Terrafame pursues annual savings of EUR 10 million and initiates change negotiations
Terrafame follows a model of continuous improvement, actively seeking ways to enhance its profitability. The challenges seen in the electric vehicle market in 2023, especially in the Chinese market, have also affected Terrafame’s battery chemicals business.
Terrafame has decided to initiate a profitability programme, aiming for EUR 10 million in annual savings. The goal is to improve the company’s international competitiveness and profitability. The company is currently implementing significant investment programmes, which are necessary for the continuation of its operations and particularly related to the construction of the new secondary leaching area. These investment programmes increase the need for ensuring cash flow. Terrafame estimates that if realized, the measures of the profitability programme would start to impact the company's profitability as of the second half of 2024.
As part of the profitability programme, Terrafame has on 21 February 2024 issued an invitation to change negotiations concerning all personnel groups on production-related and financial grounds in accordance with the Finnish Co-operation Act. Terrafame has over 800 permanent employees, and the negotiations affect all employees. According to the initial estimate of the company, the maximum personnel reduction need would be in total 75 person-years. The possibility of layoffs is also considered in the negotiations.
“We have taken an extremely important development step by starting our battery chemicals production. In particular, the plant serves the European EV market, where the sustainability and low carbon footprint of battery chemicals play a key role. To ensure financially sustainable business operations in the future, it is vital for Terrafame to take necessary savings measures – our new business operations must also be efficient and profitable as the market situation changes,” says Seppo Voutilainen, interim CEO of Terrafame.
The aim of the change negotiations between the company and the personnel is to find a solution for adjusting personnel resources, working time patterns and general work arrangements to better meet the needs of the company. The negotiations will begin without delay and are estimated to last until at least early April 2024 in accordance with the legislation and collective agreements.
Terrafame will announce the outcome of the negotiations after they end.
Background
Terrafame took an important business development step by starting its battery chemicals production in 2021. Over the past two years, the company has executed a production ramp-up at the battery chemicals plant as well as signed new supply agreements related to European battery value chains. Previously, the company has announced partnerships with Renault, Stellantis and Umicore.
In 2023, Terrafame’s operating environment was demanding: the challenges in the electric vehicle market especially in Asia were also reflected in Terrafame’s battery chemicals business. The current market conditions are expected to continue causing considerable uncertainty in the price development of battery chemicals. The ramp-up of the battery chemicals production has progressed well despite the market situation.
In the longer term, the electrification of transportation is estimated to return to the previously forecast growth track. European battery value chains are still under construction, and the manufacture of batteries used in electric vehicles is currently heavily centralised in Asia. Terrafame is strongly focused on the European markets, where the low carbon footprint, traceability and sustainability of battery chemicals are important values to car manufacturers.
The company’s Financial Statements Release for 1 January–31 December 2023 will be published on 1 March 2024.
For further information, please contact:
Seppo Voutilainen, interim CEO, tel. +358 20 7130 800, seppo.voutilainen[at]terrafame.fi
Terrafame enhances low-carbon mobility by delivering responsibly produced battery chemicals to the global battery industry. One of the world’s largest production lines for chemicals used in electric car batteries is located on Terrafame’s industrial site. The plant is capable of producing nickel sulphate for around 1 million electric cars per year. The carbon footprint of the nickel sulphate produced by Terrafame is among the smallest in the industry.
Terrafame’s integrated, unique and energy-efficient production process from the mine to battery chemicals is located on a single industrial site. It provides customers with a transparent, traceable and truly European battery chemical supply chain.
Terrafame Ltd was founded in 2015. Its net sales in 2022 were EUR 584 million. Around 1,500 people work on its industrial site, half of whom are employees of partner companies.
