VILNIUS - The government has rejected an initiative to build a pulp mill and proposed that Parliament annul a resolution that had included a mill project in the list of facilities with status of national importance.
The decision was taken following a review of timber demand forecasts until 2010. Forecasts show that local raw material supply would not suffice to meet the demand of the new plant, the government said in a press release.
Lithuania should focus on investment projects to expand production of wood chipboards instead, government experts concluded.
According to the estimations made in 2002, the value of the pulp mill project would exceed $760 million. Deko, a Russian concern, was to assume responsibility for financing the design and construction of the new plant. Deko aimed to process 1.5 million cubic meters of timber in Lithuania.
Finnish and Swedish company Stora Enso, Finland's UPM-Kymmene and Swiss Mercer International, all inquired about possibilities to invest into the mill.
According to preliminary estimations, the pulp and paper mill would employ a workforce of about 700. The turnover would reach some 2.3 billion litas per year, while the profit margin would be approximately 15 percent. Moreover, additional imports of timber for processing would also create added-value for the Lithuanian economy.
There was some surprise at the government's announcment to kill the project, which could attract some 1.5 billion euros in investments and would secure additional millions of litas in tax revenues for the budget.
The idea of building a giant pulp mill in Lithuania has been in the air for several years. A similar project in Latvia that had been in the works for several years met the same fate recently.
In the meantime, efforts to develop wood chipboard production have been undertaken by Giriu Bizonas, one of Lithuania's wood chipboard and furniture market players. The company estimates that its chipboard sales could reach 120 million litas (34.7 million euros).
Poland's Kronospan could reach annual sales of some 70 million litas following the completion of new wood chipboard plant.