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UPDATE 1-Finnish regulator positive on Terrafame's uranium mining application

Lefteris Karagiannopoulos

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OSLO, June 11 (Reuters) - Finland's radiation and nuclear safety authority (STUK) has issued a positive recommendation on miner Terrafame's application to mine uranium commercially, STUK said on Tuesday.

Its recommendation will influence the government's decision on whether or not to grant Terrafame a permit, which would allow the company to become the first miner to extract uranium on a commercial scale in the country.

"There are no radiation safety-related obstacles for granting a permit for the uranium recovery plants of Terrafame," STUK said in a statement.

Terrafame plans to recover uranium acquired as a by-product of other metals and to refine it into yellowcake, a semi-finished uranium oxide product used to manufacture fuel for nuclear power plants.

"he ore processed by the company each year contains about 300 tonnes of uranium, half of which dissolves during bioleaching. A uranium extraction plant would be able to recover about 135 tonnes of said uranium," said STUK.

If Terrafame gets the permit, it has said it estimated it can start mining towards the end of 2019 and would invest 10 million euros ($11.3 million) to expand one of its plants.

The recovery plant will be part of Terrafame's metal plant and the raw uranium products will not be transported outside the mine area for processing before the completed uranium oxide product is transported off site.

The ore mined at the Terrafame plant contains varying quantities of uranium with the highest concentrations at around 1520 milligrams per kg. By comparison, the average concentration of uranium in Finnish soil and rock is about 4 mg/kg.

Uranium mining in Finland has only previously been conducted at on a test basis.

Terrafame Ltd is a multi-metal company producing nickel, zinc, cobalt and copper at its Sotkamo mine. The company is 77% owned by Finnish Minerals Group, a company wholly-owned by the Finnish state.

Terrafame was set up by the Finnish government to take control of what was Europe's largest nickel mine some years ago from Ahtium Oyj, previously named Talvivaara.

The former owner went bankrupt after facing serious production problems caused by a waste leak in 2012 that contaminated still-polluted nearby lakes in what was Finland's worst environmental catastrophe in recent decades.

($1 = 0.8835 euros) (Reporting by Lefteris Karagiannopoulos, editing by Gwladys Fouche and David Evans)