According to Ivar Paplavskis, Aeroc's president, the production of the plant - autoclaved aerated concrete blocks and plates - will enter the market next spring. "The plant itself will be ready in March 2001, and will provide 50 jobs," he said.
The plant will be financed by a loan from Hansapank and the company's own capital. Ivar Paplavskis said Aeroc is going to return the loan in five or seven years.
Aerated concrete was invented between 1920 and 1930 and patented simultaneously in Finland and Sweden. Since that time the technology has basically remained the same - the building material is still made of sand, cement, gypsum and lime - but has been constantly improved.
Aeroc's board member Jazeps Paplavskis said it is an art to improve a simple technology and make it cheaper. The whole technological plan for the new plant was developed in Estonia.
Enno Rebane, administrative director of the Estonian building materials producers union, said the aerated concrete is completely safe, if produced from safe raw materials. The most dangerous is when they are radioactive.
"As to the components extracted and mined in Estonia, those are 100 percent safe with regards to radiation," said Rebane.
The concrete can be recycled, said Rebane. It depends upon the equipment of the producer, but in general extra pieces can be crushed and re-used as raw material.
Although being durable and five times lighter than usual concrete and insulating heat very well, aerated concrete blocks have certain characteristics to be improved, according to Rebane. "The most important task is constant improvement of the technology in order to make it cheaper and more effective," he said.
Rebane said that light-weight aggregate blocks are the main competitors of Aeroc's future production.
The phrase aerated concrete sounds new and strange in Estonian, and Ivar Paplavskis hopes an easier one - Aeroc block, will replace it.
Planned sales for the year 2001 are 45,000 cubic meters, according to Aeroc.
Initially, the sales region of the new plant will be limited to a 500-kilometer radius. However, the long-term goal of the company is the Scandinavian market. "Although similar production is already known there, we hope to beat our competitors with lower prices," said Ivar Paplavskis.
The company expects an average year net profit of up to 10 percent, and annual production of 200,000 cubic meters.
Building materials sales in Estonia totaled 1.4 billion kroons in 1997, and grew to 1.75 billion in 1998. However, the building boom went down in 1999 by 200 million kroons and slightly exceeded the level of 1997.
Nevertheless, the union predicts 11 percent growth by the end of this year, and the gross sales will reach the level of 1998.
The advantages of the plant's geographical location are evident: 90 percent of the raw materials come from the Laane-Virumaa region, and the port of Kunda, seen as the gateway for Scandinavian export, is only 8 kilometers away. "Rail and road transport will also be at our service," added Ivar Paplavskis.
Aeroc Ltd. belongs to Yaico Group, which also owns Yaico Inseneeriburoo engineering bureau and ZAO Petrobeton company. The latter is based in St. Petersburg and sells similar products there.