Officials in Latvia rejected suggestions that the Estonian mill threatened the success of a new mill to be built in Latvia.
Roar Paulsrud, a board member at Estonian Cell, told the Baltic News Service the company had selected a location for its plant and detailed planning had started. The facility is expected to be finished by the end of 2003 and to be working at full capacity in 2004. It will require an investment of 1.4 billion kroons ($82.35 million).
"We've worked in close cooperation with the Estonian energy company Eesti Energia, gas utility Eesti Gaas and Estonian railway company Eesti Raudtee," Paulsrud said. "Kehra has all the infrastructure needed for this kind of factory."
The Kehra facility will employ between 70 and 80 people, but about 100 more will be employed in related industries.
Estonian Cell and the Estonian State Forest Management Center signed Oct. 9 a long-term agreement under which the center will supply approximately 140,000 cubic meters of aspen wood to the facility annually.
Paulsrud said Estonia Cell had already found a buyer for the plant's entire output for the next 10 years but declined to name the buyer.
Estonian Cell belongs to the Norwegian Larvik Cell of which Paulsrud is the majority owner. Larvik Cell's turnover was 340 million kroons last year.
Meanwhile negotiations continue in Latvia over plans for a pulp mill near the eastern city of Rezekne. Arvids Ozols, deputy state secretary at the Agriculture Ministry, said the project was on schedule and that the Estonian mill did not threaten the success of the Latvian project.
"We're still working and negotiating. The Estonian mill will be different from ours. It will use different technology and create a different kind of product."
Ozols' comments were echoed by Jukka Laitinen, president of Baltic Pulp, the company set up to create the Latvian mill.
"The Estonian mill is so small it won't affect us at all. Their capacity of 130,000 tons of pulp per year is only 20 percent of the planned capacity of our mill," Laitinen said.
Experts have already said that the region might not be able to sustain two pulp mills, but Laitinen rejects this and says the region has enough raw material for two mills.
"If the mill in Estonia is so small, the raw material will come from Estonia," he said. "Probably they won't have any need to import raw materials."
The Baltic Pulp company comprises the timber companies Sodra and Metsaliitto of Sweden and Finland respectively, and the Latvian state. It has been said the mill would bring an investment of 1 billion euros ($909 million) to Latvia, making it the biggest foreign investment package the country has known. The mill is expected to be operational in 2005.
Ozols believes it will boost Latvia's gross domestic product by at least 3 percent.