VKG seeks investors for €1.2 billion bioproducts plant

Viru Keemia Grupp is still seeking investors for its planned cellulose bioproducts plant, as costs based on European prices could make it difficult to compete globally, ERR reported.

The company had hoped to open the plant in Ida-Virumaa five years after announcing the project in summer 2021. Instead, it is now targeting an investment decision in the first quarter of 2028. If it has not found an investor by then, VKG will assess whether to continue with the project planned for Lüganuse municipality.

VKG chairman Ahti Asmann said the company was looking for a way to structure the project so it could be built at more reasonable cost and remain competitive. After a special spatial plan was established last spring, the company had expected to find investors within a year.

VKG also gave up this year a 10-year agreement with the State Forest Management Centre to buy raw materials. If the company secures an investor by 2028, the plant is expected to begin operating in 2030, four years later than originally planned.

The estimated cost has risen by 50 percent, from €800 million to €1.2 billion. VKG has invested €2 million in the project so far.

The plant would use lower-value wood to produce cellulose, dissolving cellulose and biochemicals for use in the textile, biochemical, paint, food and pharmaceutical industries. As a by-product, it would generate 800 gigawatt-hours of electricity a year, about 10 percent of Estonia’s current annual consumption.