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Bioeconomy factories would bring thousands of new jobs to Lapland

The Finnish Metsä Fibre is plannig a large bioproduct factory in Kemi and partly Chinese-owned Boreal Bioref is planning one in Kemijärvi. Chinese-owned Kaidi Finland has a biorefinery project aiming which would also locate in Kemi.

If all three bioeconomy projects were realized, Lapland would receive a tremendous amount of new employment. According to the calculations of Boreal Bioref, its refinery would create more than 1,100 permanent jobs in Kemijärvi. In Kemi, Metsä Fibre’s new bioproduct mill would employ 250 people directly and approximately 2,500 people indirectly. According to Kaidi, the company would offer permanent positions to 150 people at their Kemi refinery.

During the construction of the factories, the employment effect would be manifold.

There would be enough wood for all three factories. However, the big question is whether Finland will still meet the EU’s carbon sink goals if all factories are built.

Metsä Fibre has project planning underway

Metsä Fibre, part of the Finnish Metsä Group, started the project planning for the construction of a new bioproduct mill in Kemi in the late spring of 2019. The mill would produce softwood and birch pulp.

The company already has a pulp mill in Kemi. The new mill would cost 1.5 billion euros. This would be the largest investment in the history of the Finnish forest industry.

The environmental impact of the new mill is currently being estimated.

‘We are likely to receive the environmental permit early next year. The investment decisions will be made in the summer of 2020 at the earliest,’ says Jari-Pekka Johansson, project director at Metsä Fibre.

The company has had pulp production in Kemi for a hundred years already. Even though the decision for the new mill has not been made yet, the area is already being cleared for the coming mill.

The project organization currently employs 16 people, many of them having experience of the construction of a similar bioproduct mill in Äänekoski some years ago.

Boreal Bioref would also produce raw material for textiles

The owners of Boreal Bioref operating in Kemijärvi include private residents of Kemijärvi, the Chinese public company Camce, behind which is the entirely Chinese state-owned Sinomach, and the Sino-Swedish Silvi Industries Ab.

In addition to long-fiber pulp, the refinery would produce dissolving pulp, which can be used to make textiles, for example. As by-products, the refinery also produces e.g. sugars that can be made into biodegradable substitutes for plastics.

‘It is essential that we can change our production flexibly according to demand. For example, if there is demand for dissolving pulp in the clothing industry, we can increase its production,’ says Heikki Nivala, the CEO of Boreal Bioref.

Boreal Bioref’s investment would be valued at 950 million euros.

The Regional State Administrative Agency for Northern Finland granted the company environmental, water and starting permits in June.

‘We are currently the only biorefinery in Finland whose permit matters are so far along,’ says Nivala.

According to Nivala, the criteria of the environmental permit were checked and executed already during the permit process in such a way that complaints should not lead to any change requirements.

Nivala says that the investment decision will be received within a few months. ‘No outside delays should be coming anymore. The ball is in the main owners’ court now,’ Nivala says.

Kaidi would turn waste into fuel

Kaidi Finland, the Finnish subsidiary of the Chinese Sunshine Kaidi New Energy Group, is planning a biorefinery in Kemi, which would produce advanced biofuels from energy wood and harvesting waste. Of the production, 75 percent would be biodiesel and the rest would be biogasoline. The size of the investment would be 900 million euros.

The EU’s renewable energy directive aims to have 20 percent of all energy consumption from renewable sources already by 2020. There is also a desire to increase the use of advanced biofuels in traffic. This may increase Kaidi’s attractiveness to investors.

The plant’s technology would be groundbreaking on a global scale. In China, the technology has been tried out in a pilot plant, but only on a small scale.

Kaidi has environmental and water permits, but the investment decision has been postponed several times.

‘There is still work to be done to manage the technical and financial risks. The investment decision will only be possible when the overall risk management is in order and the profitability evaluation gives the green light during the time of the decision,’ says Pekka Viljakainen, the CEO of Kaidi Finland.

Use of wood increasing

Metsä Fibre’s new mill would increase the company’s use of pulpwood in Kemi by approximately 4.5 million cubic meters. The majority of the wood is intended to be acquired from Finland, but the company is also considering the use of wood imported from Russia, the Baltic states and Sweden.

Boreal Bioref’s wood demand would be just under three million cubic meters. The company is planning to get the wood from the forests of Lapland, North Ostrobothnia, Kainuu and Koillismaa.

‘Of course, we also have Russia as a reserve. Kemijärvi is only about 70 kilometers from the border,’ says Bioref’s CEO Heikki Nivala.

Kaidi would primarily use forestry waste, effluents, and energy wood, so it is not on the same pulpwood market as the two pulp mills.

There has recently been heated debate in Finland about how much of our forests can sustainably be cut down.

Forests absorb carbon when the quantity of growing timber exceeds logging volumes and natural decomposition. According to the Finnish Forest Centre’s estimate, the carbon store of our forests is continuously increasing, even though the use of wood as raw material and in energy production has increased. Climate change contributes to the acceleration of the growth of forests, particularly in Northern Finland.

‘Including nature reserves, Lapland’s forests grow approximately 14 million cubic meters per year, and commercial removal in recent years has been four million cubic meters per year,’ says Nivala from Bioref.

EU to give carbon sink goals to Finland in the autumn

In the autumn, the EU will give its statement to Finland about how large a carbon sink Finland must aim for.

According to research professor Jussi Uusivuori from Natural Resources Institute Finland (Luke), the EU will probably accept Luke’s calculations. According to Uusivuori, three major users of timber in Lapland are too many for Finland to meet the EU’s carbon sink goals.

‘That would take us to risk limits,’ says Uusivuori. He notes that there would be enough timber as such.

If the limits were to be exceeded, it would cause additional costs because someone would have to buy emission permits from the market. The government will probably not consent to that, so the price of future emission permits will affect the companies’ profitability calculations. The EU’s carbon sink requirements may also reflect in the price of wood.

On the other hand, Finland can try to reduce its emissions in other industries to allow for more wood to be used.

‘This is a sensitive political question, no matter which parties are in the government,’ says Luke’s Uusivuori.

The demand for packaging materials growing

According to the head of department Jari Tielinen from Business Finland, the uncertain economic situation in China may puzzle investors. A lot of pulp is already exported from Finland to China, and the demand will grow in the long term.

‘It remains to be seen how a momentary bend in the prices and order quantities of pulp affects the projects. The standard of living in Asia is improving, however, and the demand for packaging materials and other paper products will just keep growing,’ Tielinen estimates.

His job at Business Finland is to promote the investments to the bioeconomy and circular economy from abroad to Finland. According to Tielinen, the parties investing in forestry consider Finland a stable and predictable investment environment.

‘We have a four-hundred-year tradition of expertise in forestry, and the forest industry is also developed in the long term under the control and support of the government. Large forestry projects are generally considered worth supporting, and it is important to secure a stable operating environment. Changes can be made, but in such a way that the industry has time to prepare for them,’ Tielinen says.