Baltic Pulp paper mill still in negotiations

RIGA - The never-ending Baltic Pulp mill saga is still in full swing. The negotiating parties - the Sodra Group from Sweden, Metsaliitto Group from Finland and Latvian government - are still talking about implementing the project, which Agriculture Ministry deputy state secretary Arvids Ozols said probably would boost the Latvian gross domestic product by at least 3 percent in 2005. But there are a few snags which need to be resolved before any construction of the mill can begin.

"The first thing is that we want the law on natural-resource tax to be applied," Ozols said. "This means that every polluter, even within pollution limits, pays a tax. This money goes to protecting our natural resources. They (Sodra and Metsaliitto) have more or less agreed to this." This pulp mill project has already been discussed for several years, but no real decisions have been made. The mill is to be built in Ozolsala in Jekabpils county as this location already has good infrastructure needed to support the complex.

"The second issue we'll need to negotiate is the long-term concession rights for raw material to the mill. They want to have concession rights to forest areas and a guarantee that 40 percent of the raw material will be supplied," Ozols said. "We want to give concession rights to the forest but not the forest areas. I believe that it's possible to solve these issues through negotiations."

Local business newspaper Dienas Bizness reported that Baltic Pulp A/S was trying to solve the forest supplies for the mill by buying smaller forest companies with licenses to cut state forest in the region, but Jukka Laitinen, director of Baltic Pulp A/S, told The Baltic Times: "This is a misunderstanding. Baltic Pulp is not buying any company like this."

Kari Nars, an adviser to Sodra and Metsaliitto on the pulp mill project, warned the Latvian government at a press conference Aug. 15, saying delays in the project may scare off other potential investors. "There is only room for one large pulp mill in the Baltic states, and Latvia's neighbors, including Russia, have already showed interest in the pulp mill project," Nars said. Nars suggested the Latvian population and politicians may not have been fully informed about the economic benefits it will bring once the project is implemented.

The foreign investors argue they will bring job opportunities, raise the economic growth of the country and provide energy to the town nearby if the pulp mill is constructed. Ozols said he was aware of other countries' interest in the mill but added that none of them has presented any real figures. Laitinen said there are many different views on several things which have to be negotiated. "I think that if everything runs well, we'll be prepared to start construction by next year," he said.