RIGA - Top government officials and investors have agreed that the proposed 900 million euro pulp mill in western Latvia – the largest investment in the country's history – can do without the paper plant, a demand that had recently been put forth by a state working group.
However, Prime Minister Einars Repse, who met last week with project representatives, stressed that all environmental aspects of the project needed to be resolved before negotiations on building the mill could proceed.
The government is insisting that both construction of the pulp mill and bleaching technologies implemented in pulp production should use the most modern technologies so that minimal damage is incurred to the environment.
According to Repse, representatives of Metsaliitto, the Finnish company leading the Baltic Pulp project, have agreed to use as little chlorine as possible for whitening pulp during the production process.
Environmentalists fear that any pulp production, which traditionally consists of toxic chemicals, could permanently damage the Daugava River.
Speaking on Aug. 13, Repse said that the ecological aspect of the project – called Baltic Pulp – should receive the most attention.
"I understand that Latvia must insist that the mill use nonchlorine technologies. The Finish investors say that they could also use low-chlorine technologies. This must be assessed by environmental experts," Repse was quoted by Baltic News Service as saying.
According to Baltic Pulp managing director Jukka Laitinen, who met with the prime minister, the proposed plan calls for the use of ECF – elemental chlorine free – in bleaching technology.
Finnish and Latvian specialists are currently discussing the technology, said Laitinen. "[The Latvians] want a clearer picture of ECF," he said.
Deputy Prime Minister Ainars Slesers, who also met with Metsaliitto officials, said that a Latvian delegation would be heading to Finland in the near future to study both nonchlorine and low-chlorine technologies. In order to mitigate public speculation on the environmental effects of Baltic Pulp, the delegation will include both bureaucrats and local reporters.
Dienas Business reported that, according to a government source, the state would not discuss any state support package until the office for the evaluation of the influence on the environment issued a permit defining the bleaching method to be used in the plant.
Other reports have stated that Repse expressed an interest in gas-based technology for bleaching pulp. However, Baltic Pulp has no plans to use such technology, commented Laitinen.
Still, Baltic Pulp officials remain optimistic. "We believe we can show that the environmental impact is so low that we will be able to receive the permit," said Laitinen.
Implementation of the project, which alone represents more than 10 percent of Latvian GDP and 350 jobs in the Jekabpils district, has been dragging on for years, with each new government placing its demands on the negotiating table.
In July a working group suddenly decided that it wanted investors to build a paper plant along with the pulp mill in order to increase the project's value-added benefit to the economy.
Metsaliitto Vice President Eero Kytola and Baltic Pulp director Laitinen convinced Repse and Slesers that any paper plant would be highly vulnerable to market cycles and that, given the small size of the Latvian market, there would be problems exporting output.
"If we had to also build a paper mill, we would have to seek a market outside Latvia," said Kytola, and this would be problematic considering world paper markets are saturated and suffering from overcapacity.
For their part investors want guarantees from the state on tax discounts, supply of raw materials and a clear forest development policy for the distant future.
Metsaliitto currently owns 67 percent of the Baltic Pulp project and is prepared to purchase the government's 33 percent stake – which the state agreed to sell in the beginning of the year – once the project is off the ground.
Metsaliitto recently announced that it wanted Finland's Metsa Botnia to take over Baltic Pulp, but Repse stressed that the company would not back out of the project until all environmental issues were clarified.
Observers, however, urged haste in getting the project started. Former Prime Minister Andris Skele emphasized that the importance of Baltic Pulp for the national economy.
"Latvia needs such a project that gives maximum added value from wood," he told The Baltic Times. Baltic Pulp "should be given the largest [tax] breaks because it is important for us to get higher added value."
