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ARCTIC CORRIDORJorma Pietiläinen
Global Project Plaza 201329.05. – 31.05.2013, Lotte-hotel, Seoul, Korea
• presentation of Finland and Lapland
• Business in Finland
• Arctic Corridor
• Drivers for the Arctic Railway
• Logistics in Kirkenes
• Arctic Railway
AGENDA
FINLAND EU´S NORTHERNMOST COUNTRY
• Total area: 338,000 km2• Neighbouring • countries: Estonia, Sweden, Norway, Russia• Population: 5.4 million• Languages: official languages Finnish (90.67%) Swedish (5.43%),
English important business language.• Currency: euro (€, EUR)• GDP per capita: 35,928 € (2012)• GDP growth: -0.2% (2012)• Unemployment rate: 8.7% (January 2013)• Monthly wages: average 3,040 €
Finland is Member of Arctic Council
FINLAND FACTS
Paper and board, and softwareelectronics, chemicals,metal products,Main industrial products:
BUSINESS IN FINLAND
• Stable society politically and financially
• Creative solutions economy is knowledge-based and strong on innovation
• Gateway to Russia 1300 km border with Russia
• Strong in Logistics, 2012 3rd position in The World Bank´s Logistics Performance Index comparison
• Competent professionals workforce is highly educated
• Advanced infrastructure transport, communication, electricity
WHY FINLAND ?
LAPLANDNORTHERNMOST FINLAND
ARCTIC CORRIDORThe Arctic Corridor is a new cross-border economic area as well as a transport and development corridor. It links the Baltic region with the deep-water ports around the Arctic Ocean, oil and gas fields and the Northern Sea Route.
Arctic Corridor offers businesses and investors an opputunity to get involved with major projects in Arctic EuropaArctic Corridor is an initiative carried out municipalities of Rovaniemi, Sodankylä, Inari and Utsjoki .In Finland local authorities have a monopoly on land use planning.
TOURISM IN THE ARCTIC CORRIDOR
Composite Policy and Mineral Potential RankingFrazer Institute Mining Company Survey 2013
Finland
MINING INDUSTRY IN ARCTIC CORRIDOR
MINING INDUSTRY IN ARCTIC CORRIDOR
Estimated mining on metal ores in near future
Companies having activities in the Arctic Corridor region
An estimated 20–30% of the world’s untapped gas reserves and 5–13% of oil reserves are located in Arctic regions.
Norway side of Barent sea 14 Production Licences 01/2013
Latest development projects:SNÖVIT(snow white) 2001GOLIAT 2009HAVIS 2011SCRUGARD 2012
BARENTS SEA OIL AND GAS
Trafic at NSR, according Rosatom:
Year 2012:vessels: 46freight 1,26 million tons
Year 2013vessels : 71freight 1,36 million tons
NORTHERN SEA ROUTE
• Sea ice extent record low in Arctic last September:
• 3,4 million km2
• the trend is clear
NORTHERN SEA ROUTE
NORTHERN SEA ROUTE
LOGISTICS IN KIRKENES
NEW INVESTMENTS PLANS
1. KILA(TSCHUDI)
2. PULKNESET(GTI, SVI)
3. NORTERMINAL(STOLT-NIELSEN)
1. KILA
3. NORTERMINAL
2. PULKNESET
LOGISTICS IN KIRKENES
KILA- investor Tschudi AS- investment 100 million euros- all needed approvals granted
LOGISTICS IN KIRKENES
PULKNESET- harbor and industrial area- two private investment groups GTI and SVI- contruction start 2014
LOGISTICS IN KIRKENES
NORTERMINAL- investor Norterminal AS- Oil terminal with oil storege capacity of 700 000 cbm and annual capacity 20 million tons- investment 400 million euros- starting 2014
LOGISTICS IN KIRKENES
Railway created the basis for well-being in the U.S.
ARCTIC RAILWAY
The goal of the Arctic Railway is to develop alternative routes from Asia to the Baltic Sea Region for the goods flows of the future and to improve the competitiveness of mining and other industry by creating new, cost-effective transport possibilities.
ARCTIC RAILWAY
Potential cargos for Arctic Railway:
• ore concentrates from the mines in Lapland• iron pellets from Kostamus• paper from Kemi and Oulu• timber from Lapland forests• coal from USA to Raahe• oil products from Barents Sea to south• product transportation in containers to and from Asia
ARCTIC RAILWAY
THE ARCTIC RAILWAY – TWO PHASES OF CONSTRUCTIONThe first phase of the Arctic Railway, Rovaniemi–Sodankylä, is being constructed to meet the needs of the mining and forest industries in central Lapland. Planning for the route will begin in 2013. The goal is for the track to be finished by 2020. The demand for transports in the direction of the Arctic Ocean is expected to grow to fulfil the financial preconditions to begin construction on the second phase, Sodankylä–Kirkenes, by 2030.
ARCTIC RAILWAY
• According to economic prerequisites, the implementation of the first phase of the Arctic railway Rovaniemi–Sodankylä is possible providing that mining industry in Central Lapland will grow according to expectations and railway transport will be a competitive alternative (large and frequent transport volumes).
• With regard to economic feasibility, the required traffic volumes for railway implementation in the first phase are millions of tonnes/year. Transport needs of few potential mining projects together with wood transport can produce sufficient transport volumes in the short run.
• Long-term potential for the implementation of the second phase of the Arctic railway Sodankylä-Kirkenes is based on versatile transport needs of the oil and gas deposits in the Barents area as well as on faster alternative transport route between Europe and Asia as a result of the opening of the Northern Sea Route. At the moment, sufficient potential for the construction of the second phase cannot yet be precisely identified.
• Arguments for the implementation of the Sodankylä–Kirkkoniemi railway will be defined when critical factors regarding the utilization of oil and gas reserves as well as the transport economic feasibility of the Northern Sea Route will be specified.
• Based on freight transport survey, the Arctic Corridor and especially the Northern Sea Route are significant and probably frequently used transport routes in the long run.
• Companies and business life consider the Arctic railway as an important long-term project. The significance of the Arctic railway will probably increase over time.
ARCTIC RAILWAY
Main rail alternative Length of new
railway (km)
Estimated construction cost (million €)
Low cost level Average cost level High cost level
Rovaniemi–Sodankylä (*) 145 365 624 841
Sodankylä–Ivalo (*) 125 315 538 725
Ivalo–Näätämö–Norwegian border
184 464 791 1067
Total, in Finland 454 1 144 1 953 2 633
Finnish border–Neiden–Kirkenes
53 445 445 445
TOTAL 507 1 589 2 398 3 078
(*) from/to Sodankylä mining area
ARCTIC RAILWAY
(*) estimated for bulk cargo, real volumes can be larger (net weight of train 5 600 tons)(**)estimated for bulk cargo, real volumes can be larger (total weight of vehicle 60 tons, load 40 tons)
Estimated break even traffic volume with different cost estimates, Rovaniemi-Kirkenes
Rail section Rovaniemi–Kirkenes Low cost level Average cost level High cost levelCosts:
- investment (excl. interest)
- operation and maintenance (30 v)
1 589 million €
200 million €
2 397 million €
200 million €
3 078 million €
200 million €
Minimum traffic volume for implementation (break-even volume)
3 million tonnes/year4,4 million
tonnes/year5,7 million
tonnes/year
Minimum number of trains for implementation (*) 2-4 trains/day 4-5 trains/day 5–7 trains/day
Minimum number of trucks for implementation (**)
17-19 trucks/hour
(411-413 trucks/day)
25-27 trucks/hour
(603-605 trucks/day)
32-34 trucks/hour
(781-783 trucks/day)
ARCTIC RAILWAY
FINANCE AND IMPLEMENTATION
Implementation of the Arctic railway is suitable by PPP – Public Private Partnership or an Infrastructure Company
• In PPP the State contracts a construction company to build and operate the track over a fixed period
• The construction company is responsible for acquiring market financing for the project
• Reimbursements to the construction company are agreed upon by the State and other beneficiaries (e.g. mining companies and other track users)
• The Infrastructure Company is suitable for constructing and operating international transport connections
• The Infrastructure Company engages committed shareholders to the project and it’s risks
• The shareholders could consist of the State of Finland and e.g. mining companies, logistics companies and other States
• The shareholders participate both in direct financing as well as in acquiring loans• The investment can be partly financed by collecting track charges• The Infrastructure Company would contract construction and operation of the
tracks as in PPP.
ARCTIC RAILWAY
Thank You !
• Mr Jorma Pietiläinen
• tel: +358 40 658 6880
• email: [email protected]
www.arcticcorridor.fi
