ARCTIC
BUSINESS
FORUM
Yearbook 2014
ARCTIC BUSINESS FORUM
YEARBOOK 2014
March 2014
Compiled and edited by Timo Rautajoki
© Lapland Chamber of Commerce, 2014
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TABLE OF CONTENTS
1.Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. ARCTIC COUNCIL, ARCTIC POLICIES AND ARCTIC BUSINESS. . . . . . . . . 10
2.1 2.2
Arctic Economic Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3
Report from World Economic Forum:
Arctic Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
“Demystifying the Arctic”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4
USA and Alaska. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.5
Crisis in Ukraine and the Arctic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3. NORTH OF FINLAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.1Lapland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.1.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3.1.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . . 65
3.1.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
3.1.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . . 70
3.1.2.3
Key investment project of Lapland . . . . . . . . . . . . . . . . . . . . . . . . . . 72
3.2Oulu Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3.2.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
3.2.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . . 91
3.2.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . . 93
3.2.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . . 93
3.2.2.3
Key investment project of Oulu Region. . . . . . . . . . . . . . . . . . . . . . . 95
3.3
Kainuu Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
3.3.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . 100
3.3.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . 101
3.3.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . 102
3.3.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . 103
3.3.2.3
Key investment project of Kainuu Region. . . . . . . . . . . . . . . . . . . . 103
4. NORTH OF SWEDEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
4.1Norrbotten. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
4.1.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . 113
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4.1.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . 114
4.1.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . 116
4.1.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . 117
4.1.2.3
Key investment project of Norrbotten . . . . . . . . . . . . . . . . . . . . . . . 118
4.2Västerbotten. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
4.2.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . 129
4.2.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . 130
4.2.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . 131
4.2.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . 132
4.2.2.3
Key investment project of Västerbotten . . . . . . . . . . . . . . . . . . . . . 133
5. NORTH OF NORWAY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
5.1
Finnmark, Troms, Nordland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
5.1.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . 145
5.1.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . 148
5.1.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . 152
5.1.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . 154
5.1.2.3
Key investment project of North of Norway. . . . . . . . . . . . . . . . . . . 155
6. NORTHWEST RUSSIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
6.1
Murmansk Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
6.1.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . 170
6.1.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . 171
6.1.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . 176
6.1.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . 177
6.1.2.3
Key investment project of Murmansk Region . . . . . . . . . . . . . . . . . 178
6.2
Arkhangelsk Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
6.2.1
Investment Potential 2014–2025. . . . . . . . . . . . . . . . . . . . . . . . . . . 192
6.2.2
Development of the Region 2015–2020 . . . . . . . . . . . . . . . . . . . . . 194
6.1.2.1
Investments expected to start first. . . . . . . . . . . . . . . . . . . . . . . . . . 196
6.1.2.2
Investments waiting for better times . . . . . . . . . . . . . . . . . . . . . . . . 196
6.1.2.3
Key investment project of Arkhangels Region . . . . . . . . . . . . . . . . 198
7. SUMMARY AND CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
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FOREWORD
You are holding the 6th overview on the European High North investments and business development published in association with the Arctic
Business Forum. This time the name of the report is “Arctic Business
Forum Yearbook 2014”. The leading idea of this Forum is to share information about the latest developments affecting the business in the Arctic
and discuss the actions to be taken in order to overcome the known and
foreseen barriers of business and trade.
According to studies carried out the past years by Lapland Chamber of
Commerce the main obstacle of trade among the Finnish companies is
still the lack of knowledge about the Regions in the High North and what
kind of business possibilities they offer. The purpose of this book is to
patch up part of this need. Information is the core element for all decision
making processes in companies and governments. Understanding and
continuing discussion on the Arctic evolution is important.
These six publications are not identical in nature as each year the reporting manner has gained more or less a new approach. This year the new
part is in the very beginning the introduction and overview on the arctic
development in policies from the economic and business point of view.
These structures, strategies and developments described are essential
part of the current and future steps of the Arctic economy.
This year the regions are introduced from a broader perspective as the
investments environment today is formed of many parts breathing with
local, regional, national and global trends. The familiar part from previous years are the individual, regional and sorted by industry investment
projects. The time frame which to a stand is taken and investment potential evaluated is up to 2025. Additionally the future development of the
regions is analyzed for the upcoming years until 2020 and the investment
projects predicted to be started in this time frame are listed. In this part
you may find new and exciting the view on the named “Key investment
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project” within each region which would give a boost to some other projects and developments in the region and beyond. You also find the projects which are put aside to wait for the better times to come.
It may be and more likely it is that not all the investment projects are taken
into account in this report. What has been required is at least a feasibility plan or comparable description of a project. Mere visions, needs or
demands have not met the criteria. Project plans need to have at least a
tentative conception of extend, estimated cost and a tentative schedule.
Still, there may be plans meeting the criterion and not mentioned in this
catalogue. Essential is to enlighten the whole diversity of economical activity and business growth there is in the Arctic. We are still in the mission
of trying to convince the companies and authorities, Finnish Government
included, that the Arctic and the regions of North truly is a great new opportunity and should be dealt with the necessary severity.
March 12th, 2014 at Rovaniemi
Timo Rautajoki
President and CEO
Lapland Chamber of Commerce
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2.
Arctic Council, Arctic Policies
and Arctic Business
2.1
Arctic Council
The Arctic Council was formally established by Ottawa Declaration of
1996 as a high level intergovernmental forum to provide a means for promoting cooperation, coordination and interaction among the Arctic States,
with the involvement of the Arctic Indigenous communities and other Arctic inhabitants on common Arctic issues, in particular issues of sustainable development and environmental protection in the Arctic.
Arctic Council Member States are Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russian Federation, Sweden, and the United States of America.
In addition to the Member States, the Arctic Council has the category
of Permanent Participants. Out of a total of 4 million inhabitants of the
Arctic, approximately 500,000 belong to indigenous peoples. Indigenous
peoples’ organizations have been granted Permanent Participants status
in the Arctic Council. The Permanent Participants have full consultation
rights in connection with the Council’s negotiations and decisions. The
Permanent Participants represent a unique feature of the Arctic Council,
and they make valuable contributions to its activities in all areas.
The following organizations are Permanent Participants of the Arctic
Council:
• Arctic Athabaskan Council (AAC)
• Aleut International Association (AIA)
• Gwich’in Council International (GCI)
• Inuit Circumpolar Council (ICC)
• Russian Association of Indigenous Peoples of the North (RAIPON)
• Saami Council (SC)
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This category is open equally to Arctic organizations of Indigenous peoples with a majority of Arctic Indigenous constituency representing:
• a single Indigenous people resident in more than one Arctic State; or
• more than one Arctic Indigenous people resident in a single Arctic
State.
The Arctic Council has also observers. As set out in the Declaration on
the Establishment of the Arctic Council and governed by the Arctic Council Rules of Procedure, observer status in the Arctic Council is open to
non-Arctic States; inter-governmental and inter-parliamentary organizations, global and regional; and non-governmental organizations that the
Council determines can contribute to its work.
In the determination by the Council of the general suitability of an applicant for observer status the Council will, inter alia, take into account the
extent to which observers:
• Accept and support the objectives of the Arctic Council defined in the
Ottawa declaration.
• Recognize Arctic States’ sovereignty, sovereign rights and jurisdiction in the Arctic.
• Recognize that an extensive legal framework applies to the Arctic
Ocean including, notably, the Law of the Sea, and that this framework provides a solid foundation for responsible management of this
ocean.
• Respect the values, interests, culture and traditions of Arctic indigenous peoples and other Arctic inhabitants.
• Have demonstrated a political willingness as well as financial ability
to contribute to the work of the Permanent Participants and other
Arctic indigenous peoples.
• Have demonstrated their Arctic interests and expertise relevant to the
work of the Arctic Council.
• Have demonstrated a concrete interest and ability to support the
work of the Arctic Council, including through partnerships with member states and Permanent Participants bringing Arctic concerns to
global decision making bodies.
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Decisions at all levels in the Arctic Council are the exclusive right and
responsibility of the eight Arctic States with the involvement of the Permanent Participants.
• Observers shall be invited to the meetings of the Arctic Council once
observer status has been granted.
• While the primary role of observers is to observe the work of the Arctic Council, observers should continue to make relevant contributions
through their engagement in the Arctic Council primarily at the level
of Working Groups.
• Observers may propose projects through an Arctic State or a Permanent Participant but financial contributions from observers to any
given project may not exceed the financing from Arctic States, unless
otherwise decided by the SAOs.
• In meetings of the Council’s subsidiary bodies to which observers
have been invited to participate, observers may, at the discretion of
the Chair, make statements after Arctic states and Permanent Participants, present written statements, submit relevant documents and
provide views on the issues under discussion. Observers may also
submit written statements at Ministerial meetings.
At the Kiruna Ministerial Meeting in May 2013 an Arctic Council Observer
Manual was formally adopted. Also in Kiruna the following 12 non-arctic
countries have been admitted as observers to the Arctic Council:
1. France
2. Germany
3. The Netherlands
4. Poland
5. Spain
6. United Kingdom
7. People’s Republic of China
8. Italian Republic
9. State of Japan
10. Republic of Korea
11. Republic of Singapore
12. Republic of India
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Also nine Intergovernmental and Inter-Parliamentary Organizations have
been given observer status:
1. International Federation of Red Cross & Red Crescent Societies
(IFRC)
2. International Union for the Conservation of Nature (IUCN)
3. Nordic Council of Ministers (NCM)
4. Nordic Environment Finance Corporation (NEFCO)
5. North Atlantic Marine Mammal Commission (NAMMCO)
6. Standing Committee of the Parliamentarians of the Arctic Region
(SCPAR)
7. United Nations Economic Commission for Europe (UN-ECE)
8. United Nations Development Program (UNDP)
9. United Nations Environment Program (UNEP)
In addition, the The Arctic Council receives the application of the EU for
observer status affirmatively, but defers a final decision on implementation until the Council ministers are agreed by consensus that the concerns
of Council members, addressed by the President of the European Commission in his letter of 8 May are resolved, with the understanding that the
EU may observe Council proceedings until such time as the Council acts
on the letter’s proposals.
Eleven Non-government organizations are observers in the Arctic
Council:
1. Advisory Committee on Protection of the Seas (ACOPS)
2. Arctic Cultural Gateway
3. Association of World Reindeer Herders (AWRH)
4. Circumpolar Conservation Union (CCU)
5. International Arctic Science Committee (IASC)
6. International Arctic Social Sciences Association (IASSA)
7. International Union for Circumpolar Health (IUCH)
8. International Work Group for Indigenous Affairs (IWGIA)
9. Northern Forum (NF)
10. University of the Arctic (UArctic)
11. World Wide Fund for Nature-Global Arctic Program (WWF)
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The Council’s activities are conducted in six working groups. The working groups are composed of representatives at expert level from sectoral
ministries, government agencies and researchers.Their work covers a
broad field of subjects, from climate change to emergency response.
There are six Working Groups of the Arctic Council:
1. Arctic Contaminants Action Program (ACAP)
2. Arctic Monitoring and Assessment Programme (AMAP)
3. Conservation of Arctic Flora and Fauna (CAFF)
4. Emergency Prevention, Preparedness and Response (EPPR)
5. Protection of the Arctic Marine Environment (PAME)
6. Sustainable Development Working Group (SDWG)
Each Working Group has a specific mandate under which it operates.
Also working groups have a Chair hand Management Board or Steering
Committee, and is supported by a Secretariat.
Working Group Management Boards are typically comprised of representatives of national governmental agencies of the Arctic Council Member States, connected to the mandates of the Working Groups; and representatives of the Permanent Participants.
Observer States and Observer Organizations are likely to attend
Working Group meetings and participate in specific projects. In addition,
Working Groups regularly have invited guests, or experts attending
their meetings.
It is the responsibility of the Working Groups to execute the programs
and projects mandated by the Arctic Council Ministers. These mandates
are stated in the Ministerial Declarations, the official documents that result from Ministerial Meetings.
Principle of Consensus: All decisions of the Arctic Council and its subsidiary bodies are by consensus of the eight Arctic Member States.
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The Arctic Council Secretariat supports the Chair of the Arctic Council.
In the past, the location of the Secretariat was rotated biennially with the
Chairmanship of the Arctic Council. Prior to their consecutive chairmanship periods, Norway, Denmark, and Sweden made a joint agreement to
share the Secretariat for the duration of their chairmanship periods. Norway held the chairmanship from 2006-spring 2009; Denmark from 20092011; and Sweden from 2011-2013. During this period the temporary
Secretariat was hosted by the Norwegian Polar Institute located at the
Fram Centre, Tromsø, Norway. At the Nuuk Ministerial Meeting May 2011
Arctic Ministers decided to establish the Standing Arctic Council Secretariat at the Fram Centre in Tromsø. The Standing Secretariat became
operational 1 June 2013. The Fram Centre houses many Arctic institutions and companies focusing on environmental research and cooperation in the Arctic.
Canada’s Arctic Council Chairmanship 2013–2015
At the Kiruna Ministerial Meeting on 15 May 2013, Canada assumed the
two-year Chairmanship of the Arctic Council from Sweden. The Honourable Leona Aglukkaq, an Inuk from Nunavut, is Canada’s Minister for the
Arctic Council and Chair of the Council during Canada’s Chairmanship.
Her appointment underlines the priority that the Government of Canada
places on the Arctic as well as its commitment to ensure that the region’s
future is in the hands of Northerners.
More than four million people, living in the eight Arctic states that make
up the Arctic Council, call the Arctic region home. Canada’s chairmanship
will put Northerners first. The theme of Canada’s chairmanship is “development for the people of the North,” with a focus on responsible Arctic
resource development, safe Arctic shipping and sustainable circumpolar
communities.
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Since its inception, the Council has undertaken important work to address
the unique challenges and opportunities facing the Arctic region. As these
challenges evolve, so must the Arctic Council. Canada will work collaboratively with its Arctic Council partners to strengthen the Council. The aim
is to enhance the capacity of the Permanent Participant organizations,
improve the Council’s coordination and maximize efficiencies.
Responsible Arctic resource development
The Arctic Council is working to ensure that Arctic development takes
place responsibly. Businesses in the Arctic will play a strong role in building a sustainable and economically vibrant future for the region.
Establishing a Circumpolar Business Forum will foster circumpolar economic development and provide opportunities for business to engage
with the Arctic Council.
As activity in the region increases, Arctic states are cooperating to protect
the marine environment and the livelihoods of Northern peoples.
In May 2013, the Arctic states signed an Agreement on Cooperation on
Marine Oil Pollution Preparedness and Response in the Arctic. The Council has also begun work on oil-pollution prevention. This work will continue
during Canada’s chairmanship. Effective action to prevent oil pollution is
critical to ensuring the protection of the Arctic marine environment.
Safe Arctic shipping
Opportunities for tourism are growing in the Arctic. By establishing guidelines for sustainable tourism and cruise-ship operations, the Arctic Council will encourage the benefits that tourism will bring to communities while
reducing the risks associated with increased activity.
Arctic Council states will also continue to work closely together to encourage the International Maritime Organization’s efforts to develop a mandatory polar code for the Arctic Ocean.
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2.2
Arctic Economic Council
The Circumpolar Business Forum initiative was worked out in special
Task Force simply called:”Task Force to Facilitate the Circumpolar Business Forum” (TFCBF). The mandate of TFCBF has been to facilitate the
creation of a Circumpolar Business Forum (CBF) which would provide
a mechanism to allow business and industry to engage with the Arctic
States and Permanent Participants. TFCBF had its first meeting in September 2013 and gave a report to SAOs by the end of 2013. Canada is
chairing the TFCBF in cooperation with Finland, Iceland and Russia.
The purpose of the proposed forum, as articulated in the Senior Arctic
Officials’ Report to Ministers in Kiruna is to “provide a mechanism to allow
business and industry to engage with the Arctic States and Permanent
Participants. The CBF would provide a venue for businesses, industries
and indigenous enterprises to advance Arctic-oriented interests, share
best practices, forge partnerships and engage in deeper cooperation.”
The Task Force had its third face-to-face meeting in Helsinki on December 4-5, 2013 to discuss the scope and mandate of the proposed body
and how it would work with the Arctic Council. The meeting also included
business participants from all of the Arctic States and a number of representatives from observers to the Arctic Council. The two-day meeting
focused on reaching consensus on a framework document which outlines the Arctic Council’s expectations of the new business entity, as well
as how the Arctic Council and the business entity will interact. The Task
Force also reached tentative agreement on a new name for the circumpolar business forum, which will be called the “Arctic Economic Council”.
Fostering Circumpolar Business Partnerships
The Arctic Council recognizes the central role of business in the sustainable development of the Arctic. During Canada’s Chairmanship (201315), the Arctic states and indigenous permanent participant organizations
are facilitating the creation of a circumpolar business forum - the Arctic
Economic Council.
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In the Kiruna Declaration, signed at the eighth Arctic Council Ministerial Meeting in May, 2013, Ministers from the eight Arctic Council states
“recognize[d] that Arctic economic endeavors are integral to sustainable
development for peoples and communities in the region, desire[d] to further enhance the work of the Arctic Council to promote dynamic and sustainable Arctic economies and best practices, and decide[d] to establish
a Task Force to facilitate the creation of a circumpolar business forum.”
The Task Force to Facilitate the Circumpolar Business Forum (TFCBF) is
co-chaired by Canada, Finland, Iceland and Russia. Since May 2013, the
task force has been meeting regularly to pave the way for the creation of
this body. In December 2013, the Task Force proposed a new name for
the circumpolar business forum, which Senior Arctic Officials approved
in January 2014. The forum is now called the “Arctic Economic Council.”
The Arctic Economic Council will:
• foster business development in the Arctic,
• engage in deeper circumpolar cooperation, and
• provide a business perspective to the work of the Arctic Council.
What is Arctic Economic Council
According to Ottawa media “The Globe and Mail” announced the formation and the idea of “Arctic Economic Council” in her speech in Northern
Lights -conference and trade show in Ottawa on 28.1.2014:
“Canadians living in the Arctic should be looking to their counterparts in
Russia or Norway to address their economic problems rather than southern businesses, federal Environment Minister Leona Aglukkaq said Tuesday as she announced the formation of an Arctic Economic Council.
Ms. Aglukkaq, who serves as chair of the eight-nation Arctic Council, said
there has long been a gap in that group’s work: the lack of a regional forum that would allow northerners from all the countries to work together
on common issues of economic development.
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It will for the first time establish a forum that will bring [together] Arctic countries to deal with challenges in the North, share best practices
around adaptation and climate, around energy development, shipping
and so on,” she said.
The minister said she conducted a series of consultations with northern
Canadian residents before taking over the chair of the council, and heard
frequent concerns about a lack of communication among Arctic people
from other countries. “It became clear there is a gap in Arctic-to-Arctic
expertise; we tend to go south for solutions,” she said.
She will formally announce the new council on Wednesday at the Northern
Lights trade show, a biennial event that promotes business and cultural
initiatives in the North, from the mining industry to seal-skin clothing designers. The minister said northern Canadians often encounter problems
with business development that are unknown in the South. For example,
Arctic communities have installed windmills to reduce their reliance on
expensive diesel fuel, but often the turbines do not work at temperatures
of -50ºC. Meanwhile, windmills that can function in the extreme conditions have been installed in other Arctic countries.
She also noted that all countries are pursuing resource extraction in the
Arctic region, including plans to drill for oil offshore in places such as Canada’s Beaufort Sea. The economic council will be a place where standards and best practices can be shared.
In a report issued last week in Davos, Switzerland by the World Economic
Forum suggested Arctic people need new collaborative approaches to
development that give them real partnership with global corporations and
national governments. “Community-based approaches are thus a critical
part of development, in addition to environmental protection and safety,
in order to secure sustainable change in the Arctic,” the World Economic
Forum said.
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Governments from the Arctic council agreed to set up a business forum at
a summit in Sweden last May, and have spent the past eight months consulting with northern businesses, governments and indigenous groups
on how to structure it. The membership is open to northern businesses
of any size, though individual countries will determine the kinds of businesses that will sit on the body.
Canada lags other countries, notably Norway and Russia, in northern economic development, said John Higginbotham, a senior fellow at Carleton
University who focuses on Arctic research. The existing Arctic council has
been more focused on research in environmental and cultural issues, and
a business council would complement that work. But Mr. Higginbotham
said success will be determined by how broad a mandate the economic
group has, and whether it takes a “top down or bottom up approach.”
A business-only forum would be less likely to pursue sustainable economic strategies that would bring much-needed jobs while protecting the
fragile environment and cultural diversity of the region, said Martin von
Mirbach, an Arctic researcher with World Wildlife Fund Canada. He said
it is important that the economic council have broad-based membership.”
Is the voice of Regional Business Community heard in the AEC?
The idea of Circumpolar Business Forum and the result of the work, Arctic
Economic Council is good from the regional point of view. This initiative
of circumpolar business cooperation has strong Canadian background
from late 1990s. The name of the idea was then Circumpolar Chamber of
Commerce (CCC) and it was launched in June 2000 included in the program “Northern Dimension of Canada´s Foreign Policy”. Aim of the Policy
was to promote “the creation of a Circumpolar Chamber of Commerce,
building upon those existing in the northern regions of Nordic countries
and northwest Russia and on network of contacts within the Northern
Forum.
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First written plan was made by the Governments of Canada and Greenland in 2000–2001. This idea was also presented to World Chambers
Federation (WCF) which is organisation under ICC- International Chamber of Commerce. According to the plan the idea of CCC would be one
of the main issues in the World Chamber Congress in September 2003
organized in Quebec City, Canada.
Further on WCF published a preliminary report concerning Circumpolar
Chamber of Commerce in March 2003. The report was written by Canadian Dr. Sefton Mark Malone who had worked as a special advisor to
prime minister Pierre Elliot Trudeau and had long career as diplomat on
economic and development affairs in Canada and abroad. Dr. Malone
had also been the head of North West Territories civil service during the
1980s and acted as deputy minister for petroleum and resources and as
deputy minister for intergovernmental affairs. Malone was working then
in the cabinet of Senator Charlie Watt, who also had been active in this
issue.
This report was sent among others to at least some chambers in the
Northern Region. Lapland Chamber of Commerce received it and announced that it is interested about the project. There was not enough
chambers interested in creating the CCC, so the Quebec City World
Chamber Congress didn´t speed the creation of Circumpolar Chamber.
Later on Lapland Chamber of Commerce CEO visited Ottawa in March
2004 and met the representatives of Canadian Chamber of Commerce
to discuss the CCC initiative. After this meeting the need to have some
kind of business forum in the High North existed, but it seemed to be very
uncertain that CCC could be established on the base of the Circumpolar
chamber network. The biggest problem seemed to be the differences between the Arctic region and the business communities in the region. Also
there was a strong difference in the resources and activities of northern
chambers. The Chambers like Lapland in Finland and Norrbotten in Sweden had a lot of big industrial companies as members. Then the Chamber
activities in Norway were totally different compared to the Swedish and
21
especially Finnish chamber systems. The main business in the Canadian Arctic was at the time done by very small handicrafts manufacturing
companies owned by indigenous people. It seemed to be from chambers
point of view that Canadian northern business should develop first more
closer to the level of the European High North. The time seemed not to
be right to start this kind of cooperation between the chambers. There
was also existing chamber network in the Russian Arctic Region, but their
resources to take part in this kind of international cooperation was rather
small at that time.
Northern Forum (NF) is the other organisation which has made efforts
to start regional business cooperation in the Arctic Region. The idea of
creating an organization of northern regional governments was raised in
1974 by the government of Hokkaido, Japan, during the first of a series
of international conferences on northern issues. The Northern Forum developed from a Northern Regions Conference held in 1990 in Anchorage,
Alaska, attended by more than 600 delegates from 10 countries. The
Forum was formally established in November 1991. Former Governor of
Alaska, Walter Hickel was the driving force to establish the organisation.
He was also chairing the Northern Forum for the first years of its existence.
During the chair of Ms. Hannele Pokka, Governor of Lapland, the business cooperation came to be part of the agenda of the Northern Forum.
General Assembly of NF was organised in June 1999 in Rovaniemi. First
Northern Business Conference organized by Lapland Chamber of Commerce was included to the Assembly. This issue was first discussed in
Harbin 2002 during the meeting of Regional Coordinators and in General
Assembly of the Forum in St.Petersburg in 2003. Lapland Chamber of
Commerce was the initiator of business cooperation. Efforts to establish business cooperation were not easy without necessary funding. The
Northern Forum decided first to take business partners. Companies active in Arctic Region could join to the Forum as partners. According to the
web pages of NF the amount of business partners is today is eight.
22
The final decision to start the business cooperation happened in the
Regional Coordinators meeting in Akureyri in 2008 based on the model
presented by Lapland Chamber of Commerce. General Assembly held
in October 2007 in Khanty Mansiysk had given the authority to the Secretariat to start the implementation to form a working group for chambers
of commerce and other business associations. The first meeting of the
group was in Akureyri and the second one in Canada in 2009.
Global financial crisis was almost fatal for the Northern Forum. NF lost
some of important member regions due to the problems in financing the
cooperation. Sakha Republic (Yakutia) took over the NF and secretariat
which had been from the very beginning in Anchorage, Alaska moved to
Yakutsk. Since then the activity has returned and resurrection of the NF
is today a fact. President of the Republic of Sakha has been determined
leading the Northern Forum back to where it was and even beyond, when
former members are coming back and new regions are joining to the NF.
Also the Northern Forum business cooperation is starting and it could
support the work of Arctic Economic Council, if member states and first of
all the Chair of the Arctic Council understands the importance of regions
in the work of AEC.
After 14 years the original idea born in Canada is going to be implemented. According to the official information The Arctic Economic Council will
foster business development in the Arctic, engage in deeper circumpolar
cooperation, and provide a business perspective to the work of the Arctic
Council. These ideas are very easy to accept. So far there is no official
information about the role of regions in the Arctic Council.
The work of the Arctic Council and without doubt also the Arctic Economic
Council work is done at the level of member states. The Arctic Region
itself has no mandate in this cooperation. Permanent Participants are
not enough in all parts of the Arctic from the business cooperation point
of view. Together with Lapland Norrbotten in Sweden and at least Murmansk Region from Russian Federation are totally different compared
with other regions. The role of indigenous people is not so significant
23
in the business community so that the representatives form Permanent
Participants could represent the business in the region.
Most probably the membership in the Arctic Economic Council is limited to 2–3 members from each member state and from the Permanent
Participants. Also the observer countries get their representatives to the
AEC. The biggest problem from the regional business community point of
view is the role of regional SMEs in this cooperation process. When the
member states are appointing their 2–3 representatives to the AEC, most
probably the governments are eager to nominate the directors from national big companies like Statoil, Aker, Rosneft, Gazprom, Fortum, Wärtsilä, LKAB, etc or the directors from national confederations industry. On
the other side of the table there are sitting the reindeer herders and micro
entrepreneurs from the regions. The status of indigenous people is legal
and important and there shouldn’t be any doubt that regional business
communities don´t accept this.
Most likely the business from observer countries are invited to this same
table. Only the regional business is in danger to stay outside. So once
again people from the capitals of the Arctic States are making the decisions concerning what the regional SME´s can do and what they can
not. The presence of the Permanent Participant creates an illusion of
democracy in this decision making. So far we don’t have official information how the AEC process is really happening. But if the process goes like
described above, we can say: “Ottawa, we have a problem”.
Why the regions are then so important? When a big investment project
is coming to the region the approval of the society for the project is more
and more important. This so called social license is necessary also for
official decision making about the approval of other licenses and permits.
The only way to get the social license from the local and regional society
is that the members of the society get benefit of investment projects in
the form of jobs and better circumstances and regional small and medium sized enterprises are strongly involved in the projects. If the decision
making happens remote from this process, the results are getting all the
time worse.
24
The new start of Northern Forum could help regions in this process. The
continuation of the business cooperation can have in the future strong
representation from the regions, if the regions see its importance. Only
problem is that NF is creating in this case better conditions for cooperation than the Arctic Economic Council.
So far the official information of Arctic Economic Council is very limited.
The purpose and aim of AEC is acceptable. The problem described above
is only theoretical at this moment, when we don’t exactly know how the
story really goes. Let´s all hope that this problem also stays theoretical.
But it is very important that this point of view is noticed when you still can
fix it. In spite of limited membership in the AEC the role of regional SME´s
can be organized in national backup working groups or actions as such.
Let´s strongly believe that Ottawa has solved all this.
2.3
Report from World Economic Forum:
“Demystifying the Arctic”
In January 2014 World Economic Forum published a report “Demystifying
the Arctic” authored by the Members of the World Economic Forum Global Agenda Council on the Arctic. World Economic Forum (WEF) is an independent international organization committed to improving the state of
the world by engaging business, political, academic and other leaders of
society to shape global, regional and industry agendas. Incorporated as a
not-for-profit foundation in 1971, and headquartered in Geneva, Switzerland, the Forum is tied to no political, partisan or national interests. The
Forum is best known for its annual winter meeting in Davos, Switzerland,
which has had a bit elitist atmosphere.
Global Agenda Council is one of the most important tools of the Forum.
According to the website of WEF the role of Council is following: The
Network of Global Agenda Councils is a unique, global community of over
1,500 premier thought leaders who are the foremost experts in their fields
of academia, business, government, international organizations and society. Grouped in over 80 Councils, Global Agenda Council Members commit their extensive knowledge, expertise and passion to jointly shape the
25
global, regional and industry agenda. The Global Agenda Councils are
committed to addressing the most pressing issues and opportunities of
our time and aim to provide new thinking and solutions.
The Global Agenda Councils convene globally recognized expert communities to provide interdisciplinary thinking, stimulate dialogue, shape
agendas and catalyse initiatives. Through ongoing collaboration and
debate, as well as through findings, the Global Agenda Councils transform implications and recommendations into key deliverables such as
the Outlook on the Global Agenda and Global Agenda Survey, as well as
Council-specific projects and reports.
By continuing to build these premier communities and generating personal and professional value by virtue of the globally recognized agendasetting role, Global Agenda Councils contribute to improving the state of
the world individually and as a network.
Council Members meet annually at the Summit on the Global Agenda,
the world’s largest brainstorming, which is hosted in partnership with the
Government of the United Arab Emirates. At the Summit on the Global
Agenda, over 800 Members of the Network engage in interactive workshops and sessions to provide comprehensive insight into the global, industry and regional agendas. Recognizing the great transformations that
businesses, economies and societies are currently undergoing, participants at this year’s Summit will focus on how to transform new models
into collaborative, sustained processes, which drive solutions for a greener and socially more inclusive world.
About the Global Agenda Council on the Arctic the web pages say: The
complexities of transformations reshaping the region are profound, often lending themselves to misinterpretation and misplaced emotions.The
natural starting point for the Council was to write a short booklet highlighting the five most prevalent myths, opportunities and challenges facing
the region.
26
This booklet was presented to targeted participants at the World Economic Forum Annual Meeting 2013 in Davos – both in the public programme featuring a session entitled “Arctic Development” and in private
meetings. Although it has not yet been published in its entirety, the main
messages have been repackaged and featured on Thomson Reuters,
strategy+business, the Global Economic Symposium and the Forum
Blog.
Chairman of the Council is Mr. Per-Ola Karlsson, senior VP of
Booz&Company, which is consultancy company from Sweden. Vice
Chairs are Mr. Artem Volynets, CEO of Amur Capital Group who has a
long career in aluminium business including high positions in Russian
company, UC RUSAL and the Arctic Ambassador of Sweden, Mr. Gustaf
Lind.
In spite of unpublished booklet the report was published in Davos winter
meeting 2014. “Demystifying the Arctic” is very interesting to read representing such a famous and respected Forum. The report deals with
the Arctic Issues in fairly general terms. Problems and possibilities in the
region are well known. According to the report at least two important economic pressures will affect ongoing development in the region: Natural
resources and Growing viability of seasonal shipping in Arctic waters.
The WEF Council on the Arctic finds four challenges in the development
of the Arctic. They are:
• The Arctic needs protection from environmental damage, resolution
on certain global agreements, and new collaborative models to secure sustainable growth.
• The Arctic needs investment.
• The Arctic needs measures to better ensure human and environmental safety in the face of increased shipping and offshore activity.
• The Arctic needs science.
27
The conclusions made by the Council are generally in line with other similar reports. Report avoids details, and it has been definitely wise, as is
evident that there has not been sufficient knowledge about the region in
spite of Swedish experts chairing the council. Evaluations like “Except for
certain areas of Norway and the western Russian Federation, the region
remains vastly underserved by transportation, port and other critical infrastructure” are a little bit annoying, when Norrbotten and Lapland are
absolutely the best examples of good transport connections in the Arctic
Region. Also council should know that not all land routes are destabilized
by thawing permafrost or winter ice-road seasons are shortened everywhere in Arctic Region.
The report includes one interesting proposal about Arctic Investment
Vehicle. According to the report “The resulting lack of Arctic investment
could be overcome by establishing a cross-border financing institution,
i.e. a Sustainable Arctic Investment Vehicle, designed much like (and
possibly in cooperation with) one of the international development banks,
for example the European Bank for Reconstruction and Development, the
International Finance Corporation or the Nordic Investment Bank. This institution’s mandate would be to finance projects around the Arctic region,
including cross-border infrastructure investments. Along the same lines,
dedicated Arctic funds could help mobilize private equity in close cooperation with the above institutions.”
This is very interesting regarding e.g. the idea of Finnish Arctic Railway
which is in some plans going from Finnish territory to Norway. Financing
of this project is in Finland so big problem that it prevents the reasonable
discussion about the needs for such a new transport connection.
In the end the report is highlighting some typical myths about the Arctic
Region. According to the report these myths are:
• The Arctic is an uninhabited, unclaimed frontier with no regulation or
governance.
• The region’s wealth of natural resources is readily available for development.
• The Arctic will become immediately accessible as sea ice continues
to disappear.
28
•
•
The Arctic is tense with geopolitical disputes and is the next flashpoint for conflict.
Climate changes in the Arctic are solely of local and regional importance.
Myths number 2 and 3 could anyhow be facts in European High North.
Investments are going on in North Norway, North Sweden and Lapland.
This region has also ready transport infrastructure for increasing transport from new sea routes. Myth number 4 was myth still in January, but
now after the Ukraine crisis the situation has changed and tension has
been increasing also in the High North.
2.4
USA and Alaska
United States of America is taking the Chair of Arctic Council after Canada in 2015. USA is also leading the work of Arctic Economic Council.
Canada has established this new council and it is the duty of the USA to
put it really in practice. This is why a closer look to American Arctic policies is more than reasonable.
The new National Strategy for the Arctic Region of the USA was published on May 10th 2013. President Barack Obama stated in the foreword
of the Strategy ”We in the lower forty-eight and Hawaii join Alaska’s residents in recognizing one simple truth that the Arctic is an amazing place.
The Arctic is one of our planet’s last great frontiers. Our pioneering spirit
is naturally drawn to this region, for the economic opportunities it presents
and in recognition of the need to protect and conserve this unique, valuable, and changing environment. As we consider how to make the most of
the emerging economic opportunities in the region, we recognize that we
must exercise responsible stewardship, using an integrated management
approach and making decisions based on the best available information,
with the aim of promoting healthy, sustainable, and resilient ecosystems
over the long term. … Through the National Strategy for the Arctic Region, we articulate our strategic priorities to position the United States
to meet the challenges and opportunities that lie ahead. We will seek to
prioritize and effectively integrate the work of Federal departments and
29
agencies
with activities that are already underway in the State of Alaska
and at the international level. And we will partner with the State of Alaska
and Alaska Natives, as well as the international community and the private sector, to develop innovative solutions and new ways of operating.
The Arctic is changing. We must proceed, cognizant of what we must do
now, and consistent with our principles and goals for the future.”
USA had previously defined arctic policy on January 9th 2009 in National
Security Presidential Directive and Homeland Security Presidential Directive with subject “Arctic Region Policy”. This security and defense perspective was summoned up in special Arctic Strategy by Department of
Defense which was published in November 2013. Secretary of Defense,
Mr. Chuck Hagel described the relation with these two strategies in his
foreword: “…Throughout the strategy, the President articulated clear linkages between events in the Arctic and enduring U.S. national interests...
As more countries operate in the Arctic, more opportunities – as well as
more challenges will arise. The Department will seek to work with Arctic
nations and other interested parties, focusing efforts where opportunities
exist and action is needed, while also ensuring that our national security
interests remain protected. As the President noted ‘The Arctic region is
peaceful, stable, and free of conflict,’ and it is the role of the Department
of Defense to ensure this observation remains true for future generations.
But we cannot maintain the current Arctic security environment by acting alone. The Department will operate within the established framework
of international law and collaborate with allies and partners as much as
possible. The DoD Arctic Strategy also recognizes the role that the Arctic region will play in shaping the global security environment in the 21st
century…”
Although national security has strong presence also in the new U.S.
Arctic Strategy processing a special paper has been necessary for the
Obama administration. The DoD Arctic Strategy is reconciling statement
of policy taking in the account the existing contradiction between the fact
that the Arctic region is peaceful and free of conflict and the essential role
of the Department of Defense in global policies. Only the amendment by
30
Secretary Hagel in the end of his foreword to DoD Arctic strategy raises
the role of the Arctic region in shaping the global security of this century
is a clear sign that security policy gets at least a little bit more weight in
Arctic cooperation than before.
The National Strategy of the Arctic Region sets forth the United States
Government’s strategic priorities for the Arctic region. The strategy is built
on three lines of effort:
1) Advance United States Security Interests – We will enable our vessels and aircraft to operate, consistent with international law, through,
under, and over the airspace and waters of the Arctic, support lawful
commerce, achieve a greater awareness of activity in the region, and
intelligently evolve our Arctic infrastructure and capabilities, including
ice-capable platforms as needed. U.S. security in the Arctic encompasses a broad spectrum of activities, ranging from those supporting
safe commercial and scientific operations to national defense.
2) Pursue Responsible Arctic Region Stewardship – We will continue
to protect the Arctic environment and conserve its resources; establish
and institutionalize an integrated Arctic management framework; chart
the Arctic region; and employ scientific research and traditional knowledge to increase understanding of the Arctic.
3) Strengthen International Cooperation – Working through bilateral
relationships and multilateral bodies, including the Arctic Council, we
will pursue arrangements that advance collective interests, promote
shared Arctic state prosperity, protect the Arctic environment, and enhance regional security, and we will work toward U.S. accession to
the United Nations Convention on the Law of the Sea (Law of the Sea
Convention).
31
The approach will be informed by the following guiding principles:
1) Safeguard Peace and Stability – Seek to maintain and preserve the
Arctic region as an area free of conflict, acting in concert with allies,
partners, and other interested parties. Support and preserve: international legal principles of freedom of navigation and overflight and other
uses of the sea and airspace related to these freedoms, unimpeded
lawful commerce, and the peaceful resolution of disputes for all nations.
2) Make Decisions Using the Best Available Information – Across all
lines of effort, decisions need to be based on the most current science
and traditional knowledge.
3) Pursue Innovative Arrangements – Foster partnerships with the
State of Alaska, Arctic states, other international partners, and the
private sector to more efficiently develop, resource, and manage capabilities, where appropriate and feasible, to better advance our strategic priorities in this austere fiscal nts. Ultimately to develop new and
improve existing public education and awareness programs that result
in a more informed public who understand the multi-faceted programs
and policies that regulate the conservation of Arctic biodiversity and
sustainable use of biological resources.
According to the Preliminary Report Alaska and U.S: domestic Arctic
policy must be coordinated and aligned to achieve key objectives for the
benefit of Alaskans and the nation U.S. international Arctic policy should
be a direct extension of sound domestic policy that has meaningful from,
and is endorsed by, Alaskans. And about the Alaskans the Report defines
also the Alaskan Arctic (U.S. Arctic) according to the definition set out
in the Arctic Research and Policy Act (ARPA). To Alaskan Arctic are included area from Aleutians to the Canadian border, west and north of the
Porcupine, Yukon and Kuskokwim rivers. This area is less than half of the
total area of the State of Alaska. This definition is quite strict. From European High North only Finnmark, Troms and half of Nordland from Norway,
Lapland from Finland, Murmansk region and Nenets autonomous okrug
are included to Arctic Region.
32
The comments of Alaska House Majority have been almost hostile regarding the future Chair of the USA in the Arctic Council. From European point of view the Republican Party majority in Alaska vs. Democratic
President administration in the West Wing could be the reason. Alaska
Arctic Policy Commission Preliminary Report describes the relationship
more softly. According to the Report the Commission was formed partially
in response to efforts by the U.S. government to refine its Arctic policy. It
is imperative that U.S. policy for the Arctic reflects the values and interests of Alaskans. The need for Alaska to influence national Arctic policy is
about more than informed decision making. A top-down approach to U.S.
Arctic policy that fails to build on the substantial knowledge and expertise
of Alaskans would be counterproductive, inefficient, and lack legitimacy
in the eyes of Alaskans.
Washington D.C. has heard this message. Secretary of State John Kerry
announced on February 14th 2014 that USA is going to nominate Special Representative for the Arctic Region. According to Secretary Kerry
this is going to happen soon. This Special Representative is going to be
a high-level official of stature who will play a critical role in advancing
American interests in the Arctic Region, particularly as we prepare efforts
for the United States to Chair the Arctic Council in 2015. Secretary Kerry
also mentioned the remarkable work of two U.S. Senators from Alaska,
Mark Begich and Lisa Murkowski, in shaping the Arctic policy of the USA.
A direct connection to the Preliminary Report of Alaska Arctic Policy Commission is in the end of the Press Statement by John Kerry, where he
says that ” …I look forward to continuing to work closely with Alaska’s
Congressional delegation to strengthen America’s engagement in Arctic
issues.”
4) Consult and Coordinate with Alaska Natives – Engage in a consultation process with Alaska Natives, recognizing tribal governments’
unique legal relationship with the United States and providing for
meaningful and timely opportunity to inform Federal policy affecting
Alaskan Native communities.
33
This new Arctic strategy is more a guideline for authorities than action
plan for business community. It gives more solid foundation to the future
chair of the USA in the Arctic Council than former plans or policies. USA
is taking over the chair from Canada already next year. There are going
to be more open questions about the chairmanship program of the USA,
because the next US presidential election and transition occurs at the
same time. This is very interesting from Finnish point of view, because
Finland is going to take the chair after USA in 2017.
The Arctic policy of Alaska
State of Alaska is well recognized in the new U.S. Arctic strategy. The
state itself has also started to define own Arctic policies. Alaska State
Legislature established the Alaska Arctic Policy Commission in April
2012. The aim of this commission is to develop an Arctic policy for Alaska
and produce a strategy for the implementation of an Arctic policy. One
of the goals for this Commission work is to be prepared for the United
States Chair in the Arctic Council. The Alaska House Majority or Republican Party aligned in their statement that Alaska needs to take leadership
role regarding the Nation´s Arctic policy and Alaska should be especially
critical with United States chairing the Arctic Council from 2015–2017.
Alaska Arctic Policy Commission has 24 members and it is formed within Alaska Legislature. Commission consists of three state senators appointed by Senate President, three state representatives appointed by
the House Speaker, one executive branch member appointed by the
Governor, 13 members jointly appointed by the Senate President and
the House Speaker representing the federal government, tribal entity, the
mining industry, the oil and gas industry, Alaskan university, fisheries, a
local government, a coastal community, an international Arctic organisation, a conservation group, marine transportation industry, a native corporation and marine pilots and totally four alternates. The chairmanship of
the Commission is shared by two Co-Chairs, Senator Lesil McGuire and
Representative Bob Herron.
34
The Commission published Preliminary Report January 30th 2014. The
goal is to have the Final Report ready in January 2015. Preliminary Report defined the outlines of Alaska’s Arctic Policy including The Alaskan
Arctic Vision Statement. According to it the state of Alaska envisions an
Arctic that values community sustainability and thriving cultures, advances economic development and a healthy environment, ensures public
safety and security and incorporates transparency and inclusion into decision making.
The Arctic policy of Alaska includes also to recognize and respect the
values and perspectives of the region’s indigenous people, their cultures,
and traditional ways of living both sustain current and develop new approaches for responding to a changing climate that increase community
resilience, adaptability, and sustainability, as well as promote health and
social well-being. Furthermore Alaska aims to manage Arctic fisheries
and wildlife for abundance and sustained yield using a science-based,
ecosystem approach that integrates local and traditional knowledge. Capacity to conduct science and research and advanced innovation and
technology should be built. Impacted communities should receive direct
and indirect benefits from economic development, including employment
and training opportunities. Disaster prevention should be strengthened
both with emergency response capability by coordinating the necessary
levels of public and private investment for infrastructure and equipment.
The policy of Alaska is also to collaborate with industry, local government, and federal agencies, and consult with Arctic residents, to improve
the efficiency of permitting and regulatory processes, as well as to foster
a positive investment climate. Alaska strengthens cross-border relationships with Canada and Russia and supports international Arctic cooperation both pursues opportunities to participate as partner in development
of federal and international Arctic policies. Also the state employs integrated, strategic planning and consults with Arctic residents for scientific, local and traditional knowledge to enhance Arctic decision making.
Alaska wants to attract Arctic investments with a competitive business
environment supported by strategic investment in Arctic communications,
energy, maritime and aviation infrastructure both to establish, support
and maintain national, state, community and personal security and safety.
35
Commissioner identified also strategic recommendations and they were
included to the Preliminary Report. Strategies and recommendations will
be further developed in 2014, prior to the final report´s delivery in 2015.
Recommendations regarding governance and indigenous perspectives
are to continue to pursue, and actively expand, all avenues of participation in the Arctic Council, including involvement in Working Groups and
by building partnerships with Permanent Participants. Then to develop,
where lacking, and build upon existing programs to improve transparency
and community inclusion in decision making through state coordination of
multi-agency permits, state and federal coordination of permits and plans,
and meaningful involvement of regional stakeholders in development activities or plans that affect them.
About science and research is stated to increase state funding to, and
partnership with, the University of Alaska for Arctic research that aligns
with state priorities and leverages the University´s exceptional facilities
and academic capacity. Also state agencies should consider adapting
successful models – such as the Alaska Department of Environmental
Conservation and Yukon-Koyukuk Tribal Communications Protocol – to
development agreements with local governments and tribes regarding
the use of traditional knowledge and culturally sensitive practices in research and permitting programs.
Planning and infrastructure is also included to recommendations. First
of them is to conduct a comprehensive Arctic region economic and infrastructure assessment and planning process that integrates local, regional, state and federal planning efforts. Second recommendation is to
encourage the development of an inter-agency and intergovernmental
working group tasked with working with multiple levels of stakeholders
to develop and implement a prioritization, funding and implementation
mechanism for constructing and maintaining infrastructure and economic
development.
36
Recommendations regarding oil, gas and mineral resources are to implement regional planning efforts that allow local stakeholders to identify
and communicate priorities such as education, infrastructure, and development, to state and federal agencies and both to develop mechanism
for revenue sharing from resource extraction for impacted communities,
developing perpetual trust funds (where lacking) to finance community
needs beyond the life of non-renewable resources.
About security and defense is recommended, that due to the complexity
and importance of National Arctic security issues the Commission decided that this area warrants more attention than they were able to give it.
National Arctic security issues will be reviewed for the DOD agencies and
the Coast Guard during 2014.
Regarding marine transportation is recommended to encourage development of appropriately integrated systems to monitor and communicate
Arctic marine information, and continue state and federal support for programs such as the Alaska Marine Exchange.
Finally recommendations regarding response operations first to facilitate
and secure public and private investment in support of critical aviation
and maritime response infrastructure and economic development, to
include consideration of direct state funding and public-private partnerships that address development of communications, deep draft ports,
icebreakers, logistic hubs and WX C -130 size aircraft hangars. Then
to encourage and advocate for more adequate funding so that the U.S.
Coast Guard can carry out its assigned and emerging duties in the U.S.
maritime Arctic without compromising its capacity to conduct all missions
throughout Alaska. Further to expand and support Department of Environmental Conservation´s effort to involve communities through Sub-area
Planning and provide local training to maintain limited supplies of oil spill
response equipment and to ensure timely, effective and safe response
and spill containment. And to support the Department of Environmental
Conservation´s ongoing communication with the U.S. Coast Guard in reviewing alternative compliance program development and applications.
37
Furthermore to develop stable long-term funding mechanisms for state
weatherization and energy efficiency programs while continuing robust
efforts to find long-term energy solutions. Then to develop assessment
and monitoring program in support of strategies for fish and wildlife managements that enhances food security for Arctic reside.
2.5
Crisis in Ukraine and the Arctic
Russian Federation has increased activities in the European High North
and is planning to reopen old military bases like Alakurtti near border between Russian Federation and Finland. Nato has reacted to these actions
by organizing military training operations in North Norway near Russian
border. The situation begins to resemble the Cold War period.
Tension between United States and Russia can have effects in the Arctic
Cooperation. This situation is becoming more serious if the EU is joining
to the sanctions against Russia and especially then if the sanctions are
getting tougher.
Political crisis is different than financial crisis which has reduced strongly
raw material world prices. Political global problems have usually opposite
effects on them. During last weeks significant changes can be seen in the
development of world prices of gold and nickel. Also other commodities
have the same trend. It is impossible to say how long this is continuing
and what happens when the Ukraine crisis is solved. Rise in the raw material prices can speed up some of the mining investment projects, but so
far hard to say what and where.
In the Region of European High North this new situation can be very
harmful in cross border cooperation. Kolarctic ENPI program was very
difficult to launch in 2008 because the war in Georgia. Now in 2014 EU
and Russian Federation are negotiating the new ENI Kolarctic- program
that should be implemented before the end of 2020 and according to the
information before Ukraine crisis the start should have been in 2015. If
the crisis is not rapidly over the start is going to be postponed. EU sanc-
38
tions against Russia are just now regarding negotiations about visa freedom and new cooperation agenda. If Russia is not starting peace talks
with Ukraine these negotiations are stopped. If the situation is dragging
on for months, the reaction of Russia can be stopping the Cross border
cooperation programs with the EU.
The situation is specifically difficult for Finland. All western sanctions are
damaging the bilateral business between Finland and Russia. Total collapse of rouble is also very fatal from Finnish point of view. Shopping tourism has been extremely important for Helsinki and South-East Finland
and the importance has been growing also in Lapland. In current economical situation Finland is in much bigger problems if the Ukraine crisis
is continuing and if it is escalating. Everyone is hoping peaceful solution
to the crisis, but next weeks are showing us what happens.
39
3.
NORTH OF FINLAND LAPLAND
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
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3.1Lapland
Lapland is the northernmost county of Finland with about 183 000 inhabitants. About 4500 of inhabitants are indigenous Samí people. The total
area of the county is 99 000 km2, which equals to 30% of the whole of
Finland. Lapland is sharing borders with Sweden, Norway and Russia,
altogether 1642 km. There are two international border crossings to Russia, six to Sweden and six to Norway.
The six subregions of Kemi–Tornio, East Lapland, the Valley of Tornio,
Northern Lapland, the Region of Rovaniemi and Fell Lapland form the
region of Lapland.
Rovaniemi is the administrative capital of Lapland with appr. 60 900 inhabitants. The other cities in Lapland are Kemi appr. 22 300 inhabitants,
Tornio appr. 22 500 inhabitants and Kemijärvi appr. 8 100 inhabitants.
Business in Lapland
Clean nature and abundant natural resources provide a unique, solid
foundation for the business sector in Lapland. The cornerstones of the
region’s economy are forest industry, metal industry, mining industry, forestry and tourism. The energy sector, too, will play an increasingly important role in the economy in future.
Economic uncertainty caused by Global financial crisis and continuing
poor demand in export industry has reflected in the economic development of Lapland. The decline in international demand has had a negative
impact especially in the export industry and building sector. Economic
growth of Lapland has, however, been more positive than the national
level growth. The strong growth in Tourism and mining industry have affected also to other branches of business, like trade and business to business services.
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The total turnover of the all companies in Lapland has climbed 4% over
the year 2008 level, when the financial crisis started. The export from
Lapland has reached also the level of 2008. Business to Business services have made biggest growth compared with the 2008 level. Growth
is more than 15%. Other growing branches of business are transport and
logistics (growth 14%), tourism (growth 13%) and trade (growth 12%).
Industry is still about 6% behind the year 2008 level with building and construction (-4%). Compared with other Finnish regions the development of
Lapland has been almost unique.
Key economic figures of Lapland:
• Population 182.800
• Jobs 73.300
• Total amount of companies 10.400
• Total turnover of all companies 10 bln. €
• Value of industrial export 3.7 bln. € (No. 5 of regions in Finland)
Industry is the most important branch of business in Lapland. Total turnover of industry is 4.7 bln€ and it has about 8.000 employees. Number two
business is trade with turnover of more than 2 bln€ and over 6.000 employees. Building sector is number three with 800 m€ turnover and over
4000 employees. Then is transport and logistics with 500 m€ turnover
and almost 4000 employees. Tourism is next with 400 m€ turnover and
3.700 employees. Mining is smaller with 300 m€ turnover and 1.200 employees, but after recent openings of two mines and one mine expansion
the numbers are rapidly rising.
The industrial strategy of Lapland provides guidelines for securing industrial growth and internationalisation, developing the operating environment and targeting public aid measures. The strategy assesses development prospects in the industrial sector over a long time span until 2030
and sets short and medium term objectives for promoting growth.
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Industrial vision for Lapland in 2030:
Lapland grows by nature. The cornerstone of industry in Lapland is the
sustainable refining of natural resources.
• The industry and operating environment in Lapland have reached
a level where Lapland attracts new companies and employees by
nature.
• Industrial actors in Lapland are internationally appreciated network
partners.
• Industrial growth in Lapland stems from innovativeness and arctic
competence.
The following strategic objectives have been set for the industrial development:
1. Growth and vitality based on value added: Growth in the value added
of industry in Lapland promotes vitality and well-being in Lapland.
2. Fast reaction capacity/agility: Early identification of changes in the
operational environment, reacting to them and using them as a competitive asset.
3. Best available technology: Industrial companies in Lapland always
apply and make use of the best available technology (BAT) in a competitive manner.
4. Strategic partners: Actors in Lapland develop new applications in collaboration with the world’s leading actors.
5. Growth in intellectual capital: The constant strengthening of intellectual capital is the key to increasing innovativeness, improving costeffectiveness, strengthening global competitiveness and boosting
economic growth.
6. Respecting people and nature: Natural resources are refined with a
view to respecting people and nature, together with developing other
means of living.
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In the long term, sustainable industrial growth in Lapland relies on refining Lapland’s own natural resources into high-quality products that attract
demand on the global market. In addition to metal, energy, extractive,
forest, wood product, food and organic product industry, which are based
on refining natural resources, growth opportunities are also available to
machine and equipment manufacturers, maintenance service providers,
logistics companies and industrial construction firms, which offer services to the above types of industry. By 2030, the sectors investigated in
the industrial strategy for Lapland aim to reach a total turnover of EUR
9.8 billion and provide employment to 22 700 people.
Development measures are outlined in development programmes, which
are targeted at developing companies, identifying growing markets, helping companies enter markets and building an operational environment
that supports the development of companies and defines priority areas
and measures for eliminating critical bottlenecks. Growth-impairing bottlenecks will be eliminated through concrete development projects.
Energy
The abundant energy resources of Lapland have long enabled it to produce energy for its own needs and for the rest of Finland, too. Lapland
utilizes a plenty of hydropower, local wood fuels, peat and waste liquor
from the forest industry. At present, Lapland’s self-sufficiency in electricity
production is slightly more than it needs, and renewable energy accounts
for over 90 % of electricity production. In industry, particularly, heat generated is used for its own production and in population centres it is supplied
to the district heat networks.
The trend in future energy consumption is above all dependent on the development of industry and the service sector in the Lapland. Forecasted
development such as the investments of the Tornio steel mill, mining projects and growing tourism will increase energy consumption significantly.
More renewable and low-emission energy production, especially, is also
needed in the whole of Finland, as a nation. On the other hand, energy
efficiency and new technology solutions should be developed further.
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Lapland’s large energy resources make it possible to increase production in a sustainable way and the northern conditions lay a good basis for
development of new solutions and local know-how both in energy production and consumption.
Sustainability and self-sufficiency are Lapland’s commonly agreed energy visions. The objective is to utilize Lapland’s large energy resources so
that Lappish knowledge and regional economy will develop and energy
solutions support Lapland’s vitality. Lapland’s investments are channelled
into competitive energy solutions, which also support means of livelihood
and regional economy, making use of northern abilities and creativity.
Energy resources are utilized respecting the environment and Lapland’s
unique nature. Energy production in the future will also be more diverse
based on several different production technologies and fuels so that all
potential will be utilized. The objective is that Lapland’s own knowhow
and business activities are supported so that in the future Lapland will be
known for its role as a developer and user of energy production and saving solutions which are suitable for northern conditions.
To attain the agreed objectives the strategy outlines key projects which
focus on increasing the use of local energy resources, especially, forest
energy, peat, hydropower and wind power and in addition, on developing
energy saving. To ensure the development of Lapland’s own knowledge
and skill some key projects have been defined which support education
and creation of innovations in schools, research institutes and companies. Developing networks of cooperation is particularly important. The
implementation of the projects according to the energy strategy has a
direct effect on regional economy by bringing to Lapland more income
from real estate and other tax revenues and by increasing employment.
The most significant sources of real estate tax income are hydro power
and wind power (in future to a more extent). The increase in the combined
real estate tax of the energy projects according to the energy strategy is
estimated at approximately EUR 16-17 million provided that all projects
are carried out. In Finland real estate tax money goes to the local municipalities. Remarkable employment and income effect will come due
to the construction of the mentioned investment projects and construc45
tion, operation and fuel supply of a biofuel-based new power plants and
a possible biodiesel refinery. The construction of these energy projects
could increase employment in Lapland with a total of even 7 000–10 000
man-years. The effects on employment figures during the operation of the
plants are also significant. According to the strategy, the use of local fuels,
primarily forest chips and peat, could mean a direct increase in annual
employment figures by 1000 man-years, in case a new big power plant
in the city of Rovaniemi and a biodiesel refinery in the city of Kemi were
implemented and the forest energy potential of Lapland were effectively
utilized. In addition, the direct increase in employment figures during the
operation of a nuclear power plant is estimated to be approximately 400500 man-years. Impacts on carbon dioxide emissions depend heavily
on the quantity of forest energy which is used to replace peat and coal.
Without a huge increase in the use of wood fuels, carbon emissions from
power and heat production will grow in Lapland slightly from the current
level by the year 2030. Efficient utilization of wood fuels can reduce emissions by about 30–40 % from the current level. Increasing the production
of local renewable energy as specified in the energy strategy also supports significantly the achieving the objectives of Finland’s and the EU’s
climate and renewable energy policy. It is important to notice, that already
at the present situation, renewable energy accounts for over 90 % of all
electricity produced in the region of Lapland.
Tourism
Total income of Lapland tourism business is about 700 million €. Tourism impact on employment is more than 5.200 man-years. In 2012 total
turnover of all tourism companies (in Lapland 1.586) was 471 million €.
Amount of registered tourists in year is 2.5 million. In 2013 amount of
registered international tourists was first time in history over one million.
Great Britain in number one nationality in Lapland international tourism,
Russia, Germany, France and Norway are following. Biggest growth has
been in tourist groups coming from Japan and China.
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The most important strategic issues in Lapland’s tourism strategy include
improved accessibility, growing international and all-year-round tourism
demand through vigorous sales and marketing efforts. Lapland tourism
will seek growth in international markets, and a major challenge is to generate more all-year-round demand for Lapland tourism products. A serious hindrance to the development of all-year-round service supply is the
fact that Lapland has occasionally poor accessibility, especially outside
the high seasons of Christmas and midwinter months. The tourism strategy seeks solutions to improve accessibility, but it is equally important to
have an overall perspective on development measures. If international
tourism demand could be guaranteed on an all-year-round basis, accessibility would improve automatically. In order to increase successfully
all-year-round demand from international markets, stronger emphasis on
sales and marketing measures will be necessary. Marketing development
will require joint commitment, long-term cooperation and ample resources from municipalities and tourism industry.
One method to develop sales and marketing is e-commerce. Finland is
regarded as high-technology country but in this field of business we lag
behind, although Lapland has positive prospects to develop into a strong
e-commerce actor. Intensive network cooperation between tourism industry, research and education, and other operators will be necessary,
however.
The need for extensive, accurate, and multiple research data is essential for tourism development. When planning effective foreign marketing
measures, for example, it will be necessary to secure the continuous
supply of updated information on consumer behaviour, market situation,
and future trends within the industry. Similarly, we need information about
the development within tourism industry as well as the employment and
revenue effects of the trade in order to direct public funding to suitable
projects, and to make reliable evaluations of their results. The tourism research programme of Lapland will provide an extensive network of operators and create excellent conditions for producing high-quality research
data to the industry. Within the present tourism boom, it will be obligatory
to pay special attention to the standards of construction, planning, and
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natural surroundings. In tourism development, the major distinctive attractions must be protected and the surroundings kept pleasant for both
visitors and local inhabitants.
Transport system of Lapland
ajor changes also requiring the development of the transport system
M
have taken place in the international and national operational environment and in Lapland’s development prospects and development strategies. The most important changes are the strong development of mining
and tourism and the increasingly prominent role of the Arctic Region. The
concentration of population in the sub-regions of Rovaniemi and KemiTornio, decrease in the number of population in sparsely populated areas
and the simultaneous increase in the number of the elderly also impose
growing challenges to the maintenance of Lapland’s transport system
and to targeting development measures. At the same time, scarce financing is available to the transport system, and the implementation of largescale investments is becoming more difficult.
The transport system should be capable of supporting the development
prospects of the key business sectors in Lapland (the mining, metal and
forest industry and tourism), the safe everyday mobility of people, and
the accessibility of services in urban and sparsely populated areas. It
is very important to improve the accessibility of the region and to utilise
Lapland’s favourable transportation and logistics position as part of the
broad, developing Arctic Region. There is also need to develop cooperation and unanimously promote major investments in the region.
The development strategy underlying Lapland’s transport system is
based on national and regional goals and guidelines, verified development needs and the goals set for developing the system. The guidelines
presented in the development strategy steer the defining of more specific
measures, their prioritisation, and the choices to be made in the scarce
financing and resourcing environment. The key point of departure is to
secure daily operability and the organisation of moderately priced transport services, taking into consideration the special features of Lapland
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and the new development prospects for mining, for instance, which call
for large investments. Major investments are also important in view of the
ability of Finland as a whole to profit maximally from the development of
the Arctic Region and the opportunities offered by the opening up of the
North-East Passage.
Major road and rail investments decided at the national level are of key
importance to secure Lapland’s development prospects and the accessibility of Lapland in general. The increasingly prominent role of the north,
with the new opportunities opening up in future, calls for large road and
rail investments particularly in the long term. Investments in urban regions are also important with regard to combining transport and land use.
Rail network investments benefit the business sector in particular, while
opening up new opportunities to mobility among Lapland’s local inhabitants and tourists, for instance. Considering that Lapland is characterised
by long distances, major road network investments are important for safe,
fluent travel and for transport in the business sector.
Major spearhead investment projects in Lapland are the improvement of
trunk road 4 at Rovaniemi and between Oulu and Kemi, of trunk road 21
between Palojoensuu and Kilpisjärvi, and of the service standard in the
Seinäjoki-Oulu rail connection, which lies outside Lapland but is important in view of Northern Finland as a whole.
ining and the logistic position of Lapland; important projects in the future
M
will be the electrification and renovation of the Kemi-Kolari rail connection, development of Ajos Port, which will include deepening the maritime
access route and developing road and rail connections, and the provision
of new rail and road connections required by new mines/ improvement
of the existing connections. Connection alternatives important to mining,
involving the Arctic Ocean port and utilisation of the North-East Passage;
an exhaustive account should be drawn up of the various alternatives,
and the results will be used as the basis of land use and transport planning in future.
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Safe, fluent travel facilitates people’s everyday life. Fluent travel is also
important to the business sector, including commuting and work-related
travel in the region, tourism and the accessibility of the region.
Lapland’s external accessibility will be improved by developing air and rail
traffic and the fluency of road traffic. Air traffic as a long-distance connection plays the most prominent role in view of accessibility.
In mobility within the region, account is taken of long distances and also
of promoting the use of sustainable means of travel in cases where this
is realistic. It is possible to improve the accessibility of places of work and
services in urban regions and tourism centres by promoting public transport and pedestrian and bicycle traffic. In other parts of Lapland, however,
long distances essentially require the use of private cars, and the special
challenge there is to secure mobility among people who have no car and
who live in sparsely populated areas. As for the accessibility of services,
it is also important to improve electronic services and introduce services
to sparsely populated areas through new means.
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Key development guidelines for developing safe, fluent travel:
• Developing long-distance travel chains to address the needs of tourists and local people.
• Developing air traffic together with the tourism sector, Finavia and
traffic operators.
• Improving the competitiveness of public transport broadly in cases
where sufficient demand is available. Securing the accessibility of the
most important places of work through public transport.
• Securing the basic service level in public transport in low-demand
areas and mitigating the growth of transportation costs in the society
as a whole.
• Securing daily operability in vehicle traffic.
• Targeting pedestrian and bicycle traffic development measures to potential areas.
• Improving traffic safety and accessibility through prioritised means
and by influencing attitudes more effectively.
• Securing daily operability throughout the road and street network
through maintenance activities.
• Clarifying administrative responsibilities in off road traffic.
• It is vital that telecommunications connections and electronic services are developed in the region, which is characterised by long
distances.
Business sector transports and logistics place a wealth of requirements
on the transport system. Large investments will have to be made in order
to improve the cost efficiency of transports and to offer new development
prospects in the long term, and work done largely at the regional and
areal level to enhance the efficiency of the logistic system. All in all it is
important to develop the logistic position and competitiveness of Lapland
as a whole.
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Key development guidelines for developing transports and logistics in the
business sector:
• Improving the cost efficiency of transports by prioritising the needs of
mining and other heavy industry. In development efforts, attention is
paid to the position of Kemi-Tornio sub-region as the hub of transport
corridors and the increased importance of the Arctic Ocean as part
of the development of the Arctic Region and the prominence of the
North-East Passage.
• From the point of view of cost-effective transports, it is important to
secure the fluency of winter navigation and to maintain the road and
street networks in good condition, in addition to large- scale road and
rail investments. The effects of a stricter sulphur limit to be imposed
on transports on the Baltic Sea should be minimised. The stricter limit
is scheduled to enter into force in 2025, i.e. at the same time as in
other sea areas.
• Developing the hubs of the logistic system as a networked entity
(ports, logistics centres, concentration of logistic operations, combined transports, roundwood terminals, terminal network).
• Developing logistics services, expertise and cooperation systematically (developing vocational logistics education and improving the
attractiveness of the sector, developing regional logistics cooperation, combining transports in sparsely populated areas, developing
procurement cooperation, introducing effective information systems,
telecommunications connections and electronic services).
Developing cooperation and policies is an integral part of developing the
transport system in the region. Through fluent cooperation, it is possible
to react to quick changes in the operational environment and to support
continuous, coordinated regional transport system development work.
Regional cooperation also supports a shift from competition between
sub-regions towards a regionally consistent overall approach. In addition,
when financing is collaboratively targeted more effectively and based on
users’ needs, it is possible to achieve better service standards with the
existing, scarce resources.
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Mitigating climate change and adapting to it will be taken into consideration as a precondition for all types of operation. However, it is important to
make sure that the mitigation measures are realistic and to point out that
the effects of measures concerning transport pricing, for instance, should
be recognised at the national level.
Key cooperation and policy development guidelines:
• Lapland should be active in cooperation forums in the Arctic Region.
• Setting up a regional transport system working group in Lapland. The
group will replace the current road transport working group and be
responsible for coordinating regional transport system work in future.
• Combining transport and land use planning and implementation at
all levels.
• Developing the operation of transport and land use working groups
and eliminating overlapping work.
• Taking active measures to contribute to transport system financing
and increase of regional decision-making power.
• Committing decision-makers to the guidelines presented in the plan.
• Drawing up a regional letter of intent of the spearhead tasks for the
next few years.
The Finnish Transport Agency published in 2013 working group report
summary regarding the transport needs of Mining industry. According to
the summary conclusion it is essential in the immediate and future development of transport infrastructure how the transport and travel needs
of extractive industry and other industries develop, what is done in the
neighbouring countries of Finland to develop transport routes, and, for
example, to use the Arctic Sea connections, and how the transport equipment develops. The needs must be covered in planning, and that requires
international co-operation. The transport needs become more specific
based on individual mine decisions, and then more detailed planning and
implementation needs can be programmed. In the near future, Northern
and Eastern Finland mining transport between Europe and far-off countries will be implemented via the Bothnian Bay harbours, irrespective of
the sulphur directive. Other transport needs of the industries in the area
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do not alone significantly impact the mining transport and route selections, but it is expedient to integrate those. In regional zoning, it is good
to already take into account the future needs that are visible. The following presents the most significant needs for further actions based on this
report.
Next 1–5 years
•
Improvement measures (in total about 50 million euros) related to
eliminating the bottlenecks of the existing services and transport networks of current mines will be planned and implemented.
• Small improvements to transport services will be planned and implemented case by case when new mines are launched.
• Further clarification and planning of current transport services will be
started for the increasing mining transports that are within sight. They
include e.g.
- Highway 4 from Middle Lapland to Oulu and highway 21
-The capacity of the railway network in sections Ylivieska–Oulu–
Kemi, Kemijärvi–Rovaniemi–Laurila, Vartius–Oulu and possible
new freight transfer terminals
- Kolari and Solki rail links after the mine decisions
- Growing the capacity of the Bothnian Bay harbours (harbours’ own
decisions) and deepening of sea routes based on the demand and
the sea traffic strategy of Finland and project assessments.
• The opportunities to use heavier than normal road transport and the
impact on mining transport will be clarified.
• A land use reservation will be made in the regional plan for a new
railway line to Sodankylä.
Medium-term 5–15 years
•
The track and road investments required by the Kolari and Sokli
mines will be implemented, provided that the mines will be opened
according to plans and the funding of the lines have been agreed
upon between the different parties.
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•
•
After the possible Middle Lapland mine decisions, the further planning and building needs of the Sodankylä–Rovaniemi/Kemijärvi line
will be clarified
Improvement measures required by the existing transport network
will be implemented based on mining transport and the need for
transport and travel needs of other industries.
Future after 15 years
The mining industry of the northern region will be in a lively development
phase and will have great economic significance. In transport functions,
the current transport network will have been used as basis. Fast changes
of the transport network will not be possible. The development of new
national transport connections may take years longer than starting mining
activities. New ore deposits are constantly being found, and the utilisation of them is dependent on the transport possibilities. In this work it
could be stated that mining industry and its transport needs are difficult
to predict far into the future. For this reason, there should be continuous
co-operation between mines and mining transport both nationally and internationally.
•
•
•
•
•
uture needs will be forecast in collaboration with the neighbouring
F
northern countries
The development of the Tornio–Haaparanta railway yard and freight
terminal, as well as the development of the Narvik route will be investigated together with Swedish authorities
Increasing the possibilities to use the Vartius route in Finnish mining
and Russian transit transport will be studied in co-operation with Russian authorities
The planning and implementation will take into account the changing
traffic needs and possibilities, including the North-East Passage
Hauling equipment will be developed and the opportunities they offer
will be use
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The results of this work will be used in the mining working group project
”Sustainable extractive industry - Energy, logistics and transport infrastructure” led by the Ministry of Employment and the Economy. Furthermore, the transport and logistics working group of Northern Finland will
do follow-up as part of the working group activities. The situation will be
re-evaluated in 2015.
(Source: Regional Council of Lapland. The Finnish Transport Agency)
Education and Research
University of Lapland was founded on 1st of March in 1979 and it is located in Rovaniemi. University has four faculties: Art and Design, Education,
Law and Social Sciences. Other Units of the University are: Arctic Centre,
Education and Development Services, Open University, Central Administration. Lapland University Consortium shared units are: Multidimensional
Tourism Institute, Institute for Northern Culture, Library, Support Service
Centre (R&D Support Services, IT Services, Educational Support Services).
University of Lapland has 4.685 students and 647 staff members. The
mission of the University of Lapland is to promote sustainable development, well-being and equality both regionally and internationally through
its research, artistic activity and research-led teaching. The core values of
the University are: creative and impactful involvement, critical and emancipatory perspectives, individual and community commitment.
In 2020 the University of Lapland will be an international actor in higher
education with a distinctive profile in the arts and the sciences. The University is an autonomous member of the Lapland University Consortium
and contributes in its areas of strength to delivering the Consortium’s
jointly agreed strategy. In international cooperation, the University’s key
strategic partner will be the University of the Arctic, whose thematic networks will strengthen the expertise of the University in its focus areas.
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The University of Lapland is the northernmost university in the European
Union. The institution’s profile encompasses internationally recognised
research on the people, communities and environment of the Arctic and
the North, and the interaction of these elements. Another cornerstone of
the University’s work is international tourism research, a focus valued for
its potential regional impact.
The University’s strategic focuses are: service design, Northern wellbeing and the changing nature of work, sustainable development, law,
and justice.These focus areas correspond to the strategic focuses of the
Lapland University Consortium.
The changes occurring in the Arctic and the North, and the special social,
cultural, and economic conditions in these regions, offer a unique environment for research in the focus areas.
Service design draws on the opportunities arising from the interaction
between art and science in research and development in the areas of
tourism, industrial products, electronic services, well-being services, and
safe and accessible environments.
As an expert in service design, the University creates conditions conducive to producing competitive and sustainable services for the public and
private sectors, as well as educational institutions. At the same time, it
educates experts with the holistic perspective required for successfully
managing the creative context of service design.
In the regional innovation programme of the Lapland University Consortium (LUC), service design is strongly linked to the Consortium’s strategic
focus on creating a Lapland of tourism, culture, and experiences.
Global-level social, economic, and political changes and patterns of migration – developments attributable in part to climate change – are felt
more acutely in Arctic and Northern regions, where they impact the wellbeing of the people there and the foundation on which that well-being
rests.
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To address these developments, the University is building up a strong
multidisciplinary research effort on change, one thrust of which is to educate experts on the changing nature of work. Special attention is paid to
factors endemic in Northern regions that promote or reduce well-being.
By investing in the research theme “The changing nature of work” the
University strengthens its educational offerings geared to specific professions.
One prominent research theme at the University is the social well-being
and changing livelihoods of indigenous peoples. The institution bears a
national responsibility for social-scientific research related to the Sámi
people.
In the regional innovation programme of the Lapland University Consortium (LUC), Northern well-being and the changing nature of work form a
research interest that closely serves the Consortium’s strategic focus on
creating a Lapland of well-being.
Sustainable development, law, and justice comprise an area of multidisciplinary research. Analyses in this field focus on the interests of varied
actors in relation to the conditions and regulations that apply in the environment in which they must work.
The research undertaken aims to generate information on future options
for the Arctic and North that incorporate sustainable social, economic,
ecological, judicial, and cultural development. Of particular interest are
themes related to sustainable tourism and indigenous peoples. The University bears a national responsibility for research on Sámi law.
In the innovation programme of the Lapland University Consortium (LUC),
sustainable development, law, and justice are closely linked to the Consortium’s strategic focus on creating a Lapland of industry and a Lapland
of natural resources.
The research problems addressed in the University’s research focuses
are primarily related to Arctic and Northern research as well as tourism
research.
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In 2020 the University of Lapland will be an internationally attractive, creative, and multicultural academic and artistic community.
The University’s research and artistic activity in its stated strengths and
focus areas will be recognised and influential at the regional, national,
and international levels.
The University will continue to strengthen its Arctic and Northern research orientation. It will conduct high-calibre Arctic and Northern research through cooperation between the Arctic Centre and the faculties.
The quality and impact of the research will be internationally assessed in
2013 and 2018.
The Multidimensional Tourism Institute will be a significant player in its
field internationally, and its research will have a strong impact on the region. The scientific research conducted at the Institute will represent cutting-edge research internationally in the field of ecologically and socially
sustainable tourism.
The University will direct its research efforts to its focus areas: service
design; Northern well-being and the changing nature of work; and sustainable development, law, and justice.
The University will engage in scientific basic research and practice-oriented research side by side. Applied research attuned to the interests of the
region will be conducted in cooperation with the Lapland University Consortium and will contribute to and draw on the University’s programme of
basic research.
International networking will figure prominently in the research and artistic activity at the University. International research funding will constitute
twenty-five per cent of the University’s outside funding.
The unique strength of the University will lie in the interaction between its
research and artistic activity.
(Source: University of Lapland)
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Arctic Centre
The Arctic Centre is internationally recognized for the quality and relevance of its multidisciplinary Arctic research, which is our key activity.
Through this research, the Arctic Centre promotes increased knowledge,
awareness and understanding of the Arctic both within and outside the
region. This research supports decision-making and sustainable development in the Arctic.
Research projects: on-going and completed projects.
Global Change: The Arctic is particularly vulnerable to large-scale changes in the climate and economy occurring throughout the globe. This research group examines the effects of these changes and efforts to offset
and adapt to them.
Sustainable Development studies how people, communities and institutions in the Arctic manage and cope with changing environmental, economic, social and cultural circumstances in order to promote a sustainable future.
Environmental and Minority Law: The Northern Institute for Environmental and Minority Law (NIEM) has expertise in legal research in the Arctic
and is specialized in the two branches of law that appear in its name environmental law and human rights law.
The Arctic Centre has an International Scientific Advisory Board which
meets once a year and has an advisory and supervisory role. Chair of the
Board is Professor David Hik from the University of Alberta.
The Arctic Doctoral Programme Arktis is a multidisciplinary doctoral programme of the Academy of Finland. The one-year Arctic Studies program
gives introduction to the issues that are relevant in the Circumpolar North.
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The Arctic Centre’s science communications and library compiles, popularizes and communicates Arctic issues to increase the knowledge and
understanding of the experts, decision makers and the general public on
Arctic issues.
The Science Centre is in the Arktikum House together with the Provincial Museum of Lapland. Nearly 80 000 persons visit the Arktikum House
every year, half of them tourists from abroad. Science Centre exhibitions
display the results of Arctic research interactively and inform about the
Arctic nature and people of the region.
Arctic Centre representatives serve as specialists in many international
and national tasks. We have also very wide and active network of contacts around the world.
The Science Communications compiles, popularizes and communicates
information on arctic issues to national and international experts, different
target groups and the general public. Our goal is to increase the knowledge and understanding on arctic issues of the experts, decision makers
and the general public by offering net services, theme portals and library
services by utilizing the expertise of the staff and partners.
The Science Communications develops and maintains databases and
portals on arctic research, northern environments and the Barents region.
We have active cooperation with national and international partners. Arctic Expertise in Finland publication was compiled by the Science Communications for the Ministry for Foreign Affairs of Finland.
The Library at the Arktikum serves tourists, researchers, students and
local people. It has a collection of literature dealing with natural phenomena, environment, expeditions, peoples, cultures, and livelihoods in the
Northern regions, especially the Arctic. The collection also includes information on legislation and research related to these subjects.
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The Science Communications has collaborated with organizations in other nations to develop a northern information services. The BarentsInfo.org
portal was done together with Norwegian, Russian and Swedish parters.
The newest cooperation project is the Barents Mediasphere where the
aim is to improve the cross-border communications in the Barents region.
The University of the Arctic is a cooperative network with 90 universities,
colleges, and other organizations committed to higher education and research in the North. The activities of the UArctic include e.g. the multidisciplinary Circumpolar Studies Program (BCS), north2north Mobility Program which is a mobility program for students, and Northern Research
Forum that was started to activate dialogue between students, scientists
and policy-makers.
The Arctic Centre actively participates in developing the operational content of the University of the Arctic and in its mobility programs. The Arctic
Studies Program (ASP) delivers U Arctic’s Circumpolar Studies.
European Union Arctic Information Centre initiative is the international network of 19 leading Arctic research and outreach institutions from the
various European Union Members States, and the EEA countries.
The EUAIC initiative was made during years 2009–12 as the most experienced professional network of European institutions for information,
outreach and insight into Arctic issues. The network’s objective is to provide the European Union, its citizens, institutions, companies and Member States with an Arctic information source and factual overview about
the status and trends in the Arctic. The EUAIC initiative network aims to
act as a ‘boundary organization’ of information that facilitates two-way
communication between experts, decision makers, stakeholders and the
public.
The initiative is organized using a network model to operate on the basis of existing expertise and infrastructures of its network members. The
network initiative has its headquarters located at the Arctic Centre (Rovaniemi, Finland), currently there are nineteen partners in the network.
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The European Commission selected the consortium to carry out an one
million euro project to produce a “Strategic Environmental Impact Assessment of development of the Arctic”. The project will last eighteen months
during 2013–2014.
The initiative follows the Arctic statements of the European Union (Commission 2008 and the Council 2009) that have high importance for sustainable development of the Arctic regions.
(Source: Arctic Centre)
3.1.1
Investment Potential 2014–2025
Industry:
Outokumpu Oyj, finalizing postponed investments
400 m€
Manga LNG Oy, Tornio, LNG-terminal
300 m€
Stora Enso Oyj , Veitsiluoto Mill, recovery boiler
Total:
75 m€
775 m€
Mining industry:
Agnico Eagle Finland Oy, Kittilä gold mine expansion phase 1
80 m€
Agnico Eagle Finland Oy, Kittilä gold mine expansion phase 2
200 m€
Yara Suomi Oy, Sokli mine
1.000 m€
First Quantum Minerals, Kevitsa mine expansion
Gold Fields Arctic Platinum, Suhanko mine
Northland Mines Oy, Hannukainen iron mine
Anglo American, Sakatti nickel-copper mine, Sodankylä
Mawson Resources, Rompas gold mine
300 m€
1.500 m€
600 m€
3.000 m€
300 m€
Total:
6.980 m€
Hydro power:
Kemijoki Oy Sierilä power plant
135 m€
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Wind power:
Impax Asset Management, Kuolavaara-Keulakkopää
100 m€
Impax Asset Management, Joukhaisselkä
50 m€
Tuuliwatti Oy, Löylyvaara
15 m€
Tuuliwatti Oy, Kitkiäisvaara
48 m€
Tuulikolmio Oy, Rajakangas Tornio
90 m€
Tuulikolmio Oy, Pakisvaara Sodankylä
170 m€
Taaleritehdas Oy, Posio
125 m€
Innopower Oy, Ajos
320 m€
Rajakiiri Oy, Tornio
250 m€
Wpd Finland Oy, Kemijärvi
55 m€
Posio Aneenkumpu
30 m€
Total:
1.253 m€
Bio energy:
Rovaniemen Energia Oy, Mustikkamaa bio energy plant
220 m€
Energy Transfer Networks:
Fingrid Oyj, Sokli and Hannukainen lines
270 m€
Tourism:
Laatumaa/Lapland Hotels Oy, Ylläs new resort
600 m€
Saariselkä expansion project
450 m€
Levi Summit-2 2
00 m€
Hotel Santa Claus, Rovaniemi, enlargement
30 m€
City Hotel Rovaniemi, enlargement
10 m€
Hotel Old Town Hall, Rovaniemi
10 m€
Lapland Hotels Oy, Pallas
20 m€
YIT, Kemi Sarius
120 m€
Total:
1.440 m€
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Transport infrastructure:
VT 4 Rovaniemi, Highway construction
25 m€
VT 4 Kemi-Pohjois-Ii, Highway construction
91 m€
Sokli mine-railway from Kemijärvi
425 m€
Kemi-Kolari railway upgrade
255 m€
Rovaniemi-Sodankylä railway
325 m€
Arctic Railway Finnish side
1.900 m€
Mining roads (Sokli, Suhanko)
40 m€
Kemi Deep water port
105 m€
Total:
3.166 m€
All total:
3.1.2
14.239 m€
Development of the Region 2015–2020
The fastest growing sector in Lapland has been the mining industry. The
preconditions for the development of the mining industry in the region are
sustainable solutions to environmental issues and a conflict-free existence alongside the tourism industry. After the Kevitsa Mine came in to
production and the expansion of the Kemi Mine of Outokumpu was completed the start of new investments seemed to be very difficult to define.
There was a long wait for the decision concerning the expansion of the
Kittilä Gold Mine, but the realisation of its initial stage was announced in
February 2012 and the expansion is under construction. Kevitsa mine is
ready for expansion, but still waiting for environmental permits.
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The decision on the Sokli Mine should be done before summer 2014,
but that can be based on too positive expectations. According to the media discussions with authorities about the necessary railroad to the mine
have been difficult. If the decision is negative, it is possible that Kovdorski
GOK from Murmansk Region, which was a potential partner in the project, is taking over it.
The decision to open the Hannukainen Mine in Kolari is likely to be delayed due to financing problems. Also discussion about the conflict between tourism and mining has been arisen in Ylläs resort. The opposition
has became stronger and voices louder against the mining project.
The next in line was expected to be the decision to implement the Suhanko Palladium Mine in Ranua. Gold Fields Arctic Platinum company
announced in 2013 that they are seeking financing to this 1.5 billion €
project. Continuing financial crisis is not making this process easier.
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The problems of Talvivaara mine have reflected to the mine permitting
processes in Lapland. At the moment the situation with two projects is
almost critical because some authorities like ELY Centre and Metsähallitus have appealed about the decisions by TUKES to give exploration
permits to Anglo American in Sakatti and Mawson Resources in Rompas
area. This is strange because both authorities have been involving in
the decision making process itself and after legal decision they appeal.
Geological Survey of Finland is in the same situation in the Enontekiö
with exploration permits. Business Community has discussed about this
problem with the Prime Minister who promised to take measures to solve
this situation.
As Outokumpu completed its new ferrochrome plant at its Tornio Mill,
Lapland can probably expect more industrial investments. The company
still holds a reserve of approximately 400 million euros of investments,
which were announced before the financial crisis that hit in 2008. The
expansion of the Kemi Mine and the construction of the second ferrochrome plant included in the investment plan are now to be implemented.
These are expected to be initiated once the merger of Outokumpu and
Inoxum is now finalised. In fact, with the potential new smelting plant,
the investments in Tornio can rise in excess of a billion euros. Last year,
Outokumpu and its partners also announced plans to construct the LNG
terminal in connection with the Tornio Factory.
Outokumpu plc., Ruukki Metals ltd, Gasum ltd and EPV Energy ltd have
established a development company called Manga LNG ltd. The purpose of Manga LNG ltd is to build an import terminal for liquefied natural
gas (LNG) and to create an effective logistics chain to supply the LNG.
The LNG terminal diversifies Finnish gas markets, since Finland does
not have LNG import terminal at the moment. Swedish LKAB ltd (Luossavaara Kiirunavaara Ltd) has been offered the possibility to become a
shareholder later this year.
The use of LNG will improve the competitiveness of the participating companies, since the price of LNG has during the recent years been more
stable and price development more moderate than prices of the fuels to
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be replaced with LNG. LNG is also more environmental friendly than fossil fuels used currently in industry, maritime transport and energy production. LNG reduces carbon dioxide, nitrogen oxide and particulates emissions considerably.
The construction of the import terminal will also have a major job-creating
effect. The estimated job-creating effect during the construction period is
estimated to be 240 man years. The project is expected to be ready in
2017.
Manga LNG has signed a turnkey engineering, procurement and construction (EPC) contract to purchase a liquefied natural gas (LNG) receiving terminal to be built in Tornio, Northern Finland. The contract, valued
at approximately EUR 100 million, has been made with Wärtsilä Corporation, a global leader in complete lifecycle power solutions for the marine
and energy markets. The contract is conditional on receipt of investment
support and Manga LNG Oy’s contracts with other parties, including the
gas suppliers.
The biodiesel plant planned for Kemi by the Vapo Group was granted EU
support totalling nearly 100 million euros, if the project is implemented.
The problem is finding a new partner for the project to replace Metsä
Group which left the project some years ago. In January 2014 Vapo
Group announced to abandon the project and close it due to the financing problems
The investments into tourism in Lapland were around a billion euros over
the last decade, with most investments focused on the western Lapland,
Levi and Ylläs districts. It was believed that the investment boom was
over, but a positive boost in tourism following the financial crisis has
turned things around. The investments will rise to another billion within
next ten years if the projects are implemented. The biggest projects include the new centre for Äkäslompolo, the Saariselkä investment project
and the Koutalaki expansion in Levi.
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Wind power seems to be only energy projects to be started within the next
five years. Process is slower than expected due to many appeals regarding the wind parks. Hydro power project in Sierilä is still alive, but appealing processes have been long and appealing court decided to restart the
application process. Final building decision can be done sometimes after
2020.
Arctic Railway has been the most popular investment plan in Lapland.
This railway has three main options, one in west, one in north and one in
east. Eastern Lapland announced that Russia is now interested in building railway between Salla and Alakurtti. This would be according to them
the cheapest alternative. City of Oulu has been active in Tromsö and
announced that the only way to solve this problem is to build the railway
from Kolari to Skibotn and from there to Tromsö. City of Oulu needs this
connection, but this project from Kolari to Tromsö need financing 4-6 billion euro. The Government of Finland has been silent and the Ministry of
Transport and Communication and the minister are not willing to discuss
about the project.
3.1.2.1 Investments expected to start first
Also industrial investments are expected to start during next couple of
years. Stora Enso has already decided to start recovery boiler project
and LNG-terminal project is proceeding well. Mining projects look very
possible and some wind power projects are also started. Smaller hotel
invests look necessary especially in Rovaniemi. Road investment in Rovaniemi has starting decision and Kemi-Oulu road is expected to be next
to be financed.
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Projects:
Manga LNG Oy, Tornio, LNG-terminal
300 m€
Stora Enso Oyj , Veitsiluoto Mill, recovery boiler
75 m€
Agnico Eagle Finland Oy, Kittilä gold mine expansion phase 1
80 m€
Agnico Eagle Finland Oy, Kittilä gold mine expansion phase 2
200m€
Yara Suomi Oy, Sokli mine
1.000 m€
First Quantum Minerals, Kevitsa mine expansion
300 m€
Impax Asset Management, Kuolavaara-Keulakkopää
100 m€
Impax Asset Management, Joukhaisselkä
50 m€
Tuuliwatti Oy, Löylyvaara
15 m€
Tuuliwatti Oy, Kitkiäisvaara
48 m€
Taaleritehdas Oy, Posio
125 m€
Hotel Santa Claus, Rovaniemi, enlargement
30 m€
City Hotel Rovaniemi, enlargement
10 m€
Hotel Old Town Hall, Rovaniemi
10 m€
Lapland Hotels Oy, Pallas
20 m€
VT 4 Rovaniemi, Highway construction
25 m€
VT 4 Kemi-Pohjois-Ii, Highway construction
91 m€
Total:
2.479 m€
3.1.2.2 Investments waiting for better times
The rest of the mining projects can be implemented after the financial
crisis is over. Energy projects like Sierilä and Mustikkamaa are possible, but processes take time. Big tourism investments are depending on
financing and the crisis must be over before they are starting. Transport
infrastructure projects are very expensive and positive mine decisions are
necessary in Sokli and Hannukainen.
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Projects:
Outokumpu Oyj, finalizing postponed investments
Gold Fields Arctic Platinum, Suhanko mine
Northland Mines Oy, Hannukainen iron mine
Anglo American, Sakatti nickel-copper mine, Sodankylä
400 m€
1.500 m€
600 m€
3.000 m€
Mawson Resources , Rompas gold mine
300 m€
Kemijoki Oy Sierilä power plant
135 m€
Rovaniemen Energia Oy, Mustikkamaa bio energy plant
220 m€
Tuulikolmio Oy, Rajakangas Tornio
90 m€
Tuulikolmio Oy, Pakisvaara Sodankylä
170 m€
Innopower Oy, Ajos
320 m€
Rajakiiri Oy, Tornio
250 m€
Wpd Finland Oy, Kemijärvi
55 m€
Posio Aneenkumpu
30 m€
Fingrid Oyj, Sokli and Hannukainen lines
270 m€
Laatumaa/Lapland Hotels Oy, Ylläs new resort
600 m€
Saariselkä expansion project
450 m€
Levi Summit-2
200 m€
YIT, Kemi Sarius
120 m€
Sokli mine-railway from Kemijärvi
425 m€
Kemi-Kolari railway upgrade
255 m€
Rovaniemi-Sodankylä railway
325 m€
Arctic Railway Finnish side
1.900 m€
Mining roads (Sokli, Suhanko)
40 m€
Kemi Deep water port
105 m€
Total:
11.760 m€
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3.1.2.3 Key investment project of Lapland
Sokli Mine
Positive decision by Yara Suomi Oy to start the Sokli project would be
very important both for Lapland and for the whole mining industry in Finland. After Talvivaara problems began mining industry has been in big
need for positive investment decisions. Discussion about mining industry
has been vivid in Finland, but mostly about problems. The connection
between high class mining technology industry in Finland and the mines
has not been largely noticed.
One of the most typical problems with junior mining companies in investment projects has been the underestimation of the real costs to build a
mine. Yara company is big enough to be able to finance the project and
also finish the started implementation.
Lapland has survived through the last five years in spite of the financial
crisis. Economic development has been getting slower and the positive
decision to start the Sokli mine project would boost the economy and allure new business to Lapland.
Projects that speed up with Sokli mine:
Economic development in Lapland and all mining projects in Finland.
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3.2
NORTH OF FINLAND OULU REGION
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
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The Finnish region of Oulu (terms ‘North Ostrobothnia´ and ‘Northern
Ostrobothnia´ used in some contexts are synonymous to Oulu region)
extends across Finland from the Gulf of Bothnia coast to the Russian
border and has an area of 37 000 km² and is about equal in size to the
whole of Netherlands.
Oulu region is a growing and developing region that has a population of
about 380 000 people (7,2% of the Finnish population) and 80% of whom
live in built-up areas (2008). The population is well educated and has the
lowest average age of any region in the country.
The total population of the City of Oulu and its surrounding districts is
more 200 000. Five surrounding municipalities have joined to Oulu from
the beginning of year 2013 and the population of the city is now 190 695.
In contrast, the remaining parts of the region are sparsely populated. The
average population density of the region falls down to about 10 inh/km2.
The Oulu Region includes the City of Oulu and 6 surrounding municipalities: Hailuoto, Kempele, Liminka, Lumijoki, Muhos and Tyrnävä. Also the
rest of the County of Northern Ostrobothnia is included in this report to
Oulu region.
The Oulu Province belongs to a sub-Arctic climate. The City of Oulu has
a moderate climate because of its maritime location. At Oulu’s latitude
the average monthly temperatures range from -11°C in January to 16°C
in July. The mean temperature in January is -16°C in the Northeast (Oulanka).
The Oulu region is an internationally recognised centre of technology and
expertise where conscious efforts have been made to develop ideal conditions for new technology and practical cooperation between training, research and private enterprise. In addition to the electrical and information
technology the Oulu region is also well known for its medical technology
and biotechnology.
75
The few more densely populated centres in the area have significant industrial facilities specialized in the field of wood processing, steelworks,
chemistry, and electronics industry.
Oulu is served by Oulu Airport, the second biggest airport in Finland by
passenger volume. Port of Oulu is one of the busiest harbours within
the Bothnian Bay. Port of Oulu includes four separate harbour areas:
Vihreäsaari oil and bulk docks, Nuottasaari docks, Oritkari docks and the
Toppila docks.
Business in Oulu Region
Oulu is the leading information and communications technology cluster
in Northern Europe. In certain ICT fields, it is one of the most interesting
clusters in the whole world. Oulu wants to be the leading and most agile
ecosystem in Europe, and it will cover the whole value chain from the design of components and devices to producing end products and services.
At the moment, Oulu’s key actors in the ICT field operate in product and
device development of mobile networks, wireless information transfer
and the design of wireless DTEs. As a cluster of wireless information
transfer and radio technology, the region is in a class of its own, and
world-class companies and research and educational institutions are
working on product and device development in Oulu. One number says
it all: over 7,000 experienced engineers work in the field’s research and
development sector. In the future, ICT competence will also serve other
business lines more comprehensively.
ICT competence will be applied in other growing fields such as life science, Cleantech and mining industries as well as nuclear power, logistics
and commerce. Oulu therefore offers a diverse environment for the development of new products and services right at the intersection of different
industries.
Oulu invests strongly in Life Sciences and connected health solutions,
3D Internet, printed intelligence, data security and games. New startup companies are popping up all over the field. By 2020, Oulu will be a
76
world-class incubator of start-up companies that are planning to go international.
The key figures relating to the ICT field in Oulu:
• About 270 companies
• Total turnover approximately EUR 4 billion
• Employs around 12,000 people
The growth engine behind the basic industry in Oulu is the large investments in Northern Finland and nearby regions. In total, they add up to
tens of billions of euros. The most significant investments are intended
for energy production and the mining industry. There are also various
important infrastructure-related projects underway.
The biggest current investment is the nuclear power plant project in Pyhäjoki. In addition, more growth potential is gained from the construction of
wind farms, bio-based fuel production plants and other renewable energy
plants.
The mining industry in Northern Finland has increased considerably. New
or reopened mines in Northern Finland are located in Talvivaara and
Taivaljärvi in Sotkamo, in Laivakangas in the Raahe region and in Hitura
in Nivala. In addition, investigations are being carried out regarding the
reopening of the mines in Mustavaara in Taivalkoski, and Juomasuo in
Kuusamo. Thanks to its stable and multifaceted industrial background,
Oulu has great chances to seize the growth and investment opportunities
offered by the major projects. Traditionally strong fields are the forest,
metal, chemistry, wood product and food industries. The largest paper
mill of its kind operates in Oulu, and the nearby cities of Raahe and Tornio
have two large steel plants. Furthermore, the region is a leading production area for log houses and prefabricated homes.
The extensive network of education and services and the great logistic
connections support the industrial sector’s growth. The varied technological competence and the educational institutions in the area offer opportunities for creating the new solutions of the future.
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A significant share of industrial production in Oulu is exported. The export
industry benefits from the city’s location at the intersection of transportation networks and the specialized production.
Key figures of the basic industry in Oulu: over 550 sites, turnover of over
EUR 1.7 billion (in 200),nearly 5,300 employees.
Environmental technology, i.e. Cleantech is one of the most rapidly growing industries on a global scale. In Oulu, we invest heavily in the development of the Cleantech industry. Cleantech products from Oulu are used
all over the world: for purifying exhaust fumes in Hong Kong and cleaning
wastewaters in European beach resorts, for smart lighting solutions at
gas stations in Finland, reducing greenhouse gas emissions in Hungary
and for generating green energy in France.
Cleantech companies create solutions that help minimize detrimental environmental impacts and improve the state of the environment. These
solutions may include technologies, products or services. Their goal is to
lessen the impacts on environment, increase the energy efficiency and to
improve the economic use of raw materials.
The strongest Cleantech competences in Oulu:
• Emission control
• Renewable energy and energy efficiency
• Material efficiency
• Cleantech ecosystem in Oulu
Oulu also aims to promote the use of Cleantech solutions and consider
the economic use of energy and the environment.
The strong and comprehensive ICT competence in the region fuels the
development of Cleantech in Oulu. Incorporating ICT and environmental
competence creates a lot of promise. The utilization of wireless technology in particular enables the creation of completely new applications.
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In addition to companies, the University of Oulu and the Oulu University
of Applied Sciences also invest heavily in R&D work in the Cleantech
industry.
Key figures for the Cleantech industry in Oulu:
• Over 100 companies, most of them planning on going international
• Turnover of approximately EUR 400 million
• Employs about 1,500 people.
Nearly one thousand companies from creative industries are operating
in Oulu. The diversity of creative industries covers architecture services
and the communications sector as well as design and sports and adventure services. Oulu is known as an exceptionally enthusiastic newspaperreading city, and during the last few years, games and online, mobile and
SaaS services have started to emerge as new branches.
For example, Oulu has around one hundred architecture offices, the university is famous for its education in the field and Oulu-based architects
are known for their skills in planning industrial buildings, holiday centers,
public facilities and wooden buildings.
The creative industries are economically very significant to the Oulu region. They also offer new opportunities, perspectives and inspiration for
other business sectors and to the community around them. In addition,
creative industries have intrinsic value, as art and culture should not only
be measured through economic figures. They have a great impact on the
attractiveness of the cities and are major developers of urban culture and
events. Some top international events are also organized in Oulu, such
as the widely-known and very popular Air Guitar World Championship
competition.
Key figures of the creative industries in Oulu:
• Nearly 1,000 companies
• Turnover of approximately EUR 200 million
• Approximately 2,000 employees
• About 100 new companies annually
79
Oulu Life Science consists of the companies in the bio, health and welfare
fields of business. The sector includes both high-tech companies and
health service companies. In Oulu, there are main focuses: the next generation health ecosystem and the emerging bioeconomy. In both fields,
Oulu-based competence is among the best in the world.
The health ecosystem is a new kind of system of health and wellness
services, constructed around people and using broadly various leadingedge expertise. In health ecosystem LifeScience meets ICT. It targets
better and easy accessibility of services independent of time and place.
It uses mobile and other eServices. It promotes fluent flow in information.
It emphasizes disease prevention and early diagnosis and uses home
diagnostic solutions as a part of health system. It combines genes and
lifestyle to create novel personalized health solutions.
The bioeconomy, on the other hand, blends the life science, ICT and environmental sectors. The results can be seen for instance in cosmetics,
biopharmaceuticals (biologics), biomaterials, biorefineries or in cleantech
applications. It includes technologies to improve the development of production processes and downstream purification processes and real time
on-line monitoring of the processes.
There are a couple of hundred Oulu-based LifeScience high-tech companies aiming for international markets and addressing global needs. If
we include the companies offering health service providing companies,
1700+ companies are operating in this sector. The total revenue amounts
to around €700 million.
Examples of innovations and products produced by the life science sector in Oulu include the world’s leading brand of heart rate monitors, the
world’s first production method for recombinant collagen, products for
faster development and scaling of biotech production processes, simple
device for the detection of otitis at home or point of care, Smartscope
camera from retinal and dermatoscopic imaging to otoscopic imaging,
World´s smallest fully featured micromanipulator for medical research
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and microinjections, Selection of diagnostic tests, real-time online methods for improving food safety at point of production in food processing
plants.
In recent decades, Oulu has built an extensive network of twinning, foster and partner cities. In total, Oulu has a cooperation relationship with
16 cities on four continents. In addition, Oulu has an official cooperation
agreement with the Vienne region in France. During the last few years
and thanks to new research and business relationships, Oulu has been
able to extend its networks to San Jose in California, Sendai in Japan and
Hangzhou in China, among others.
As the center of gravity of world economics is moving from the West towards BRIC countries (India, China, Brazil, Russia) and Eastern Europe
and STAN countries, the internationalization process in Oulu is also looking for new directions.
In recent decades, Oulu has built an extensive network of twinning, foster and partner cities. In total, Oulu has a cooperation relationship with
16 cities on four continents. In addition, Oulu has an official cooperation
agreement with the Vienne region in France. During the last few years
and thanks to new research and business relationships, Oulu has been
able to extend its networks to San Jose in California, Sendai in Japan and
Hangzhou in China, among others.
The City of Oulu and several companies and research institutions have
been working closely together with the biggest city in Silicon Valley, San
Jose, since the beginning of 21st century. The model for the first Nordic
technology village, Oulun Teknologiakylä, was taken from Silicon Valley
during the 1970s. Over 6,300 technology companies are working in San
Jose, including Adobe, Cisco, eBay and IBM.
Oulu took part in Finland’s section at Expo 2010 in Shanghai, China. This,
together with the relationship between the University of Oulu and Zhejiang University led to a cooperation agreement between Oulu and Hangzhou, China. Concrete cooperation is to be developed in the education,
81
high-tech, energy and environment, and tourism and culture sectors. In
2008, Hangzhou was ranked the best investment environment and best
commercial environment in China. The city has also been ranked high in
studies comparing the quality of life in Chinese cities.
For several years now, Oulu and the City of Sendai in Japan have worked
closely together in the well-being and nanotechnology sectors. The University of Oulu and Tohoku University in Sendai have several cooperation
projects. Sendai is a metropolis on the eastern coast of Japan. In March
2011, it was hit by the most powerful earthquake in Japanese history, followed by a massive tsunami. The City of Oulu donated EUR 100,000 to
help the victims of the tsunami and aid the reconstruction of the city.
The newest opening in Japan is the cooperation agreement between
Oulu and the City of Fujisawa. The cooperation focuses particularly on
Living Lab activities.
In Manaus, Brazil, BusinessOulu cooperates with main local operators,
such as Suframa. BusinessOulu has signed a valid Memorandum of Understanding, which is the basis for constructing an “export bridge” to Brazil.
A very important part of internationalization for Oulu is the nearby cooperation area of the Nordic Countries and Russia. The actors in the Oulu
region are networking increasingly with other actors in the Barents Region. Among others, significant targets are:
•
•
•
•
Mining and construction projects in Northern Sweden
Energy and construction projects in Northern Norway and North-west
Russia
Energy and mining projects in Northern Finland and the improvement
of their prerequisites
The logistics corridors of Barents Region: railway, road and shipping
routes and flight connections
82
Cooperation in the Bothnian Arc area is developing significantly. Its active way of seizing new business opportunities is expanding over new
business sectors such as ICT, well-being, services and environmental
technology.
In the nearby northern regions, Oulu’s network includes Boden, Luleå
and Umeå in Sweden, Alta in Norway and Arkhangelsk and Petrozavodsk
in Russia.
Oulu also takes part in the cooperation network of Bothnian Arc, which
includes seven municipalities from Sweden and five sub-regions and one
province around the Bothnian Bay from Finland. The region has around
700,000 inhabitants. In Sweden, the arch starts from Skellefteå and in
Finland from Kalajoki in Central Ostrobothnia. The Bothnian Arc is the
northernmost European center of competence and industry, and its importance in terms of European and global development is constantly increasing. The Bothnian Arc cooperates with both the Torne Valley Council
and the North Calotte Council.
Oulu participates in the extensive cooperation in the Barents Region
launched in 1993 through the regional committee of the Barents Regional
Council. The Barents strategy, endorsed when Oulu acted as the chair of
the committee in 2008–2009, will guide their work until 2015.
In the future, significant investments concerning energy, tourism and mining, for example, are expected to take place in Northern Finland and the
Barents area. The cCompany networks enabling internationalization project aims to coach the companies in our region in order to secure their opportunities of gaining access to major national and international projects.
With the help of BusinessOulu, companies will receive a new opportunity
to engage in cooperation activities in the nearby regions as the operations of Euregio Karelia will be extended from the political level to cooperation at the operational level.With the help of lobbying, Euregio Karelia
promotes the infrastructure of border areas such as the efficiency of border stations and traffic connections
83
Transport
Oulu’s location, right in the middle of Northern Europe’s developing markets and its active business life, is excellent. All logistic connections –
road, railways, sea or air – function well. Traffic and transport to and from
Oulu works effortlessly. The city is the most significant logistics hub in
Northern Scandinavia: it is a junction for all traffic.
Oulu Airport is the second busiest in Finland by some margin. The recently expanded and completely renewed airport serves over one million passengers annually. The regular domestic and international flights
of several airlines connect Oulu with the rest of the world. Currently, Oulu
Airport offers direct flights to Helsinki (Finnair, Norwegian) and Stockholm
(SAS).
Oulu Port is one of the leading ports in the Bothnian Bay and 500–600
ships visit annually. The port has regular connections all over Europe.
The annual amount of cargo shipped through Oulu is between 3 and 3.5
million tonnes. The most significant export product is paper, and the main
import products are fuel and raw materials for the forest industry. Oulu
Port is open all year round, and it is the biggest port in Northern Finland
in terms of containers and unit traffic.
Railway transport of both goods and passengers between Oulu and everywhere in Finland functions efficiently. The modern Pendolino and InterCity trains guarantee a pleasant and rapid journey. Oulu is also easy to
access by road.
In addition, Oulu has a high quality and fully functional terminal for combined goods transport. It is located in the logistics center for road, railway
and sea traffic in the Oritkari area.
84
Education and Research
Oulu is a research hub with a capital R: the local Technical Research
Centre of Finland (VTT) is the largest organization in Northern Europe involved in applied research. Research is also conducted at the universities
in Oulu, along with the diverse education provided in various disciplines.
The educational offering is further complemented by vocational institutions and private education providers.
The University of Oulu is an international science university which creates
innovation for the future, well-being, and knowledge through multidisciplinary research and education.
Future innovation is about seeking, utilizing and applying new knowledge.
The University of Oulu researches people and culture in a changing living
environment, as well as opportunities that new technology provides for
improving the well-being of people and the environment. The University
of Oulu is a multidisciplinary expert in Northerness.
Founded in 1958, the research and education community is 16 000 students and 3000 employees strong, and one of the biggest and the most
multidisciplinary universities in Finland. The nine faculties, the many departments and the specialized research units of the University of Oulu
create the foundation for multiscientific research, innovation and training
of experts for demanding professional tasks.
The University of Oulu conducts scientific basic research in over 70
branches of science. Open-mindedly combining technical sciences, natural sciences and human sciences creates a unique foundation for new
multidisciplinary research knowledge, innovation and education.
The research areas of strength include four focus areas and four development areas.
85
Focus areas:
• Biosciences and health
• Information technology
• Cultural identity and interaction
• Environment, natural resources and materials;
• Development areas
• Business and economy
• Steel research
• Research-based teacher education
• Mining and mineral field
The research organizations of the focus and development areas are
typically multidisciplinary, and they encourage researchers to make new
scientific initiatives and discoveries. The University of Oulu conducts research in close cooperation with sector research institutions and corporations. Acting in the international scientific network is the foundation of
renewal.
(Source: Business Oulu)
3.2.1
Investment Potential 2014–2025
Industry:
Valio/Pohjolan Maito, Oulu dairy plant upgrade
40 m€
Stora Enso Oulu reducing environmental impact of Oulu mill
14 m€
Akzo Nobel/average investments 2 m€ per year
14 m€
Forest industry, pulp boiler
400 m€
Microsoft Data Center
500 m€
Total:
968 m€
Mining industry:
Mustavaara iron mine reopening and smelter
Dragon Mining Oy Kuusamo gold mine
450 m€
40 m€
Total:
490 m€
86
Hydro power:
Pohjolan Voima, Kollaja project
115 m€
Oulun Energia, Pyhäsalmi pumped storage station
200 m€
Total:
335 m€
Wind power:
Wind energy onshore projects 1800–2800 MW, 700–900 turbines
Merijärvi, Ristivuori
Ii Olhava II
Ii, Laitakari
Raahe, Kopsa I-vaihe
Raahe, satama I
Ii, Myllykangas
Ii, Olhava (Nyby)
Pyhäjoki, Mäkikangas
Siikajoki, Vartinoja I
Kalajoki, Jokela
Kalajoki, Tohkoja
Lumijoki, Varjakka
Merijärvi, Pyhäjoki, Pyhäkoski
Raahe, Kopsa II-vaihe
Siikajoki, Isoneva
Siikajoki, Vartinoja II
Alavieska, Kytölä
Alavieska, Saarenkylä-Vieskanjärvi
Kalajoki, Mustilankangas
Lumijoki
Nivala, Kukonaho
Oulainen, Maaselänkangas
Pudasjärvi, Tolpanvaaran - Jylhänvaara
Pyhäjoki, Palkusmäri
Pyhäjärvi, Vuohtomäki
Raahe, Annankangas
87
2.500 m€
Raahe, Ketunperä
Siikajoki
Suomussalmi ja Hyrynsalmi, Kivivaara-Peuravaara
Ylivieska, Pajukoski
Ylivieska, Tuomiperä
Kajaani, Kokkosuo
Kajaani, Piiparimäen-Lammaslammnkangas (Pyhäntä, Siikalatva,
Kajaani, Vieremä)
Paltamo, Teerivaara
Pyhäjoki, Parhalahti
Raahe, Haapajärvi, Rautiomäki, Piehinkin Sarvikangas
Raahe, Hummastinvaara
Raahe, Nikkarinkaarto
Raahe, Pöllänperä
Raahe, Somerokangas
Raahe, Yhteinenkangas
Raahe-Siikajoki Mastonkangas
Hyrynsalmi, Iso Tuomivaara
Hyrynsalmi, Lumivaara
Hyrynsalmi, Lumivaara
Kalajoki, Juurakko
Lumijoki, Selkämatala tai Nälkämatala
Raahe ja Siikajoki, Mastokangas
Siikajoki, Kivivaara
Haukipudas, Ketunmaankangas
Kajaani, Luolakangas
Raahe, Arkkukari
Raahe, Hietakangas (Piehingin kylä Balkintien varressa)
Pyhäjoki , Silovuori
Wind energy offshore 1400–2200 MW, 400–500 turbines
Ii, Suurhiekka
Haukipudas, Hoikka-Hiue / Luodeletto
88
2.700 m€
Haukipudas, Nimettömänmatala
Oulunsalo / Hailuoto
Raahe, Maanahkiainen
Raahe, Pertunmatala
Raahe, Ulkonahkiainen
Total:
5.200 m€
Bio energy:
Oulun Energia, new power plant
300 m€
Biorefinening park
150 m€
Biotehdas/Biogas planf for recycling biowaste
Total:
8 m€
458 m€
Nuclear power:
Fennovoima Oy, Pyhäjoki plant
6.000 m€
Energy Transfer Networks:
Fingrid/Power lines and electrical stations
120 m€
Trade:
Arina/Oulu city center
150 m€
Ritaportti Mall, Oulu
100 m€
Kaakkuri Mall expansion, Oulu
45 m€
Zatelliitti- Mall, Kempele
375 m€
Raahen Portti-mall/Raahe
150 m€
Other: Galleria, CUBE, Castrenin kulma,Voudinkrouvi,
Mini-Ideapark, Pallas
130 m€
IKEA, Oulu
135 m€
Raksila Arena/Mall reconstruction, Oulu
150 m€
Total:
1.235 m€
89
Tourism:
Nallikari Resort (hotel, theme park, holiday village etc)
70 m€
Other holiday villages and recreation resorts
10 m€
New hotel projects to City Centre
80 m€
Superpark indoor fun park
7 m€
OuluZone (motorsport-center)
2 m€
COR Group, Lipporanta Health City wellbeing center, Oulu
100 m€
Nallikari Resort continuing
35 m€
Hotel projects
50 m€
Other holiday and recreation investments
Total:
10 m€
364 m€
Transport infrastructure:
Seinäjoki–Oulu, railway
654 m€
VT 4, Oulu–Kemi, highway
120 m€
VT 22 (45 m€), VT 8 ja VT 20 yht.
50 m€
Oulu railway yard
100 m€
Harbour area extension 2014
12 m€
Oulu Harbour, (aver. 3 m€/year) 2015–2020
14 m€
Oulu Harbour/ deep channel improvements
Road and railway infrastructure/nuclear plant
VT 4 Oulu-Jyväskylä highway
23 m€
150 m€
160 m€
Total:
1.283 m€
Public investments:
Kastelli multi action center, Oulu
44 m€
Kivisydän underground parking, Oulu
74 m€
Oulu Zone- motorpark, 2 phase
21 m€
nd
Laguna Centre for Underground Physics, Pyhäsalmi
Future hospital, Oulu
600 m€
500 m€
Total:
1.239 m€
All total:
17.672 m€
90
3.2.2
Development of the Region 2015–2020
Oulu Region or Northern Ostrobothnia as it is sometimes called has experienced positive trends, despite the complicated ongoing structural
changes in Oulu. The region is expecting almost 20 billion euros of investments within the next ten years, if all the planned projects are implemented.
The largest single project is the construction of Fennovoima Oy’s Pyhäjoki Nuclear Power Plant near Oulu. The project was expected to commence at the end of the decade, once the issue concerning the ultimate
placement of nuclear waste had been resolved and the official construction permit had been granted. The project is of such a large scale that the
positive impacts it will have will also ease the post-Nokia phase Oulu will
be entering after a few years. The company has decided to establish its
operative centre in Oulu.
However, this situation changed rather dramatically in the second half of
2012 when one of its main shareholders and the only real expert competent in nuclear energy technologies, EON sold its share in Fennovoima
Oy. The main reason for the sale was probably due to the energy policies
of the German Government and a decision to stop using nuclear power.
The ongoing reactor supplier selection process became ready in 2013
when the company announced that the project is implemented as a smaller scale alternative, and Rosatom is the supplier.
A smaller reactor is expected to decrease the construction costs for the
power plant. The problem with new partner could be solved so that Rosatom could also become a major shareholder.
The decisions made and those pending are also affected by the delivery schedule, as there are conflicting views in Finnish Parliamentary circles whether or not the project should be reconsidered by Parliament. In
March 2014 Minister of Business and Employment of Finland, Jan Vapaavuori announced together with the company that Fennovoima submits
91
an application to supplement the valid Decision-in-Principle addressed to
the Government to the Ministry of Employment and the Economy. Fennovoima requests that the Government would make a decision to supplement the valid Decision-in-Principle granted in 2010 to the effect that
the supplemented Decision-in-Principle would confirm that Fennovoima’s
nuclear power plant project remains in line with the overall good of society
in accordance with Section 11 of the Nuclear Energy Act.
The process in Finnish parliament is going to happen in autumn 2014.
Process might be complicated and difficult but majority seems to be possible for accepting this procedure.
Oulu is receiving large commercial investments, the value of which could
exceed a billion euros in the next few years. Expansive wind power parks
worth over a billion euros have been planned for the coastal region of
Northern Ostrobothnia, close to Oulu. The wait for the national decisions
regarding use of wind power is hampering the implementation of these
projects, not to mention a variety of discussions concerning locations with
landowners and the air force alike.
Northern Ostrobothnia will also see new mines, although in a somewhat
smaller scale to those of Lapland and Kainuu. The Laivakangas Gold
Mine in Raahe has recently commenced operations, but has also been
troubled with environmental issues and financing the production of gold.
The Mustavaara Iron-Vanadium Mine in Taivalkoski is to be reopened,
with ore concentrated in Raahe. The planned gold mines for the Kuusamo area have brought about a great deal of discussion among tourism
enterprises. Some of the projects lie at such a distance from the Ruka
Resort that implementation would be feasible. Discussions and conflicts
are certain to continue for quite some time.
92
3.2.2.1 Investments expected to start first
Trade investments have already started in the city of Oulu. Biggest industrial investment is the upgrading of dairy plant by Valio in Oulu. Region
has a lot of wind power projects. The need to increase domestic energy
means that wind park projects are implemented. Mustavaara iron mine
project is proceeding slowly, but the production start is expected to happen within next years especially when raw material prices are rising.
Projects:
Fennovoima Oy, Pyhäjoki plant
6.000 m€
Valio/Pohjolan Maito, Oulu dairy plant upgrade
40 m€
Stora Enso Oulu reducing environmental impact of Oulu mill
14 m€
Akzo Nobel/average investments 2 m€ per year
14 m€
Arina/Oulu city center
150 m€
Kastelli multi action center, Oulu
44 m€
Kivisydän underground parking, Oulu
74 m€
Nallikari Resort (hotel, theme park, holiday village etc)
70 m€
Other holiday villages and recreation resorts
Wind energy onshore projects 1800–2800 MW, 700–900 turbines
10 m€
2.500 m€
Mustavaara iron mine reopening and smelter
450 m€
Microsoft Data Center
500 m€
Total:
9.866 m€
3.2.2.2 Investments waiting for better times
Euro crisis is going to disturb Finnish economy for many years. The
growth is expected to be rather low during next 3–5 years. This means
that many investments are postponed.
93
Projects:
Forest industry, pulp boiler
400 m€
Dragon Mining Oy Kuusamo gold mine
40 m€
Pohjolan Voima, Kollaja project
115 m€
Oulun Energia, Pyhäsalmi Pumped storage station
200 m€
Wind energy offshore 1400-2200 MW, 400-500 turbines
Oulun Energia, new power plant
2.700 m€
300 m€
Biorefinening park
50 m€
Biotehdas/Biogas planf for recycling biowaste
RitaporttiMall, Oulu
8 m€
100 m€
Kaakkuri Mall expansion, Oulu
45 m€
Zatelliitti- Mall, Kempele
375 m€
Raahen Portti-mall/Raahe
150 m€
Other:
Galleria, CUBE, Castrenin kulma, Voudinkrouvi, Mini-Ideapark Pallas
130 m€
IKEA, Oulu
135 m€
Raksila Arena/Mall reconstruction, Oulu
150 m€
New hotel projects to City Centre
80 m€
Superpark indoor fun park
7 m€
OuluZone (motorsport-center)
2 m€
COR Group, Lipporanta Health City wellbeing center, Oulu
100 m€
Nallikari Resort continuing
35 m€
Hotel projects
50 m€
Other holiday and recreation investments
10 m€
Seinäjoki-Oulu railway
654 m€
Oulu railway yard
100 m€
Harbour area extension 2014
12 m€
Oulu Harbour, (aver. 3 m€/year) 2015–2020
14 m€
Oulu Harbour/ deep channel improvements
23 m€
Road and railway infrastructure/nuclear plant
150 m€
VT 4Oulu-Jyväskylä highway
160 m€
Oulu Zone- motorpark, 2nd phase
21 m€
94
Laguna Centre for Underground Physics, Pyhäsalmi
600 m€
Future hospital, Oulu
500 m€
Total:
7.416 m€
3.2.2.3 Key investment project of Oulu Region
Fennovoima Oy Pyhäjoki nuclear plant
Pyhäjoki in Raahe, about 120 km south from Oulu is very important place
in Finland. The nuclear power plant of Fennovoima Oy should be there
ready in the first years of next decade. Project is very important for Finnish industry and importance is even bigger for Oulu Region. City of Oulu
has long history of industry and it has been going through many structural
changes. City was world famous center of Nokia more than 20 years.
Now structures are changing again and Oulu is without any doubt finding
a new route to success.
Pyhäjoki project is huge. Total value of this investment is about 6 billion €.
If the company succeeds in the new application process and the supplement to the valid Decision-In -Principle is accepted and the final financing
of the project is ready the project is going to boost all possible investment
plans in the region. Final building permit to the nuclear power plant leads
Oulu Region far ahead from all structural changes and problems.
Projects that speed up with Fennovoima:
All investment plans in the region.
95
3.3
NORTH OF FINLAND KAINUU REGION
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
96
Kainuu is located in the Oulu province and it borders the regions of Northern Ostrobothnia, North Karelia and Northern Savonia. In the East it also
borders Russia.
The region consists of eight municipalities and two cities. The administrative capital is Kajaani. Municipalities of Kainuu: Hyrynsalmi, Kuhmo, Kajaani, Paltamo, Puolanka, Ristijärvi, Sotkamo, Suomussalmi, Vaala and
Vuolijoki.
The total population of the region is 84 350, Kajaani being the biggest city
with nearly 38 000 inhabitants. Land area is 24 452 km2 and population
density 3,51 km2.
The Town of Kajaani was founded by Count Per Brahe in 1651. The River
Kajaaninjoki and the ruins of the historical Kajaani Castle are situated
in heart of the town. Kajaani Castle celebrated its 400th anniversary in
2004.
The turnover of companies within the technology industry of Finland has
continued its growth during 2006. The same trend exists in the region
of Kainuu. Currently there are more than 2,300 people employed in the
regions ICT and metal industries.
The economical development in Kainuu Region was favourable in the first
years of the new millenium. The beginning of global financial crisis in the
last months of year 2008 changed rapidly the situation. Biggest impact
of the new recession has been the total exit of forest industry from the
county. UPM company decided to close the mills in Kajaani.
Kainuu Region started rapidly to prepare to this enormous structural
change. Base from the new growth was found on new ideas. One of the
most interesting projects have been the plans to establish data centers
in the old premises of closed paper mill right in the center of Kajaani.
Kajaani has been competing with two neighbors in the west: Luleå in
Sweden and Oulu.
97
Kajaani is a location that has existing infrastructure perfectly positioned
for Data Center business so much so that the Finnish Government chose
to locate its new Super Computer Data Center on a UPM site that used
to house a paper mill. The Super Computer project is due to establish
the world’s 1st zero-emissions Super Computer, utilising the local environment in terms of 100% non-mechanical cooling (water and/or air resources). The Finnish government is working with the Green Grid and
others to open up and share best practice of design, build and operation
to maximise energy efficiency, adhering to similar objectives as the Open
Compute program.
The transformation of use to a Data Centre has brought significant benefits to further investors to the region by establishing local expertise and
easy routes to develop and commission data centers. The site benefits
from the availability of significant power capacity (120MW on site renewable & 400MW diverse grid connectivity) and immediately available zoned
greenfield land adjacent to the ex-paper mill site. The very secure, sustainable and extremely commercially attractive power and 50 hectares
of zoned land ’spade ready in 4 weeks’ means the site is available today
for Data Center development. The power contracts can be fixed for at
least 7 years, providing certainty for the most obnoxious cost elements of
running data centers and it is Carbon Neutral ’Green’ generation to boot.
Furthermore the area benefits from excellent diverse fibre connectivity to
the European international exchanges and a unique untapped fibre connection direct from site to the Russian market.
As the world’s data requirements continue to increase in terms of volume,
speed and frequency there is a natural progression for the increased demand for data centers to facilitate the delivery of these expanding information services.
The increase in demand is happening at the same time as the pressure
on the World’s electricity capacity and pricing, which are decreasing and
increasing respectively. Furthermore the pressure of lowering the Carbon
98
emissions from the electricity production is forcing organizations to look
for sustainable renewable energy sources, ideally within geographically
suitable areas for fiber connectivity to markets.
There is a plethora of locations around the world stating that they have
all the major points covered for the high level criteria to facilitate commercially, politically and environmentally sustainable data centers. Given the
technology is now available to create zero mechanical cooling in all countries in Northern Europe and the expertise of staffing is easily sourced,
the key siting criteria for most Data Center operators and users is based
on the following and can take anything up to 5 years to identify and clarify
before a data centre goes live:
•
•
•
•
Power – Secure, Available, Sustainable and competitively priced,
preferably with long term contracts for TCO planning
Land – Available secure environmentally and geo-politically stable
with planning approved
Fiber – Diverse routes within acceptable latency parameters to markets
Tax – Commercially and Politically sustainable combined with the
ease of doing business
The main objective for the Kajaani Data Centre Cluster is to enable the
operational environment for the knowledge-intensive data center cluster
in Kajaani and to ensure the regional multiplier effect. The project cooperates and networks with companies and institutions in the information
technology field, creating visibility for the Kajaani data center. Kajaani DC
Cluster will provide the operational framework for new companies, spinoffs, R&D operations and companies that are placing their operations in
the data center. Cooperation with the local educational institutes is helping to build a curriculum for data center-specific education within the area
and thus ensuring a skilled data center workforce in the area.
99
Tourism is one of the key business areas determined in the regional programme. Kainuu already has plenty to offer for visitors: Vuokatti, Ukkohalla and Paljakka ski resorts, shimmering Lake Oulujärvi, the unspoilt
nature of the whole region, various sports activities and cheerful cultural
events, just to name a few attractions.
In the following years, tourism in Kainuu will be developed further for
example by:
•
•
•
•
•
Developing individual tourist centres
Drawing up tourist centre or tourist area-specific Master Plans
Cooperating in marketing, particularly on an international level
Increasing the level of know-how – education & training
Improving the accessibility of Kainuu – transport connections
(Source: Invest in Kainuu, Kainuun liitto)
3.3.1
Investment Potential 2014–2025
Mining industry:
Talvivaara mine
280 m€
Sotkamo Silver Oy, Taivaljärvi siver mine
Total:
40 m€
320 m€
Wind Power:
UPM Oyj, Hyrynsalmi Iso-Tuomivaara
45 m€
Metsähallitus, Kivivaara-Peuravaara
250 m€
EON Kainuu, Ristijärvi
5 m€
EON Kainuu, Kivesvaara
10 m€
Vaala, Manamansalo
45 m€
Kajaani, Luolakangas
115 m€
Sotkamo Munninmäki
35 m€
Total:
505 m€
100
Tourism:
Vuokatti Holiday Club Resort Oy enlargement
45 m€
Sokos-Hotel, Vuokatti
20 m€
Ukkohalla Chalets
6 m€
Total:
71 m€
Transport infrastructure:
VT 22 Oulu-Kajaani road construction
45 m€
All total:
3.3.2
941 m€
Development of the Region 2015–2020
The mining industry investments in Sotkamo gave ia powerful growth for
Kainuu, although the current difficulties of the mining company Talvivaara
Oy darken the future. The company must resolve its environmental issues in a sustainable manner, if the financing bodies and Finnish Government allow such. Resolving these issues and restoring the reputation
of nickel mines on the international markets is a vital prerequisite for implementation of the proposed expansion plans. The Talvivaara expansion “Overlord” would be worth over a billion euros. At this moment the
expansion seems to be impossible, when the company is in enormous
financial problems and the ability of company itself to solve the problems
looks almost impossible. It is almost tragicomic that the financing which is
crucial for a company to survive is also some kind of investment.
In addition to this massive survival project, the Taivaljärvi Silver Mine near
Sotkamo is opening, which was listed on the Helsinki Stock Exchange in
July 2012. By size, the project is significantly smaller than Talvivaara. The
date of the implementation start is unknown.
101
Other sectors experiencing development in Kainuu are tourism and other
forms of energy production. Resolving Talvivaara’s problems is also a key
issue for tourism. Expansion investments exceeding 50 million euros are
planned for Sotkamo. The focus for energy production is on wind power,
and a number of wind power plans are in place for the region.
3.3.2.1 Investments expected to start first
Finnish Government has made decision to finance the road construction
between Oulu and Kajaani. Tourism projects are also profitable and they
are going to be implemented. Wind power projects could also start within
next five years.
Projects:
VT 22 Oulu-Kajaani road construction
45 m€
Vuokatti Holiday Club Resort Oy enlargement
45 m€
Sokos-Hotel, Vuokatti
20 m€
Ukkohalla Chalets
6 m€
UPM Oyj, Hyrynsalmi Iso-Tuomivaara
45 m€
Metsähallitus, Kivivaara-Peuravaara
250 m€
EON Kainuu, Ristijärvi
5 m€
EON Kainuu, Kivesvaara
10 m€
Vaala, Manamansalo
45 m€
Kajaani, Luolakangas
115 m€
Sotkamo Munninmäki
35 m€
Total:
621 m€
102
3.3.2.2 Investments waiting for better times
Mining is not popular in Kainuu today after the problems of Talvivaara.
Before the main problems are solved and the worst damages repaired no
new project seems to be possible. Only positive thing in this situation is
the fact that all must happen within a couple of years. This gives hope to
Taivaljärvi project.
Project:
Sotkamo Silver Oy, Taivaljärvi silver mine
40 m€
3.3.2.3 Key investment project of Kainuu Region
Talvivaara mine
If Talvivaara mine gets the badly needed financing and implements the
necessary technology improvements and if the company gets more capital and all the licenses and permits, mining is still possible in Kainuu. This
could mean that if company after some years is in better shape, the giant
investment Overlord is possible.
Projects that speed up with Talvivaara mine:
All mining projects in Kainuu and other parts of Finland
103
4.
NORTH OF SWEDEN NORRBOTTEN
(SWEDISH LAPLAND)
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
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r u s s i a
s w e d e n
Brønnø
Pajala
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4.1 Norrbotten
Norrbotten County (Norrbottens län) is a county in the North of Sweden. It borders to Västerbotten County and the Gulf of Bothnia. It also borders
the counties of Nordland and Troms in Norway, and Lapland Province in
Finland.
Norrbotten has some 248 545 inhabitants, which represents three per
cent of Sweden’s population. There were people in this part of the country
as far back as the Stone Age, 9 000 years ago. Reindeer husbandry and
the Sami culture are couple of thousand years old.
The mountain area in Norrbotten, which is part of the Scandinavian mountain chain, is a near 100 km wide zone running from North to South. All of
Sweden’s mountains above 1800 meters are located in this area. Many
of them are in the Sarek area and the Kebnekaise mountains, which are
the two most extensive high mountain regions.
The county railway network, both in a north-south direction and to Finland
and further on eastwards is a vital link, both for goods traffic and passenger traffic. The Ore Railway between Luleå and Narvik in Northern Norway is one of the country’s most important goods routes. Half Sweden’s
tonnage of railway freight is transported from Kiruna to Riksgränsen and
on to Narvik in Norway.
In Norrbotten County there are five airports with scheduled flights: Luleå
Airport, the fifth busiest in Sweden, Arvidsjaur, Gällivare, Kiruna and Pajala. The county is crossed by a national road network, which links to
Norway and Finland.
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The roads in Norrbotten are important also to link together this vast county. Nine per cent of Sweden’s road network is in Norrbotten County, a
region where the rate of car ownership is among the highest in Sweden.
The harbour in Luleå is Sweden’s leading bulk goods terminal. An effective ice-breaker service enables the ports of Piteå and Luleå to remain
open all year round for the intensive shipping. The Port of Kalix is open to
shipping during the ice-free period.
Luleå University of Technology is Scandinavia’s northernmost technical
university, with world-class research and education The university today
has more than 12,000 students, 1,400 employees, and an annual turnover of more than 1,000 million SEK.
Cooperation with the surrounding community is one the university’s
characteristics. Luleå University of Technology is now widely known as
a ”business university”. Luleå University of Technology offers courses at
basic, advanced and research level in engineering, business administration, social sciences, health, music, media, teaching and drama.
The university recruits students from both in and outside Sweden. The
university’s regional remit includes cooperation with among others the
municipalities in the region to offer customised education, not least
through the campuses in Skellefteå, Piteå and Kiruna.
Research is carried out at the university in close cooperation with companies that include Shell, Ericsson, Ford/Volvo, LKAB, Airbus, Volvo Aero
and IBM, and with international partners such as Monash University in
Australia and Stanford University in the US. The university’s research
has an annual turnover of more than 500 m SEK in six priority areas:
mining technology and metallurgy, customised construction,mechanical
engineering, process IT, product development and environmental engineering.
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Production of raw materials may be the main driver of Norrbotten’s
economy, but small and medium-sized enterprises are assuming a role
of ever greater importance. The willingness of existing companies to invest has never been so high. LKAB mining is investing thousands of millions of SEK in Kiruna and Malmberget. Boliden AB mining is investing
similar amounts in Aitik Copper Mine near Gällivare. The IKEA start-up in
Haparanda is attracting retail chains to the area, and housing and hotels
are under construction. Because of the geographical location, companies
there have their customer base in both Sweden and Finland, and even in
Norway and Russia.
Testing operations in the inland municipalities of Arjeplog, Arvidsjaur,
Gällivare, Kiruna and Älvsbyn are constantly growing. Multinational companies here test car components, aircraft and missiles.
Polarbröd in Älvsbyn delivers frozen bread all over Sweden and also exports to European countries. Älvsbyhus is the largest manufacturer of
prefabricated homes in the Nordic region. Polarica in Haparanda deals
in berries and game meat for the European and world markets. Among
Norrbotten companies, Polarica has been a pioneer in trade with Russia
and the company has a production plant in Poland. Polaris Eyewear AB
in Boden manufactures eyewear and has subsidiaries in England and
Japan. Liko AB in Luleå is a world leader in patient lifts for the care sector.
Luleå is northern Europe’s main metallurgical development centre. SSAB
is one of the world’s leading producers of steel. Gestamp Hardtech supplies the European and North American automotive industries with collision protection components and Ferruform makes chassis components
for trucks and buses.
Research and skills development are creating new industries in the county. At Luleå university’s School of Music in Piteå, the focus of the Acusticum Business Park is on music and media. Gällivare has concentrated on
medical technology; Kalix and Pajala on computer technology and electronics. The basis of Boden’s local economy has shifted from the public
to the private sector. International space and environmental research is
carried out in Kiruna.
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The Gross Regional Product (GRP) is the regional equivalent of the national yardstick - Gross National Product (GNP). GRP is the aggregate
value of all goods and services produced in a region in a given year. GRP
shows how great production is, reckoned in SEK. The average GRP for
Sweden was 319,000 SEK per capita in 2006. This amount was given the
index value 100. The index for Norrbotten County was 99, i.e. one per
cent lower than the national average. The reason why Jokkmokk Municipality has such a high GRP is that some of Sweden’s largest hydropower
plants are in the municipality while the municipality has few inhabitants.
The county has the second highest productivity after Stockholm County
expressed as GRP per employee. In the years 2007–2009, industry annually invested an average of 6,800 SEK per inhabitant in Sweden. The
biggest industrial investments were in Norrbotten County, at 36,000 SEK
per inhabitant.
Norrbotten County has roughly 2,340 import companies and about 890
export companies. Most of the export and import companies in Norrbotten County trade with other EU States. The county has a smaller proportion of export companies trading within the Nordic region than the average for Sweden.
The harbours in Luleå and Piteå are open to shipping year round, thanks
to the national icebreaker service, which assists vessels all along the
coast of northern Sweden during the winter. In terms of tonnage, the port
of Luleå is among Sweden’s five largest, largely thanks to its handling of
raw materials for the mining and steel industries. Piteå is a shipping port
for wood and paper. Both harbours handle petroleum product imports.
Forestry is of major economic importance to the development of Norrbotten County. Almost 40 per cent of the county is forested. More than half
is owned by different forestry companies. In all, the forestry industry employs around 4,000 people in the county.
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The county has three pulp and paper industries: Smurfit Kappa Kraftliner
AB and SCA Packaging Munksund AB, both in Piteå and Billerud Karlsborg AB in Kalix. The plants in Piteå manufacture brown and bleached
kraft liner. The plant in Kalix manufactures bleached sulphate pulp, sack
paper and kraft sack paper.
The county’s five largest sawmills all produce more than 70,000 cu m
sawn and processed wood products annually. They are located in Kalix,
Luleå and Piteå.
There are 20 hydropower plants in Norrbotten County producing over 14
TWh of electricity. That represents 11 per cent of Sweden’s total electricity production. The biggest power plants are on the two rivers Lilla Luleälv
and Stora Luleälv. The county is self-sufficient in electricity and half of the
electricity produced here is transmitted to other parts of the country.
Investments in wind power have increased significantly in the county. In
Piteå Municipality, major investments are being made in new plants which
will produce approximately 12 TWh of electricity a year. The primary industries in the county are highly energyintensive and their energy consumption is 75 per cent of Norrbotten’s total consumption. About 42 per
cent of the supplied energy in the county comes from fossil fuels, while
renewable fuels constitute 38 per cent of the total energy supply. For
2006, energy consumption in the county amounted to around 31 TWh.
Luleå airport is Sweden’s fifth largest airport with 20 arrivals and 20 departures daily (weekdays). Domestic destinations are Göteborg, Kiruna,
Pajala, Stockholm, Sundsvall, Umeå och Östersund. International flights
to London. Geographic position, good service and high level of safety
make Luleå Airport an attractive airport for air cargo. The strategic location in the Barents region makes Luleå Airport interesting for the world’s
air freight carriers. Within the airport’s geographic market region are the
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Norwegian fisheries and oil industry, world-leading engineering companies in northern Sweden and Finland, and enormous gas, oil and mineral
reserves in northwestern Russia. Kallax Cargo develops air cargo services at Luleå Airport in cooperation with LFV, forwarders and logistics
companies in the Barents region.
(Source: Facts about Norrbotten, Länstyrelsen i Norrbottens Län)
Future Development of Norrbotten
Business opportunities in Norrbotten are based on climate and raw material assets that are unique from an international standpoint. Great investments have already been made, but there is an enormous potential for
business associated with investments that are also planned and secured
for the next ten-year period.
The Node Pole region in northern Sweden, close to the Arctic Circle, as
Norrbotten calls itself, holds a combination of ideal inherent qualities for
major data centers and high-tech industry. In northern Sweden, the electricity grid has an extremely high redundancy and capacity, which is vital
for powering for instance data centers. Among the lowest electricity prices
in Europe, 100% renewable hydropower and a highly developed infrastructure are three other aspects that make The Node Pole unique.
The Node Pole is one of the most secure and stable places in the world
– geologically, politically, socially and digitally. Sweden has not been to
war since 1814, the seismic activity is extraordinarily low, and the country
is ranked as number one in Europe regarding technology readiness, ICT
use and broadband quality.
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The region is well known for its higher education. Luleå University of
Technology conducts research and innovation within diverse fields such
as distance-spanning technology, long-term digital preservation and lower energy consumption of web technologies. In addition, Luleå Science
Park, the University’s next-door neighbor, is one of Sweden’s fastest
growing science parks. The region is already one of Scandinavia´s leading skill centers in ICT – Information and Communications Technology.
The Node Pole is at the same latitude as Fairbanks, Alaska, USA, and
is the coldest region in Sweden. The climate enables fresh air cooling all
year round. Read more about how nature’s combined forces can enable
cost savings and more efficient cooling operations. Norbotten can also
show results of promotion the Node Pole idea. Facebook has already
opened first data center in Luleå and is preparing to build two more centers in the neighborhood.
Cold, dark and sparsely populated Norrbotten converts the natural advantages to competitive advantages. The region’s potential for cold climate
testing, with strong collaboration between academia and industry. Main
part of this activity is concentrating to Arvidsjaur region, west from Luleå.
Norrbotten can provide the market’s most energy-efficient solutions, and
what’s more, they are 100% green. The lowest energy costs, free low
temperatures, good communications, attractive start-up locations and
well-qualified personnel are also what Norrbotten has to offer.
Svevind company is engaged in wind power in the north of Sweden, and
its project in Markbygden, Piteå Municipality, has the potential to become
one of the largest wind farm networks in Europe, and maybe even the
world. Once fully developed in 2022, its accumulated production output is
expected to reach 8–12 TWh. This is equivalent to one-third of Sweden’s
total hydro power production, and involves investment in the region of
EUR 80 million.
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Several stakeholders have joined forces to realise the gigantic Markbygden wind power project in Piteå Municipality. A key player in the initiative is German company Enercon, which features among the world’s
largest wind turbine manufacturers. Enercon currently employs 60 staff
in Piteå, a figure which is set to climb as the project continues to expand.
Norrbotten is home to Europe’s largest iron ore production with more new
mines waiting in the wings. LKAB’s underground mining operations are
carried out using world beating technology. A century of high tech development has also led to a number of world beating products. Magnetite
ore (the rock) is transformed into the worlds’ most eco-friendly iron ore
pellets (the roll).
Just over 40 years of age, Luleå University of Technology – LTU – is one
of Sweden’s youngest higher education institutions. The emergence and
development of the university is closely linked with the region’s extensive
mining and mineral industry – today, LTU is renowned as one of Europe’s
most comprehensive universities in the field.
The mining sector is crucial for Norrbotten. LKAB has been carrying out
mining operations in the region since the end of the 19th century. According to a recent survey, both directly and indirectly, through subcontractors
as well as related industries, LKAB has contributed towards the creation
of 54,000 jobs in the Cap of the North.
SGU – has been mapping the geology of Sweden for over 150 years. The
national drill core archive, in Malå, is one of the world’s largest, featuring over 3000 kilometres of drill cores from across the nation. The cores
have been accumulated by the Government as well as private prospecting companies.
(Source: Invest in Norrbotten)
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4.1.1
Investment Potential 2014–2025
Industry:
SSAB Luleå, New Blast Furnace
200 m€
Facebook II, Porsön Luelå
500 m€
Facebook III, Porsön Luleå
500 m€
Total:
1.200 m€
Mining industry:
LKAB investments up to 2018
3.500 m€
Hannans Reward/Kiruna Iron AB Rakkurijoki
700 m€
Hannans Reward Pahtohavare copper-gold
500 m€
Jokkmokk Iron Mines AB Kallak
700 m€
Boliden Laver, Älvsbyn copper mine
500 m€
Total:
5.900 m€
Hydro power:
Vatttenfall AB Norrbotten powerplants capacity upgrade
1.500 m€
Wind energy:
Markbygden, Piteå wind park
6.720 m€
WPD Luleå sea wind park
300 m€
Total:
7.020 m€
Energy transfer network:
Norrbotten network
200 m€
Trade:
Barents Center, Haparanda
120 m€
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Tourism:
Arjeplog Car testing climate hall
560 m€
Träkronan Hotell/Shopping, Piteå
35 m€
Spaceport Sweden, Kiruna
220 m€
Total:
815 m€
Transport infrastructure:
Regional road investment plans
85 m€
Pajala-Svappavaara road
150 m€
Malmbanan Kiruna-Norwegian border
90 m€
Railway Pajala-Svappavaara
350 m€
Norrbotnia railway Umeå-Luleå
3.000 m€
Total:
3.675 m€
All total
4.1.2
20.430 m€
Development of the Region 2015–2020
The economic development in the northernmost Sweden has been very
rapid during last five years. Norrbotten in particular has entered a new
age, thanks to mining industry investments.
The investments for the next ten years are expected to be around 20
billion euros. The mining company LKAB alone is responsible for investments totalling more than three billion euros into Kiruna, Malmberget and
Svappavaara. The company has decided to double its iron production
from the current 19 million tons a year to approximately 37 million tons.
Even the town centres of Kiruna and Malmberget will have to be relocated
to make way for the expansion of the mine. The province will also have
other large mines, including for the Pajala Municipality close to the Finnish border. Two iron mine projects are also ongoing in the neighbouring
areas of Kiruna, one of which is located close to the town of Jokkmokk.
Newest mining project is in Älvsby where Boliden has promising copper
project.
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Mining projects have been in problems also in Sweden. Northland Resources which has opened iron mine in Pajala has been in economical
problems and is still practically under reconstruction. Whether Northland
will continue, or if a new company will step in, only the future can tell.
However, these problems will probably postpone the company’s plans for
further investments, at least to some degree.
Jokkmokk iron mine project has been also in problems, but in a different
way. The confrontation between mining project and reindeer herding escalated in summer 2013 to small riots. Local Sami population states that
mining is destroying the reindeer herding and mining company claims
that both parties can live together. This kind of confrontation is rather new
in Norrbotten and time will tell, if it has more serious impacts on mining
projects.
The largest investment sector is nevertheless wind power. A massive wind
power park with over 1100 wind turbines is currently under construction
for the Markbygden area west of the town of Piteå in the inland regions of
Norrbotten. Hydropower investments are seen in the province by increasing the efficiency of the power plants along the Norrbotten rivers at a cost
of over one and a half billion euros. The electricity distribution network is
also being greatly expanded.
Investments into the mining industry require functioning traffic connections. Together with the company, the requirements of LKAB have been
met by updating the Kiruna track and rail yards. In the near future, the
bypassing areas of the Kiruna – Narvik track will be improved and over
the next few years, the construction of the second track is inevitable due
to the increase in production.
The Swedish Government has made enormous investments into traffic
for the mining industry. For instance, in September 2012, the government
alliance decided on the construction of the Pajala – Svappavaara road
and an increase in the junction points with the ore track. According to
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the decision made, a massive 12.5 billion euros has been reserved for
investing into the traffic requirements of the mining industry up to 2025.
Most wanted railway project in the region, the Norrbotniabana- project is
not yet listed to be financed and implemented.
The Norrbotten forest industry has also made smaller investments on a
continual basis. Some kind of industry are also big data centers that are
planned to be build in Luleå. First center for Facebook is ready and in full
use. Facebook is going to start second center project latest in 2015.
The biggest expectations for the future of the province lie with tourism.
The big increase in tourism to Lapland has been noticed in Norrbotten,
which has led to substantial investments made into marketing Swedish
Lapland. As a result of intense national investment, the main attractions
of tourism in the province, the Jukkasjärvi ice hotel and Kiruna space
centre are expected to make a big appearance on the markets.
4.1.2.1 Investments expected to start first
LKAB mining projects are proceeding as planned. Also Facebook is very
satisfied with the first data center in Luleå and wants to have two more.
Renewable energy was one reasons to Facebook to invest in Norrbotten. That is why the energy projects are all implemented. Markbygden is
huge project and it is ready completely after 2020, but it is within a couple
of years in full speed. Transport investments are decided in the national
plan and tourism investments are increasing step by step. Norrbotten is
important location for car testing. The plan to build climate hall in Arjeplog
is realistic.
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Projects:
SSAB Luleå, New Blast Furnace
200 m€
Facebook II, Porsön Luelå
500 m€
Facebook III, Porsön Luleå
500 m€
LKAB investments up to 2018
3.500 m€
Vatttenfall AB Norrbotten powerplants capacity upgrade
1.500 m€
Markbygden, Piteå wind park
6.720 m€
WPD Luleå sea wind park
300 m€
Norrbotten network
200 m€
Barents Center, Haparanda
120 m€
Arjeplog Car testing climate hall
560 m€
Träkronan Hotell/Shopping, Piteå
35 m€
Regional road investment plans
85 m€
Pajala-Svappavaara road
150 m€
Malmbanan Kiruna-Norwegian border
90 m€
Total:
14.460 m€
4.1.2.2 Investments waiting for better times
New mining projects have met resistance in Norrbotten and the discussion has already prolonged the time to have licenses and permits. Also
the rise of raw material market prices is needed before the implementation is profitable. Spaceport Sweden is an exciting idea, but the final
decision needs first that the basic project by Virgin Galaxy is completely
finished in the USA. Kiruna is also competing with the Emirates which
Spaceport is done first.
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Projects:
Hannans Reward/Kiruna Iron AB Rakkurijoki
700 m€
Hannans Reward Pahtohavare copper-gold
500 m€
Jokkmokk Iron Mines AB Kallak
700 m€
Boliden Laver, Älvsbyn copper mine
500 m€
Spaceport Sweden, Kiruna
220 m€
Norrbotnia railway Umeå-Luleå
3.000 m€
Total:
5.620 m€
4.1.2.3 Key investment project of Västerbotten
Norrbotniabanan
The North Bothnia Line is a new railway between Umeå and Luleå. The
270 km stretch begins where the Bothnia Line ends, and completes the
coastal railway along the coast of northern Sweden. The North Bothnia
Line will be part of the Barents Link, connecting Europe by joining the
Swedish and Finnish rail systems. Through the North Bothnia Line, the
export-intensive industries skirting the Gulf of Bothnia will have considerably improved transport facilities at their disposal. The North Bothnia
Line shortens distances, and increases capacity and speed, reducing
transport costs. By shrinking the region through improved infrastructure,
a larger market for labour and education is achieved. The system of rapid
rail links will allow commuting between the coastal towns – while facilitating communications between the inland and coast.
Norrbotten has made several efforts to get the Norrbotniabanan- project
to the investment lists of the Government but without any result. The
destiny of this project is decided in the parliament election of Sweden in
September 2014. Present government alliance has not accepted the plan
to be financed. Norrbotten is strong supporting area for social democrat
party so the hope is that after getting to power the present opposition is
more positive for Norrbotniabanan.
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This project could be first example of totally new type of investments.
Present investments have been mostly based on mining and heavy transport. The period of LKAB expansion is over right after 2020. What´s next?
Norrbotniabanan would show the way to the future.
Projects that speed up with Norrbotniabanan:
New generation of investment projects
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4.2 NORTH OF SWEDEN västerbotten
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
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Västerbotten has a population of around 260 000 where 80% live along
the coast and the remaining live in the sparsely populated interior and
mountain areas. One can say that 70% of the population is concentrated
to 20% of the total area. The population in the interior is concentrated to
the chief city in each municipality and it has decreased significantly over
the past 20 years. In sharp contrast, Umeå has been one of the most
dynamic cities in Sweden with a population growth of 27% during the
period of 1980–97. The other coastal municipalities have decreased in
population.
Västerbotten is a productive region with strong and diverse business sectors. It is at the forefront of R&D, has abundant natural resources and
is an attractive location as a gateway to Northern Scandinavia and the
Barents region. Companies locating in Västerbotten benefit from a strong
entrepreneurial tradition, competitive costs for personnel, operations and
facilities, an excellent infrastructure and a reliable, well-educated work
force. The region offers readily available land and premises at affordable
costs. Companies establishing businesses in Västerbotten may also apply for financial and employment incentives from the government.
Västerbotten has experienced one of the highest GDP growth-rate of all
Swedish provinces for the last six years, with an increase of 48% compared to the national average of 40%. A strong industrial culture, based
on forestry, mining and pulp and paper, is making way for new high-tech
industries, creative companies and a high-productivity manufacturing and
processing sector. Since the region hosts most of Sweden’s energy resources, there is also an active development of eco-friendly power and
heating solutions. Västerbotten has a collaborative spirit with many established networks and consortiums, business incubators and cross border research and development.
The region has three universities, Umeå University, including the world
known Umeå Institute of Design, Luleå University of Technology and
the Swedish University of Agricultural Sciences. The universities all offer inspiring environments for students, researches and scientists, whom
are world leaders in many fields. The region’s universities are constantly
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evolving and improving through regional, national and international cooperation with trade and industry, research institutes and authorities.
The region’s well-developed infrastructure with seven airports, deep sea
ports, railroad communications, trucking service and an excellent road
network with three European highways make it easy to travel and carry
freight. Västerbotten also has a world-renowned development of both
mobile and fiber-based broadband, and an extensive GSM and 3G network coverage. For example, Umeå has the fastest broadband connection in Europe.
In Västerbotten, life is family-friendly with very high standard of living at
an affordable level, whether you choose the city life or the countryside
calm. There are sunny summers and snowy winters. Beautiful and unexploited nature and wildlife are just around the corner, and the opportunities for sports, entertainment, outdoor activities and culture are endless.
Västerbotten has the lowest crime rate in the country. Streets are safe,
and people are honest and helpful.
More Västerbotten advantages:
• Low corporate taxes
• Lowest electricity prices in Sweden
• Energy tax in the province is only 66% of the normal Swedish rate
• Green and energy-saving solutions for a dependable power supply
• Gateway to Northern Scandinavia and the Barents region
• Access to world-class R&D
• Highly educated and skilled work force
• Low labour costs
• Low absence due to illness
• Most citizens speak fluent English
• Advanced users of new technology
• Highly sophisticated health care
• Good schools
• Snowy winters and sunny summers
• Low living costs
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Manufacturing industry
The manufacturing industry in Västerbotten is a wide-ranging network of
innovative and flexible companies with a joint capacity for, and experience of, extensive supply contracts.
Based on the region’s long traditions and strong clusters in forestry, mining and pulp and paper, several major manufacturing companies have
evolved and reached a global market. Among the subcontractors, there
are a large number of small and medium size engineering companies
characterized by advanced technologies and successful collaborations.
Thanks to a low staff turnover, many of the companies have been able to
build unparalleled levels of competency over a long period of time.
With a strong industrial culture and a strategic position as a gateway to
Northern Europe and the Baltics, Västerbotten is a perfect place to start
new manufacturing processes or find qualified partners, even for largescale projects. Suppliers and subcontractors cooperate with a mutual
interest in developing the region, and are prepared to make the investments and modifications necessary to take on new types of products.
The opportunities to recruit staff locally are excellent thanks to the many
courses available at secondary school and university levels developed
in close cooperation with the local trade and industry sector. The region
also has a well-developed infrastructure adapted to the needs of heavy
industry, including railway, deep-water ports and excellent roads.
The roads have always played a significant role in the growth of the region and are still one of the most important means of transport for both
goods and people. Västerbotten has a well-developed transport and communications infrastructure. Accessibility of the region by road is good. In
fact, Västerbotten has Sweden’s longest road system–10,000 kilometres
of public roads to which can be added an expansive network of private
roads.
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Forest industry
With a long forestry tradition and a strong supply of raw material –
3 041 000 hectares of productive forest – Västerbotten in north Sweden
has generated exceptional craftsmanship as well as unrivaled know-how
in large wooden constructions, solid wood frames and glulam products.
World-class institutes like Luleå University of Technology, Umeå Institute
of Design, the Swedish University of Agricultural Sciences and SP Trätek
(the Swedish National Testing and Research Institute for wood technology) are constantly taking R&D to new heights in fields like wood and biofuel technology, wood physics, ultra structure, forest biotechnology and
industrial design. Västerbotten also hosts the world’s densest cluster of
forestry machine manufactures and developers, including the headquarters and production plant of Komatsu Forest in Umeå and an R&D center
for intelligent off-road vehicles.
Umeå Plant Science Center (UPSC), a centre of experimental plant biology, is the world leader in forest biotechnology and attracts hundreds
of international scientists. Companies like SweTreeTechnologies provide
technologies for improved productivity and performance properties of
trees and wood fibers, creating new business opportunities for forestry,
paper- and pulp industries as well as packaging and textile.
With the forest biotechnology as an emerging market, Västerbotten offers
an educated workforce and unique access to academic research through
tech transfer establishment, as well as many forest research sites and
strong links to the processed wood industry.
Mining industry
Sweden is by far the largest producer of iron ore and also number one for
lead in the EU, the second largest silver, gold and zinc producer, and the
third largest copper producer. Some of the most important ore deposits
and interesting geological regions are found in the Skellefteå district in
Västerbotten. Ever since the 1920’s, the mining and smelting company
Boliden has been the major force behind the development of the mining
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industry in the mineral rich Skellefteå field. Today, Boliden is the third
largest copper supplier and the third largest zinc supplier in Europe. The
processing plant Rönnskär is one of the most efficient copper and zinc
smelters in the world. Rönnskär is also a specialist in the recovery of base
and precious metals from electronic scrap.
Mining industry is growing rapidly. New mines open almost annually, and
a significant number of new exploration permits have been granted. Yet,
it is estimated that only 20% of the mineral assets in North Sweden have
been exploited. Potential for new findings is still very good and there is a
continuous establishment of new operators. Some of the current exploration and mining companies are New Boliden, Elgin Mining, Canada,
Dragon Mining, Australia, Blackstone Ventures, Canada and Lapland
Goldminers, Sweden.
Thanks to the dominating role mining has played in trade and industry for
centuries, mining infrastructure is well developed, with highly advanced
mining and metallurgy R&D. Sophisticated technology with a high level of
automatisation makes our mines among the most efficient and profitable
in the world.
The region is home to several competence centers and two universities
with world-class research institutions. 90% of Sweden’s academic and
vocational units related to mining, metallurgy and geology are located
within a radius of 130 kilometers. Both the Geological Survey of Sweden
(SGU) and the Mining Inspectorate of Sweden are located in the region.
SGU assists mineral explorers with exploration-related information and
data. The world’s largest collection of drill core, more than 3 500 000 m
from all over Sweden, is available for research – free of charge!
There are also a number of specialized companies linked to the mining industry, such as world-class manufacturers of mining equipment and
machinery, mining software developers and drilling services companies.
With an ever-growing industry there is a high demand for technical consultants and environmental expertise.
125
As one of Europe’s largest concentrations of mining and mine related
industries, we aim to expand even further. The prospects for a profitable
business establishment in Västerbotten have never looked better!
Tourism
With four full seasons– each of them as beautiful as they are different –
the potential for tourism business to grow in Västerbotten, North Sweden,
is practically unlimited.
Travel and tourism is expected to double in Sweden by 2020 according
to the Swedish National Strategy for Tourism – which indicates a bright
future for the travel industry. The northern parts of Sweden already attract
visitors from all over the world and the growing interest has led to an increased need for high-quality accommodation and activities.
In 2011, Sweden was ranked the 5th best country for tourism, according to
the World Economic Forum 2011. The north of Sweden is of great interest to the global market and tourism is expected to grow by 100 percent
by 2020, from SEK 252 billion to SEK 500 billion, according to Sweden’s
National Strategy for Tourism.
The exotic north attracts visitors thanks to a unique blend of experiences and surroundings, beautiful and untouched nature, the northern
lights and much more. Västerbotten, a central part of Northern Sweden,
is experiencing rapidly growing international interest, and the opportunities to meet the demand are manifold. With investments in ski resort
destinations, hotel and accommodation, real estate development, activity
companies and medical tourism; anyone from large capital investors to
small scale private companies can discover new markets and grow in
Västerbotten.
126
Västerbotten has four distinct seasons, each one with its own exceptional
features widening the potential of the region and providing an extra advantage. But the potential of Västerbotten also resides in the people who
live and work here. With a service minded attitude, pleasant manners and
good language skills, they make the difference.
But Västerbotten isn’t all about nature. The cities offer shopping, excellent restaurants and various cultural activities. A unique cultural feature
of northern Sweden is one of the few remaining indigenous people in Europe, the Sami. Their strong heritage influences the culture of the entire
region of Västerbotten. Moreover, in 2014 Umeå will be the European
Capital of Culture – an honour that further reveals the viability of the region.
Transport
The main axis runs along the coast (E4 motorway linking the South of
Sweden and Finland). In an east-west direction the E 12 links the countries of Russia, Finland, Sweden and Norway. The main road in the western part, going in a north-south direction is the E45, starting in Gothenburg and ending in Karesuando.
Rail services are well established. The Swedish National Railway’s main
line to northern Sweden runs through Västerbotten, connecting the northern part of Sweden with Europe, along with several regional railway lines.
Branch rail lines provide access to the main industrial sites. The Bothnia
Line along the coast will significantly cut rail travel times, it will be opened
for traffic in August 2010. The Bothnia Line is the biggest railway project
of modern times in Sweden. It is a single-track railway being laid from the
bridge over Ångermanälven, north of Kramfors airport, via Örnsköldsvik,
Husum, Nordmaling, to Umeå.
127
The Bothnia Line will link together a highly productive region, where a
series of significant industrial locations are all situated along the Swedish coastline. This new link will mean efficient transport of freight and
the halving of travelling times for passengers. The Bothnia Line will be
able to cope with speeds of up to 250 km/hour. Inlandsbanan (“the inland
railway”) runs from Kristinehamn in the south to Gällivare in the north – a
total distance of 1300 km.
Shipping is important to the existing companies and those looking to invest in northern Sweden, particularly for the forest and mining industry
(export and import of raw materials and products). In the Västerbotten
province there are industrial seaports in Umeå, Skellefteå and Rundvik,
together with smaller ports all along the coastline. The continuity of service is a major goal and year round accessibility is guaranteed by efficient
ice breaking during the winter.
Umeå Hamn is a year-round port which is located at the north of Sweden’s fastest expanding part and is known for its high quality and a strong
customer orientation with a high level of service. The port is located strategically at the natural shortest route across the northern Gulf of Bothnia. Geography provides the port with a natural harbour sheltered by the
unique conditions in the winter. Despite being located far north in the
northern Gulf of Bothnia’s narrowest part with mostly northern winds the
Umeå port as well as the other seaports along the coast are open all year
round.
The port of Skellefteå (Skellefteå Hamn) is one of the gateways for sea
transport in Norrland. The port is located in Skelleftehamn, adjacent to
the industries of Rönnskär and Kuusakoski. It is also strategically located close to sawmills, mines and engineering companies and acts as an
important link between Norrland’s industry and its assets: minerals, forests and energy. Many years of working with the region’s industries have
given Skellefteå Hamn a solid base of experience in the transportation of
goods.
128
The port has all the resources to serve as a gateway to the rest of the
world. Skellefteå Hamn has excellent links with other transport systems
including the national road and rail networks and air services. Another key
advantage of Skellefteå for mixed consignments is its proximity to ports
in northern Finland.
Västerbotten has several airports–in Umeå, Skellefteå, Lycksele, Vilhelmina, Storuman Hemavan and Arvidsjaur. All the regional airports
have regular connections with Stockholm airport (Arlanda). Hemavan in
the mountains has an airstrip for taxi-, charter- and private aeroplanes.
(Source: Västerbotten Investment Agency)
4.2.1
Investment Potential 2014–2025
Industry:
SCA Obbola new digester
60 m€
SCA Rundvik sawmill
5.0 m€
Fågens Sågverk AB sawmill
10.0 m€
Total:
75 m€
Mining industry:
IGE Rönnböcken nickel mine, Storuman
Lappland Goldminers, Fäboliden
1.600 m€
200 m€
Tertiary Mining fluorspar mine, Storuman
Total:
40 m€
1.840 m€
Hydro Power:
Vattenfall AB, Laxeden-Umeslupen turbines
60 m€
EON AB, Bålforsen, Betsele, Hällforsen upgrade
100 m€
Total:
160 m€
129
Wind Power:
Sorsele-Storuman windpark
2.075 m€
Skogsmark windpark
900 m€
Blaiken windpark
450 m€
Fäboberget windpark
200 m€
Skellefteå windpark
50 m€
Nordmaling windpark
30 m€
Total:
3.705 m€
Energy Transfer networks:
Svenska Kraftnät AB
300 m€
Tourism:
Hemavan/Tärnaby expansion of the resort
340 m€
Transport infrastructure:
E4/E12 Umeå
240 m€
E4 Djäkreboda-Bygdeå
15 m€
Storuman infrastructure (airport/terminals/railroad)
Total:
480 m€
All total
4.2.2
225 m€
6.900 m€
Development of the Region 2015–2020
The completion of the Botniabana track has, among other things, improved the transportation connection and logistic status of business.
During the next years, construction of the coastline track is expected to
continue to Luleå in Norrbotten as the Norrbotniabana project. The region
has good logistical location and connections to Mo i Rana in Norway and
Vaasa in Finland are increasing international transport in the future.
130
Industry in Västerbotten is upgrading technology in forestry and forest
industry.
The biggest project for Västerbotten in recent years is the construction
of the wind power park in the province. The construction of wind power
parks is concentrated on Storuman municipality in the western part of the
region.
The area also has a mining industry and the opening of new mines is also
expected in the next few years. The largest and most interesting mining
investment project is the Rönnbäcken nickel deposit located in the Storuman municipality. The construction costs for the mine are estimated to increase to around 1.5 million euros. Sweden is traditional mining country,
but today the discussion about nature, reindeers and mining has been
increasing also in Västerbotten,
Tourism is a very important industry in the region. The Hemavan-Tärnaby
downhill skiing centre is located in the western section of the province,
mainly in the Storuman Municipality on the Norwegian border. This fell
region resort has been constructed continuously over the past few years
and it is expected to continue expansion.
4.2.2.1 Investments expected to start first
All technology upgrading projects in industry are implemented as soon
as possible. There is no doubt that also the hydro power plant upgradings are done. Wind power is important for the region and all projects are
going to start. Also transport infrastructure projects are implemented as
decided in the National Transport Plan.
131
Projects:
SCA Obbola new digester
60 m€
SCA Rundvik sawmill
5 m€
Fågens Sågverk AB sawmill
10 m€
Vattenfall AB, Laxeden-Umeslupen turbines
60 m€
EON AB, Bålforsen, Betsele, Hällforsen upgrade
Sorsele-Storuman windpark
100 m€
2.075 m€
Skogsmark windpark
900 m€
Blaiken windpark
450 m€
Fäboberget windpark
200 m€
Skellefteå windpark
50 m€
Nordmaling windpark
30 m€
Svenska Kraftnät AB
300 m€
Hemavan/Tärnaby expansion of the resort
340 m€
E4/E12 Umeå
240 m€
E4 Djäkreboda-Bygdeå
15 m€
Storuman infrastructure (airport/terminals/railroad)
Total:
225 m€
5.060 m€
4.2.2.2 Investments waiting for better times
Mining industry in the Västerbotten region has not implemented any bigger projects for years. All three projects are possible to implement, but
the profitability of projects is uncertain due to the low raw material market
prices. Also the companies planning these investment are not in the best
possible economic condition.
Projects:
IGE Rönnböcken nickel mine, Storuman
Lappland Goldminers, Fäboliden
1.600 m€
200 m€
Tertiary Mining fluorspar mine, Storuman
Total:
40 m€
1.840 m€
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4.2.2.3 Key investment project of Västerbotten
Rönnbäcken nickel mine
The implementation of IGE nickel mine project in Rönnbäcken near Storuman is key project for all future mining projects in Västerbotten. Region
itself has long tradition in mining industry. Boliden company started activity in the northern part of Västerbotten. New mine could also increase
metal industry in the region. Boliden has big plant in the port of Skellefteå
and new mines could need expansion also in the refining process.
Projects that speed up with Rönnbacken nickel mine:
Other mining projects and industrial investments
133
5.
NORTH OF NORWAY
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
134
5.1
Finnmark, Troms, Nordland
The Norwegian High North consists of three counties: Finnmark, Troms
and Nordland. Population of Finnmark is 75 207 and the total land area
is 48.618 square kilometres. Most of the population live along the coast.
However, the indigenous people (Sami), about 10% of the population have a special status with its institutions and live mainly in the inland.
5% of the population in Finnmark is of recent foreign origin and mainly
from Russia and Finland. The Sami people constitute the majority in Finnmark’s interior parts, while the fjord areas have been ethnically mixed for
a long time. The Finnic Kven residents of Finnmark are largely descendants of Finnish immigrants who arrived in the area during the 19th century
or before from Finland, suffering from famine and war.
68º-70º North, Troms is a county in North Norway bordering Finnmark to
the northeast and Nordland in the southwest. To the south is Norrbotten
Län in Sweden and further southeast is a shorter border with Lapland
Province in Finland. To the west is the Norwegian Sea (Atlantic Ocean).
The entire county is located North of the Arctic Circle. The Gulf Stream
running up the cost gives the county a temperate climate. Area is 25.877
square kilometres
Troms county has a total of around 158 000 inhabitants. Major cities and
municipalities are Tromsø (71 295), Harstad (2640), Lenvik (11 345), Målselv (6 599) and Balsfjord (5 502). More than third of the county’s population lives in the City of Tromsø. In Troms, three different cultures meet:
Norwegian, Sami and Kven cultures. Approximately 10% of the population is of Sami heredity.
Nordland is located along the northwestern coast of the Scandinavian
peninsula and extends about 500 km from Nord-Trøndelag to Troms.
From the county border in the North to the southern border the distance
is about 600 kilometers. At the narrowest the county is only 6 kilometers
wide from the coast to the Swedish border. Area is 38.456 square kilometers.
135
Population in Nordland is 238 124 which of 49 400 reside in Bodø and 18
473 in Narvik cities. Nordland has population of about 3000 Sami people,
of whom 8% are engaged in reindeer herding.
Business in Finnmark
The economy of Finnmark grows about just as much as in the country as
a whole. As a result of this growth there is a lack of workers, notably in the
building industry. Problems are biggest in the western part of the county.
Finnmark is a big exporter of seafood, minerals and LNG gas. The value
of all export seen under one was according to figures given by The Confederation of Norwegian Enterprise (NHO) of Finnmark 18 milliards of
Norwegian crowns in 2010. Such figures put Finnmark at the first place in
added value pr. county inhabitant.
Finnmark is geographically situated close to rich energy resources while
prospecting activities for oil and gas in the Barents Sea are being stepped
up. Local economic entrepreneurs and scores of subcontractors are involved in this. At the same time work goes on with the development and
production of wind and water based power stations. An own company
was recently founded with the purpose to build and operate wind and
water based power stations in Finnmark in cooperation with local power
producing companies and Finnmark Estate Agency which is owner of the
ground.
Reindeer husbandry is intrinsic to Sámi culture and identity. In Finnmark
more than 2.000 persons are somehow associated with reindeer husbandry. A number that has been stable for a while, although the number
of units as well as the number of reindeer has decreased.
Finnmark is one of the most tantalizing destinations in Europe. After many
years with a big flow of tourists during the summer season, winter tourism has increased after a lot of efforts were made by the tourism industry.
136
But also the competence industry, consisting of many different types of
economic activity, is on the increase in Finnmark. Firms busy with this are
different from other types of economic activities as their main input factors are not dependent on raw materials, energy, machines or equipment.
In such competence based firms the main input factor is competence as
such.
iving and working far north in our country has a lot of economic advanL
tages. Some of these are aimed at private persons while other measures
aim at companies in Finnmark or in the northern part of Troms county.
The reason for this is that the Norwegian Parliament in 1990 ratified a
special enterprise zone for Finnmark and North Troms.
The measures for companies provide good framework conditions for both
companies which already exist and for new ones. Most types of companies are exempted from Employers’ National Insurance Contribution and
there is no tax on used electricity. Measures aiming at individuals give
inhabitants of Finnmark advantages such as lower income taxes and annual reductions of student loans. This last mentioned measure is often
considered the best existing private economy support.
Annual reduction of one’s student loan is given with up to 25.000 Norwegian crowns a year. Calculations show that these different support measures taken together have a value of up to 100.000 Norwegian crowns a
year for a 4 persons household.
Hammerfest
Hammerfest is the host municipality for Statoil’s LNG facility (Snøhvit) and
ENI’s regional and local office and operating organisation for the Goliat
field. As a result of the introduction of petroleum activities in the Barents
Sea, both national and international suppliers have opened offices in the
region, opening the door to a number of new and interesting jobs. Since
the final decision was reached to develop Snøhvit and until the time of
writing, the region of Hammerfest has gained more than 1,000 new jobs
and the town’s population has risen by approx. 1,000 persons, with the
137
highest rate of growth identified within the age group of 19 to 39 years.
Polar Base is the main hub for oil-and gas-related activities in the Barents
sea is located in Hammerfest, in Rypefjord, 5 km from Hammerfest centre.The Polarbase area is a powerhouse in Finnmark with varied industry
and other mercantile companies. The supply business for the oil and gas
industry plus service companies for other businesses are localized in Polar Base. A small part of the area is reserved for the fishing industry, cold
storage, fish-processing plants, etc.
Kirkenes
Kirkenes town has a population (2012) of 3,444. When the neighbouring
suburban villages the urban area reaches a total population of almost
8,000 people.
138
The International Barents Secretariat is located in Kirkenes. One of its
tasks is to create cross-border cultural, educational and business relations in the Barents Region. There is now substantial optimism in the
town as a consequence of the increased petroleum-drilling activity in
the Barents Sea. Kirkenes is the Norwegian Gateway to Russia. Border
crossing station Storfjord/Borisogelbsk is just outside the town. Closest
neighboring towns in Murmansk Region are industrial centers Nikel and
Zapoljarnyi. Road to Murmansk is in excellent condition and the distance
is only about 150 kilometers.
Kirkenes port is the center of business in the Norwegian High North. The
port is an important center for passenger traffic and the end point of Hurtigruten: regular, all-year traffic operations between Bergen and Kirkenes.
Kirkenes port has ore transport (2,9 million tonnes), fish transport and
service transport of oil and gas industry (total volume of other transport
is 112 000 tonnes. Deep-water channel and all-year ice-free transport
service , ready-made plans and ongoing investments exist for developing
the port for unit load transport and already made 2–3 billion crown investments are the basic factors in the future development plans of Kirkenes
port.
139
Business in Troms
Principal industries are fishing and fisheries, agriculture, services, tourism and public service industries. The county is rich in resources and the
location offers particular advantages, especially in the fields of fisheries
and aquaculture, extraction of mineral resources, energy production and
tourism. With the University of Tromsø and the colleges in Tromsø and
Harstad the county has a considerable number of jobs within education
and research particularly in the fields of science and medicine, particularly telemedicine.
The Norwegian armed forces is a vital employer in Troms, having the
seat of the 6th army division, Bardufoss Air Station, helicopter wings and
radar stations in the county. The armed forces employ over 2,000 people
in Central Troms.
Agriculture
In the south of the county there are areas with a long agricultural tradition. Farther north there are more and more instances of farms combining agriculture with other business activities. Much of Norway’s goat’s
cheese is made from the milk of more than 20,000 dairy goats in the
county. Traditional agriculture is being re-adjusted as farmers develop
supplementary industries, such as tourism and the production of highclass niche products.
Fisheries
The population of Troms has harvested from the resources of the sea
since time immemorial. A lot of the county’s trade is still related to the sea.
The number of fishermen has been reduced, however, due to larger and
more efficient fishing fleets. It is also evident that many consumers are
willing to pay more for the highest quality seafood.
140
Industry
Troms industry is mainly tied to the fishing industry and related industries.
Within the field of fisheries and aquaculture, development, research and
an increase in competence will be large-scale areas of commitment in
years to come.
New business
The research in Tromsø plays a major role in the development of new
business opportunities in the county. Competence and research have
provided a breeding ground for development within fields such as marine
biotechnology, information and communication technology, earth observation, satellite monitoring and space research.
Marine biology is an area of commitment with a huge potential. Business and industry in Troms has gradually become more integrated within
the global economy, due to the fact that these new industries are mostly
export industries. Consequently, business and industry are ever more dependent on global markets and international business conditions.
Transport by land, sea and air is well developed with Tromsø as the central point of the county´s transport system. Troms is the main port to the
Arctic waters.
The multitude of islands and deep fjords presents great communicational
challenges. Previously, the boat was the only alternative. Today, bridges and tunnels provide an increasing number of mainland connections.
However, the terrain still presents major challenges because of factors
such as the volume of snow and danger from landslides. Express boats
and small aircraft cut down travel time to a minimum.
Fast boats carry goods and passengers up and down the coast. The
coastal steamer is also an important means of transport that links many
coastal communities together. Hurtigruten line has become internationally very popular tourist attraction.
141
The road network is well developed throughout the county. The county
has no railway system. The closest railway station is situated in Narvik.
The largest airports, Evenes at Harstad, Bardufoss and Tromsø, connect
the county with the rest of Norway and the world beyond. Tromsø airport
has a direct service to Murmansk and Archangel in north-west Russia.
Tromsö is the biggest city in North Norway with over 71.000 inhabitants. It
is famous tourism center and now also developing to one of the business
centers of Norwegian High North offshore activities. Aker Solutions has
openedengineering office in Tromsö in 2012 starting with 50 employees.
Company has plans to expand the office up to 300 persons. The office will
work with maintenance and modifications projects and field development
projects in cooperation with other Aker Solutions offices in Norway. In
future Aker Solutions office expansion is included in Nordområdesenterproject in the southern part of the city. Tromsö University, UIT The Arctic
University of Norway is the northernmost university of the world. Its location on the edge of the Arctic implies a mission. The Arctic is of increasing
global importance. Climate change, the exploitation of Arctic resources
and environmental threats are topics of great public concern, and which
the University of Tromsø takes special interest in.
Harstad is another town in Troms county which is developing as a Norwegian High North business center. Statoil has decided to locate the Barents
Sea operations center in the town which has about 23.000 inhabitants.
It´s location is about 300 km south from Tromsö. Town is also planning to
build a new base for offshore business called Nordlysparken within next
five years.
Business in Nordland
Nordland is one of the country’s largest export counties within raw materials and industry. Nordland is also the economic hub of Northern Norway. The industrial area of Helgeland – concentrated in particular around
Mosjøen and Mo – is the main such area north of Dovre and the second
biggest in Norway. The processing industries at Mo industrial park have a
combined annual turnover of around 3 billion Norwegian kroner. In total,
142
Nordland’s processing industry encompasses close to 20 businesses. In
2004 these firms exported goods to a value of around 9 billion kroner.
The trade and industry in Nordland consist of metallurgical, cement and
fertiliser industry, fisheries, fish-farming, agriculture, forestry and timber, services, tourism, assorted light industry and small shipyards. The
sea also provides a living for the people of the region. Nordland has the
country’s largest fishing industry with more than 3,000 active fishermen
(2006). Large quantities of fish are brought ashore with an export value
of close to four billion Norwegian kroner. The enormous growth in fish
farming has been a major addition to the trade in local natural resources.
Nordland is the country’s second biggest fish-farming region.
Nordland is Norway’s largest producer and supplier of electrical power.
The development of the Svartisen hydroelectric facility in the 1980s and
90s was at that time the biggest in the country. The quantity of available
energy attracted several major industries to the area. Elkem and Hydro
all have large production facilities in Nordland.
Oil and gas have raised great expectations in Nordland. Reserves have
been found in several fields that are still unopened to development. The
oil industry brings together considerable knowledge and expertise.
Nordland is connected to international markets by a network of air, rail,
and ferries. Bodø is a communications hub for aeroplanes, trains, buses,
the coastal express boat and fast-going ferries.
Nordlanders are a people of ferries, and the famous Hurtigruten is also
based in Nordland. Over the past few decades big investments have been
made to improve infrastructure within the county. New roads and bridges
bring people and the various parts of the county ever closer together.
Twelve airports make Nordland still more accessible for those who live
and work here.
143
City of Narvik in the northern part of Nordland County is one of the most
important transport hubs in the High North. Iron ore products from LKAB
are transported by train from Kiruna to Narvik and shipped via LKAB’s
own port facilities at Narvik. In the port all handling of pellets is done in­
door in covered silos and ware houses.
The new logistics structure also includes complete moderni­zation of the
Narvik ore port (project SILA), which was complet­ed in the autumn of
2009. This includes construction of a whole new storage and discharging
facility with 11 underground silos in Narvik. The Narvik ore port is free of
ice all year round. In 2012 LKAB shipped about 18,6 Mt from the port in
Narvik.
ew mining company Northland Resources is also shipping iron ore from
N
the Narvik Port. Company uses already existing roads (150 km) and railway (226 km) from Kaunisvaara to the Port of Narvik. At the ice free Port
of Narvik the Iron Ore Concentrate will be reloaded on Cape Size Vessels. On December 1, 2011 Northland received construction permit for a
new iron ore terminal in Narvik, Norway. The terminal, which is expected
to efficiently load vessels of up to 180,000 tonnes, will consist of a quay,
an unloading facility for the railcars, a storage building and a ship loader.
The first shipment from Port of Narvik took part 25 th of February 2013.
(Sources: finnmark.no, Hammerfest kommune, Kirkenes näringshan)
144
5.1.1
Investment Potential 2014–2025
Industry:
Aluminum plant, Hammerfest
1.300 m€
DRI steel mill, Hammerfest
500 m€
Carbon black plant, Hammerfest
135 m€
Gas power plant, Hammerfest
270 m€
Elkem Salten
45 m€
Wasco Coating, Mo i Rana
30 m€
Vesterålens AS, Sortland
20 m€
Fishing industry, North Norway
10 m€
Total:
2.310 m€
Mining industry:
Sydvaranger Gruve AS, iron mine expansion
Rana Gruber AS
280 m€
42 m€
Nussir AS Kvalsund copper mine
350 m€
Total:
672 m€
Oil and gas:
Johan Castberg – oilfield
12.000 m€
Veidnes oil terminal, Honningsvåg
1.000 m€
Aasta Hansteen gas field, Nordland
5.000 m€
Skarv,Skuld, Goliat,etc –fields
6.720 m€
Kirkenes Oil Terminal
280 m€
Sandnessjön base, Nordland
150 m€
Bröndre base, Nordland
150 m€
Nordlysparken, Harstad
115 m€
Polarbase, Hammerfest
11 m€
Total:
25.426 m€
145
Hydro power:
Finnmark 20 power plants and small power
Nordland/Troms projects
2.970 m€
950 m€
Total:
3.920 m€
Wind power:
Statkraft Development AS
1.836 m€
Varanger Kraft AS
700 m€
Statoil ASA Offshore/Finnmark
840 m€
Norsk Miljökraft AS
1.078 m€
Vindkraft Nord AS
336 m€
Nordkraft Vind AS
200 m€
Finnmark Kraft AS
1.351 m€
Fred. Olsen Renewables AS
1.800 m€
Troms Kraft AS
2.824 m€
Nord-Norsk Vindkraft AS
1.476 m€
Nord-Norsk Havkraft
3.480 m€
Total:
15.921 m€
Energy transfer networks:
Nordland, power line and transformers
315 m€
Ofoten – Hammerfest power line
360 m€
Finnmark, power lines and transformers
Total:
585 m€
1.260 m€
Tourism:
Målselv Fjellandsby, Blånisseland
100 m€
Buchardt Hotell, Tromsö Sörbyen
100 m€
North Cape Turn around - project
10 m€
Total:
210 m€
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Transport infrastructure:
Nordkjosbotn-Kirkenes road
115 m€
Indre Nordnes – Skardalen road
60 m€
Alta western road
150 m€
Tromsö port
30 m€
Narvik port, Northland terminal
135 m€
Fagernes terminal
70 m€
Hålogaland bridge
280 m€
Fauske-Nordkjosbotten road
65 m€
Gimsöy airport
225 m€
Helgeland airport
225 m€
Mosjöen Toventunneln road
70 m€
Railway Narvik – Swedish border
1.200 m€
Grötnes airport, Hammerfest
300 m€
Kirkenes Industrial logistics area
50 m€
Arctic railway, Norwegian side
1.000 m€
Total:
3.975 m€
Public investments:
Helse Nord, Nordland
340 m€
Helse Nord, Troms
785 m€
Helse Nord, Finnmark
205 m€
Nordområdesenter Tromsö
450 m€
Total:
1.780 m€
All total
55.474 m€
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5.1.2
Development of the Region 2015–2020
Norway is still number one area in European High North regarding investment plans and projects. Total costs of planned investments is more than
55 bln€. Energy sector is constantly on the top of the investments list
including offshore and onshore, wind power and hydro power. The fjords
of the region are ideal for wind power, and hydropower, which is integral
to the energy production framework for the entire nation, utilises the vast
water resources of mountain lakes.
At present, the electricity transmission network of northern Norway does
not facilitate use of energy produced today and in the future in its own
region. Consequently, the construction of new transmission networks is
currently being planned for all three counties.
There will also be substantial investments into the traffic network, as the
terrain on North Norway is extremely challenging. The only form of transport that is problem-free is seaborne transport. The internal freight transport in the area is primarily handled by road.
The national railroad network only runs as far as Bodø in the north, the
administrative centre of Nordland County, and the Swedish rail network
travels along the Kiruna ore haulage track to Narvik, from which freight
has to be transported by road. Flight connections are vital for passenger
traffic. The State is significantly subsidising regional flight connections.
The previously closed iron mine in Kirkenes was reopened in 2009 and
is working fine. Plans for expansion are evaluated and expected. The
opening of a large copper mine is being planned for Kvalsund, close to
Hammerfest, and at the same time preparations are being made for reopening of the former Finnish-owned Bidjovagge gold-copper mine near
Kautokeino. The environmental impacts of the mining industry have also
hit the headlines in North Norway, and the Sámi have questioned the
opening of mines. Also the low price level of raw materials in the world
market have been postponing the implementation of these projects.
148
Tourism in Norway has experienced a boom. The Hurtigruten cruises
along Norway’s coastline have been particularly popular. The route is
also significant for the logistics for its own region and the increase in
foreign passengers has caused a few problems. North Norway is also
popular destination for international cruise business. Tourist resorts are
also being built. Målselv municipality close to the City of Tromsø has been
constructing a Norwegian version of a fell resort with its own Santa Claus
Land. This project has not been successful, because the main company
of the project was bankrupted in 2013. Anyhow the project is continuing
with a little bit lower ambition level.
Oil and gas projects have been the flagships of North Norway investment
plans. In March 2014 ENI Norge is still finalizing the Goliat project, which
has delayed from the original plan. The floating platform should arrive in
summer 2014 to Polar Base in Hammerfest to be finalized. This happens
about one year later that was planned.
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Statoil announced in 2012 that two enormous projects will be implemented. The first to commence is the construction of the Aasta Hansteen gas
field, located in the Norwegian Sea off the coast of Nordland. Gas is conducted southwards via a pipeline and further on to the network linking to
Europe. This project is continuing as planned.
The other project which should have been implemented is Skrugard/
Havis oil field, which by scale should be nearly three times the size of
the Goliat project. Statoil published details on the construction of the future field’s terminal for Veidnes, north of Honningsvåg and near the North
Cape. A pipeline stretching 280 kilometres was planned to run from the
field to the shore, where should be built big terminal with estimated to
cost around 800 million euros. This enormous oilfield was renamed to
Johan Castberg. Some months later in June 2013 Statoil announced to
postpone this project. According to the announcement Statoil has continued to mature the resource base and development plans for the project.
There are still uncertainties related to the resource estimate and investment level. Company named also decision of the Norwegian government
to reduce uplift in the petroleum tax system, which reduces the attractiveness of future projects, particularly marginal fields and fields which
require new infrastructure. This is why it is necessary to review the Johan
Castberg project.
This announcement happened only a few months before the parliament
election in Norway. Some specialists assumed that Statoil tried to push
the Government and postponing was a political stunt. Success of the
Government was very bad in the parliament election in September 2013.
New government with winning parties started in October 2013. All the
time everyone has been expecting decision from the new government to
abolish the harmful legislative amendment that postponed Johan Castberg project. Nothing has so far happened and the discussion continues.
From Statoil point of view the biggest problem is that the possible pipeline from oilfield to Veidnes in Honningsvåg municipality is not anymore
profitable. Statoil counted that government gives same size subsidies to
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pipeline like in Snow white project in the beginning of the 2000s. Without
this subsidy the whole plan is probably not profitable. Taking the oil from
Johan Castberg directly from the platform or platforms requires new plans
and extra costs.
Profitability of oil wells and gas in Barents Sea has become controversial after the success of shale gas and oil in the USA. It looks like every
planned offshore project in the Arctic has been postponed. Shtokmanovskoje is not realistic maybe for decades and the situation in North Norway
begins to have resemblance with the Shtokman project. Representatives
of Statoil have not given any dates in recent Arctic conferences when
the planned projects like Johan Castberg could be implemented. Statoil
directors confirm only that the company has come to the Arctic and they
are going to stay there the next 40 years.
If the Norwegian offshore projects are postponed over 2020 the development in the region is going to slow down because they are the backbone
of expected development programs like some made by SINTEF research
institute has issued. In a preliminary strategy is described on how North
Norway can be industrialised based on Barents Sea gas and raw materials from neighboring regions. If projects are not implemented the strategy
is postponed to 2030 or even behind.
The significance of Hammerfest as an offshore centre has not suffered
because of the aforementioned decisions. ENI Norge is establishing its
own northern centre in the city and Aker Solutions continues to develop
its service base activities in the city, as well as investing into the development of underwater technologies. Snow white gas field is still producing
gas to Melköya LNG-plant. Probably Statoil is going to invest in Snow
white to increase gas production. Pipeline is there ready and does not
need any investments.
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Other town that continues to grow is Kirkenes. Statoil has entered into
agreement with Rosneft for further exploration of the so-called border
agreement area. For the first time, this will shift the focus of offshore
projects on a practical level in the direction of East Finnmark. Kirkenes is
here natural base for actions and the Kirkenes Port has enormous development possibilities.
5.1.2.1 Investments expected to start first
In spite of the postponements in oil and gas project the economy of Northern Norway continues to grow. Almost all projects regarding transport
connections are going to be implemented. Decisions have already been
made in the National Transport plan up to 2024. Energy grid is renewed
and public hospitals are going to be built. Probably also Kirkens mine expansion is starting when the raw material prices are stabilizing on higher
level. Small tourism projects are included in projects that will be starting
before 2020. Wind energy projects are implemented especially in Nordland.
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Projects:
Elkem Salten
45 m€
Wasco Coating, Mo i Rana
30 m€
Vesterålens AS, Sortland
20 m€
Fishing industry, North Norway
10 m€
Aasta Hansteen gas field, Nordland
5.000 m€
Kirkenes Oil Terminal
280 m€
Sandnessjön base, Nordland
150 m€
Bröndre base, Nordland
150 m€
Nordlysparken, Harstad
115 m€
Polarbase, Hammerfest
11 m€
Sydvaranger Gruve AS, iron mine expansion
Rana Gruber AS
280 m€
42 m€
Nordland, power line and transformers
315 m€
Ofoten – Hammerfest power line
360 m€
Finnmark, power lines and transformers
585 m€
Nordland/Troms hydro power projects
950 m€
Nord-Norsk Havkraft wind power
3.480 bln€
Nordkjosbotn-Kirkenes road
115 m€
Indre Nordnes – Skardalen road
60 m€
Alta western road
150 m€
Tromsö port
30 m€
Narvik port, Northland terminal
135 m€
Fagernes terminal
70 m€
Hålogaland bridge
280 m€
Fauske-Nordkjosbotten road
65 m€
Gimsöy airport
225 m€
Helgeland airport
225 m€
Mosjöen Toventunneln road
70 m€
Railway Narvik – Swedish border
1.200 m€
Kirkenes Industrial logistics area
50 m€
Målselv Fjellandsby, Blånisseland
100 m€
Buchardt Hotell, Tromsö Sörbyen
100 m€
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North Cape Turn around- project
10 m€
Helse Nord, Nordland
340 m€
Helse Nord, Troms
785 m€
Helse Nord, Finnmark
205 m€
Nordområdesenter Tromsö
450 m€
Total:
16.338 m€
5.1.2.2 Investments waiting for better times
North Norway doesn´t have many projects that are postponed to undefined future. New mining projects like Kvalsund projects have to wait for
higher raw material prices and also problems concerning Sami reindeer
herding and mining must be solved. Huge investment project Finnish Arctic Railway is waiting for better days not because of Norwegian decision,
but because of Finnish Transport policy. Norway has announced that it
is ready for cooperation in cross border transport projects with Finland
even regarding financing, but the initiative must come from Finland. So
far Finns have even denied to start to discuss about this. Some big wind
power and hydro power projects are postponed.
Projects:
Arctic railway, Norwegian side
1.000 m€
Nussir AS Kvalsund copper mine
350 m€
Finnmark 20 power plants and small power
2.970 m€
Rest of the wind power
12.441 m€
Johan Castberg – oilfield
12.000 m€
Veidnes oil terminal, Honningsvåg
1.000 m€
Total:
29.761 m€
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5.1.2.3 Key investment project of North of Norway
Johan Castberg oil field
The decision to start the implementation of Johan Castberg oil field is
the key to all big investments in North Norway. Aasta Hansteen gasfield
near Nordland and possible expansion of Snow white-1 are based on old
projects and existing plans. Johan Castberg would be totally new oilfield
project and it would show that offshore projects in Arctic Regions are still
profitable in spite of all shale gas and oil plans.
One big player in this game is the political crisis in Ukraine and Crimea.
Gazprom is providing a lot of energy to Central Europe and especially to
Germany. If the crisis continues or the solution is not found to Ukraine/
Crimea the tension could stay between Russia and USA and also with
EU. This could increase the need to get energy from the west.
The new energy policy of Germany is still making confusion on the European energy market. This can be seen in the unbelievably increasing
demand of coal, when other energy is much more expensive.
If Johan Castberg decision is made soon and it is positive, and the terminal is going to be build to Veidnes also other similar projects are proceeding more rapidly than expected. Total value of the planned investments
in North Norway could in that case be more than double compared with
present numbers.
Projects that speed up with Johan Castberg oil field:
Giant offshore projects in the Barents Sea.
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6.
NORTHWEST RUSSIA MURMansk region
Airport
A R C T I C
Harbour
S E A
Lakselv
Railway
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
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6.1
Murmansk Region
Murmansk Region is situated in the North-West of European Russia and
it is one of the strategic areas of the country in the North-Western Federal
District. The Region borders with the Republic of Karelia in the southwest and with Finland and Norway in the west and north-west. The Murmansk Region is one of the few Russian regions to share the border with
the European Union and NATO countries.
The strategic importance of the Murmansk Region is based on enormous
raw material resources and also military political importance. The Region
is the base for Northern Navy ensuring defence capacity of the northern
frontier. Headquarters of the Navy is located in Severomorsk about 20 km
north of Murmansk.
Murmansk port is open all year round and it is the biggest Russian port
situated to the north of the Arctic Circle. The products of Kola Peninsula
mining industry is shipped to the world market from Murmansk. Nuclear
icebreakers have ensured year-round Arctic navigation.
The Region occupies an important geopolitical position in relation to regions with a developed industry connected to it with land, sea and air
routes. The location close to the border, significant exporting capabilities
and available transport links establish good conditions for enhanced cooperation with other countries. The Murmansk Region is an active member of the international Barents Euro-Arctic cooperation.
As of early 2012, the Region includes 12 urban okrugs (Murmansk is
the regional capital), 5 municipal districts and 23 settlements, 13 of them
urban and 10 of them rural.
Population of the Region has decreased in 20 years from 1.2 million
inhabitants to less than 800.000 inhabitants. People have moved back
to their home regions or to cities like St. Petersburg and Moscow. The
population density is 5.4 / sq. km. Population has concentrated in cities
where live almost 93% of the inhabitants. Rural areas have only 7% of
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population. Nationalities are (2002): Russians are the majority in Murmansk Region with 85.%, Ukrainians 6.4% and other nationalities 8.4%
are minority. Sami people are living in Lovozero area and total population
of Sami is less than 2000 people.
The total amount of inhabitants in the Murmansk Region was in 2012
787 900. The biggest towns are Murmansk (305.000 inhabitants), Apatity (59.200 inhabitants), Severomorsk (50.000 inhabitants) and Monchegorsk (44.600 inhabitants).
Business community
Mining industry is the backbone of Kola Peninsula economy. In the Murmansk Region, there are over 60 large deposits of various raw minerals
where 30 types of useful minerals are extracted. Most deposits of the
minerals are of national significance, and of international significance as
far as apatite, nepheline and cyanide ores and rare metals are concerned.
The economic specialisation of the region includes extraction and processing of ferrous and nonferrous metal ores, industrial production of
copper, nickel, cobalt, semi-fabricated precious metals products, primary
aluminium and apatite concentrate that is a raw product for phosphate
fertilisers.
The share of the Kola land of the total Russian production is 45% in nickel, 11 % iron-ore concentrate and 7% of refined copper. The Region is the
only producer of apatite, nepheline and baddeleyite concentrates (100%
are produced in the Murmansk Region).
Main industrial companies
JSC “Kolskaya GMK” is a single complex for extraction of sulphide copper and JSC ores and production of precious metals. Company is a division of Norilsk Nickel located in the Murmansk Region. Most important
mines of Kola GMK are in Zapoljarnyi, Pechenga area and smelters in
Nikel and in Monchegorsk which is the headquarters of the company.
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JSC “Apatit” extracts and processes apatite and nepheline ores of the
Khibiny deposits which are part of the largest and richest deposits in the
world as well as the basis of phosphorous raw materials in Russia. JSC
Apatit is part of Fosagro company.
JSC “SZFK (North West Phosphorous Company)” is new industrial company in the Murmansk Region. It opened the first mine in Rutshij Olenij
near the town of Kirovsk two years ago. The company belongs to Akron
group.
JSC “Kovdorsky GOK” develops the Kovdor deposit and produces ironore, apatite and baddeleyite concentrates. It is part of EuroChem company. Kovdor is near Finnish border and the company has been interested
about the Sokli mine deposit on Finnish side only 54 km from the town of
Kovdor.
JSC “Olkon” extracts banded iron formations and sells high-quality ironore concentrate. It is a part of Severstal company which is the second
biggest steel company in the world.
“KAZ-RUSAL”, a branch of United Company RUSAL, the biggest aluminium company in the world. KAZ smelts aluminium from aluminium
oxide delivered there. The smelter and the plant are in the town of Kandalaksha.
The major production facilities were built decades ago, and the enterprises currently aim at deep-level mining and underground mineral extraction which requires upgrading and expanding the mining industrial
infrastructure.
Change of policy in investment strategies
Shtokmanovskoje gas field project was prioritized in every development
strategy of the Murmansk Region for over 10 years. In 2013 the imple-
159
mentation of the vast project seemed to been postponed to 2030 or later.
This influenced to the policy of Regional Administration which decided to
support the development of existing industrial companies.
Investment projects for replacement of decreasing yield at the existing
deposits and for new regional production types are being currently implemented in the Murmansk Region. These are the projects of building
mining and processing plants on the basis of the “Oleniy Ruchei” apatite
and nepheline ore deposits, the “Fyodorova Tundra” platinoid deposits
and the “Sopcheogorskoye” chromite deposit.
The construction project for the “Oleniy Ruchei” mining and processing
plant is prioritised in the North-Western Federal District. A distinctive feature of the new mining and processing plant will be an integrated extraction of useful component from the ore.
The overall investment provides for RUB 30 bln and 3000 jobs. The capacity of the facility is one million tonnes of apatite concentrate a year
after commissioning the 1st stage of the plant that took place in July last
year and increasing the capacity of the processing factory to 2 m tonnes
after commissioning the 2nd stage of the plant.
State-of-the-art energy-saving materials are used on the compound of the
mining-and-processing plant which makes it possible to improve energy/
output ratio in the difficult conditions of the far north. In order to reduce
adverse environmental impacts, modern waterworks have been built:
the enterprise will use a closed water circulation technology to protect
bodies of water from contamination. A storage facility for tailings using
eco-friendly state-of-the-art pollution control is under construction. Over
60 contractors from various regions of the country are involved in the
construction.
The project is being implemented within a public-private partnership
including investment in social projects for reconstruction of the school,
culture centre and residential buildings in the Koashva settlement in the
amount of RUB 30 m.
160
Coordination board on development of investment and innovative activities in the Murmansk region (established on 05.11.2013) has assigned
a strategic and priority status for the investment project «Construction
of the ore-dressing and processing enterprise on the base of apatitenepheline deposit «Oleniy ruchey» and adopted a decision to provide
state measures for the project implementation.
On the 18th of November 2013 Governor of the Murmansk region and
CJSC «North-West phosphorus company» have signed agreement on
state support of the investment activity on the territory of the Murmansk
region during the implementation of the strategy priority project «Construction of the ore-dressing and processing enterprise on the base of
apatite-nepheline deposit «Oleniy ruchey». State support measures concern the tax concession on property, lowered rate on income tax during
5 years.
Industrial development of the apatite and stafellite ore deposit to replace
the depleting amount of apatite concentrate is a priority task of the Kovdor mining and processing plant modernisation. The project provides for
reconstruction of the existing JSC “Kovdorsky GOK” industrial facilities
on the basis of the complex for processing of technological deposit sands
and the apatite and baddeleyite factory of the processing complex to build
a new processing complex for apatite and stafellite ores.
The project implementation will ensure increased amount of iron-ore, apatite and baddeleyite concentrate production by more than 900 thousand
tonnes a year. The amount of processed ores from the main open mine
will increase by 2 m tonnes.
On the 18th of November 2013 Governor of the Murmansk region and
CJSC «North-West phosphorus company» have signed agreements
on state support of the investment activity on the territory of the Murmansk region during the implementation of the strategy priority projects
«Modernization of production capacity of the JSC «Kovdorsky GOK»»
and «Apatite-staffel ore-dressing complex». State support measures concern the tax concession on property, lowered rate on income tax during
3 years.
161
Fishing industry
Fishery is one of the traditional economic sectors of the Murmansk Region and plays an important part in the socio economic specialisation of
the region. Murmansk Region fishermen account for 16% of the overall
Russian catch. About 90% of fish is processed immediately at sea.
The sector is based upon the fisheries fleet and the onshore complex
that includes port facilities, onshore fish-processing enterprises and shipyard companies. Total of 141 organisations employing about 7.4 thousand people are active in fishing, fish farming, processing and tinning fish
products and seafood in the Murmansk Region. 105 organisations are
active in industrial and coastal fishing.
About 600 thousand tonnes of aquatic bioresources are harvested each
year. The annual amount of fish production is 500 thousand tonnes, 60%
of the production going to the Russian domestic market.
At the end of 2012, the Murmansk Region took the first place of all Russian federal entities in the amount of shipped fish production – over RUB
30 bn.
The Strategy of Murmansk Region Socioeconomic Development until
2025 prioritises a comprehensive upgrade of fisheries and aquaculture
sector development.
Tourism
There are 100 active tourism companies in the Murmansk region, 34 of
the being orientated at domestic tourism. The main attractions of the Kola
Peninsula are sport fishing, alpine skiing and cruises to the North Pole.
162
More than 20 companies are active in organising sport and amateur fishing. There are about a hundred of bodies of water allocated for use by
those companies. 78 of these bodies of water are Atlantic salmon rivers.
Atlantic salmon fishing traditionally takes place in the most popular rivers:
Ponoi, Varzina, Rynda, Karlovka, Yokanga, Varzuga, Umba and Kola. An
increasing number of smaller salmon rivers have become available for
sport and amateur fishing. Wild Atlantic salmon has become a sort of
“tourist brand name” of the Murmansk Region.
The town of Kirovsk is a centre for alpine skiing and other active outdoor
tourism. There are three alpine skiing complexes in the town. The “Bolshoi
Vudyavr” complex is the highest not only in the Khibiny Mountains but
also for the whole north-western Russia. The elevation difference is 550
metres. A distinctive feature of the resort is its wide European-standard
FIS-certified pistes suitable for both professional alpine skiers and beginners.
163
The Region is the only place where it is possible to go to the North Pole
aboard a nuclear icebreaker. Two-week tours are very popular with enthusiasts of exotic tourism worldwide. The most popular routes include
tours to Svalbard and Franz Josef Land where one can see walruses,
seals and whales, visit picturesque harbours with bird colonies and where
polar bears sometimes come to the icebreaker surrounded with ice.
Transport
Murmansk is the only port in European Russia with an open access to
major oceanic routes. Port of Murmansk has direct access to the Northern Sea Route, that links the Atlantic to the Pacific through the arctic
waters and provides access to natural resources of the Far North, Siberia
and the Far East.
The Murmansk Region located at the junction of transnational routes and
having reliable sea, railway, road and air links with industrial Russian regions can surely be called a northern gateway of Russia.
There are three seaports in the Murmansk Region. The main port of the
Region is the Murmansk Port located in the Kola Bay. It is also the core
port of the Arctic Basin as far as transporting goods to the Far North and
far abroad is concerned.
The necessary infrastructure for receiving, servicing and repairing vessels is in place in the Murmansk port. It is a base for Russian shipping
companies, the emergency and rescue fleet and the unique fleet of nuclear icebreakers which arrange piloting ships along the routes of the
Northern Sea Route.
The Murmansk seaport is one of the ten biggest Russian ports in the
amount of cargo transhipment. It is the only port in the country capable of
receiving vessels of up to 300 thousand tonnes deadweight any time of
the year due to non-freezing deep water area of the Kola inlet.
164
Cargoes going through the Murmansk port include general cargoes, liquid cargoes as well as containers, fish and fish products. The total cargo
turnover is above 25 m tonnes a year.
Coal prevails in the overall amount of transhipped goods. The coal is handled in terminals of JSC ”Murmansk Commercial Seaport”, the biggest
stevedore company of the Murmansk Region. The company also successfully handles apatite and iron-ore concentrates, non-ferrous metals,
manganese ore, containers and other cargoes.
Two ports – Kandalaksha and Vitino – are located in the southern part of
the Kola Peninsula in the water area of the Kandalaksha Bay. The Kandalaksha port specialises in transhipment of bulk and general cargoes,
and the Vitino port is orientated at transhipment of oil products. The total
cargo turnover of the Kandalaksha Bay ports is over 4.5 m tonnes.
The Murmansk Region is of significant interest for tourists from around
the globe. The vessels of the FSUE ”Atomflot” icebreakers fleet provide
tourist cruises to the North Pole, islands and archipelagos of the Central
Arctic.
The Arctic Harbour project is being implemented in the framework of
preparation to the 100-year anniversary of Murmansk in order to build the
needed infrastructure for receiving and servicing cruise ship and ferries,
create a regular ferry link with Norway and increase the number of foreign
cruise vessels entering the port.
Development the regional port infrastructure is closely connected with
development of the railway transport infrastructure. The general railway
transport is a leading element of the regional transport system. It takes up
a considerable share of the cargo and passenger transport market. Total
length of railways in the Murmansk region is about 870 kilometres.
165
A reconstruction of passenger transport infrastructure facilities and creation of a single transfer complex uniting the sea, railway and bus passenger terminals are planned to be carried out in Murmansk in the future.
There are two operational airports on the Kola Peninsula providing services for aircraft and passengers and handling of luggage, post and cargoes: in Murmansk and Apatity. There are also landing grounds for local
airlines.
Up to 550 thousand passengers pass through the Murmansk Airport each
year. The reconstruction of the runway, apron and lighting has been finalised by now. Reconstruction of the passenger terminal, cargo terminal
and engineering networks of the maintenance zone is planned finalised
by 2015.
Murmansk Transport Hub
The project of “Complex Development of the Murmansk Transport Hub”
is the main transport infrastructure development project in the region.The
project is being implemented within the sub-programme “Development
of Transport Services Export” of the federal targeted programme “Development of The Russian Transport System (2010–2020)” with the aim
of increasing competitiveness and further development of the regional
transport infrastructure.
In the project implementation, a year-round marine hub will be created for
processing container liquid cargoes and transhipment of coal and mineral
fertilisers. It will be integrated into the North–South international transport
corridor.
The project provides for development of the Kola inlet water area, the
sea, rail and road transport infrastructure development as well as logistics
and warehouse infrastructure development.
166
In the framework of the new project, it is planned to build a new branch
line and a cargo terminal on the western shore of the Kola Bay, reconstruct the existing coal terminal and build a container terminal, a logistics
centre and a distribution zone on the eastern shore of the Kola Bay.
The project is being implemented in a private-public partnership, the total
funding being over RUB 130 bn. The state funds the construction of an
auxiliary utility infrastructure for investment projects to be implemented
by private investors. The project, when implemented, will increase the
Murmansk port cargo turnover to 70 m tonnes.
The Northern Sea Route underlies the Arctic transport system of Russia
and the importance of Murmansk Transport Hub. It ensures economic
integration of the Arctic territories both with developed areas of Russia
and with other countries, gives access to major petroleum deposits and
aquatic bioresources of the Arctic zone and to other strategic raw materials.
The presence of a powerful nuclear icebreakers fleet predetermines the
use of the Northern Sea Route for transnational transit between the countries of North-West Europe and the Pacific areas (Japan, China, the USA
and Canada) and its integration into the global transport system as an
independent Eurasian transport corridor with year-round transport of export cargoes.
FSUE ”Atomflot” where an integrated icebreaker technology complex for
the Russian federation civil nuclear fleet is based provides icebreaker
pilotage for vessels along the Northern Sea Route, for exploration, scientific and research activities in the arctic seas and for emergency and
rescue operations in the ice.
(Source: Murmansk Regional Government, Ministry of Economic Development of the
Murmansk Region)
167
Future development of the Murmansk Region
Murmansk Regional Government has published a new forecast of the
regional development to 2020–2030. According to the forecast for the
period up to 2030 is projected to create new kinds of economic (industrial)
activities, such as mining and quarrying of energy resources and oil refining; new form x s products: LPG, petroleum products, processing of chromite ore, platinum group metal ores; creation of a modern large transport
and logistics center, including modernization of existing and creation of
new port facilities to initiate the operation I special port economic zone,
construction refinery and a plant to liquefy natural gas.
For transportation of goods for export, including production and refinery
plant to liquefy natural gas will be used mainly by sea. Provides for the
formation of active open space for international exchanges, tourism development, the use of transit potential of the Northern Sea Route, which
will contribute to upgrade the nuclear icebreaker fleet.
Main investments of the region are following:
• commissioning of the ore processing plant on the basis of deposits
of apatite- nepheline ores ”Deer creek” (Rutshij Olenij, JSC SZFK);
• implementation of integrated development of the Murmansk Transport Hub;
• creating e transport hub based on train, bus arrangement with adjacent areas, airport network, road approaches to Marinas,
• building on ore processing plant based on deposits of platinum group
metals ”Fedorova-Tundra”;
• building on ore processing plant on the basis of chromite deposits
”Sopcheozerskoe”;
• building and on the modernization of the mining and mineral processing I production of vermiculite, phlogopite and pegmatite in Kovdor;
• beginning of the active phase of implementation of integrated mastering I Shtokman field, including the construction of a liquefied natural
gas plant and pipeline;
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•
•
•
•
•
•
•
building on the Kola Nuclear Power Plant - 2;
building of the refinery on the Kola Peninsula;
construction of wind farms;
building and reconstruction of power grid energy system I Murmansk
region (the ”National Rate” (modernization and construction of boilers
in the Murmansk region);
building on North PES in Long Bay of the Barents Sea, the substation
”North” and the combined heat and power in Kovdor;
building on Ships nuclear icebreaker fleet
implementation of the project and the ”Russian Lapland”.
The forecast includes also the Shtokman Gas field which seems to be
postponed up to 2020. There is also a plan to renew the power grid system of Murmansk Region. Especially the city of Murmansk has been suffering of the limited power transfer from Kola Nuclear Power Plant.
Cross regional product is going to increase from the level of October 2013
totally 2.1 times higher. GRP growth will be achieved mainly the growth
of the economy conditioned m positive dynamics of investment and consumer demand, preserving state support areas of social and economic
development. Industrial production is forecasted to grow in the same time
frame totally 3.2 times higher. The mining industry is leading this production growth.
Implementation of major investment projects aimed at creating new jobs,
diversify the economy, defining the growth of entrepreneurial activity, the
development of social and infrastructure will create the foundation for the
region to attract migrant workers, to keep out-migration of working age
population and, accordingly, reduce the rate of decline in population of
the region.
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6.1.1
Investment Potential 2014–2025
Industry:
Food industry, CJSC Rusky Losos, fishfarming plant
110 m€
Norilsk Nickel/KolaMMC Cobalt plant, Monchegorsk
50 m€
Monchegorsk industrial park
150 m€
Total:
310 m€
Mining industry:
JSC Kovdorsky GOK, ore dressing
100 m€
JSC Kovdorsky GOK, technology upgrade
OAO Pana/Barrick, Fedorova Tundra platinum project
90 m€
1.000 m€
JSC Akron/JSC SZFK, Oleniy ruchej, Kirovsk, processing mill
700 m€
Norilsk Nickel, Yugo Vostochnaya Gremyakha titanium project
600 m€
Norilsk Nickel, Vuruchuaivench copper-nickel project
600 m€
Norilsk Nickel, Sopcheozerskoje chromium project
300 m€
OOO Apatit Vostostshny project
500 m€
Arcmineral Service Mining Company, Afrikanda titanium project
Total:
200 m€
4.090 m€
Oil and gas:
CJSC Sintez Petroleum, oil refinery
800 m€
Hydro power:
JSC Leningradskaya GAES/JSC Rusgidro,
tidal power plant Dolgoya-Vostochnaya bay
TGK-1, modernization Kola power plants
Total:
160 m€
850 m€
1.010 m€
Wind power:
Windlife-Energy BV, Murmansk-Tumanny
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320 m€
Nuclear power:
Rosatom, KAES-2, Polarnye Zori, two reactors
6.000 m€
Tourism:
Winter sport centers, Kirovsk/Polarnye Zori
20 m€
Azimut/Hotel Arktika, Murmansk, reconstruction
50 m€
Russian Lapland, Revda
30 m€
Total:
100 m€
Transport infrastructure:
Murmansk transport hub, Lavna
3.200 m€
Railway and bus stations, Murmansk
75 m€
Cruise terminal, Murmansk port
125 m€
KIP/MMPP Pechenga seaport project
1.500 m€
Total:
4.900 m€
Public investments:
JSC Murmansk Heat Power plant
1.200 m€
Coal heat plants, Nikel, Motshegorsk, Zapoljarnyi
Heat power transit pipleine, Apatity-Kirovsk
Total:
75 m€
1.335 m€
All total:
6.1.2
60 m€
18.865 m€
Development of the Region 2015–2020
Murmansk Region has been during the last 30 years an area of giant
investment plans and visions. Mikhail Gorbachev himself gave speed in
October 1987 to all visions in his speech in the city of Murmansk. After
that Soviet Union has collapsed and having suffered from negative migration for a couple of decades, the Murmansk region has gradually managed to balance its economy and the wellbeing of the area has improved.
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The Kola Peninsula is strongly dependent on two factors: the non-ferrous
metallurgy industry of the region and Military Forces of Russian Federation. Metallurgy industry due to the global process of raw materials, has
fared well over recent years. The salary levels of people living in the region have clearly increased in industry as well as with civil servants and
soldiers. Also military section has had revival in the Region after hard
times in the first decade after the collapse of the Soviet Union. Salaries
have been raised according to federal policies. A raise in living standards
can clearly be noticed in Lapland due to the dramatic increase in the border crossings by Russians at the Raja-Jooseppi and Salla border crossing points. The figures for the border crossings for 2013 were expected
to have increased by over fifty percent from approximately two hundred
thousand to somewhere between 300,000–450,000. On the national level, the number of border crossings is still minimal, but the increase from
the just over one hundred thousand visitors in the early 2000s has been
enormous.
Visa freedom belongs to the great expectations in the European High
North. Negotiations between the EU and Russian Federation have proceeded so well that year 2018 has been mentioned as the time when passengers don´t any more need visas in travelling between the Schengen
area and Russian Federation. This would mean explosion in the border
crossings also in the High North and would stimulate cross border business. Continuation of economic crisis in Russia has had effect on the
exchange value of Russian currency, rouble. Serious political crisis in
Ukraine has deepened the decline of rouble and made the situation in
economic cooperation more serious. European union has decided to stop
the visa freedom talks with Russia as one of the sanctions if Russia is
not withdrawing from its political positions in Ukraine. This has brought
much tension in all relations with the EU and Russia. The damage is not
yet definitive, but the real solutions in solving the Ukraine crisis must be
found soon.
Future expectations for the Murmansk region were set very high. Above
all, the development boost provided by the commencement of the exploitation of the huge Shtokman gas field is still patiently awaited, despite
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news reports rumouring that the project will be postponed until sometime
in the future. Norwegian Statoil has left the project, and according to Norwegian sources, Gazprom has been evaluating abandoning the entire
Shtokman project. Total, the third shareholder of the SDAG Company
(Shtokman Development AG) established for the construction of the gas
field, has announced its willingness to continue with the project. But not
any time frame. In fact Shtokmanovskoje may be alive, but it has been
probably postponed to the time after 2030 or even further. Shale gas has
changed the situation in the USA and the same process is spreading all
over the world changing the energy market.
The uncertainty regarding the fate of the Shtokman gas field also put
pressures on the Murmansk regional administration. The realisation of
the project is a significant matter for the region, but this is also associated
with the renewal of the entire energy system of the Kola Peninsula to be
based on natural gas. Now, even these plans were about to be totally
reworked. Governor of the Murmansk Oblast, Marina Kovtun expressed
her concerns on the matter to Vladimir Putin in October 2012. President
Putin informed that the project has not been abandoned or shelved, but
its realisation would commence before 2017. Obviously the Murmansk
Regional Government is not relying any more on the Shtokman project.
In the annual mining conference in Kirovsk the first deputy governor Aleksey Tyukavin said that Shtokman has been a fairytale and further on the
Region wants to develop existing mining and metallurgical industry. Also
the new strategy of the Region states the same.
Anyhow Barents Sea is not totally forgotten. Gazprom finally opened the
Prirazlomnye oil field to production. Rosneft has many agreements for
cooperation in the Barents Sea. First with Statoil about the exploration of
the new border area between the two nations. Rosneft has also agreed
cooperation with the Italian ENI for working with oil and gas in the Barents
Sea. A little bit further out in the Kara Sea, Rosneft is commencing cooperation with the American Exxon Mobil.
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The other mega project of the Murmansk region is the Murmansk Transport Hub, which entails the renewal and expansion of the city harbour,
and has already postponed its planned timetable. Now the Transport Hub
is one of the key projects in the Region. Construction work is expected
to start in practice this year, but we are still waiting for a final decision regarding the schedules. Last July, the Governor of the Murmansk Oblast,
Marina Kovtun, signed a letter of intent for the commencement of planning procedures for the western coast of the Kola Fjord belonging to the
traffic centre. The project includes the construction of a new coal terminal
and new railway line of the Murmashi – Pechenga line. According to the
news in the beginning of March 2014 Companies Stroygazkonsulting and
Story-Trest have been approved to take part in a tender on the construction railway line along the western shore of the Kola Bay. Typically in
Russia today both companies belong to oligarks. Stroygazkonsulting is
controlled by billionaire Ziyad Manasir, the Story-Trest company is part of
the business of Gennady Timchenko who was one of the main constructors of Sochi Olympics. He belongs to the friends of president Putin and
has also Finnish citizenship.
Norilsk Nickel is the biggest taxpayer of the Kola Peninsula as well as
being a key player. The company planned to renew the Monchegorsk
smelting plant and start to refine nickel a little further. Today the plans
are different. Norilsk Nickel is partner in a smelter project in Indonesia together with Indonesian Nusantara Smelting Corporation. Now this project
is prioritized. The production of cobalt has also increased. The company
concentrates its mining operations to the town of Zapolyarny located in
the Pechengsky District. As far as concerns Pechenga, Norilsk Nickel
also has plans to modify its smelting of nickel to refine metals recovered
from the new Gremyakha Mine, e.g. titanium. The company is also involved in the planned chrome mine project to the west of Monchegorsk
together with Severnaya Khromovaya Kompaniya.
The mining industry of Kola Peninsula has been making some substantial
investments into the Murmansk region. The high prices for raw materials
on the global markets did provide a welcome boost for these projects.
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Companies expanding their operations include at least the Olenegorsk
Mining and Concentration Works (OAO Olkon) owned by Severstal, and
the fertiliser company SZFK owned by Akron that saw the inauguration
of its million ton-producing Oleniy Ruchey apatite mine on 24 July 2012.
Furthermore, the Apatite Group, which has recently resolved its longstanding contract dispute with Akron, is renewing step by step its technologies and planning to open a new mine in the Kirovsky District. The first
international player is also entering the Kola Peninsula. The Canadian
owned Barrick Gold Company has long time been planning the opening
of its palladium/platinum mine together with Russian Investor company
OAO Pana at Fedorova Tundra located in the centre of the region. Likewise, the Kovdorslyuda mineral mine in the town of Kovdor has been
expanding its production.
Finnish enterprises have also expressed an interest in the mining industry
and its required technologies during last years. The Finnish companies
already involved in the projects include at least Metso, Pöyry, Ahma Insinöörit Oy, Firotec Oy and Paakkola Conveyors Oy. The Kovdor mining
and processing facility owned by chemical industry giant Eurochem was
interested in the Sokli Project of Yara Suomi Oy, but left the project in
February 2013 for technological reasons. The company needs new raw
materials for its operations during the course of this decade. Its plans are
to reprocess the mine waste and potentially open a new mine at Vuorijärvi
close to Alakurtti and the border of Finland which is a long perspective
project.
The other industrial investments of the Murmansk region are experiencing difficulties. The long-awaited and prepared construction project for
the new aluminium smelting plant for Kandalaksha appears to have been
completely forgotten. The plans of oligarch Viktor Vekselberg’s company
SUAL also interested UG RUSAL, with which the company later merged.
The construction project was decisively postponed, as the company did
not reach agreement for a sufficiently long-term electricity distribution
contract. This project might rise again some day, because a major part
of the raw materials used in aluminium process exist in Kola Peninsula.
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Tourism has long been the focus of development schemes of the Murmansk Regional Administration. Despite efforts, breakthroughs have yet
to be achieved. The region has a lack of sufficiently high standard accommodation facilities, and even though the Khibiny Mountains have the
possibilities for the construction of a high standard ski resort, the projects
have not really taken off.
Political crisis in Ukraine has already had impacts in the Murmansk Region. The military forces have probably been in readiness during the
escalation days of the crisis. Big military training operations have been
happening in Kola Peninsula and according both to the media and other
sources in Murmansk military forces are returning to Alakurtti base, about
70 km from the border between Russia and Finland. This time the base
grows bigger than before. Helicopters are returning and also perhaps
some parts of air force. A marine brigade from Northern fleet is also moving to Alakurtti.
It still appears likely that some investments for the Murmansk region will
occur during the current decade, but the peak is sometimes after 2020.
Nevertheless, the mining industry can be clear exception to this assumption.
6.1.2.1 Investments expected to start first
All projects related to mining industry technology upgrade have very good
possibilities to be implemented within next years. Building of the ski centers in Khibiny mountains could be profitable after the Sochi building project is finished. Low value of ruble may boost domestic winter tourism.
The city of Murmansk is celebrating 100 years in the beginning of October 2016. Already now city has started several building and construction
projects. Also some other projects like new railway and bus stations are
going to be implemented. Murmansk Transport Hub has priority in the
region and it is expected to start.
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Probably also the need for energy in the Murmansk Region is speeding up plans to build new reactors to Polarnye Zori Nuclear power plant.
Murmansk Region was planning a long time to get needed energy from
Shtokmanovskoje, but change in implementation order is now necessary.
Rosneft is also main partner in Finnish nuclear power project by Fennovoima near the city of Oulu. Two similar projects not far away from each
other could give synergy also to Russian side project in Kola Peninsula
and make the implementation of KAES-2 project possible. This demands
that the Parliament of Finland gives a new permit to Fennovoima project
or accepts the changes in the existing permit.
Projects:
Rosatom, KAES-2, Polarnye Zori, two reactors
JSC Kovdorsky GOK, ore dressing
6.000 m€
100 m€
JSC Kovdorsky GOK, technology upgrade
90 m€
Winter sport centers, Kirovsk/Polarnye Zori
20 m€
Azimut/Hotel Arktika, Murmansk, reconstruction
50 m€
Russian Lapland, Revda
30 m€
Railway and bus stations, Murmansk
75 m€
Murmansk transport hub, Lavna
3.200 m€
Total:
9.565 m€
6.1.2.2 Investments waiting for better times
Big industrial and energy projects demand better economic circumstances than today is available in Murmansk Region. Also public sector energy
projects need better economy for Murmansk Region Government. This
kind of projects have mainly been financed with the financing from international funds like EBRD and NEFCO. If political relations are freezing,
these projects don´t proceed.
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Projects:
Food industry, CJSC Rusky Losos, fishfarming plant
110 m€
Norilsk Nickel/KolaMMC Cobalt plant, Monchegorsk
50 m€
Monchegorsk industrial park
150 m€
OAO Pana/Barrick, Fedorova Tundra platinum project
1.000m€
JSC Akron/JSC SZFK, Oleniy ruchej, Kirovsk, processing mill
700 m€
Norilsk Nickel, Yugo Vostochnaya Gremyakha titanium project
600 m€
Norilsk Nickel, Vuruchuaivench copper-nickel project
600 m€
Norilsk Nickel, Sopcheozerskoje chromium project
300 m€
OOO Apatit Vostostshny project
500 m€
Arcmineral Service Mining Company, Afrikanda titanium project
200 m€
CJSC Sintez Petroleum, oil refinery
800 m€
JSC Leningradskaya GAES/JSC Rusgidro,
tidal power plant Dolgoya-Vostochnaya
160 m€
TGK-1, modernization Kola power plants
850 m€
Windlife-Energy BV, Murmansk-Tumanny
320 m€
Total:
6.340 m€
6.1.2.3 Key investment project of Murmansk Region
Murmansk Transport Hub
Most important planned project for the future development of Murmansk
Region is Murmansk Transport Hub. The implementation of this 3.2 bln€
investment speeds up all other projects in the region and improves the
economical activity. It confirms in practice that the visions of the Regional
Government have been right. Transport Hub strengthens the position of
Murmansk as a significant logistic center of Northern Sea Route.
The Murmansk Transport Hub project includes a deep-water logistics Hub
– centre for handling of container and petroleum cargo, oil and mineral
fertilizer transfer integrated into the North – South International Transport
Corridor. According to the plan the implementation should happen before
2018, but the start has delayed.
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Most of construction and reconstruction of new port infrastructure facilities on the coast of the Kola Bay, including construction of the coal, oil
and petroleum products transfer terminals on the western coast opposite
existing port. On eastern coast the plan consists of construction of a container terminal, reconstruction of a coal terminal, construction of storage
and distribution areas connected to the container terminal.
Also new 28 km long railway is going to be built from existing Pechenga railway, from Vykhodnoy to Lavna including new bridge over
Tuloma river and construction of 10 railway stations and yards, reconstruction of track arrangement of 4 stations. Also roads must be
built from Murmansk to the new port.
The ownership of Murmansk Commercial Sea Port-company was one of
the reason to delay the start. EuroChem (Evrohim) -company which owns
Kovdorski GOK- mining company bought the majority of the Sea Port
in 2012. In December 2013 Russian oil giant Rosneft announced that
it wanted to become a major shareholder in Murmansk Transport Hub
with 75% of the stakes. This was absolutely a good sign, because after
Gazprom seems to be withdrawing from Murmansk, Rosneft is ready to
take place as the motor of investments and development in the region.
Projects that speed up with Murmansk Transport Hub:
OAO Pana/Barrick, Fedorova Tundra platinum project
1.000 m€
JSC Akron/JSC SZFK, Oleniy ruchej, Kirovsk, processing mill
700 m€
Norilsk Nickel, Yugo Vostochnaya Gremyakha titanium project
600 m€
Norilsk Nickel, Vuruchuaivench copper-nickel project
600 m€
Norilsk Nickel, Sopcheozerskoje chromium project
300 m€
OOO Apatit Vostostshny project
500 m€
Arcmineral Service Mining Company, Afrikanda titanium project
200 m€
Cruise terminal, Murmansk port
125 m€
Total:
4.025 m€
with Murmansk Transport Hub
7.225 m€
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6.2
NORTHWEST RUSSIA ARKHANGELSK REGION
Airport
Harbour
A R C T I C
Railway
S E A
Lakselv
Anden
es
Narvik
Svolv
Leknes aer
Bodø
Mo I R
Gälliva
re
ana
n o
r w
ay
ysund
Arvidsj
aur
Mosjøe
n
F I N L AND
r u s s i a
s w e d e n
Brønnø
Pajala
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Arkhangelsk Region belongs to the northern part of North West Russia.
It has 3000 km coast by the White Sea, Barents Sea and Kara Sea. The
region includes the Nenets autonomous district, the Novaya Zemlya and
the Franz Josef Archipelago. Total area of the region is 410.700 square
kilometers.
Population in Arkhangelsk region is 1 230 000 which is 0.8% of Russia’s
population. The population density is 2,2 per sq. km. and 74 % of the
inhabitants live in cities and 26% live in rural areas. Ethnic groups are: Russian 94.2%, Ukrainians 2.tä1%, Nenets 0.6% and other nationalities
3.1%.
City of Arkhangelsk is the capital of the region and it has 356.000 inhabitants. Other bigger cities are Severodvinsk in the neighborhood of
Arkhangelsk with 192.000 inhabitants, Kotlas with 60.500 inhabitants,
Novodvinsk with 40.600 inhabitants, Koryazhma with 39.600 inhabitants
and Onega with 21.300 inhabitants.
Industrial production
Industry is the key factor of Arkhangelsk Region economy. Main branches of business are forest industry and machine building industry. The
Arkhangelsk region ranks eighth in Russia and second in the North-western Federal District in the volume of forest resources. Total square of
commercial forests is 22 mln. hectares, timber reserves – 2,8 billions m3.
Timber reserves of the Arkhangelsk region are recognized to be of high
quality. Total forest reserves include 82% of coniferous forests and 18%
- deciduous forests. Available cutting area is 48% of the total forest area.
The region produces 30% of Russia’s exported sawn material and 25%
of paper and cellulose exports. Forestry, wood processing and pulp &
paper are very important sectors of the economy-contributing over 40%
to the regional production volume. Woodcutting in 2002 totaled 8 million
cub meters (80 million cub feet), but 23 million cub meters can potentially
be cut. According to regional administration, there are over 200 wood cutting enterprises in the region and some 30 wood processing companies.
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According to expert estimates, regional enterprises produce 1.5–2 million cub meters of sawn timber, plywood, glued blanks, fireproof plywood
slabs and other wood products, approximately half of volume being exported. There are also furniture manufactures. One of the most successful is Aquatechnika.
An impediment to increased production is poor road infrastructure, especially bad access to forests. Modernization and productivity enhancement on existing sawmills are the priorities for development of logging
and wood processing sectors. Active processing and trading companies
include Arkhangelsk Plywood Plant, Dvinosplav JSC, Primorsky Sawmill,
Onega Sawmills, Solombala Sawing and Woodworking Combine, Timber
Mill N3 and Timbex.
The three pulp & paper manufacturing facilities in the region are Kotlas
(part of St. Petersburg-based Ilim Group), Arkhangelsk (part of Titan holding), and Solombala mills. In average, their output totals 728,000 tons of
pulp, 320,000 tons of paper and 674,000 tons of cardboard. The mills
have their own logging capabilities and cut a significant share of needed
timber themselves. For example, Kotlas pulp & paper mill has 16 logging
companies, which are using Timberjack logging machines. Products include sulfate pulp, cardboard, coniferous sulfite bleached cellulose, offset
printing and bag paper, Kraftliner, foliage sulfate bleached cellulose etc.
Arkhangelsk pulp & paper mill is part of Titan Holding with nearly 25,000
employees. Titan produces 35% of Russia’s cardboard. Its logging companies cut two million cub meters of timber every year (25% of logging in
the region).
A strong machine-building industry has developed in the Arkhangelsk region and it is specialized in shipbuilding. Shipbuilding is an important part
of the regional economics because of high competence and unique production assets. The largest enterprises of this sector are «Sevmash» and
«Zvezdochka» which create near 90 % of proceeds of the sector.
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These companies are constructing and repairing nuclear and diesel submarines, oil and gas platforms, ship vessels and others. The unique Russian center for construction, repairing and utilization of nuclear power
submarines was founded here. The enterprises have facilities and technologies for construction of oil and gas platforms and necessary unique
competence for implementation of the project of construction of floating
nuclear thermal power station.
There is an infrastructure for preparation of specialists for machine-building sector. Today in Arkhangelsk region there are two higher educational
establishments which train such specialists: Arkhangelsk State Technical
University and Sevmashvtuz which is a branch of the St.-Petersburg Marine Technical University.
Sevmash has build an offshore ice-resistant platform for “Prirazlomnaya”
oil field in the Pechora Sea. The total cost of the project was $1 billion.
Sevmash is also a contractor of several oil companies to manufacture
sea shelf platforms for oil and gas development in Sakhalin. Zvezdoychka has a contract from the Finnish shipbuilding company, Azipod, to
supply screw propellers for civil ships. The company is also Norway’s
contractor to build bearing structures for tidal electrical power stations.
Zvezdyochka has experience in designing and manufacturing of floating
bridge piers, pontoons, pontoon bridges of different length, ships, fishing
trawlers, jack-up drilling rigs for exploration and exploitation of oil and gas
offshore wells in the Russian Arctic. However, attraction of investment is
difficult due to the fact that the enterprise is still government property and
is engaged in Russian military programs.
Transport
Advantageous geographical position of the Arkhangelsk region gives important role in the transport system of the North-western Federal District
and Russia. The region has a considerable transit potential. Arkhangelsk
is the most optimal transport junction for cargo transfer between Europe
and Asia. Nowadays two transport corridors go through Arkhangelsk:
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Northern Sea Route and International Euro-Asian transport Corridor:
North-South.
Sea transport plays the major role in international trade of Arkhangelsk
Region, as well as in supplying some settlements along the seashore and
on the islands. The main ports are located in Arkhangelsk—Narjan-Mar,
Onega and Mezen’. The seaport in Arkhangelsk has 124 berths and is
able to handle all types of cargo including timber, cellulose, containers,
oil, metal, etc. Vessels with 9.2 meters depth can use the port. The port
has also container terminal, the only in Russia’s European North (Russia’s regions west of the Urals), where over 5.000 TEUs can be stored
simultaneously. The owner of the Arkhangelsk Commercial Sea Port is
Norilsk Nickel.
In case implementation of the project of construction of the railroad Syktyvkar-Perm (Belkomur) the Arkhangelsk region will get a shortest access
to the regions of the Urals and the railroad Transsib which will open supplementary advantages for cargo transit.
The main railway goes from Arkhangelsk through Vologda and Yaroslavl
to Moscow. There is a rail link between Arkhangelsk and Murmansk. No
fast and short rail, river or road link exists between Arkhangelsk Region
with eastern parts of Russia. East-West railway connection is problematic
in Arkhangelsk Region. The Belkomur project is improving the situation,
but the investment is very expensive. Only railroad connection from east
to west runs in the south of the region, from Komi Republic through Kotlas
in Arkhangelsk Region to Pudozh in Karelia Republic.
Talagi airport in the city of Arkhangelsk is the main civil airport. Also international flights to Tromsö, Norway are two times a week. There were also
flights to Rovaniemi, Finland and Luleå Sweden, but they were ended
about 10 years ago. There are regular flights to Moscow, St. Petersburg
and some other Russian cities, carried out by Nordavia, local air company
owned today by Norilsk Nickel. Other companies flying to Arkhangelsk
are Aeroflot, Rossija and Utair. There are also small airports in many regional cities as well as several military airports. The flight time from St.
184
Petersburg to Arkhangelsk is 80 minutes. The flight time from Arkhangelsk to Moscow is slightly longer.
(Source: Arkhangelsk Region Administration)
Future Development of Arkhangelsk Region
The Government of the Arkhangelsk region has assumed some measures to increase investment attraction of the region.
1. The regional law «On state policy of the Arkhangelsk region in the
sphere of the investment activity» has been adopted. This law will
establish uniform standards and rules for organization of investment
activity in the region. It is the basis of investment legislation of the
region.
2. The regional law «On tax benefits for investment activity on the territory of the Arkhangelsk region» has been adopted. According to this
law, new companies registered on the territory of the Arkhangelsk region in the form of legal entities are given corporate income tax benefits for that part of the tax, which goes to the regional budget, and
property tax benefits in case of implementation of large investment
projects. At present amendments simplifying the procedure of providing facilities to big investors are worked out and will be introduced in
regional Assembly of deputies.
3. The Procedure of support of investment projects, implementing and
planning for implementation on the territory of Arkhangelsk region
has been adopted. It establishes uniform universal procedure of investors’ and applicants’ support with cooperation with executive authority of the Arkhangelsk region within implementation or preparation for implementation of investment projects.
4. Committee of investment policy under the Governor of Arkhangelsk
region has been created and functions today. It is created for solving
any problems of investors with which they meet during implementation of investment projects.
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5. The investment portal of the Arkhangelsk region (www.dvinainvest.
ru) has been created in Internet and it functions today. It is created to
provide investors with on-line access to information about investment
proposals and production areas which are perspective for implementation of projects.
The goal of the Regional Government: to construct a new deep-sea harbour to the North of Arkhangelsk with a direct and independent access to
the World Ocean, to meet the demands of Russian and foreign shippers
for extra harbour facilities. Location – north-eastern part of the Dry Sea
bay in the Dvina gulf. The construction of a new deep-sea harbour in the
port will make it possible to provide:
• independent departure of large vessels to any foreign harbour of the
world;
• intensification of the economic activity in the northeastern region of
the European part of Russia;
• solutions for many challenges related to the oil and gas developments on the Arctic shelf, operation of production units, development
of coastal shipping;
• establishment of industrial facilities for the processing of hydrocarbons in the North of Russia;
• significant improvement of the investment attraction of the Arkhangelsk Region;
• development of industrial, innovation, technical, living, entertaining,
cultural and service facilities near the harbour;
• 9000 new work places in the Arkhangelsk Region;
• extra taxes to the federal budget – about 400 mln. rub., to the regional budget – about 800 mln. rub., to the local budget – about 280
mln. rub.
The project has been considered and approved by the Federal Agency
«Rosmorrechflot» in the Ministry of Transport of the Russian Federation.
There is a positive resolution from the FSU «Directorate of State Contracting Authority for Marine Transport Development Programs». The Ministry
of Regional Development of the Russian Federation has included the pro-
186
ject in the Conception of long-term social and economic development of
the Russian Federation: «to provide, among other things, operation of the
Northern Sea Route and involve huge mineral and natural resources of
the northern Russian areas».
The development of the deep-sea harbour in the Arkhangelsk sea port is
in close connection with the implementation of the Belkomur project (the
White Sea–Komi Republic–the Urals), i.e. construction of the railroad Solikamsk– Gajny–Syktyvkar–Arkhangelsk (1155 km long). The Belkomur
project is included in the «Strategy of the Railroad Development of Russia up to 2030», which is approved by the RF Government on June 17,
2008 and will be implemented on the basis of private and public partnership. The project goal is:
• to get rid of infrastructural dead ends, to provide access to the mineral resources which are not in use at present,
• to make a new short transit route connecting the Urals and Siberia
with the northern Russian harbours.
• Total length of the railroad – 1252 km
On August 7, 2009 Belkomur project was approved by the Investment
Commission for selection of projects claiming to get budgetary allocations from the Investment Fund of the Russian Federation. The Belkomur
project and the Deep-sea harbour «Severny» in the Arkhangelsk sea port
are included in the «Integrated program for industrial and infrastructural
development of the Komi Republic, the Perm Krai and the Arkhangelsk
Region». The Memorandum about joint implementation of the program
was signed in June 2007 by the Heads of participating regions. However,
the project is especially relevant for shippers only if it is implemented
simultaneously with the construction of the new deep-sea harbour in the
Arkhangelsk sea port, thus providing the best transshipment and logistic
scheme (the shortest railroad, cheap and efficient modern harbour giving
convenient access to the Northern Atlantic) aimed at the development of
relations between the Russian Federation and its business partners in
the European Union, Northern and Southern America, Central and Southeastern Asia.
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Basic advantages of the Belkomur railroad construction are:
• A shorter route for cargo delivery from the Urals to the Arkhangelsk
and Murmansk harbours
• A solution for the problem of dead-end railroad junctions on the territories of three regions of the Russian Federation
• Involvement of unreachable natural resources in the economic life,
development of uncultivated areas.
Arkhangelsk region has a developed machine-building complex with a
great potential which creates attracting conditions for investments. The
main engine of regional machine-building is shipbuilding enterprises. JSC
“PO “Sevmash” is the largest shipbuilding complex in Russia. At present
it is the only shipyard in Russia where nuclear submarines are built. The
shipyard was founded in 1939 and it has 25 000 employees. The yard
performs the following works:
• construction of submarines and surface ships and vessels with nuclear power installations
• construction of vessels, pontoons, barges, and other floating facilities
of different classes and functions
• construction of oil and gas offshore ice-resistant jack-up platforms
• design, manufacturing and testing of the equipment for production,
transportation and processing of oil and gas
JSC “SC “Zvezdochka” is a leading Russian shipyard specialized in repairing and re-equipping of submarines, surface vessels and ships of any
class and function. In recent years the yard has mastered construction of
vessels, fishing trawlers, jack-up drilling rigs for oil and gas production on
the Russian Arctic shelf. The yard was founded in 1954 and it has 14 000
employees. The yard performs the following works:
• repairing and upgrading of nuclear submarines and surface vessels
• manufacturing of marine equipment and facilities for oil and gas production civil shipbuilding
• manufacturing of industrial and technological products for mechanical engineering, metallurgical, oil and gas, and other industries
• utilization of nuclear submarines and surface ships
• manufacturing of propellers
• faceting of diamonds, manufacturing of jewelry.
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Arkhangelsk region is one of the leading timber-industrial regions in Russia. Total area of forest land is 29.1 mln. hectares, including commercial
forests – 21.6 mln. hectares (74%). Arkhangelsk region ranks second in
the North-western Federal District of the Russian Federation in terms of
timber reserves. Total reserves of forest forming species are 2.5 bln. cubic meters, including old-growth and over-mature forests – 1.7 bln. cubic
meters (65,3 %), coniferous forest – 2.1 bln. cubic meters.
Timber reserves available for commercial use and processing are 1.8 bln.
cubic meters. Coniferous trees in reserves – 83.0 % (of which fir-trees
are 70 %), soft-wooded broadleaved – 17%. Annual allowable calculated
cutting area in the region is 22 mln. cubic meters, including coniferous
forest – 16.7 mln. cubic meters. Maximum possible volume of harvesting,
with tending of forest, is 5.3 mln. cubic meters.
Vast timber reserves make possible to develop manufacturing of fiberboards and furniture, as well as construction of wooden houses, manufacturing of different things of wood and wood wastes, including alternative fuels.
Key regional timber-industrial enterprises are:
Pulp-and-Paper Mills:
Filial of JSC “Ilim Group” in Koryazhma (Kotlas PPM)
JSC “Arkhangelsk PPM”
JSC “Solombala PPM”
Large Wood-working Factories:
JSC “Timber Plant No25”
JSC “Onega Wood-working Plant”
JSC “Solombala Wood-working Plant”
JSC “Timber Plant No 3”
JSC “Timber Plant No2”
JSC “Arkhangelsk Wood-working Plant No 3”
JSC “Arkhangelsk Plywood Manufacturing Plant”
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The priority Investment Projects for Development of Forests in the
Arkhangelsk Region are:
• Upgrade of manufacturing facilities for production of cardboard and
white paper (Filial of JSC “Ilim Group” in Koryazhma). Volume of investments: 9900 mln. rubles.
• Renovation of manufacturing facilities for production of cardboard at
JSC “Arkhangelsk PPM”. Volume of investments: 5451.9 mln. rubles.
• Upgrade of wood-working facilities owned by “Solombalales Holding” and establishment of objects of forest infrastructure. Volume of
investments: 2718 mln. rubles.
• Construction a wood-working plant in Arkhangelsk with production
capacity 95 thousand cubic meters of laminated veneer lumber and
planed elements for carcass house-building per year (“KharviSeverLes” ltd.) Volume of investments: 1235.4 mln. rubles.
• Establishment of a wood-working complex on the basis of “Ustjyansky Forestry Enterprise”. Volume of investments: 800 mln. rubles.
• Establishment of manufacture of oriented strand boards (OSB). Volume of investments: 7158,4 mln. rubles.
Regional construction complex is presented by construction, installation
and specialized organizations, which are capable to provide whole range
of construction and repair works, companies producing construction materials, engineering and survey organizations. The potential of the construction complex in the Arkhangelsk region is rather high. Construction
companies have qualified personnel, high-capacity machines and equipment and can construct facilities of any complexity level: from multi-storey
blocks of flats and industrial buildings to complex out-of-class bridges
and hydro technical structures. Engineering organizations employ highly
qualified specialists who use advanced technologies for design and upto-date materials for construction.
There are factories in the region producing construction structures and
materials. They manufacture whole range of steel and reinforced concrete structures for industrial and civil construction, supplying sufficient
amount of them for all the regional construction projects. Their production
capacities allow increasing the volume of manufactured construction materials more than three times.
190
The region has considerable mineral and raw material resources which
make it possible to develop long-term strategic planning within this industrial sector. The development of the mineral resources complex of the
Arkhangelsk region is firstly connected with such minerals as diamonds,
bauxites, various building materials and underground waters. The largest
diamond-field area in Europe is explored in the Arkhangelsk region (18%
of reserves of Russian Federation). This is implication for development of
faceting manufacture. On the territory of the region there are possibilities
for developing of basalt extraction (reserves – near 4,6 bln. tones), and
also manufacture of crushed chippings and paving tiles. On the territory
of the region there are deposits of limestones, which is convenient for organization of cement plant with production capacity of more than 1,8 mln.
tons. There are also clay deposits which give opportunity for creation of
brick manufacture.
Arkhangelsk region has a potential for develop oil-and-gas fields on the
shelf of the Arctic seas, including the greatest gas distillate deposit Shtokman. The Arkhangelsk region can offer the following. Local companies
can be involved as suppliers of materials, goods and services. Distribution centre and integrated logistic base for the project development can
be located on the territory of the region. Background: well-developed infrastructure of the Arkhangelskseaport, vacant production sites, reserves
in energy supplying capacity and upcoming gasification, proximity to the
large industrial centers of the country. Shipyards of Severodvinsk with
their potential can construct offshore and subsea facilities: drilling rigs,
supplier vessels on the “turn-key” basis, specialized oil and gas equipment. In cooperation with foreign partners these plants can manufacture
templates, manifolds, subsea completion equipment, etc. Mobilization of
local construction companies for participation in projects can be used.
Local qualified personnel and potential of educational establishments can
be used to train oil and gas specialists for the project. At present regional
companies are already involved in servicing huge oil and gas projects in
the Arctic and Siberia, and Arkhangelsk transportation hub is the largest
transshipment base for such supplies.
(Source: Arkhangelsk Region Government, Economic and Investment potential)
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6.2.1
Investment Potential 2014–2025
Industry:
JSC Onezshki PPM, sawmill expansion
65 m€
JSC Arkhangelsk PPM, Novodvinsk,, pipeline from Niuksenitsa
10 m€
Sawmill 25, Arkhangelsk, wood pellet production
10 m€
JSC Arkhangelsk Plywood company, new shelling line
10 m€
LLC Titan Development company, business center
10 m€
JSC New Timbertechnologies, wood working plant
250 m€
JSC Velskaya poultry factory, food indusrty poultry plant
200 m€
OOO Veliskiy Kombikormoviy Zavod, Veliskiy, food industry
60 m€
ZAO Peterkom, aspen, spruce, pine, board plant, Karpogory
150 m€
OOO Fakel, brick factory, Velisky region
15 m€
Shipyard Krasnaya Kuzhetsa, Arkhangelsk
20 m€
JSC North timber processing association, sawmill, Arkhangelsk
20 m€
JSC Ustyanski wood processing plant, sawmill, Bereznik
30 m€
JSC HarviSeverLes, woodworking mill, Arkhangelsk
25 m€
Solombales, production technology upgrade
70 m€
Arkhangelsk PPM, Novodvinsk, reconstruction of cardboard mill
125 m€
Ilim Group, modernization of paper and cardboard production
300 m€
Furniture manufacturing plant, Savinski
35 m€
Total:
1.405 m€
Mining industry:
JSC Severalmaz, Lomonosov diamond field
250 m€
Hydro power:
JSC Malaya Mesen TEC/Rusgidro, tidal power plant Mezenskaya
192
200 m€
Bio energy:
Ltd Forest Bioteks, autonomoys energy systems
15 m€
Ltd Forest Bioteks, Konosha pellet plant
10 m€
Arhbioenergy, wood pellet boilers
5 m€
JSC Biotech, Velski pellet plant
10 m€
JSC Ustyanskya, pellet plant Ustyanski
45 m€
JSC Arkhangelsk Plywood company, wood waste heat power
15 m€
JSC Club Wildlife, Letne-Zolotskie- project
30 m€
JSC Bionet, fuel pellets project
20 m€
JSC Arkhangelsk regional energy company, Leshukonskoe biofuel
20 m€
Municipal boiler houses for biofuel
110 m€
Total:
280 m€
Tourism:
JSC Onega, Ski biathlon and sport center, Onezhki district
10 m€
Transport infrastructure:
Belkomur- railway Solikamsk-Syktyvkar –Arkhangelsk
Road Kyanda-Letnyyaya Zolotitza
3.000 m€
100 m€
Onega sea port
3.200 m€
Arkhangelsk deep Sea port Severny
650 m€
JSC RZD, Arkahngelsk railway terminal and logistic center
300 m€
Total:
7250 m€
Public investments:
Energy pipeline Niuksenitsa-Arkhangelsk
Energy pipeline Niuksenitsa-Arkhangelsk, connection Kuloy
Severodvnsk heat station -2
15 m€
5 m€
10 m€
Arkhangelsk heat stations
10 m€
Total:
40 m€
All total:
9.435 m€
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6.2.2
Development of the Region 2015–2020
Located on the eastern edge of the European High North area, the
Arkhangelsk region almost completely differs from the Murmansk region,
even though it too is located along the Northeast Passage, or the Northern Sea Route. Arkhangelsk is an old Russian town and all activities in
the Region have much longer history than Murmansk Region which is
mostly product of Soviet Union period. Arkhangelsk has an abundance of
forestry industry and the oil industry is located in its northern part, in the
Nenets Autonomous Okrug. Severodvinsk, close to the city of Arkhangelsk, has shipbuilding yards and a mechanical engineering industry. Geographically, the region is closer to Moscow than Murmansk.
The city of Arkhangelsk competes with Murmansk for which city will succeed in becoming the operative centre of Russia’s Arctic and northern
regions. Both are potential main port locations for the Northern Sea Route
(Northeast Passage), although Murmansk has a year-round deep harbour and Arkhangelsk has not. However, in regard to the Northern Sea
Route, the Russian Government decided that its administrative centres
are located in Moscow and Arkhangelsk, so the competition continues.
NSR Center in Arkhangelsk was officially opened in June 2013.
The Arkhangelsk region has a number of mega-class investment plans.
The investments associated with the renewal of the forestry industry technology in the region appear to be the most probable to be implemented.
There are also things happening in the mining industry, as the region
has the Alrosa Diamond Mine, which is currently expanding its activities.
Exact time schedule especially for bigger industrial investments is very
hard to say.
However and without a doubt the main project in the region is the socalled Belkomur railway connection which, when completed, will connect the city of Perm in the Ural Mountains with the Komi Republic and
the Arkhangelsk Port. The project has been under construction for quite
some time, but the past few months have seen increased activity. It is an
194
enormous investment that includes the construction of a new track in the
Arkhangelsk region from Karpogory to Vendinga in the Republic of Komi.
This rail track will also assist with development in the forestry industry, as
the region has expansive forest resources.
Designs are also underway for a new deep harbour in Arkhangelsk, which
is planned for construction on the coast of the White Sea in the estuary of
the northern Dvina River. The current port is located along the Dvina River, but shallow channel depths are its constant headache. Furthermore,
the channels have to be continuously dredged due to the flow of the river.
The port is owned by Norilsk Nickel, which according to experts only allows the use of the best piers for its own ships, thereby complicating the
development of the existing port. A deep harbour would enhance the importance of Arkhangelsk along the Northern Sea Route, but icebreakers
still will be needed to enable year-round functioning.
Arkhangelsk also has significant development plans for air traffic.The
main airport for Nordavia that services Aeroflot’s northern routes is the
Talagi Airport in Arkhangelsk. The airline also flies international routes
from Arkhangelsk via Murmansk to Tromsø, and it used to operate services to Rovaniemi and Luleå. The airline is also owned by Norilsk Nickel.
There are intentions to develop Talagi Airport to become a type of northern hub for Russian air traffic, which would somewhat ease the immense
pressure put on the Moscow airports of Sheremetyevo, Domodedovo and
Vnukovo. European Union ENPI Kolarctic funding has also been sought
for the renewal of the airport, but the project has suffered a setback due
to the flyover conflicts between Russia and the EU. Future seems also
here fuzzy due to the political problems between the EU and Russian
federation.
195
6.2.2.1 Investments expected to start first
Forestry and forest industry are the most important factors in the economy
of Arkhangelsk Region. The region has a huge potential in forestry and
forest industry. Production technology and even the mills are old fashioned and need badly investments. Big projects like renovation of pulp
or paper mills are not the first ones because of the large global structural
changes in using paper. So it is expected that small investments to upgrade existing production technology in size of 10–20 millions are probably the first ones to be implemented even in the next couple of years.
Also some other smaller investment could be proceeding, like sport stadiums, etc. If recent fall of the rouble delays the projects remains to be
seen. Belkomur project is also expected to start within the next five years.
Projects:
JSC Arkhangelsk PPM, Novodvinsk, pipeline from Niuksenitsa
10 m€
Sawmill 25, Arkhangelsk, wood pellet production
10 m€
JSC Arkhangelsk Plywood company, new shelling line
10 m€
LLC Titan Development company, business center
10 m€
Shipyard Krasnaya Kuzhetsa, Arkhangelsk
20 m€
JSC North timber processing association, sawmill, Arkhangelsk
20 m€
JSC Ustyanski wood processing plant, sawmill, Bereznik
30 m€
JSC HarviSeverLes, woodworking mill, Arkhangelsk
25 m€
JSC Onega, Ski biathlon and sport center, Onezhki district
10 m€
Belkomur- railway Solikamsk-Syktyvkar –Arkhangelsk
3.000 m€
Total:
3.145 m€
6.2.2.2 Investments waiting for better times
In today’s economical situation which is stirred by political crisis between
Russia and the western world, bigger industrial investments seem to be
unlikely in Arkhangelsk Region. First possible point of time for bigger project implementation is after 2020. The Start of the Belkomur could expedite some projects like Arkhangelsk deep sea port.
196
Continuation of difficult time is not good even for smaller public energy projects. The list of bio energy projects in the region is magnificent
compared with all other regions in the High North. This kind of projects
have mainly been financed with the financing from international funds like
EBRD and NEFCO. If political relations are freezing, these projects won’t
proceed.
Projects:
Ilim Group, modernization of paper and cardboard production
300 m€
JSC New Timbertechnologies, wood working plant
250 m€
JSC Velskaya poultry factory, food industry poultry plant
200 m€
ZAO Peterkom, aspen, spruce, pine, board plant, Karpogory
150 m€
Arkhangelsk PPM, Novodvinsk, reconstruction of cardboard mill
125 m€
Solombales, production technology upgrade
70 m€
JSC Onezshki PPM, sawmill expansion
65 m€
OOO Veliskiy Kombikormoviy Zavod, Veliskiy, food industry
60 m€
OOO Fakel, brick factory, Velisky region
15 m€
Furniture manufacturing plant, Savinski
35 m€
JSC Severalmaz, Lomonosov diamond field
250 m€
JSC Malaya Mesen TEC/Rusgidro, tidal power plant Mezenskaya
200 m€
Ltd Forest Bioteks, autonomous energy systems
15 m€
Ltd Forest Bioteks, Konosha pellet plant
10 m€
Arhbioenergy, wood pellet boilers
5 m€
JSC Biotech, Velski pellet plant
10 m€
JSC Ustyanskya, pellet plant Ustyanski
45 m€
JSC Arkhangelsk Plywood company, wood waste heat power
15 m€
JSC Club Wildlife, Letne-Zolotskie- project
30 m€
JSC Bionet, fuel pellets project
20 m€
JSC Arkhangelsk regional energy company, Leshukonskoe biofuel
20 m€
Municipal boiler houses for biofuel
110 m€
Road Kyanda-Letnyyaya Zolotitza
100 m€
Onega sea port
3.200 m€
Arkhangelsk deep Sea port Severny
650 m€
197
JSC RZD, Arkhangelsk railway terminal and logistic center
Energy pipeline Niuksenitsa-Arkhangelsk
Energy pipeline Niuksenitsa-Arkhangelsk, connection Kuloy
300 m€
15 m€
5 m€
Severodvnsk heat station -2
10 m€
Arkhangelsk heat stations
10 m€
Total:
6.290 m€
6.2.2.3 Key investment project of Arkhangelsk Region
Belkomur project
The start of Belkomur railway project is the key to the further development
in the Arkhangelsk Region. The implementation of this 3 bln€ investment
speeds up all other transport infrastructure projects in the region and improves the economical activity.
In the 20th century Russian railways development was based on a latitudinal approach (West-East connection). Because of that now there is
a lack of meridional rail ways that has lead to a shortage of convenient
communications between raw and industrial regions of the country and
existence of dead-end industrial centers. A shortage of communications
has been in the North for a long time. Railway construction in a planned
Belkomur location began together with establishing Northern Coal and
Metallurgy Industry in the middle of the 1930s. In 1944 rail way KotlasVorkuta connected Pechora Coal Basin and Cherepovets metallurgical
works. Railroad construction continued in Polar Russia further but due to
a mass amnesty of the main work force GULAG prisoners it was stopped
in 1953–1954.
The project came to life again in the 1990s. Belkomur had to integrate
economically the Northern regions - Perm and Kirov regions, the Republic of Komi and Komi-Perm Autonomous District.In 1995 a large scale
meridional project was proposed - a railway connecting Arkhangelsk,
Syktyvkar, Kudymkar and Perm with the name Belkomur (White SeaKomi-Urals).
198
Priority is the construction and setting into use the railway KarpogoryVendinga. Next step is reaching full capacity of the railway KarpogoryVendinga. The link will connect idle and unprofitable dead-end lines
Arkhangelsk-Karpogory and Syktyvkar-Vendinga. Thus a shorter way
from the Republic of Komi to Arkhangelsk sea port will be created, as well
as to Kola peninsula and Finland that will make possible to develop interregional and foreign relations of the Republic of Komi and Arkhangelsk
region, minerals and wood resources.
At the moment railway cargo transportation between the Republic of
Komi, Arkhangelsk region and other North-West regions is made by a
circular track through Konosha station. A direct access from Arkhangelsk
to Mikun-Syktyvkar begun to be built after the World War II was not completed, two dead-end lines were built from Arkhangelsk to the South to
Karpogory 222 km and from Mikun to Vendinga 176 km. Previously these
lines worked to transport significant volumes of wood. Now they are idle
and unprofitable because harvesting was decreased.
A railway Karpogory-Vendinga will connect two dead-end stations mentioned above and give a direct way. Transportation distance will be reduced at 160–400 km and transportation costs at 20-65%, also there will
be good possibilities for wood harvesting near the Pinega river. Today
wood transportation from that remote place causes big problems and
made by trucks by forest roads and a rail way combined which is as
much as 3.5–4 times more expensive comparing to a railway transportation, sometimes it leads to losses. Because of that estimated annual cut
is used only at 30–40%.
Second stage is construction and setting into use the rail way Syktyvkar-Perm. Next stage is reaching full capacity of the railway SyktyvkarPerm.The link gives a direct access to the main Transsiberian Rail Way
Moscow-Vladivostok and reduce distance for cargoes from the Urals to
Arkhangelsk, Murmansk and Finnish sea ports.
199
The Southern link is a second stage of the meridian rail way. The new rail
way Syktyvkar-Kudymkar-Perm 580 km should be built which will connect
Syktyvkar and Komi North shortly (800 km distance reduction) with a well
developed railway network of the Urals near Perm. This will make possible to deliver Timan bauxites, chromium ores, Pechora coal, other Polar
Urals minerals to the Urals processed industries.
The implementation start of Belkomur would have positive impact on several projects. First it would put speed on some other transport projects
like Arkhangelsk deep sea port and to Arkhangelsk railroad terminal and
logistic center. Onega sea port- project is estimated to cost more than
Belkomur. Either question is of bigger transport infrastructure plan or it
is over estimated. The implementation of Belkomur would probably not
have positive influence on it. Most likely the project in that size is possible
to be implemented in 2030 or something.
Belkomur is a gateway for Arkhangelsk Region forest industry to large
forests and new raw material areas. So the real start of Belkomur would
make even bigger forest industry investments profitable.
Projects that speed up with Belkomur:
Ilim Group, modernization of paper and cardboard production
300 m€
JSC New Timbertechnologies, wood working plant
250 m€
JSC Velskaya poultry factory, food indusrty poultry plant
200 m€
ZAO Peterkom, aspen, spruce, pine, board plant, Karpogory
150 m€
Arkhangelsk PPM, Novodvinsk, reconstruction of cardboard mill
125 m€
Solombales, production technology upgrade
70 m€
JSC Onezshki PPM, sawmill expansion
65 m€
Arkhangelsk deep Sea port Severny
650 m€
JSC RZD, Arkhangelsk railway terminal and logistic center
300 m€
Total:
2.110 m€
with Belkomur
5.110 m€
200
7.
SUMMARY AND CONCLUSIONS
The global financial crisis has slowed down the investment projects in the
European High North. Many projects are postponed and some are totally
turned down. Energy sector is facing new challenges and changes. The
role of US shale oil and gas is still unclear in global business. Decreasing
industrial production due to financial crisis has decreased the demand
of energy. These two factors have influenced to the Barents Sea. Shtokmanovskoje gas field project seems to be postponed for decades and
also Norwegian investments are not proceeding.
Politics have also started to disturb the business in the High North. Crisis
in Ukraine and Crimea have increased tension between Russian Federation and the EU and most of all with the USA. Sanctions against Russia
in case that the problems are not solved are reflecting directly to the investment plans. At the same time media is telling that military actions and
bases in Arctic Regions are about to increase.
In situation like this the future seems a little bit fuzzy. The investment
projects and the investors expect predictability in business. This predictability has been shortened by both financial and political crises. Old projects are strongly going on but new ones are not starting. The problem is
same everywhere. Norway is leading with the largest amount of investment projects. Still nobody knows when the next big offshore investment
is about to begin.
This book takes slightly a different approach and evaluation to the investment projects than before. Each region holds the named key investment
project, the projects expected to start first and the projects in waiting line.
The evaluation and analysis of these numbers gives a good picture about
the current situation and the expectations for the next 4–5 years.
201
Investments expected to start first:
Arkhangelsk Region
3.145 m€
Murmansk Region
9.565 m€
North of Norway
16.338 m€
Västerbotten
5.060 m€
Norrbotten
14.460 m€
Kainuu Region
621 m€
Oulu Region
9.866 m€
Lapland
2.479 m€
Total:
61.534 m€
Projects in waiting:
Arkhangelsk Region
6.290 m€
Murmansk Region
6.340 m€
North of Norway
29.761 m€
Västerbotten
1.840 m€
Norrbotten
5.620 m€
Kainuu Region
40 m€
Oulu Region
7.416 m€
Lapland
11.760 m€
Total:
69.067 m€
In the evaluation made in 2013 the total amount of investments for the
next five years was 80 bln€. Total amount in group one is a bit over 61
bln€, so the level is almost the same. It should be also noticed that in
2014 the time frame was not necessarily the same five years. It could be
in some cases longer or shorter. Global changes and different crisis have
not so big influence to investments.
Group two, the projects in waiting tells about investment potential in the
region. Numbers are quite equal in Russian regions and in Northern Finland except Kainuu Region. Investment potential for 2020+ period seems
to be almost nothing. Kainuu is of course an exception, the region is quite
202
small. If problems in Talvivaara mine could be solved, more than one billion euro investments can be realistic. But it is only one company in the
region with population more than in Finnmark County in North Norway.
Situation in North Sweden looks interesting. The list of investment plans
is almost exactly the same as last year. Investment boom is very strong
just now and in the upcoming 5–7 years. But when the giant projects are
over, what happens. There are too few new names on the list. It is sure
too early to say that the chain of investments is going to continue much
slimmer than on the 2010s. Situation in 2015 is going to show the real
direction more concrete.
Northern Norway is still number one concerning investment plans. Total
amount of the investments on 2010s is biggest of all regions and the
potential is absolutely greatest. The fate of offshore investments is a little unclear, but maybe this development moderates the huge boom of
investments that has been going on there for many years. Region begins
to resemble Swedish and Finnish neighbors.
Conclusions on the regional development
Arkhangelsk Region has a lot of investment potential. There are good
possibilities that the regional key project Belkomur is started before 2020.
Longer delay could also be viable option. If this giant investment doesn´t
start, development in the region continues on a normal level. Opening
of the Northern Sea Route administration in Arkhangelsk was important
for the region. That only doesn’t make the city the main port of the North
West Russia for NSR. Port of Arkhangelsk is not deep and big enough for
Hub development. Port investments seem to depend on what happens
to Belkomur.
Forest industry in the region is ready even for bigger investment projects.
Some of the mills are producing packaging paper, which has quite good
demand worldwide. Large forests in the region ensures that the forest
industry in Arkhangelsk Region can be competitive.
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Murmansk Region seems to have lost the biggest investment project,
the Shtokman gas field, or it is postponed far into the future. In spite of
this the investment potential of the region is good. Biggest project is the
nuclear power plant project with total value of about 6 billion euro. Investment is huge, but Murmansk Region must have new sources of energy
pretty soon. Metal industry needs huge amount of electric power in smelting processes. Shtokman has been postponed, so nuclear power is the
only option and the reactors in Kolatom plant are all over 30 years old and
the oldest two over 40 years old. Something must be done.
Murmansk Region Government has decided to support strongly the existing industry in the region. Mining investment plans look interesting and
new mining and processing technology gives possibilities to reuse old
tailings. Fedorova Tundra project is very interesting, because there is a
foreign investor as a partner. Next years show if there is still a risk, political or financial for large foreign investments.
Murmansk Transport Hub is the key project in the region. A rapid and
strong implementation could give a boom also to the other projects. The
possibility of Murmansk to develop for international logistic center depends not only on the investments. Port of Murmansk is in the southern
part of the Kola bay. The northern part belongs to Northern Fleet and is
one of the biggest navy bases in the world. This could be an obstacle to
develop Murmansk as one of the logistical centers of the Northern Sea
Route.
North of Norway is developing rapidly. The region is not easy for foreign companies to start business. Companies are quite small in the High
North of Norway and industrial production is concentrated to Nordland,
the southern county of the Northern Norway. Huge offshore projects are
not proceeding with the expected speed. Anyhow the region needs better
infrastructure and these investments seem to be increasing. In the long
run probably all investment plans are going to be realised.
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Mining industry could be interesting branch of business for foreign companies. Kirkens mine needs a lot of suppliers, service and maintenance
which can not be done by North Norwegian companies. This kind of services could be common with the mines in Norrbotten and Lapland.
Västerbotten has a lot investment potential. Projects are not as huge as
in Norway or neighboring Norrbotten. Wind power projects are still big
and the region has promising investment plans in mining. When present
investments projects are concluded the region might face some problems. There has been no new project names on the lists since 2010.
Norrbotten was the region where the present investment boom started.
Big state owned mining company LKAB has been the driving force in the
region over 100 years. Company is leading the way to the 2020. There
are also a long list of other mining companies wanting to invest in Norrbotten. They have anyhow met resistance from Sami community. It is
likely that some of these projects are not going to be implemented.
Wind power projects are huge in Norrbotten. The region has avoided the
problems of neighbour regions by concentrating all projects to one place
in Markbygden near Piteå. Facebook project was a great world wide success for Norrbotten and the project continues.
Regional key project is the Norrbotniabana railway project. Present Government is against it and has not yet given financing. Region has great
expectations regarding parliament election in September 2014. If opposition wins, the new Government could be more positive and give financing.
Kainuu Region financing list is short. Talvivaara mine was a great success and driving force for the region until year 2012. After that the company has fighted to survive. Environmental problems have been huge
and some of them are not yet solved. Development in Talvivaara shows
also the future of the region.
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Oulu Region has prominent investment potential. City of Oulu and the
region is going through big structural changes after Nokia. City has been
growing rapidly and the growth seems to continue. Oulu is the third biggest city in the European High North. Only Murmansk and Arkhangelsk
are bigger, but in contrast to Oulu the amount of inhabitants is decreasing.
Oulu has a lot of trade center investment plans and one of the biggest is
already under construction. Data centers are also coming to Oulu. Microsoft has announced to open one center in Northern Finland and Oulu is
probably the site of this investment.
Problems in ICT sector can be solved and the city is working hard with the
project. Compared with last year the investment potential is Oulu Region
is growing. Key investment project is Fennovoima Oy nuclear power plant
project near Oulu. The start of this 6 billion euro project could boost all
other investments and create a new start for new business.
Lapland has not faced the financial crisis like other regions in Finland.
The mining boom has calmed up but the list of new projects is still long.
Lapland has two new mines and the increased production can be seen in
the mining municipalities in increasing taxes.
International tourism is increasing in Lapland. Total amount of international tourist is over one million and it is growing. Biggest problem seems to
be the flight connections and the future of all airports in Lapland is unclear
because of the new strategies of the Ministry of Transport and Communication. One of the biggest problems in the region is that authorities in
Helsinki don´t see the right role of Lapland as Arctic Region.
Key investment project of the region is Sokli mining project. The start of
this investment project would be a positive sign for especially Eastern
Lapland and also to the whole mining industry in Finland.
206
207
1335
18865
250
0
200
0
280
0
0
0
10
7250
40
9435
Mining Industry
Oil and Gas
Hydro Power
Wind Power
Bio Energy
Nuclear Power
Energy Transfer Networks
Trade
Tourism
Transport Infrastructure
Public Investments
4900
100
0
0
6000
0
320
1010
800
4090
310
1405
Industry
Murmansk
Region
Arkhangelsk
Region
Million €
55474
1780
3975
210
0
1260
0
0
15921
3920
25426
672
2310
North of
Norway
European High North Investment Potential 2014–2025
20430
0
3675
815
120
200
0
0
7020
1500
0
5900
1200
Norr-
botten
6900
0
480
340
0
300
0
0
3705
160
0
1840
75
Väster-
botten
941
0
45
71
0
0
0
0
505
0
0
320
0
Kainuu
Region
17692
1239
1283
364
1235
120
6000
458
5200
335
0
490
968
Oulu
Region
14250
0
3166
1451
0
270
0
220
1253
135
0
6980
775
Lapland
7043
143987
4394
24774
3361
1355
2150
12000
958
33924
7260
26226
20542
References and sources of information
Arkhangelsk Region:
en.dvinainvest.ru
Murmansk Region:
Ministry of Economic Development of Murmansk Region
North of Norway:
Konjukturbarometeret Nord
North of Sweden:
NHO Norrbotten
Invest in Norrbotten
Västerbotten Investment Agency
Kainuu Region:
Invest in Kainuu
Oulu Region:
BusinessOulu
Oulu Chamber of Commerce
Lapland:
Lapland Chamber of Commerce
208
PROMOTING BUSINESS IN THE NEW NORTH
Lapland Chamber of Commerce (est. 1939) mission is to create success
for its member companies and to business in Lapland.
Representing views and opinions of trade and industry the Chamber is
working on better business environment, offering business related services and building networks in order to maintain and enhance business
competitiveness.
International cooperation and networking plays an active role of the
Chamber activities in the European High North not forgetting the worldwide context.
Members of the Chamber include a variety of companies from big industrial companies to SME’s from different industries and branches of business, municipalities and other business related services.
We are open for cooperation and see that each new contact is a chance
of new business opportunities.
Please don’t hesitate to contact us for more information.
Lapland Chamber of Commerce
Tietokatu 3, 94600 Kemi
Maakuntakatu 29-31 B, 96200 Rovaniemi
[email protected]
www.lapland.chamber.fi
209
www.arcticbusinessforum.com
Publisher: Lapland Chamber of Commerce