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EBRD financing for a large "green-field" saw-mill in Latvia
The European Bank for Reconstruction and Development (EBRD) is providing a US$ 9 million (ECU 7.1 million) loan to finance the construction of a modern export-oriented saw-mill in the south-eastern region of Latvia. The two-tranche loan to the Latvian saw-mill company, SIA Vainionpaa Ltd, is the EBRD's first to an industrial enterprise in Latvia and one of the largest foreign direct industrial investments in the country.
"Latvia's abundant wood resources offer natural preconditions for the emergence of a modern and competitive mechanical timber industry. At full capacity the mill is expected to generate about US$ 23 million per annum in valuable foreign exchange income to the country. Impact on the local economy will also be significant as business opportunities for related private companies in wood harvesting, logging and transport will be created and Latvian forest owners will have a strong buyer for their timber", said George Krivicky, Director of the EBRD's Baltics/Belarus team.
In line with the recommendations of the Latvian Forestry Master Plan, the modern saw-mill will be able to produce sawn and dried wood at competitive rates, enabling Latvia to increase its exports of high-quality timber. The project will introduce a modern efficient full-scale operation into Latvian saw milling which is currently undergoing rapid and profound restructuring.
SIA Vainionpaa is majority-owned by the Finnish timber company Vainionpaan Saha Ky. The overall investment in the project will be US$ 27.1 million (ECU 22 million), of which 42 per cent is equity. Most of the proceeds will be used for purchasing equipment.
Measures to prevent damage to the environment and to safeguard health and safety have been incorporated into the plans for the construction of the mill while management initiatives will ensure that environmental concerns with respect to both mill operations and wood supply are taken into consideration. The project is expected to create several hundred jobs at the mill site and in transport and logging.
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