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Second-largest foreign direct investment to Estonia signed
EBRD participates in construction and operation of EUR153 million pulp mill
The European Bank for Reconstruction and Development is investing alongside other shareholders €5 million of equity in AS Estonian Cell to build and operate a state-of-the-art pulp mill. Together with Norway’s Larvik Cell and Austria’s Heinzel Holding the EBRD will become a 33 per cent shareholder in Estonian Cell, and the shareholders will also extend a €14 million subordinated loan to the company. A senior syndicated loan facility will be arranged by Raiffeisen Zentralbank of Austria. With a total investment of €153 million, the project is the second-largest foreign direct investment in Estonia.
The turn-key contractor for the mill is RWE of Germany and the main equipment supplier is Andritz from Austria. The factory will be located in the Kunda region in north-east Estonia and will produce bleached chemical thermo mechanical pulp from aspen wood for the world market, with a focus on Europe.
Aspen pulp has considerable advantages over the more widely used bleached kraft pulp, but limited production capacity so far has limited its use. In the Baltic countries, however, aspen is plentiful, with the proximity to an abundant supply of raw material which regenerates naturally providing a major competitive advantage.
Noreen Doyle, EBRD First Vice President, said three factors form the cornerstone of the project’s strategy: the pulp mill will be the most modern of its kind in the world, sited near a source of abundant, competitively priced raw material, and also close to its main market. The investment should demonstrate the possibilities for attracting strong long-term industry partnerships and it will help develop Estonia’s export industry.
Roar Paulsrud, President of Larvik Cell, said that the utilisation of Estonian raw material to produce high value product for the world market is one of the most important features of this project, contributing directly to the development of the Estonian economy.
Alfred Heinzel, President Heinzel Group, said that the unique combination of trading and fiber production experience of Heinzel Group will be deployed for the benefit of the project. Also the Heinzel Group’s world wide marketing network will be used for sales of Estonian Cell´s pulp.
Since the start of its operations in 1991, the EBRD has signed more than 40 projects worth some €450 million in Estonia.
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