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ARCTIC CORRIDOR

Global Project Plaza 2013 29.05. – 31.05.2013, Lotte-hotel, Seoul, Korea. ARCTIC CORRIDOR. Jorma Pietiläinen. AGENDA. presentation of Finland and Lapland Business in Finland Arctic Corridor Drivers for the Arctic Railway Logistics in Kirkenes Arctic Railway.

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ARCTIC CORRIDOR

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  1. Global Project Plaza 2013 29.05. – 31.05.2013, Lotte-hotel, Seoul, Korea ARCTIC CORRIDOR Jorma Pietiläinen

  2. AGENDA • presentation of Finland and Lapland • Business in Finland • Arctic Corridor • Drivers for the Arctic Railway • Logistics in Kirkenes • Arctic Railway

  3. FINLAND EU´snorthernmost country

  4. Total area: 338,000 km2 • Neighbouring • countries:  Estonia, Sweden, Norway, Russia • Population:  5.4 million • Languages: official languages Finnish (90.67%) Swedish (5.43%), Englishimportant 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 ArcticCouncil FINLAND FACTS

  5. BUSINESS IN FINLAND Main industrial products: Paper and board, metal products, electronics, chemicals, and software

  6. WHY FINLAND ? • Stablesocietypolitically and financially • Creativesolutionseconomy is knowledge-based and strong on innovation • Gateway to Russia1300 km borderwithRussia • Strong in Logistics, 2012 3rd position in The World Bank´s Logistics Performance Index comparison • Competentprofessionalsworkforce is highlyeducated • Advancedinfrastructuretransport, communication, electricity

  7. LAPLANDnorthernmost Finland

  8. ARCTIC CORRIDOR The 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 Europa Arctic Corridor is an initiative carried out municipalities of Rovaniemi, Sodankylä, Inari and Utsjoki . In Finland local authorities have a monopoly on land use planning.

  9. TOURISM IN THE ARCTIC CORRIDOR

  10. MINING INDUSTRY IN ARCTIC CORRIDOR Composite Policy and Mineral Potential Ranking Frazer Institute Mining Company Survey 2013 Finland

  11. MINING INDUSTRY IN ARCTIC CORRIDOR Estimated mining on metal ores in near future Companies having activities in the Arctic Corridor region

  12. BARENTS SEA OIL AND GAS • 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) 2001 • GOLIAT 2009 • HAVIS 2011 • SCRUGARD 2012

  13. NORTHERN SEA ROUTE Trafic at NSR, according Rosatom: Year 2012: vessels: 46 freight 1,26 million tons Year 2013 vessels : 71 freight 1,36 million tons

  14. NORTHERN SEA ROUTE • Sea ice extent record low in Arctic last September: • 3,4 million km2 • the trend is clear

  15. NORTHERN SEA ROUTE

  16. LOGISTICS IN KIRKENES

  17. LOGISTICS IN KIRKENES NEW INVESTMENTS PLANS1. KILA(Tschudi)2. pulkneset(GTI, svi)3. norterminal(stolt-nielsen) 3. NORTERMINAL 2. PULKNESET 1. KILA

  18. LOGISTICS IN KIRKENES • KILA • investor Tschudi AS • investment 100 million euros • all needed approvals granted

  19. LOGISTICS IN KIRKENES • PULKNESET • harbor and industrial area • two private investment groups • GTI and SVI • contruction start 2014

  20. 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

  21. ARCTIC RAILWAY Railway created the basis for well-being in the U.S.

  22. 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.

  23. 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

  24. ARCTIC RAILWAY THE ARCTIC RAILWAY – TWO PHASES OF CONSTRUCTION The 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.

  25. 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.

  26. ARCTIC RAILWAY

  27. ARCTIC RAILWAY Estimated break even traffic volume with different cost estimates, Rovaniemi-Kirkenes (*) 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)

  28. ARCTIC RAILWAY Finance and implementation Implementation of the Arctic railway is suitable by PPP – Public Private Partnershipor 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.

  29. www.arcticcorridor.fi • Mr Jorma Pietiläinen • tel: +358 40 658 6880 • email: jorma.pietilainen@arcticcorridor.fi Thank You !

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