State Forest Management Center (RMK) sent an inspiring message to the developers of a major pulp mill near Tartu in which it agrees to negotiate supply of timber necessary for the future mill.
“This major investment will not be possible if we cannot cover 50-60 percent of supply and sales beforehand,” said head of developer Est-For, Margus Kohava.
The intentions protocol concerns RMK supplying the mill with around 500,000 cubic meters of birch, spruce, and pine a year over a period of 15 years, starting in the summer of 2022.
It is but a small part of the 3.3 million cubic meters of timber needed to keep the mill running. Developers plan to source 2.2 million cubic meters of timber in Estonia and the rest from abroad, mainly Latvia.
“RMK offers Est-For no concessions as they will have to pay market price for the timber,” said chairman of the board of the state forest manager Aigar Kallas. “If a competitor offers us a better price, they will not get their timber.”
Current prices would put the volume of the transaction around €300 million, or sales of nearly €20 million a year. Pulpwood prices are expected to go up in the future that would give RMK more money for the same quantities.
The protocol prescribes the possibility of a contract similar to what RMK currently has with Estonian Cell, where it supplies one-third of its asp over 15 years. Kallas said that RMK wants to sign the intentions protocol as the planned mill would make it possible to add value to pulpwood in Estonia.
“RMK currently sells 86 percent of birch pulpwood, 55 percent of spruce pulpwood, and 61 percent of pine pulpwood out of Estonia. Keeping that wood in Estonia would benefit everyone. A long-term supply contract with a local industry would give forest owners better prices, a stable timber market, and fewer price fluctuations,” he said.
Should negotiations succeed, RMK will publish the 15-year sale notice of pulpwood in 2019.
The pulp mill plan is being opposed by the Estonian Renewable Energy Chamber that claims international agreements make it impossible to supply the major industry with Estonian timber.
Member of the board Rene Tammist finds that Estonia’s 12-15-million-cubic-meter prescribed cut is excessive.
Estonia is subject to the UN Durban climate accord in which Estonia’s annual prescribed cut cannot exceed an average of 9.7 million cubic meters in 2010-2020. That limit has already been exceeded. Quantities over the average prescribed cut are subject to CO2 quota purchases,” Tammist claimed.
Activists in Tartu collected nearly 1,500 signatures against Est-For’s project in January, calling into question whether a material-intensive and inevitably polluting company is the best fit for Tartu and Estonia.
Authors of the address and undersigned include Peeter Hõrak, Tiia Kõnnussaar, Asko Lõhmus, Ülo Mander, Raul Rosenvald, Virve Sõber, Kristjan Zobel, Asko Tamme, and Marju Unt.