PM disheartened over Metsaliito back-out

  • 2005-03-09
  • From wire reports
RIGA - Optimism over plans to build a new pulp mill was dampened on March 4 when Latvian Prime Minister Aigars Kalvitis said that no development could be expected in the near future due to the difficulty of finding a financial investor.

"I think that there are only a few companies in the world who could [build the pulp mill], who are engaged in the market and who are big players. [Finnish wood industry concern] Metsaliitto is one of them. I think, it is impossible for now to find another [investor]. But Metsaliitto has not left Latvia forever, they have just suspended the project, maybe to return to it later," Kalvitis said.

The prime minister noted, however, that there were no limitations set for any other investors wishing to develop such a project in Latvia. Yet if such an investor were to be found, the state would not participate in the construction of the plant.

"If somebody wants to, he, of course, can try to do it. But the government will not get involved in any relations with such companies. Relations with Metsaliitto should also be built purely on the principles of private initiative and free market, and not on support from the state. EU legislation forbids us to give this support," Kalvitis said.

However, the PM did not rule out the possibility of discussing the issue with his Finnish counterpart Matti Vanhanen during his upcoming visit to Finland, where he is also planning to meet Metsaliitto representatives.

Finland's Metsaliitto Group dropped plans to build a new pulp mill in Latvia this past February.

"If the government, Parliament and the Latvian population do not want a pulp mill, we won't build one," Metsaliitto group Vice-President Eero Kytola said.

He added that a year ago, the company nearly reached an agreement with the government over the construction of a pulp mill in Ozolsala, located in eastern Latvia near the River Daugava. However all of this changed when the State Environmental Effects Assessment Office prohibited the use of the proposed pulp-bleaching method, as it could threaten the area's ecological system, as well as fish resources in the country's largest river.

Kytola argued that pulp mills in Finland used this technology, and that alternative methods were rare.

He added that the company would change its decision not to build the pulp mill when "conclusions will be made based on facts, not assumptions."

The prime minister said that he regretted Metsaliitto's decision: "We will have lost a large investor and a project important for the forestry industry."

Metsaliitto had promised to invest 900 million euros into the plant, which would have been the country's largest investment project so far. The plant's output was estimated to be 600,000 tons a year, and would have created 350 jobs directly, not to mention related industries.