continue in accordance with the company's strategy, the annual value of exports from Kainuu to elsewhere in Finland will be approximately EUR 90 million. This consists of the sale of nickel, copper and cobalt for further domestic processing.
According to the report, each euro of Terrafame exports would generate EUR 2.88 of the total output in Finland, and each euro of Terrafame imports would generate EUR 7.62 of exports.