Talvivaara Short-Term Default Concern Eases on Nyrstar Support

Nyrstar NV reinstated support for Talvivaara Mining Co. (TALV)’s reorganization, easing concerns that the Finnish nickel and zinc miner will go bankrupt.

A district court in Finland appointed an administrator after Talvivaara filed for a corporate reorganization last month to raise funds and avoid bankruptcy. Talvivaara, a supplier to Nyrstar, received an extension until Dec. 18 to provide additional information after Nyrstar withdrew its support.

Nyrstar officials since then have met the interim administrator and “through this dialog, have obtained additional information and established a more clearly defined process moving forward,” it said in a statement today. The talks gave Nyrstar, the biggest zinc smelter, “additional comfort,” allowing it to reinstate support.

Talvivaara shares surged as much as 29 percent and traded at 6 pence, up 23 percent, at 10:18 a.m. in London trading. Nyrstar advanced 4.4 percent to 2.12 euros in Brussels.

“Nyrstar’s support means that the immediate fear of Talvivaara’s bankruptcy is pretty much over,” Antti Kansanen, an analyst at Evli Bank Oyj in Helsinki, said by phone. “It means that they will now get into the reorganization process, but there are still questions whether there’s long-term value in Talvivaara.”

Talvivaara has suffered from falling nickel prices and a slow ramp-up at its mine in northern Finland. The Espoo-based company withdrew a 2013 output forecast of 18,000 metric tons in July after producing 4,508 tons of nickel in the first half. At current nickel prices, Talvivaara needs to produce 30,000 tons of nickel a year to be profitable, according to Chief Executive Officer Pekka Pera.

Nyrstar in 2010 agreed to pay $335 million for all of Talvivaara’s zinc concentrate until 1.25 million tons had been delivered. About 94,000 tons were supplied by the end of September, Nyrstar said last month. Talvivaara said Nov. 26 that the Brussels-based client had withdrawn its support.

To contact the reporters on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net; Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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