Project number:


Business sector:

Manufacturing and Services

Notice type:


Environmental category:


Approval date:

02 Mar 2004



PSD disclosed:

07 Jan 2004

Project Description

The proposed project is an investment to construct and operate a green-field aspen Bleached Chemi Thermo Mechanical Pulp (BCTMP) mill with a daily capacity of [500] tonnes in the Kunda region of Estonia (the Projec").

The client is a special purpose company AS Estonian Cell incorporated in Estonia for implementing the Project. The BCTMP mill will use as a raw material under-utilised aspen resources of Estonia.

The project will provide technology transfer by introducing to the country the first new pulp mill since 1960's with modern, state-of-the-art technology.
The project will process and add value to a local low cost raw material before exporting.
The project will catalyse the market expansion for Estonian wood supply industry and will induce further competition.
The project is also expected to improve standards of business conduct and backward linkages to wood suppliers. Significant local sourcing will also have beneficial impact on the local forestry sector as the commitment of the Sponsor to use sustainable wood procurement and standard terms and conditions for suppliers should help spread such practices in the region. The Project's main contractor for fixed price turn-key contract is German RWE Industrie-Losungen GmbH and the main equipment supplier is Austrian Andritz AG.

Transition Impact

  • The project will provide technology transfer by introducing to the country the first new pulp mill since 1960's with modern, state-of-the-art technology.
  • The project will process and add value to a local low cost raw material before exporting.
  • The project will catalyse the market expansion for Estonian wood supply industry and will induce further competition.
  • The project is also expected to improve standards of business conduct and backward linkages to wood suppliers. Significant local sourcing will also have beneficial impact on the local forestry sector as the commitment of the Sponsor to use sustainable wood procurement and standard terms and conditions for suppliers should help spread such practices in the region.

The Client

AS Estonian Cell, a joint-stock company incorporated in Estonia for the purpose of implementing the project. The Project Sponsor is a Norwegian pulp producer Larvik Cell AS.

EBRD Finance

Equity and subordinated shareholder loan in total for EUR 19 million.

Project Cost

EUR 165 million

Environmental Impact

Screening categories and rationale for classification
The production capacity of the planned new plant is more than 200 tonnes of pulp per day. Therefore, the project has been screened A/0, requiring an Environmental Impact Assessment (EIA).
Information reviewed
At the time of the Bank’s involvement in the Project, the EIA had already been carried out in accordance with Estonian EIA law, which is consistent with EU EIA directive and with the Bank’s EIA requirements. Based on the EIA process, the Estonian Environmental Authorities have issued an integrated environmental permit for the construction and operation of the Plant. The Bank’s Environmental specialists have reviewed the EIA and the integrated environmental permit. They were found to provide satisfactory information for meeting the Bank’s EIA requirements.
Environmental issues
A contemporary environment-friendly technology will be used in the production – the Bleached Chemi-Thermo-Mechanical Pulp (BCTMP) technology, which, in the form to be used at Kunda, conforms to the requirements of the Estonian Integrated Pollution Prevention and Control Act (IPPC), which prescribes the conditions for the use of the best available technique in applying for an integrated pollution permit, as well as to EU and international requirements for the best available techniques (BAT). The Plant will introduce highest standards of energy and resource efficiency.
The Project will have an impact on the water regime of the production territory. A surface water dispersion system and a drainage system on the industrial territory have been incorporated into the project design to minimise the impacts and to ensure the preservation of high-value plants in the northern part of the real estate property.
The level of noise at the periphery of the plant may at certain times exceed the limit value of 55 dB and extend up to 300 m of the production building and the barking shop. The noise may cause some disturbance to residential area south west of the plant's territory. Noise abatement measures to ensure the acceptable will be determined on the basis of measurements after the start-up of the plant.
The process water demand of the plant (up to 10 l/s) is marginal compared with the average water flow in Kunda river at the location of the water inlet (6.2 m3/s). Therefore, the impact of the extraction of the plant's process water from the Kunda River is considered negligible and not to have a significant effect on the water resources of the river or on the spawning conditions of fish at the lower course of the river.
Wastewater will be purified in an activated sludge treatment process, widely used and proven in practice in the pulp and cellulose production. Aspen pulp can be easily bleached to a high level of whiteness in soft conditions, using only hydrogen peroxide as an active chemical and, therefore, wastewater do not contain toxic chlorinated organic compounds. Purified wastewater will conform to the levels recommended by the IPPC with regard to all parameters.
Rainwater and water created as a result of the drainage of the plant's territory will be collected and conducted through the rain water sewerage system to the purification installations consisting of bar screens and open ditches.
The impact of the discharge of purified wastewater into the sea through the deep-sea outlet has been assessed to be local and confined to the immediate vicinity of the outlet. The route of wastewater pipeline and wastewater outlet has been re-located as a result of the public consultation. The new locations of the outlet and pipeline will be more distant from the Letipea protected area and the recreational beach of the Letipea residential area to ensure these will not be significantly affected. The wastewater discharge will not cause significant adverse transboundary impacts.
The air emissions conform to the best available technique (BAT) standards and to the limit values applicable in Estonia with regard to any parameter. Due to the nature of BCTMP process, no foul-smelling reduced sulphur compounds are formed. The plant is not expected to have a significant impact on the ambient air quality in the surrounding areas. The combined effect of air pollution with other sources located in Kunda (mainly AS Kunda Nordic Tsement) will also remain within acceptable limits. The air emissions will not have significant adverse transboundary impact.
The Plant will use up to 400,000 m3 of aspen per year. The necessary aspen resources are available in Estonia and the more intensive use of aspen will have a favourable effect on the management of aspen forests. The area under aspen forests is 115,900 ha and the growing forest resources are 37.2 million m³. The current volume increment is 800,000 m³ per year. Estonian Cell is committed to adopt and implement wood procurement procedures that are based on principles of sustainable forestry, ensuring, inter alia, that:
  • the wood does not originate from protected forests or from areas recognised as having high ecological value;
  • the origin of the wood is monitored;
  • suppliers operate according to the principles of sustainable development, in compliance with applicable legislation ; and
  • the biodiversity and the functions of the forest ecosystem are maintained in accordance with internationally and nationally approved principles.
Solid waste will be either recycled or disposed of in accordance with regulatory requirements. The majority of the waste is bark and wood processing residues (sawdust, chips), which will be mainly sold to be used as fuel, although a part of it may be composted. Residual sludge from the wastewater treatment plant and the residues from the treatment of technological water will be composted. Hazardous waste and municipal waste management will be outsourced to licensed companies. Used oils will be collected into the waste storage facility located in the garage complex and will be sold to a concrete company. Waste storage or handling will not have a significant effect on the environment outside the plant's territory.
Chemicals will be stored in steel, plastic or RGP containers of 3 – 250 m³ partially surrounded by a concrete secondary containment. Any possible leakage of chemicals is to be removed with the help of pumps operating automatically.
The construction of the plant will have a positive socio-economic impact by creating direct jobs for 70 persons and an indirect employment of ca 300 persons and by promoting the management of aspen forests. The gross domestic product resulting from the processing of aspen into pulp will surpass by several times the GDP obtained from the export of round wood.
Environmental opportunities
The plant will promote sustainable and environmentally friendly forest management as well as contribute to the more effective use of aspen stands (forests) that have not been used for a long time in Estonia. The chosen technology will also allow the use of low-quality aspen and will thereby promote the management of aspen stands primarily in private forest land where a majority of forests with communities of aspen grow.
Summary of Environmental Mitigation and Management Measures 
The EIA and the associated public consultation process resulted in a number of recommendations for mitigating the potentially significant impacts of the construction and operation of the Plant, including:
  • An environmental management system will be established and implemented in due course after the start-up of the plant's operation in accordance with ISO 14001 standards to reduce a continuous environmental effect and to prevent accidents.
  • A drainage system will be provided to preserve the water regime and to ensure the protection of the ecologically valuable forest growing in the north of the project site. Forest protection measures and forest management works will also be applied.
  • Noise abatement measures, for example, the construction of noise barriers in the vicinity of the Plant's main sources of noise, will be sought for bringing the level of noise into conformity with the applicable standards, if it becomes evident in the course of operation of the plant that the level of noise in the closest residential district of Jõe street, Kunda Town, does not conform to the requirements.
  • When designing the final location of the utility network pipeline for wastewater, regard should be given to the borders and the applicable regulations of the Letipea nature protection area and to ensure taking account of the legitimate interests of landowners. The will be located at least 10m below the surface of the sea;
  • In case monitoring shows that the bottom flora and fauna in the surroundings of the wastewater deep-sea outlet have been affected to a significant effect and/or that the spawning conditions of fish have deteriorated, the programme for the restoring fish resources (in particular with regard to salmon and sea trout) will be taken part in;
  • In addition to compliance with the requirements of legislation, measures to prevent the use of illegally obtained wood as a raw material for the plant will be applied. In co-operation with wood suppliers, measures for promoting sustainable and environmentally friendly forest management will be applied;
  • Employees working on the composting grounds will be provided with special clothing and equipment to reduce the possible harmful effect of emissions emitted in the course of the composting process (including allergens);
  • Procedures for the prevention of accidents and for action in the event of accidents and regulations for internal fire safety will be established.
  • In the event of possible accidents, supervisory and local government authorities will be promptly informed thereof, risks will be evaluated and, as a result, the production process will be suspended or stopped, if necessary.
Disclosure of Information and Consultation
The EIA process in accordance with the Estonian EIA law, completed before the involvement of the Bank in the project, had included an extensive public consultation, including several public meetings held in different phases of the Project. A public consultation process was also carried out in the course of procedure for issue of the integrated permit in accordance with the Integrated Pollution Prevention and Control Act. In addition, several articles regarding the Project have been published in the newspapers with national and local coverage.
In the framework of potential participation of the EBRD in the project, the EIA materials and integrated environmental permit were re-released for a 60-day public comment period from 12 September to 10 November 2003 in accordance with the Bank’s public consultation procedures. Only one comment was received from the Estonian Fund for Nature (ELF) related to the contemplated amendments to the integrated environmental permit of AS Estonian Cell concerning the use of wood certified in accordance with Forest Stewardship Council (FSC) standards of sustainable forest management and the implementation schedule for ISO 14001 Environmental Management System. Subsequently, the Bank has received evidence showing that ELF and AS Estonian Cell have reached an agreement on the amendments to the integrated environmental permit.
Monitoring and reporting
In addition to requirements for monitoring the Plant’s emissions and discharges and waste amounts set out in environmental regulations and environmental permits, the EIA has resulted in recommendations for specific monitoring of the potentially significant environmental impacts of the construction and operation of the plant.  These include:
  • After the completion of the construction work, a balance of the water conducted away and used for the preservation of the water regime of the key biotope should be prepared;
  • Monitor the amount of water of Kunda River;
  • Ambient air should be monitored in accordance with the specifications set forth in the environmental permits; it is advisable to co-operate with other enterprises in Kunda that are emitting pollutants area and to use the assistance of independent experts;
  • In the surrounding area of the wastewater deep-sea outlet, it is necessary to arrange the monitoring of the pollution load of the emitted wastewater and the evaluation of the effect of wastewater on the marine flora and fauna the deep-sea outlet. The monitoring should include periodical measurements of the quality of the sea water and determination of changes in the species structure, in the spread of natural communities at the bottom of the sea (flora and fauna) and in the fish fauna, and investigation of the reasons.
There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation


Company Contact

Mr. Roar Paulsrud (Larvik Cell AS), Email:

Mr. Terje Haglund (Larvik cell AS), Email:

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