Can Finland’s forests withstand Chinese-driven growth?

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File photo from 2017 of clear-cut forest in Kainuu, in eastern Finland. (Pasi Peiponen/Yle)
There are currently five major forestry-related projects underway in Finland driven, at least in part, by Chinese investment.

That’s good news to the CEO of a Finnish company involved in one of them. Heikki Nivala is the head of Boreal Bioref, a planned billion-euro biorefinery project in Lapland’s Kemijärvi, in the Arctic. A quarter of the funding for the project, about 250 million euros, will come from Chinese investors.

Nivala, a nationally-recognised champion of the forestry industry, said he doesn’t agree with researchers who’ve issued warnings about Chinese advancements and investments in the country’s forests.

“We have plenty of forest here. The growing stock is young, the forests are growing quickly and need to be thinned,” he said.

“We are just about ready,” he said of the project. “The only things we need now are environmental and building permits, the plant will be built in 30 months,” Nivala explained.

Nivala spearheaded a grass-roots protest movement after paper firm Stora Enso announced it was shutting down a cellulose plant in Kemijärvi in 2007. The facility was closed the following year, but the town’s – and Nivala’s – name continues to be remembered by many in the country, including lawmakers.

The town suffered many job cuts when the factory closed, but because of the prospect of Chinese investments, Boreal Bioref has estimated that its planned facility will bring 1,000 new jobs to the little community. The firm has already inked contracts of intent with the Chinese and the facility’s environmental permit application is expected to be processed this spring.

Researcher does the math

Not everyone is excited about increased activity in the forestry industry. Jakob Donner-Amnell is one of them.

He’s a history and geography studies researcher at the University of Eastern Finland, has studied the forest industry’s past, present and future – and said he is worried about looming growth in the industry.

“If all of the projects proceed to full-scale efforts, forestry usage levels will rise by 15 million cubic metres and pulp production by three million tonnes. That is not my assessment, I’ve only put together the capacity and raw materials figures the companies have announced,” Donner-Amnell said.

Last year, Finland cleared some 77 million cubic metres of forests, but adding the anticipated output of the five upcoming projects that sum would rise to some 95 million cubic metres.

Plans would exceed limits
Last year, Finland cleared some 77 million cubic metres of forests, but adding the anticipated output of the five upcoming projects that sum would rise to some 95 million cubic metres. (Pasi Peiponen/Yle)

“That’s 11 million [cubic metres] more than recommended by Luke (the Natural Resources Institute) as Finland’s highest sustainable felling level,” Donner-Amnell explained, noting that each of the five projects’ environmental impact surveys have been carried out individually. He said the combined environmental impact of the projects has not been considered.

“This is interesting because none of the five projects has been given a final green light yet, the decisions for all of them are expected this or next year,” he said.

Donner-Amnell said the new government will have to decide on the projects, because the impact they will have on the forestry industry will be far-reaching and problematic.

Despite his misgivings about the forestry industry’s plans, he said he is not accusing the Chinese of anything.

“It is our officials – read government and ministers – that are responsible for the entire forestry industry and [they] have the ability to make sure it doesn’t go overboard,” he said.

Donner-Amnell said that if the projects go ahead as planned, the bio-based economy will pose threats to the country’s ecology and economic interests.

An opportunity for China

But according to Nivala, it is funding from China that is making the Boreal Bioref project viable. He said he personally dealt with the Chinese investors and has visited the country several times.

“They are tough negotiations, the Chinese have centuries of experience behind them as deal makers. They need raw materials and the forestry industry here in safe Nordic countries are very interesting to them,” Nivala said.

The Chinese state-owned construction firm China CAMC Engineering is Boreal Bioref’s longest-running partner and is involved as an investor, but other Chinese players are also engaged in the project.

The business effort has also received funding from investors in several European countries, as well as Finland. Due to the fact the planned biorefinery will produce more electricity than it uses, energy companies are also involved in the project.

“The Chinese have done a good deal of preliminary work, they know what their needs are and that it’ll be worth their while to come here,” Nivala said.

China is in the process of carrying out an investment strategy across the Nordic region. For example, investment firm Nordic BCI, which is part of Chinese state-owned Beijing Capital Investment, is setting up a 400 million euro fund for investments in the Nordic tech sector.

China investing billions

It was recently reported that a Finnish firm looking to construct a tunnel linking Tallinn and Helsinki is set to receive some 15 billion euros from a China-linked investment firm helping to advance China’s Belt and Road initiative.

Nivala said that China is looking for access to raw materials, and that processing those goods adds value locally.

“If Europeans pay the most, then we’ll send our products to Europe, but if the Chinese pay more, we’ll sell to them. It’s all about the market economy here,” Nivala said.

The plant in Kivijärvi is one of five major forestry-related projects in the works which are at least partially financed by Chinese investors.

  • Boreal Bioref – planned plant to produce 0.5 million tonnes per year of paper and textile pulp materials in Kemijärvi. Chief investor is Chinese company.
  • Finnpulp – plans to produce 1.2 million tonnes of pulp in Kuopio. Joint owners of project include a Chinese forestry firm, MTK (Central Union of Agricultural Producers and Forest Owners) and private investment firm Grizzly Hill Capital.
  • Kai Cell Fibers – plans to produce 0.6 million tonnes of paper and textile pulp in Kajaani. Chief and most important buyer is large Chinese conglomerate.
  • Metsä Fibre – plans to more than double production to 1.3 million tonnes of pulp in Kemi. Company is major exporter of cellulose, a large portion of which is exported to Asia. Company part-owned by Japanese firm.
  • Stora Enso – plans to convert one of its paper plants in Oulu to produce cardboard and to boost its annual pulp output to 0.85 million tonnes. The firm exports a good deal of cellulose to Asia and also operates a cardboard factory in China. On Monday the firm announced it was cutting up to 400 jobs at its facility in Oulu.
Related stories from around the North:

Finland: Climate change casts doubt on future of Finland’s forest industry, Yle News

Norway: WWF urges Norway to protect its Arctic forests to help fight climate change, The Independent Barents Observer

Sweden: Sweden to support forest industry following historic summer wildfires, Radio Sweden

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