Boreal Bioref and China CAMC Engineering (CAMCE) have signed a letter of intent for the construction of a bio-refinery in Kemijärvi, Lapland.
The bio-refinery is set to enter into commercial operation in 2020 and have an annual production capacity of 400,000 tonnes of bio-based chemicals and materials, such as dissolving and softwood pulp.
Most of the pulp will likely be transported to China. The country's annual pulp needs are projected to exceed twenty million tonnes in the near future, as it seeks to ramp up the production of paper and paper-board in the face of surging demand.
“We believe this will be a good project for both Finland and China,” Wang Yuhang, the deputy chief executive of CAMCE, tells Talouselämä. “The plant's capacity isn't awfully big in light of our needs, but it's a good start.”
Finland, he adds, was a particularly attractive investment destination due to its ability to guarantee both competitive prices and a stable political and regulatory environment.
“If you compare Finland to Russia or Belarus, the construction and operating costs may be a bit higher, but the political and legislative environment is great. Finland is a safe place from an investor's standpoint. Still, the costs can't be too high. If the pulp market nosedives, only the producers with the lowest costs will survive,” says Wang.
CAMCE, a subsidiary of the majority state-owned heavy equipment manufacturer Sinomach, is expected to make its final investment decision by the end of next year. Once confirmed, the investment will be yet another indication of the competitive manufacturing environment in Finland, views Jari Tielinen, a senior advisor at Invest in Finland.
“We have a great platform, a deep-rooted industrial tradition, world-class expertise and growth opportunities. This verifies and corroborates our belief that Finland is an excellent growth platform for the bio-economy,” says Tielinen.
Finland's vast forest reserves also practically guarantee the supply of raw material for bio-refineries, says Jussi Pesonen, the chief executive of UPM and the board chairman of Finnish Forest Industries. The country, he says, has the best-managed forests in the world that can be utilised more efficiently than ever before.