Silmet calls for state to help develop Sillamae

The Silmet Group, one of northeastern Estonia's heavyweight industrial players, this week asked the state to cover a third of the cost of building a state-of-the-art cargo port in the coastal town of Sillamae.

"With an annual cargo turnover of 10 million tons, Sillamae port could become a competitor to the transit corridors of the neighboring countries and significantly raise living standards in northeastern Estonia," said Tiit Vahi, Silmet Group's chief executive, after submitting drafts of the project to the Ministry of Economy and the Ministry of Regional Affairs.

"Our project would need about 200 million kroons ($12 million) or one-third from the state. We've held talks with two bank groups, and they found the idea promising. The amount to be self-financed would be 25 percent of the total cost," said Vahi.

State funding could come either in the form of investment by the state-owned company Talinna Sadam (Tallinn Port) or by the European Union, said Vahi.

Government-backed construction could begin as soon as next year, he added.

Tiina Salumae, adviser to Economy Minister Liina Tonis-son, played down hopes of a quick government response, saying the Sillamae proposal was one of hundreds of such applications the ministry receives.

"The project will be analyzed, but the issue is so complicated we cannot expect an answer soon," said Salumae.

The port of Sillamae was established early in the 20th century and was active until the 1940s, when a uranium refinery was built next to it. The Soviets closed down the port and later partly destroyed it for security reasons.

About 400 people would get jobs in the port, and another 3,500 would be employed in auxiliary services such as customs warehouses, said Vahi.

Operators of the Port of Muuga, a branch of Tallinn Port, believe that giving money to Sillamae would be a slap in their face.

Arnout Lutgeimer, chair of Estonian Oil Services, an oil transit company, said he was tired of hearing about investing in Estonia's regions.

"If Tallinna Sadam started to invest in Sillamae instead of investing in Muuga port, this would show (Tallinna Sadam's) negative disposition to the bread we, the port operators, give them every day," he said.

Such comments prove how competitive Sillamae could be, Vahi retorted.

"The state should keep the whole country developing, not just the capital city. A port would turn Sillamae from a mass of problems into a sexy investment destination," said Vahi.

Sillamae town has about 19,000 residents, most of whom work at Silmet.

The Silmet Group comprises five enterprises involved in rare metal production, environmental management, electricity and heat production for the public sector, real estate management, a free economic zone and port development work.