According to Vambola Kolbakov, the strategic project director, the plant uses easily recyclable raw material (grain) to produce plastics that currently are made from mineral oil mainly.
"The product of the project is an environmentally friendly PLA [poly-lactic acid]-based plastic," said Kolbakov. "Also non-core business products like bran, which will be further transformed to fodder, will be produced, and production waste will be composted."
Lounatoostus through its project development company Estbiotech and the University of Tartu, which owns the microorganism used, will implement the project.
The plant will be located on a 25 hectare plot in Polva, which already has suitable road and railway accesses, according to project officials. Some infrastructure such as a two-mile-long gas pipeline, a water pipeline and half-mile-long power lines will be installed.
"The company will employ 100 people but indirectly about 3,000 people dealing in agriculture, and transportation will be bound to this project," said Kolbakov.
The Estonian government has expressed its support for the project due to its effect on the overall development of the Estonian economy, especially agriculture. According to Kolbakov, the project anticipates 200,000 hectares of grain growing.
PLA-based plastics have many advantages over oil-based plastics, said Kolbakov. First, the PLA-based plastic is self-degrading in a natural bacteria environment. Second, the world market price for grain has been largely stable over the past couple of years while crude oil price has been fluctuating greatly and is on an upward trend. Third, the grain can be produced locally and it doesn't need processing before it can be used as raw material.
"Additionally, the PLA-plastic has the same positive physical, chemical and optical characteristics as existing plastics, and these characteristics can be varied with additions, and the price of it doesn't exceed the price of existing plastics," Kolbakov added.
"Our prices should be competitive," he added. "Our estimates show that we will be competitive. It becomes evident in the practical work. The projected price of PLA manufactured by the new plant is $1 - $1.50 per kilogram," said Kolbakov.
The full capacity of processing grain in the planned factory is 200,000 tons per year. After fermentation, 60,000 tons of PLA will be produced, 45,000 tons of bran will be left for fodder and 95,000 tons of waste can be used as compost.
According to Kolbakov, other starch-based products like food starch, dextrin and alcohol may be produced if there is no demand for PLA polymers.
PLA-based plastics can be used to produce pressed and blown plastic (packaging bags, waste bags), fabrics and fibers (hospital clothing, personal hygiene), cover material (plastic cups, paper and board cover), temperature formation (dishes, containers for fruit and vegetables, milk containers), blown products (bottles for several liquid foods and drinks).
"The PLA-based plastics have an antiseptic function. They keep bacteria away from food wrap," said Kolbakov.
The main markets for the product are expected to be Estonia, Latvia, Lithuania, Finland, Sweden, Norway and Denmark. The total plastic usage in these countries per year is approximately 1.2 million to 1.3 million tons.
Kolbakov believes it'll be possible to replace plastics now in use with bioplastics with little extra investment and estimates an immediate market of 100,000 tons to 180,000 tons per year. The total production at the factory comprises only about 8 percent to 9 percent of the whole plastic market, said Kolbakov.
According to the Modern Plastics Encyclopedia 1998, the demand for environmentally friendly biodegradable plastics is increasing by approximately 70 percent annually.
About 100 companies in the region have been contacted and approximately 60 percent of them have expressed their willingness to purchase bioplastics, Kolbakov said.
"Total investment needed for the project is
$ 40 million over two years, from which approximately $40 million is planned to be share capital for the plant building and working capital of $20 million financed with loan capital," said Jaan Tobreluts, senior project manager at Lounatoostus.
"According to our business plan, we should find an investor by May 2001. We have sent our project description to funds and investors all over the world," said Tobreluts.
According to Tobreluts, the final completion of the plant and training of employees will take place in April 2003, and the standardization and certification of production should be finalized at the same time.
The official opening of the plant is scheduled for May 2003, said Tobreluts.