The Swedish-Finnish railway bridge over Torne River in Haparanda/Tornio. The Swedish part is blue and the Finnish part is grey. Photo: Thomas Johansson Abstract North Finland and North Sweden are sparsely populated areas with rich natural resources, forests, nature as tourist industry and especially exploitable deposits. There are also plenty of activities supporting that industry in the area. Long transports pose a challenge.

A driving force behind this study is the demand for raw materials on the world market and the rise in market prices which led the mining industry to invest in research in the region. This is combined with the need to regard national infrastructure development also in a European and international perspective.

This study is concentrated on iron ore transports in Pajala-Kolari area because the mines, with a size comparable with the Swedish iron ore mine in Malmberget, cannot be opened without an efficient chain of logistics. The transports from and to the planned mines will also mean considerable changes to the transport patterns in the North. The mining activities will create up to 1800 new jobs in Sweden and Finland and the investments in the necessary infrastructure will add the job opportunities during the construction period.

The cost benefits of the different alternatives of the whole chain of transport from mine to customer as well as the models of implementation suitable for major infrastructure construction projects, were evaluated and compared. In addition the socio-economical consequences of the mining operations and costs for the construction of infrastructure and transports were assessed. The result is thus based on several technical and economical sub-surveys made during this study as background studies.

A number of possible combinations of railway, harbour and fairway solutions for the iron ore transports are studied. The conclusion is that Kemi harbour is needed in the first stage to enable mining operations. Necessary needs of infrastructure improvements must be decided this year. Further conditions for starting up mining activities should be considered in the ongoing planning processes in Sweden and Finland.

According to socio-economic calculations the effects of mining activities with construction of relating roads, railways and fairways are significant.

The first 3 million tonnes of iron ore/ year can be transported from Pajala mine to Kolari by trucks and on to Kemi by train during the year 2012. To ensure the cost-efficiency of the mine transport for larger volumes, up to 10 million tonnes/year, further infrastructure investments have to be made. They include a track to the Pajala mine area and upgrade of the track from Kolari to Kemi at least for 25 tonne axle load, 12 tonne metre load and 750 metre long trains including electrification and noise and vibration protection. They also include investments in the harbour and the fairway in and to Kemi. The total cost sum, used in the calculations for these investments, is 528 million euro which includes the rail connection Kolari-Kemi with 235 million euro.

The big challenge is how the infrastructure required by mining activities is to be financed. Three different solution principles are sketched in the report.

This study comprises also a survey of the transports between Finland and Sweden. Infrastructure of common interest is identified and a number of conclusions are drawn. A Swedish outlook on the Baltic States is also sketched.

The most important conclusions for the study as a whole are summarised:

Conclusions regarding transport corridors in the North in an EU-perspective General questions • The Bothnian Corridor is a joint Finnish –Swedish framework skirting the Gulf of Bothnia and connecting the Nordic Triangle with the Northern Axis and should be given priority as part of the TEN-T network.

• The Bothnian corridor crosses the Finnish-Swedish border between Haparanda and Tornio. Improved capacity for this corridor means a need for improved ability also for the border crossing infrastructure.

I Maritime questions • A general finding is that the sea traffic between Sweden and Finland is served in an adequate way by the harbours concerned.

• The on-going icebreaking cooperation between Finland and Sweden can be further improved.

• There may be a potential to coordinate the Finnish and Swedish fairway charges in order to promote increased sea traffic efficiency.

• A joint ambition for Finland and Sweden for the ferry connection between Umeå and Vaasa is that it should develop into a viable business concern as a long-term component of the infrastructure (E12).

• The on-going planning for the Horsten fairway should be followed through.

Railway questions • Upgrade the bearing capacity of the existing railway bridge over Torne River to 25 t axle load and 12 t/m.

• Improve the efficiency of the goods terminals in Tornio and Haparanda in view of expected future demands.

• The Värta rail line should be kept until other transport alternatives are available.

Road questions • Secure a uniform standard of E8/E4 regarding traffic safety and an even traffic flow.

Public transport questions • A joint coach station for Haparanda and Tornio will improve public coach service across the border.

Conclusions concerning the planned mines in Pajala and Kolari General questions • The iron ore deposits represent huge economic values and indicate major positive socio-economic development for a region burdened of a shrinking economy for decades. Instead of a possible continued development in the same vein, fulfilled mine plans means new job opportunities and an increasing population and growing local economy with possibilities to use existing social investments.

• The first 3 million tonnes per/year can be transported in 2012 via road and the existing railway between Kolari and Kemi and via an upgraded Kemi Harbour.

• The transports of phosphates from the planned mine in Sokli is not expected to have any influence on the choice of rail/harbour alternative for the iron ore transport.

• Iron ore needs to be transported from the Swedish part of the planned new mining field to Kolari. The most efficient and environmental-friendly solution for this is by railway. The infrastructure around the mining field is a matter for the mining company but concerns the rail and road administrations in both countries. Close cooperation between all parties is necessary.

• A land use reserve east of Tornio is proposed in order to retain future possibilities to re-route the railway and the road E8.

II Maritime questions • In any eventuality, Kemi Harbour is needed in the fist phase to enable the mining operations. The economic analysis conducted in connection to this study indicates that in the second phase, up to 10 million tonne/year, all port alternatives Kemi, Kalix and Narvik alone or combined are possible and reasonable. However, according to the analysis, the Kemi harbour having the highest cost benefit ratio, appears to be a better alternative from a socio-economic perspective.

• Transport routes using the harbours in Kokkola, Raahe, Oulu, Luleå or Skibotn mean considerably higher transport infrastructure investments and/or transport costs than the routes included in this study. The need for a harbour complementing Kemi in Kalix or in Narvik is dependent on the development of the planned mines and the development of the harbour in Kemi including the channel dredging to the harbour. This will mean added total investments in infrastructure of about 300 (Kalix) or 700 (Narvik) million euro.

• Ice-breaking for the increased ore transport can be carried through without additional, new icebreakers when using smaller, ice classed bulk vessels during the winter season.

Railway questions • It will be possible at the beginning of 2015 that a further upgrade of the Kemi-Kolari railway is carried out.

• The planning processes for new infrastructure are time-consuming. In order to enable meeting future demands, pre-studies are proposed for possible rail connections for iron ore shipments from Kolari/Pajala to Kalix or Narvik.

Road questions • Make the necessary road investments around the mining area.

Conclusions especially regarding financing • The start-up time of the new mines is critical and motivates public support. However a viable business concern will create pay back possibilities. That motivates the use of risk-sharing models between the company and the states concerning financing of the needed infrastructure improvements. This study shows three different joint financing models.

III Content

1. Introduction ...... 3 1.1 The mission ...... 3 1.2 How the tasks were carried out ...... 3 1.3 Models for financing in Finland and Sweden ...... 4 2. The EU-perspective on transport corridors in Finland and Northern Sweden...... 6 2.1 General ...... 6 2.2 Trans-European transport network (TEN-T)...... 6 2.3 The Barents Euro-Arctic Region...... 7 2.4 The Northern Dimension...... 8 2.5 A Baltic Sea Strategy for the Northern Dimension...... 8 2.6 The Northern Axis...... 9 2.7 The N.E.W. Corridor...... 10 2.8 On-going and planned activities connected to the Bothnian Corridor ...... 11 2.8.1 Finland...... 12 2.8.2 Sweden ...... 13 2.9 Discussion ...... 15 3. National and regional economy...... 16 3.1 Gross domestic products ...... 16 3.2 International trade ...... 16 3.3 Bilateral trade ...... 18 3.4 Population and employment...... 20 3.5 Industries in the region...... 22 3.5.1 Minerals...... 22 3.5.2 Wood ...... 23 3.6 Discussion ...... 23 4. Transport and journeys...... 24 4.1 Infrastructure and flow of goods in the North...... 24 4.2 Regional transport – Goods...... 25 4.3 Transport modes...... 26 4.3.1 Maritime...... 27 4.3.2 Rail ...... 31 4.3.3 Roads...... 32 4.4 Discussion ...... 34 5. Issues for an interactive transport system for goods and persons ...... 35 5.1 Maritime...... 35 5.1.1 Icebreaking ...... 35 5.1.2 Maritime charges...... 36 5.1.3 The Umeå-Vaasa link – the Quark region...... 37 5.2 Rail ...... 38 5.2.1 Differences between the Finnish and the Swedish railway infrastructures...... 38 5.2.2 Track charges ...... 39 5.2.3 The Värta rail line (Värtabanan) ...... 40 5.3 Road ...... 40 5.4 The construction and maintenance industries in the Nordic countries...... 41 5.5 Haparanda –Tornio...... 42 5.5.1 The terminal issue ...... 43 5.5.2 Track gauge switching system ...... 43 5.5.3 Common coach station for Haparanda-Tornio...... 44

1 5.5.4 E4/E8...... 45 5.6 Discussion ...... 45 6. New mining operations will change the Finnish-Swedish transport patterns and make new demands on the common infrastructure and society ...... 47 6.1 Mining operations ...... 47 6.1.1 Pajala – Kolari...... 48 6.1.2 Sokli ...... 48 6.1.3 Other activities ...... 49 6.2 Demands on the infrastructure ...... 49 6.2.1 Railways ...... 50 6.2.2 Ports and sea transports ...... 53 6.2.3 Road Infrastructure measures connected to mining in the Pajala and Kolari region ...... 56 6.2.4 Land use ...... 57 6.2.5 Environment ...... 58 6.3 The regional effect of infrastructure investments required by mining projects ...... 58 6.4 Cost-efficient and benefit-cost calculations ...... 59 6.5 Discussion about different infrastructure financing alternatives for new mines in Pajala/Kolari...... 62 7. Conclusions ...... 64 7.1 Background and general demands...... 64 7.2 How to read and understand the conclusions ...... 65 7.3 The Nordic Triangle, the Motorways of the Sea, and the Bothnian corridor are joint Finnish-Swedish interests...... 65 7.3.1 Demands...... 65 7.3.2 Conclusions regarding transport corridors in the North in an EU-perspective ...... 65 7.4 The planned mines in Pajala and Kolari...... 67 7.4.1 Requirements...... 67 7.4.2 Conclusions and proposed measures...... 67 7.5 Conclusions especially regarding financing...... 70 References ...... 72 Annex ...... 74

2 1. Introduction

1.1 The mission Commissioned by their Governments the Finnish and Swedish rail, road and maritime administrations shall describe the cross-border infrastructure between Sweden and Finland in order to point out measures to enable for efficient transportation of goods and persons today and in the future.

These tasks were remitted to the Swedish administrations in late October 2008 and to the corresponding administrations in Finland and shall be presented by May 1 2009. The responsibility to co-ordinate the work within and between the countries was given to the rail administrations.

The Swedish and Finnish tasks are formulated slightly differently. When they are combined it is obvious that the emphasis is on new, planned mining operations in northern Finland and Sweden and the joint land border. However the maritime connections between the two countries must also be considered. The Swedish government has also asked for an overview of the connections between Sweden and the Baltic States.

1.2 How the tasks were carried out With input from the concerned administrations persons were appointed to lead and carry out the work. Steering and working groups were established. (Annex 1.1).

An early decision was to aim at a joint report. The reason is obvious: a joint infrastructure needs joint standpoints on a joint basis. As a consequence it was decided to write the report in English.

In order to discuss and clarify the main thrust of the work on the Swedish side a work-shop was carried out in Luleå on January 14. The participants invited were county administrations, the Geological Survey of Sweden, municipalities, harbours and Chambers of Commerce from Stockholm to the very north of Sweden. The participants in this work-shop were mostly from the northernmost part of Sweden.

A heavy axle loads seminar was held on January 21 in Helsinki. The seminar was organized by Ratahallintokeskus (RHK)1. The main theme of the seminar was North American experiences on heavy axle loads. Tampere University of Technology has carried out a pre-study for RHK on prerequisites and effects of heavy train loads that ore mining operations require. The seminar presented the effects of the different axle- and metric loads upon wagon capacity, bridges, embankment stability and culverts, as well as the technical specifications of the wagons and track.

On February 4 a seminar was arranged in Umeå by the Kvarken council addressing the connections between Norway, Sweden and Finland with emphasis on the importance of the ferry connection between Vasa and Umeå.

On February 11-12 a high-level Finnish-Swedish seminar was arranged by this project in Haparanda/Tornio. The participants represented the governments, regional authorities, industries, municipalities, harbours and the transport authorities. There were121 participants and 22 participants in a “post-congress tour” to the Pajala/Kolari area. The lectures and the discussions in the seminar had obvious focus on goods transport questions related to the planned mines in Pajala/ Kolari on both sides of the border between Finland and Sweden.

1 Ratahallintokeskus (RHK) = Finnish Rail Administration.

3 On March 20, a report on the project status was given by the project sponsors and the project leader as part of a meeting between the Swedish Ministry of Enterprise, Energy and Communications and the Finnish Ministry of Transport and Communications and Ministry of Employment and the Economy.

The mining company in question, Northland Resources Inc., is working with permit and licensing and other preparations for starting its planned mining in the Kolari and Pajala areas. This is described in Chapter 6 of this report. As a consequence there are a lot of other planning activities going on in the concerned transport administrations and municipalities.

The work with this report has therefore been carried out in consultation with the different actors in these planning processes in order to support and use a joint context even though the different actors have different responsibilities and interests. The County Administrative Board in Norrbotten County and the Geological Survey of Sweden has also been consulted.

1.3 Models for financing in Finland and Sweden An obvious area of joint and differing interests for the states and the industry is how to finance and divide the costs for the exploration of a new mining field.

The responsibilities for the Finnish and Swedish states concerning the infrastructure for road, rail and seaways are clearly defined.

In Sweden, investments in the state-owned road and railways are normally paid direct via the state budget. The total amount for road and rail administrations is decided by the government year by year. The yearly plans and priorities are guided by the national transport policy and by a national long term planning which is up-dated every 4-6 years.

In both countries, investments in the state owned infrastructure are evaluated with the support of cost- benefit analyses. Normally the effects for the transports weigh heaviest. However there are situations when the socio-economic effects are extensive and have a big impact on the final priorities.

There are also situations when municipalities, regions or industries want to make a contribution to an extension of the infrastructure because it adds value not only to the public interest but also to the private interest.

Finland has a growing mining industry where these two factors are relevant. The Finnish government is regarding the mining industry as very important for the economy of the whole country and especially for the rural and high-unemployment areas.

The reasons are diversification of the economic structure, employment in the constructing phase, increase in economic activity in the economy in the concerned region and in the country and improvement of technology in exploration, mining and construction of mining machinery and equipment.

For these reasons the Finnish government in September 2008 made a principal decision to support the mining industry on following conditions:

• the project shall be of such magnitude and long term duration that its impacts in terms of national economy, regional economy and employment are significant, • financing shall be based on the projects positive socio-economic and financial cost-benefit ratio, • certain direct budget financing and possibilities for financial support and • contribution of several levels and forms of education and training of personnel required for the mines.

4 The planning of the traffic infrastructure for the mining projects will be performed in co-operation with the mining companies. State financing is granted on a discretionary and case-by-case basis. For this purpose a wide-ranging cost-benefit report will be compiled on the larger mining projects.

A post-financing model will be applied for the construction of the traffic infrastructure, where the Finnish state reimburses the mining companies investments within an agreed period, usually after 5-10 years, with the stipulation that mining activities are still ongoing. Reimbursement principles are agreed separately, but the State will not necessarily reimburse all of the projects expenses. An example where this is put into practise is the railway connection to the new mine in Talvivaara.

A separate report will be compiled on the Kolari and Sokli (north of Salla) mines, which takes into consideration Northern Finland’s other industrial policy requirements.

Sweden has no explicit corresponding policy from the government. However, the Swedish government does not so far support any kind of PPP were the financing is private. This is motivated by the fact that state loans always are cheaper. The government instead supports co-financing from private parties and municipalities and user charges on the rail network or bridge charges on the road network. The government also supports projects on a case-by-case-basis by contributing to guarantees for parts of the projects.

The transport infrastructure administrations in Sweden are also together studying the possibilities of co-financing measures in the state-owned infrastructure all over the country. One reason (out of many) can be that the project is expected to have a positive influence on regional or local development. Another is that coordination with other planned activities makes it necessary to implement a planned investment earlier.

Co-financing for an investment by the state can be done in different ways:

• Contributions, direct or in increments from a municipality, region or industry • Investment in a construction commissioned by a municipality, region or industry • Contribution from the State to an investment by a municipality, region or industry • Contribution from the EU • User charges

The extent of co-financing is proposed to correspond to the benefits of the measures.

5 2. The EU-perspective on transport corridors in Finland and Northern Sweden

2.1 General Finland and Sweden joined the European Community in 1995. This meant for both countries a new context to use the possibilities and handle the threats of the future. Questions concerning for example economic growth, environment, transports and infrastructure now had to be regarded in a wider perspective than before.

The joint infrastructure for Finland and Northern Sweden is part not only of the comprehensive multimodal transport network for the European Union but also part of a network that comprises Northern Norway and North-Western Russia.

2.2 Trans-European transport network (TEN-T) Transport infrastructure is fundamental for the mobility of persons and goods and for the territorial cohesion of the European Union.

Most of these transport infrastructures have been developed under national policy premises. In order establish a single, multimodal network that integrates land, sea and air transport networks throughout the Community, the European policymakers decided to establish the Trans-European Transport Network, allowing goods and people to circulate quickly and easily between Member States and assuring international connections.

Establishing an efficient Trans- European Transport Network (TEN-T) is a key element in the relaunched Lisbon Strategy, the strategy created to achieve more competitiveness and employment in Europe.

The Trans-European Transport Network comprises transport infrastructure, traffic management systems and positioning and navigation systems. Figure 2.1 Trans-European Transport Network and prioritised projects.

The transport infrastructure comprises road, rail, inland waterway networks, Motorways of the Sea, seaports and inland waterway ports, airports and other interconnection points between modal networks.

6 The present TEN-T programme includes 30 priority projects. The projects that concern Sweden and Finland are two of the “transport axis” namely “12. Nordic Triangle railway/road axis” and “21.Motorways of the sea”.

The Commission has published a Green Paper, in order to initiate a broad review process of the Trans- European Transport Network policy (TEN-T). It considers future political and economic challenges such as meeting climate change objectives, further economic growth, economic and social cohesion as well as the strengthening of Europe's international role. Based on 15 years´ experience of the TEN-T policy and in the light of the new challenges, the Commission sets objectives and proposes options for the future TEN-T development. It seeks the opinion of a broad range of stakeholders on its proposals before deciding about legislative proposals and other relevant action to be taken. The Commission foresees, as a major legislative proposal to follow from the Green Paper process, a revision of the TEN-T Guidelines.

2.3 The Barents Euro-Arctic Region The Barents Euro-Arctic Region (Figure 2.2) is Europe’s largest region for interregional cooperation and includes the northernmost parts of Sweden, Norway, Finland and North-Western Russia. The landscape is unique and the environment vulnerable. The wealth and diversity of natural resources, e.g., biotopes, forests, fish, minerals, diamonds, oil and gas poses great opportunities and challenges.

Figure 2.2 Barents Euro-Arctic Region and its subregions.

Formal cooperation was begun in 1993, managed by “Barents Euro-Arctic Council” with delegates from the concerned governments and “Barents Regional Committee” with representatives from the county and regional administrations. Transport has been and is an essential part of the cooperation.

The Barents Region is peripheral and geographically fragmented. The region’s population and economic activities are located in few clusters, which are far apart and poorly connected with each other. The general situation for industries and businesses is that the markets are very far away, distances long and transport costs high.

The identification of a comprehensive transport network (Figure 2.3) in order to facilitate the cross- border communications and indicate the most important transport connections to the world outside the region was done early in the cooperation.

7

The Barents Region was introduced into the EU transport co-operation as a Transport Area in 1997.

The main aim for Barents EuroArtic Transportation Area (BEATA) co-operation is to create an efficient transport system in the Barents Region that integrates the different modes of transport.

The co-operation includes border crossing points, ideas of customs co-operation, maintenance and reconstruction as well as new projects to improve the infrastructure. Today most of the activities take place in the joint programme “Sustainable Transports in the Barents Region” (STBR).

Figure 2.3 Main transport network in Barents Region, schematic.

This work to improve the transport facilities has turned out to be complicated and time consuming but at a same time necessary. However, the importance of this transport network is increasing, for example with regard to new mines in the region in Finland, Norway and Sweden, oil- and gas exploration north of Norway and north of the Kola peninsula, and because of increasing opportunities to use the seaway between Barents Sea and the Bering Strait.

2.4 The Northern Dimension The Northern Dimension is an initiative from the European Union regarding the cross-border and external policies covering Nordic countries, Baltic States and Russia. The Northern Dimension as an important topic for EU policy was first recognised in 1997 and has continuously been developed after that.

The Northern Dimension addresses the specific challenges and opportunities Figure 2.4 This night satellite picture reflects concentrations arising in those regions and aims to of human and industrial activities. strengthen dialogue and cooperation between the EU and its Member States and the northern countries associated with the EU. It comprises all regions of the northern area from the Baltic Sea to the Barents Sea and the Arctic, including Iceland, Norway and Russia, and all kinds of political territories.

2.5 A Baltic Sea Strategy for the Northern Dimension In 2006, the European Parliament passed a resolution on a Baltic Sea Region strategy for the Northern Dimension. At the European Summit in December 2007 the European Council invited the Commission to present an EU strategy for the Baltic Sea Region by no later than June 2009.

8

The Strategy will aim at four main objectives for the Baltic Sea Region:

1. Support environmental improvement. 2. Support balanced economic development. 3. Make the region more accessible and attractive. 4. Make the region a safer and more secure place.

Among a number of different measures Figure 2.5 The Finnish-Swedish zone with concentrations of identified in the resolution, two communities and industries stretches uninterrupted along the concerned the transport sector. entire coast of the Gulf of Bothnia.

“16. Recognises the increase in maritime traffic, mainly due to the strong economic growth of the Russian Federation; regards maritime safety as one of the most pressing concerns of the region; proposes the gradual expansion of the joint Vessel Traffic Management and Information Systems (VTMIS) to cover the whole of the Baltic Sea instead of just the Gulf of Finland; underlines the need for a common commitment to rapid implementation of the Baltic Sea classification by the IMO as a PSSA, including a ban on single hull oil transport” and

“17. Suggests that the Trans-European Network (TEN) Nordic Triangle be enlarged to cover the whole region and inclusion of the road and railway routes of the Barents Corridor and the Bothnian Corridor within the TEN system; calls for the realisation of the Rail Baltica project; envisages a high-speed train connection linking the whole region”.

2.6 The Northern Axis The Northern Axis is one of the five Trans-European transport axes identified by the “High Level Group” in 20052 and presented in the report “Network for Peace and Development”. The axis is the main trade and transport connection between Russia and the EU countries.

The Northern Axis consists of the following road and rail corridors, which are directly linked to the TEN-T networks:

1. Narvik-Haparanda/Tornio-St. Petersburg 2. Helsinki-St. Petersburg-Moscow 3. Tallinn-St. Petersburg 4. Ventspils-Riga-Moscow 5. Klaipeda-Vilnius-Minsk 6. Kaliningrad-Vilnius 7. Berlin-Warsaw-Minsk-Moscow 8. Oslo- Swedish Border (direction Gothenburg) 9. Oslo- Swedish Border (direction Stockholm)

2 The Commission Vice-President responsible for transport and energy, Loyola de Palacio, set up a High-Level Group to assist the Commission with the preparation of a proposal for far-reaching revision of the guidelines for the Trans-European Transport Network.

9 A report 3 to the Commission in 2007 concluded: “The analyses show that the transport demand between the EU and Russia will roughly double by 2020in all studied scenarios, creating increasing pressure for the infrastructure development. However, even after implementation of the current extensive infrastructure plans, bottlenecks will remain on the transport networks. Clearly the most severe problems are concentrated on border operations resulting to long waiting times. This is due to differences in administrative and technical systems of neighbouring countries.”

Figure 2.6 Northern and Central Axis with prioritised projects.

The Northern Transport Axis has become part of the Northern Dimension process.

The proposed objectives for the future work are:

• Work together to improve major transport connections between the Northern Dimension partners. • Accelerate the implementation of transport and logistics infrastructure projects along the major trans national connections. • Accelerate the removal of non-infrastructure related bottlenecks. • Set up effective structures to monitor the implementation of the proposed projects.

2.7 The N.E.W. Corridor The Northern East West Freight Corridor is a project organised by the International Union of Railways UIC to connect the east coast of the United States to East Asia by train and ship.

3 “The Northern Transport Axis- Pilot for the analytical support framework to monitor the implementation of the infrastructure and “soft” measures proposed by the High Level Group”, Final Report December 2007 WSP Finland.

10

Figure 2.7 N.E.W. Corridor.

The concept builds on the actual short distances between the producing and the consuming areas (as clearly seen on a globe), existing infrastructure and possibilities for less time consuming transport. Taken together this can mean considerable savings.

However there are also obstacles with this route. They are technical, financial and political. Different rail gauges and needs for increased rail and port capacity, competing harbours, the need for big investments and financial risks and inefficient and problematic border crossings are hindrances to overcome. There are also possibilities to implement and use component parts of the concept, for example transport from the fishery industries in northern Norway to St. Petersburg.

2.8 On-going and planned activities connected to the Bothnian Corridor The Bothnian Corridor is a strategically important link in the European freight transport system. The link combines northern Europe and its rich natural resources with the most densely populated markets within the EU.

The Bothnian Corridor is also the missing link in the system to connect the EU priority corridors Northern Axis and Nordic Triangle.

Already there are many activities concerning investments in roads and railways in the Bothnian Corridor, both in Finland and in Sweden.

Figure 2.8 The Bothnian Corridor with proposed Swedish rail projects. (ÅF Infraplan).

11 2.8.1 Finland

Seinäjoki–Oulu 550 M€ – I phase

– II phase

Kokkola–Ylivieska 250 M€ – 2.track

Oulu–Vartius 150 M€ – Oulu–Kontiomäki Kolari – Kontiomäki–Vartius Kelloselkä Kemijärvi Rovaniemi Ylivieska–Vartius 390 M€ Isokylä

Tornio Laurila Oulu railyard 35 M€

Kemi

€ Oulu Oulu–Tornio 75 M – Oulu–Laurila Raahe – Tornio railyard Vartius

Kontiomäki Kokkola Ylivieska Rovaniemi–Kemijärvi 25 M€ Pietarsaari – electrification

Iisalmi

Vaasa Kemijärvi–Kelloselkä 85 M€ Seinäjoki Joensuu Kaskinen Jyväskylä Pieksämäki Tampere–Seinäjoki 50M€ Niirala Parkano – 25 t – partly additional track Pori Parikkala Tampere Rauma Toijala Tornio–Kolari 90 M€ Lahti Luumäki – renewal ongoing or starts before 2011 Uusikaupunki Vainikkala Riihimäki Kouvola Naantali Hyvinkää starts 2011-2015 Turku Kerava Hamina Kotka Loviisa Laurila–Kolari 60 M€ Sköldvik Vuosaari – electrification Helsinki starts after 2015 Hanko

Figure 2.9 On-going and planned measures on Finnish railways (RHK).

Kilpisjärvi

Palojoensuu

E8 Palojoensuu - 50 M€ Kolari Kilpisjärvi Kelloselkä –improvement Kemijärvi Rovaniemi Isokylä E75 Rovaniemi 50 M€ – additional lanes – grade-separated junctions Tornio Laurila Kemi Road to port of Tornio 6 M€ –improvement Ii Oulu € Raahe E75 Kemi 74 M – new motorway Vartius

Kontiomäki Kajaani Kokkola Ylivieska E75 Oulu - Kemi 113 M€ Pietarsaari – median barrier – several bypass lanes Iisalmi – improvement of motorway in Oulu Vaasa

Seinäjoki Joensuu E75 Oulu–Kemi, phase 2 Kaskinen – additional lanes Jyväskylä Pieksämäki – new bypass road for Ii Niirala Parkano – costs not determined yet

Pori € Parikkala E8 Oulu–Vaasa 110 M Tampere – phase 1, some bypass lanes Rauma Toijala Lahti Luumäki Uusikaupunki E75 Oulu–Jyväskylä 85 M€ ongoing or starts before 2011 Vainikkala Riihimäki Kouvola – phase 1, some bypass lanes Naantali Hyvinkää Turku Kerava Hamina Kotka starts 2011-2015 Loviisa Sköldvik 22 Oulu–Kajaani 37 M€ Vuosaari Helsinki – improvement starts after 2015 Hanko

Figure 2.10 On-going and planned measures on Finnish roads (Tiehallinto).

12 2.8.2 Sweden

The Haparanda Line (Boden – Haparanda) The project includes upgrading of the existing railway Kalix – Boden and a new railway between Kalix and Haparanda (electrification and capacity for ore transports). This line is under construction now and will be finished in 2012.

The North Botnia Line (Luleå - Umeå) This line is a missing link in the Bothnian Corridor. The Swedish Rail Administration has carried out pre-studies for the whole stretch. The phase with railway investigations is divided in 6 parts and 4 parts are on-going at the moment.

The Bothnia Line (Umeå – Kramfors) This line is under construction and will be ready for traffic in August 2010.

The Ådal Line (Kramfors – Sundsvall) This project includes upgrading of the existing line and two parts with new railway. Traffic start is planned to 2011.

The East Coast Line (Sundsvall – Gävle) A pre-study for building double track stage by stage will start in 2009. Figure 2.11 On-going and planned measures on Swedish railways. (“Botniska korridoren, informationsbroschyr”).

13 Figure 2.12 show an example from Norrbotten and Västerbotten (the northernmost parts of Sweden). European Road 4 (E4) between Haparanda and Nordmaling is planned to safe road standard with separating fence in the middle (2+1 road) or better standard depending on traffic flows and functions needed. There are also on-going and planned activities for future detours in Umeå and Skellefteå where the E4 today passes through the central parts of the city.

The E4 continues south and connects to the Nordic Triangle north of Stockholm. There are planned activities for the whole E4.

• Red lines show present sections with fulfilled target standard.

• Purple and magenta show started up projects underway. Figure 2.12 On-going and planned measures on Swedish roads in the north (Road Administration). • Dark black and yellow parts show future investments not yet approved.

14 2.9 Discussion According to processes that are described in brief above, it seems that both the importance and awareness of the value of the northernmost parts of Europe is increasing.

Figure 2.13 The Bothnian Corridor is the joint Finnish-Swedish transport framework around the Gulf of Bothnia.

The natural resources in this part of Europe indicate that goods transport is a main issue concerning transport in the Bothnian Corridor. The markets for currently transported goods are mostly situated in other parts of Europe and the world. It is therefore important that the comprehensive transport networks for Europe also include its northernmost parts.

Seen from a Finnish-Swedish perspective as well as from a broader international perspective, the Bothnian Corridor through highly industrialised and populated areas in Finland and Sweden around the Gulf of Bothnia is a central axis in combination with the Nordic Triangle. With improved capacity, it will strengthen the possibilities for the EU´s own supply of raw and refined natural resources in the short and long term perspective, it will support the development of its surroundings and it will improve the possibilities of interaction with The Motorways of the Sea and connecting railways and roads.

A consequence to note is the corridor´s need for an effective and smooth border crossing between Finland and Sweden. Efficient solutions to bridge over the technical differences between the railway systems and differences in road standard are areas for improvement.

Also the conditions and infrastructure for public transport border crossings in the corridor can be improved, since no seamless possibility exists today.

15 3. National and regional economy

3.1 Gross domestic products Gross domestic product (GDP), or the total added value of the goods and services produced is forecasted to be 12.5 trillion euros in the 27 EU countries for the year 2008. The Swedish GDP corresponds to 2,6 per cent and the Finnish GDP corresponds to 1,1 per cent of that.

350000

300000

250000

200000 Finland Sweden 150000

100000

50000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009* 2010*

Figure 3.1 Gross domestic product (GDP) of Finland and Sweden in billions of euros 2008*: Finland 186,2 billion euros; Sweden 328,4 billion euros. Source Eurostat, * forecast.

GNP per capita in PPS

35000

30000

25000

20000 Finland € Sweden 15000

10000

5000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009* 2010*

Figure 3.2 The gross domestic product (GDP) of Finland and Sweden per capita in euros in purchasing power standards (PPS). 2008*: Finland 28900 € (9th in EU); Sweden 30900 € (4th in EU). Source Eurostat, * forecast.

The Gross Domestic Product has diminished in the last quarter of 2008 over the previous quarter. The growth slowed down already in early 2008 and in the third quarter output diminished over the previous quarter.

3.2 International trade The total export of goods and services 2008 from Finland was 82,2 billion euros and from Sweden 177,8 billion euros. The total import of goods and services 2008 was 75,0 and 153,7 billion euros

16 respectively. The trends shown in Figures 3.3 and 3.4 may be optimistic according to the latest national statistics.

Bill. € Total Export of Goods and Services

200 180 160 140 120 Finland 100 Sweden 80 60 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010*

Figure 3.3 The total export of goods and services from Finland and from Sweden. Source Eurostat, * forecast.

Total Import of Goods and Services Bill. €

200 180 160 140 120 Finland 100 Sweden 80 60 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010*

Figure 3.4 The total import of goods and services to Finland and to Sweden. Source Eurostat, * forecast.

The trade in goods with the neighbouring countries is shown below. One half of the import in both countries comes from there. The area of pie segments below is related to the volume of trade.

Finland's Import Finland's Export (Total 62,1 billion €) (Total 65,5 billion €)

Russia Germany Sweden Norway 10,0 % Denmark Estonia 9,9 % Poland Latvia Lithuania Others

Figure 3.5 Finland's trade, 2008, especially to the neighbouring countries. Source: National Board of Customs, Finland.

17 Sweden's Import Sweden's Export (Total 108,7 billion €) (Total 119,4 billion €)

6,3 % Russia 5,7 % Germany Finland Norway Denmark Estonia Poland Latvia Lithuania Others

Figure 3.6 Sweden's trade, 2008, especially to the neighbouring countries. Source: Statistics Sweden (SCB).

For Finland the three biggest trade partners are Russia, Germany and Sweden and for Sweden Germany, Denmark and Norway. Finland is the 6th biggest trade partner for Sweden.

3.3 Bilateral trade Finland’s exports of goods to Sweden for the year 2008 totalled 6,6 billion euros (+6,5 %) and Sweden’s exports to Finland was 6,2 billion euros (+4,5%). Finland's export to Sweden is greater than vice versa. Figure 3.7 shows that the exports between Finland and Sweden have doubled during last ten years.

Export from Sweden to Finland Export from Finland to Sweden

Figure 3.7 Exports between Finland and Sweden. Source: National Board of Customs, Finland.

Exports from Finland to Sweden has decreased by 20 per cent and from Sweden to Finland by 14 per cent from November 2007 to November 2008 according to National Board of Customs, Finland (Figure 3.8 and 3.9).

18

Exports between Finland and Sweden by the SICT level 1

2500

2000

€ 1500 Sweden

1000 Million Million Finland

500

0 animals tobacco Food and live table oil,table fat equipmt Mineral fuels, fuels, Mineral elsewhere Beverages and Beverages Chemicals and related products related Animal and vege- electric power etc power electric factured articles factured Crude materials, materials, Crude Basic manufactures Machinery, transport transport Machinery, inedible, except fuels inedible, except Miscellaneous manu- Miscellaneous classified not Goods Figure 3.8 Exports between Finland and Sweden by the SICT level 1 2008. Source: National Board of Customs, Finland. SITC is the classification of international trade.

Export between Finland and Sweden by the SICT 2 level Million € %

1 400 40

1 200 30

1 000 20

800 10 SE export FI export SE change 600 - FI change

400 -10

200 -20

- -30 products products Iron andsteel Iron classified manufactured Road vehicles Road industries Miscellaneous metal scrap Petroleum and Commodities not Commodities pharm Medicinal, Metalliferous ores, machinery Electric Machinery, special Machinery, Non-ferrous metals Paper, paperboard Paper, Metal manufactures General industrl machy industrl General Figure 3.9 Exports between Finland and Sweden 2008 by divisions of the SICT level 2. Source: National Board of Customs, Finland. SITC is the classification of international trade.

The main Finnish exports to Sweden are in the petroleum and metallurgy sector, whereas the Swedish exports to Finland are more widely spread, the four highest volumes being iron and steel products, road vehicles, industrial machinery and ore. The changes in some export items are remarkable high.

19 3.4 Population and employment Table 3.1 shows total population in Finland and in Sweden as well as the population of the northern regions.

Table 3.1 Populations in Finland and in Sweden, a selection. Population Population Increase of Increase of 31.12.2008 31.12.2007 population 2008 population (%) Finland 5 326 314 5 300 484 25 830 0,49 North Ostrobothnia Region 386 144 383 411 2 733 0,71 Kainuu Region 83 160 83 779 -619 -0,74 Lapland Region 183 963 184 390 -427 -0,23 Sweden 9 256 347 9 182 927 73 420 0,80 Norrbottens län 249 677 250 602 -925 -0,37 Västerbottens län 257 812 257 593 219 0,09

During the last ten years the population has changed in Luleå +2,3 %, in Haparanda -4,0 %, in Tornio -4,2 %, in Kemi -7,6 % and in Oulu +16,7 %. The trend shows that the population increases in localities with universities (Figure 3.10 and 3.11).

Figure 3.10 Populations in Finland and Sweden. Source: Northern Sparsely Populated Areas (NSPA).

Figure 3.11 Development of the population in per cent under 1992-2007. Source: Northern Sparsely Populated Areas (NSPA).

20 Unemployment has decreased in Finland in the last nine years. Unemployment is the highest in East and North Finland. Today the unemployment rate in Finland is 7,6 %, in the provinces of Lapland 10,8 %, Oulu 8,2 % and East Finland 11,6%. In Sweden unemployment has decreased during the last three years but is still higher than under the years of 2001 and 2002. Unemployment is very evenly spread over the whole country. The Figures 3.12 and 3.13 shows the unemployment rates both in Finland and in Sweden.

Unemployment rate, by NUTS 2 regions

15

12,5

10 East Finland South Finland 7,5 West Finland per cent North Finland 5

2,5

0 1999 2000 2001 2002 2003 2004 2005 2006 2007

Figure 3.12 Unemployment rate by NUTS 2 regions in Finland. Source Eurostat.

Unemployment rate, by NUTS 2 regions

15

12,5 Stockholm Östra Mellansverige 10 Småland med öarna Sydsverige 7,5 Västsverige per cent Norra Mellansverige 5 Mellersta Norrland Övre Norrland 2,5

0 1999 2000 2001 2002 2003 2004 2005 2006 2007

Figure 3.13 Unemployment rate, by NUTS 2 regions in Sweden. Source Eurostat.

The Figures 3.14 and 3.15 show the employment originating from mining and quarrying and manufacturing industries in Finland and in Sweden. Annex 3.1 shows the number of employees in different branches of industry in the northern region of Finland and Sweden.

21

Mining and quarrying

12000

10000

8000

Finland 6000 Sweden

4000 Persons employed Persons

2000

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Figure 3.14 Persons employed by mining and quarrying in Finland and Sweden. Source: Eurostat.

Manufacturing

900000

800000

700000

600000

500000 Finland 400000 Sweden

300000 Persons emplyed 200000

100000

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Figure 3.15 Persons employed by manufacturing in Finland and Sweden. Source: Eurostat.

3.5 Industries in the region There are lots of industries in the region. The infrastructure plays an important role for the industries. A selection of industries and their volumes are listed in Annex 3.2.

3.5.1 Minerals

Table 3.2 Production Value in Finland and Sweden. Source:SCB. Country/Region Production value Production value Total (Bill. €) Processing Industry Production value (Bill. €) (Bill. €) Sweden Norrbottens län 1,6 1,5 3,1 Finland North Ostrobothnia 0,3 6,4 6,7 Kajaani 0,1 0,3 0,3 Lappland 0,1 3,7 3,8 Total 2,1 11,9 14,0

22 In Finland chrome, copper and gold are the most important part for the mining industry. Yearly, Finland produced, in the area of the Arctic area of the Scandinavian countries a value of 11 billion euros.

Twelve of Sweden’s fifteen mines are situated in the Arctic area of the Scandinavian countries and 90 % of EU mine-extracting takes place in the area. Ore for total 2,1 billion euros is quarried in the area. Ore and metals mean that Sweden produced 3,1 billion euros per year in production and refine of raw materials.

The trade industry has estimated that exports of ore, in tone, will increase with 25 per cent until 2020.

3.5.2 Wood Wood and paper industry is of tradition strong in the Northern Scandinavia countries. Approximately 10 % of total production value within wood based industry in Sweden and 15 % in Finland came from the Northern Scandinavian regions (Figure 3.3).

Table 3.3 Production value, wood related industry. Source SCB. Country/Province/Region/ Sub-region Production value, Wood related industry (billion euros) Sweden Norrbottens län 1,5 Finland North Ostrobothnia 1,3 Kajaani 0,5 Lappland 1,4 Total 4,4

3.6 Discussion The Finnish and Swedish key figures of national economics and trade in ratio to population are quite similar. The Finnish population, gross domestic product, export and import in rough numbers are all about 60 per cent of the Swedish ones. The Finnish gross domestic product per capita in purchasing power is 7 per cent lower than that of Sweden.

In both countries the population is concentrated to the south making the northern parts of the countries sparsely populated. The unemployment ratio is more even divided in Sweden than in Finland where the unemployment rate is about 40 % higher in the north than in the south.

In the northern parts of the countries the wood and metal industries are to be reckoned both in the means of employers and sources for transportation.

The obstacles to the development are the sparse population and long distances to the densely populated centres.

There are good qualifications for reasonable high living standards in the north because of the rich natural resources and unique nature combined with the human resources of high potentiality. The level of education, the productivity growth, the ratio of R&D personnel as a percentage of persons employed and the regional innovative performance index are all very high compared to the other European regions.

23 4. Transport and journeys

4.1 Infrastructure and flow of goods in the North The infrastructure in the region reflects transport heading south. Figure 4.1 illustrate goods flow from Northern markets. The demand for goods in an east-west direction is low because of the use of the traditional transport routes, insufficient infrastructure and location of the markets. The goods traffic flow in Arctic Scandinavia consists of a few very large flows of specific commodities but is otherwise relatively small and scattered. The big raw material product industries are becoming more and more multinational, increasing their demand for border crossing and related transport. The main commodities are raw materials (mine, timber, fish, agricultural products) exported from the region, commodities produced, marketed and transported within the region and consumer products transported into the region.

Part of the transport between Finland and Sweden is by vessel. Harbours in Arctic Scandinavia generate considerable transport flows. Long-distance lorry traffic has the biggest market share of the northern transport flows dominated by food products and consumer goods going north and bulk goods, steel products, processed wood products going south. The main part of goods transport in the northern part of Finland and Sweden is by lorry. The biggest proportion of all transport is of wood-based products at 15 %, followed by chemicals and consumer goods.

Figure 4.1 Flow of goods from Northern markets.

Transport in the southern and northern parts of Finland and Sweden differs. In the Stockholm region, short transports are common compared to the northern parts. Living in the north of Finland and Sweden, especially in the inland, means long distances to towns or cities with more than 10,000 habitants. This means long-distance transport.

24

Figure 4.2 Distance to a population centre. Source: Northern Sparsely Populated Areas (NSPA).

4.2 Regional transport – Goods The main freight commodities in the northern part of the region are raw materials (timber, fish, agricultural products) exported from the area, commodities produced within the area and consumer products imported to the area.

The growing amount of multinational industries means cross border transport, which are either coordinated or non-coordinated.

It is forecast that goods transport in Sweden during the period of 2001 to 2020 will increase by 21 % (from a total of 99 to 119 billion tonnes kilometres). For maritime (vessels) by 12% (from 38 to 43 billion tonnes kilometres), maritime (ferry) by 34% (from 1 to 1 billion tonnes kilometres)4, rail by 18 % (from 19 to 22 billion tonnes kilometres) and road by 30 % (from 41 to 53 billion tonnes kilometres).

Table 4.1 Increase of production in Finland and Sweden during 2001-2005. Source: SCB. Locality Production Production value 2005 Change value 2001 (Billion euro) 2001-2005 (Billion euro) (%) Sweden Luleå 861 1,144 33 Kalix 268 268 0 Haparanda 79 93 18 Finland Kemi-Tornio 2,341 4,789 105 Oulu 4,858 5,565 15

4 Reference SIKA 2005. Kort om Prognoser för person- och godstransporter år 2020. Report 2005:10. Page 14.

25 4.3 Transport modes Passenger traffic in the Northern region is usually by car. All border-crossing passenger traffic is by car or coach because there is no passenger train available between Finland and Sweden.

Figure 4.3 Long-distance passenger traffic by private (car), rail, bus and air of travel in Northern Finland, Northern Sweden and Northern Norway.

Figures 4.4 and 4.5 show the different transportation modes that cross the border, calculated from total numbers of passengers and tonnes of goods in both directions. The amount of goods is calculated from a mean value of each lorry carrying goods weighing either 12 tonnes or 20 tonnes (one lorry with trailer takes a load of 20 tonnes and one lorry without trailer 8 tonnes). This because today we have poor information about whether the lorries are with or without trailers. Figure 4.4 is bases on 12 tonnes and Figure 4.5 on both 12 and 20 tonnes.

There are harbours, for examples, in Helsinki, Turku, Mariehamn, Eckerö, Kaskinen, Vaasa, Raahe and Koverhar in Finland. In Sweden there are harbours in Stockholm, Värtan, Kapellskär, Grisslehamn, Gävle, Härnösand, Sundsvall, Umeå, Skellefteå, Piteå and Luleå.

It is possible to cross the border by rail at Värtan and Haparanda-Tornio.

There are six different options to cross the border by car/lorry. These are Haparanda-Tornio, Övertorneå-Ylitornio, Swedish Pello-Finnish Pello, Swedish Kolari - Finnish Kolari, Muodoslompolo- Muonio and Karesuando-Kaaresuvanto. Annex 4.1 to 4.9 shows the yearly goods quantities in tonnes and numbers of passengers crossing the border in each direction, between Finland and Sweden.

26

Sweden-Finland, total tonne goods and number of passangers during one year, both directions

Goods(tonne/year) Passengers(number/year) 4000000 7000000

3500000 6000000

3000000 5000000

2500000 4000000 Goods 2000000 Passengers 3000000 1500000

2000000 1000000

500000 1000000

0 0 Pello-Finland Luleå-Finland Gävle-Finland Kolari-Finland Umeå-Finland Göteborg-Oulo Värtan-Finland Värtan-Finland Göteborg-Kemi Göteborg-Kotka Stockholm-Riga Stockholm-Tallin Haparanda-Tornio Haparanda-Tornio Kapellskär-Finland Härnösand-Finland Stockholm-Finland Övertorneå-Finland Karesuando-Finland Grisslehamn-Eckerö Muoduslompolo-Finland MARITIME RAIL ROAD

Figure 4.4 Total annual numbers of passengers and goods between Sweden and Finland in both directions. The total amount of goods on lorries is based on 12 tonnes.

Sweden-Finland-Sweden, total number of passangers and tonne goods during one year, both directions

(Number/Tonne)

10000000 9000000 8000000 7000000 Passengers 6000000 Goods 5000000 Goods (20 tonne) 4000000 3000000 2000000 1000000 0 Maritim e Maritim e Maritim e Total Rail Total Road Göteborg- Stockholm- Northern Finland Finland coast - Finland

Figure 4.5. The numbers of passengers and amount of goods with different modes and at different places.

4.3.1 Maritime The transport volumes between southern Finland (Helsinki, Turku, Naantali and Mariehamn) and the Stockholm region are considerable, both measured in terms of value and in terms of tonnes. In 2008 the total volume shipped between the two regions was about 4,8 million tonnes. The volumes shipped on the ore shuttle between Luleå and Raahe in the same year was 2,9 million tonnes. The third most important region or port on the Swedish side is Gothenburg. It has developed a hub function for goods to and from the ports of Kemi, Oulu and Kotka. All in all it handled 1,4 million tonnes in 2008, with

27 about equal shares from the three Finnish ports. There are some minor transport between Kaskö and Härnösand and between Gävle and Finnish ports.

In terms of passenger transport, the traffic between southern Finland and the Stockholm region counts for well above 90 per cent of the number of ferry passengers between the two countries, or almost 9 million passengers a year. On the Swedish side, the central Stockholm ports dominate (7,5 million passengers in 2008), but Grisslehamn (0,9 million passengers) and Kapellskär (0,8 million) are also important. On the Finnish side Turku (2,9 million), Mariehamn (2,8 million) and Helsinki (2,3 million) dominate. Eckerö (0,9 million) is also important. In 2008 the ferry line between Vaasa and Umeå had comparatively few passengers (0,07 million).5

Southern Finland and the Stockholm region From historical times up until today, the maritime route between southern Finland and the Stockholm region has been of the utmost importance for trade and travel between Finland and Sweden. The traffic has gradually increased and together with the development in the world around, triggered improvements to the infrastructure. To a large extent the maritime route has remained, but hydrographical data has been improved as well as navigational aids and information systems. Some, albeit limited, dredging operations have been undertaken. Ports have expanded and land connections have been improved.

Today the traffic between the two regions is fairly differentiated with pure roll on roll off ferries (ro- ro) with strict focus on freight transport at the one end and, and at the other end, passenger ferries with a prime focus on passengers and cruises, while freight transport is non-existent or a secondary operation. A market segment with considerable importance in the region and with a specific character is the developed combination of:

• Freight transport (lorries and trailers). • Passenger transport (including cars). • Quality cruising.

Quality cruising in particular, and passenger transport in general, is fuelled by the specific EU rules that allow for duty-free shopping on ships to and from the Åland Islands. This market segment, as well as dedicated cruise vessels, needs central locations at the destination. It makes demands on the land infrastructure, a central port location, but still good access for lorries and private cars.

The region’s route network is illustrated by Figure 4.6 (including routes to the Baltic States). The routes where private transport is a major business call at Åland in order to qualify for duty-free sales. The ports of Naantali and Turku are equally most important, particularly in terms of freight transport.

The maritime infrastructure for the traffic between the two regions is satisfactory. In this respect ship- owners and ports raise no specific demands. Businesses with focus on passenger transport and cruises stresses the importance of remaining at central port locations. In general, land infrastructure is felt to be satisfactory, ongoing improvements like Norra länken (Stockholm) taken into account. A specific pinpointed missing link however is Road 77, hampering westbound traffic from Kapellskär and vice versa. While the road access to Norrtälje and E18 is of good quality, the nearest connection to the E4 is not of adequate standard for large trucks. About 20 per cent of the HGV6-traffic to and from the port is westbound.

The port of Kapellskär was proposed as a strategic port by the Swedish Port Strategy Commission.7

The location of Värta Harbour means that it is possible to make a round trip, in one day. This means the ”best” capacity and it is hard to find another harbour with the same conditions. The consequences

5 FMA statistics. 6 HGV= Heavy Goods Vehicle 7 Port Strategy – Strategic port nodes in the Swedish transport system, SOU 2007:58.

28 if the Värta Line were to shut down are that all goods transportation on railway would be transferred to long-haul trucks which would mean, in a long perspective, that the numbers of trucks between Sweden and Finland would increase by 30,000 yearly. This might affect the environment and the traffic.

Figure 4.6 Harbours in the area of Stockholm and Helsinki.

Gothenburg – A hub for freight to and from Finland The Port of Gothenburg is the biggest port in Scandinavia as regards container transport. It has direct calls by ocean-going container lines to Asia as well as to North America. The port has the ambition to develop into a Nordic hub of increasing importance. To that end, Finland is a market of importance and the freight in question is almost entirely transit cargo seen from the perspective of the Port of Gothenburg, the goods in question arriving by vessel and leaving by vessel. In 2008, somewhat more than 50 per cent of the units shipped between Gothenburg and Finland were SECU boxes (the specific container used by Stora Enso) and 40 per cent were traditional containers. In terms of number of units the ports of Kemi, Oulu and Kotka account for roughly equal shares. The fairways to the ports in question are all satisfactory for the traffic. The transport make no demand on land infrastructure in Gothenburg. The Port of Gothenburg was proposed as a strategic port by the Swedish Port Strategy Commission.8

Harbours in Gävle and Härnösand The main goods transported between Gävle and Finnish harbours were petroleum, scale and ore concentrate, and from Finnish harbours to Gävle wood chips, petroleum, pulp and steel rods.

The quantity of goods shipped from Härnösand to Kaskö was 857 tonnes in February 2009 and from Kaskö to Härnösand 2,220 tonnes. The type of goods is unknown.

The Northern Quark The narrowest strait between Finland and Sweden is the Northern Quark. The distance between the mainlands is 80 km and between the outer islands only 25 km. Maritime shipping between the two regions has a long history and has considerably influenced the development of the regions of Österbotten (Finland) and Västerbotten (Sweden).

8 Port Strategy – Strategic port nodes in the Swedish transport system, SOU 2007:58.

29 In the region, the eight largest harbours are Vaasa, Kaskinen, Kristinikauppi, Jakobstad and Kukkola in Finland and Umeå, Skellefteå and Örnsköldsvik in Sweden.

As long as duty-free shopping was available, the travel was extensive. Before 2001 there were more than a million passengers a year on the route. Today there are less 70,000 passengers and the ferry line’s prime focus is on freight transport, a growing market segment. The traffic is of considerable importance to the regions and to the community. The importance of the link is reflected by the fact that the Finnish government and the Swedish region of Västerbotten provide financial support to safeguard the traffic.

Unlike other ferry traffic between the two countries, this line is dependent on ice-breaking assistance. In this, passenger ferries are given priority. All in all, the maritime infrastructure is not a problem for the business. The Port of Umeå (Holmsund) desires some improvements when it comes to the land infrastructure.

The main goods transported between Umeå and Vaasa are industry goods (55%), paper and wood (25%) and commodities (20%). From Umeå to Vaasa 102,202 tonnes/year was shipped in 2008 and from Vaasa to Umeå 173,373 tonnes.

Volvo recently opened a new truck plant in Kaluga. Goods to the plant go by vessel from Umeå till Vaasa and by truck from Vaasa to Kaluga.

The ore shuttle Raahe to Luleå The cargo volumes shipped between Luleå and Raahe are considerable, as mentioned, almost 3 million tonnes in 2008. The entire volume is bound to the ore shuttle that normally operates on a daily basis. Another 0.8 million tonnes were shipped between Luleå and Koverhar. Today, due to the economic slowdown, the volumes and frequency have been reduced.

The maritime transport infrastructure relating to the ports in question is satisfactory, ice-breaking assistance included. There are no bottlenecks in the land infrastructure hampering the transport in question.

The Port of Luleå was proposed as a strategic port by the Swedish Port Strategy Commission.9

Maritime transport between Sweden and the Baltic States While the Finnish directive for this study is entirely focused on transport between Finland and Sweden, the Swedish directive also has a bearing on transport to the Baltic States. Leaving Finland aside, the Stockholm region is the dominant area for Swedish-Baltic trade and travel. There are daily ferry connections between Stockholm and Riga as well as between Stockholm and Tallin. From Kapellskär, there are ferry lines to Paldiski and from Nynäshamn to Ventspils. The Stockholm to Tallin line calls at the port of Mariehamn to benefit from the possibility of duty-free sales and combines freight and passenger transport with quality cruises. It is most the important of the Swedish- Baltic lines in term of passengers, but both the Kapellskär to Paldiski lines (Tallink, Silja and BSL) are larger in terms of freight.

The Stockholm to Riga line would benefit from the planned new Horsten fairway. The traffic could then avoid the narrow and complicated part of the Sandhamn fairway and reduce the risk of conflicts with leisure boats.

A ferry service between Karlshamn and Klaipeda offers six departures per week in each direction. The service is a combined freight and passenger line.

9 Port Strategy – Strategic port nodes in the Swedish transport system, SOU 2007:58.

30 Harbours in Arctic Scandinavia generate considerable transport flows. Shipping companies have been interviewed, transport-buyers by the coast. On the Swedish side, interviews indicate on no extra needs. Annex 4.6 and 4.7 show some harbours in Finland and Sweden.

4.3.2 Rail The goods traffic on the Finnish side of the border travels south along the main line via Tornio and Oulu.

The volume of goods and passenger traffic is low in the region. Annex 4.10 shows the volumes and numbers of passengers and train on railway lines, a selection. Annex 4.11 shows the handing of goods in harbours in the Gulf of Bothia.

Several issues will affect the demand for railway transport services (Figure 4.7):

• Construction of new lines (Haparanda Line, Bothnia Line) • Rehabilitation of old lines (Seinäjoki-Oulu, Tornio-Kolari) • Old mines will produce more (Kiruna, Aitik, Sotkoma) • New mines will be opened (Tapulivuoma, Stora Sahavaara, Pellivuoma, Kuervitikko, Hannukainen, Sotkamo, Talvivaara) • Timber and base chemicals transport in Northern Finland. • Railway transport from Russia

Figure 4.7 Potential and new or increased transport within or through the Barents Region.

The rail network plays two important roles, heavy freight transportation service for the important mining and forest industry and consumer goods and fish freights.

The capacity is restricted as a single track with passing tracks. Slower freight trains have to use the empty slots between the faster passenger trains that operate on a timetable basis.

The main line in Finland links Helsinki to Oulu via Tampere, Seinäjoki and Kokkola. In Sweden the north-south Main Line goes through north Sweden with connections to Umeå, The Ore Line (North Norway) and the Hällnäs – Storuman Line.

31 There is a train ferry (SeaRail) connection between Värtan och Turku. The capacity on the ferry is approximately 6,500 wagons per year. One wagonload corresponds to two articulated lorries. SeaRail EEIG is owned by Green Cargo AB (50 %) and VR Oy (50 %). The ferry MS Seawind itself is owned by Tallink Silja Oy.

4.3.3 Roads Road systems connect all modes of human activity. Most of road traffic goes north to south, above all along E4 on the Swedish and Finnish side. The E4 serves as an artery within, to and from the region and connects all other modes directly or indirect via other roads. Industry and heavy transport interests have identified the need for a first-class network as a need for making necessary priorities according to the long-haul truck transport network HVN10, as it is called in Sweden. TEN road classifications are well represented except between Holmsund/Umeå and Mo i Rana (E12) and the missing link between Svappavaara and Karesuando (E45) respectively.

As presented in this chapter earlier, the needs for road infrastructure investments are a consequence of and related to both rail and maritime expansion plans.

Bearing capacity is problematic on the secondary road system and geographically widespread the mining, forestry and pulp industries are heavily dependent on roads maintaining full bearing capacity all year. Special problems arise during that periods in spring and autumn every year.

Traffic flows are relatively low, often under 2,000 vehicles per day. Long distances and lack of alternatives lead to higher vulnerability for the community as a whole. This fact is emphasised during winter period because of low winter standard and higher collision risks than average for the respective countries.

The purpose of road trips is divided among travel to recreational cabins, other personal reasons, visits or business. Coaches are most often used for education, leisure and visits, trains for education and business and vessels for pleasure. Approximately 73 % of travellers use private car, 9 % bus, 10 % train and 3 % vessel. Annex 4.12 shows in percentages reasons for travelling in the Northern area.

On the Finnish side the main road network includes Vasanejden main road 8 from Åbo to Oulu, the E4 from Tornio to Helsinki and main road 16 to Seinäjoki.

There are currently land border crossings between Finland and Sweden in six locations from Haparanda/Tornio in the south to Karesuando/Kaaresuvanto in the north.

Long-haul trucking has the biggest market share for food products and consumer goods, mixed cargos, products of steels and processed wood products going north, and bulk goods, steel products, processed wood products going south.

Figure 4.8 shows commodity types on lorries crossing the border.

10 HVN=Main long-haul route (Huvudväg för långväga gods)

32 Commodity types Per cent 60

50

40 Muonio 30 Ylitornio Tornio 20

10

0 Food Other Empty Paper/Pulp Timber/wood Mineral/metal/ore

Figure 4.8 Commodity types.

Over 40 % of the vehicles are empty, and this is slightly more than average in the both countries. This relates to mostly timber transport and bulk transport. One third of the vehicles are fully loaded. The share of empty vehicles is higher at minor crossings and lower at locations where longer routes can be estimated (Tornio and Muonio). Most of the, daily, cross-border trips by car cross the border at Haparanda-Tornio (Annex 4.13). Daily trips are most common between Sweden and Finland. Of border crossings in Tornio and in Muonio, respectively, 45 % and 25% cross the border daily, 35 % and 20 % weekly, 10 % and 20 % monthly and 10 % and 35 % less than monthly (Annex 4.13).

Cross-border trips are mostly internal trips within the Barents Region. Only the border at Tornio has external cross-border traffic – on a minor scale. The purpose of cross-border trips is shopping and commuting (approximately 20%, border commuting at Muonio is as high as 40%), and personal business. These trips are usually shorter than 100 km.

Public transportation Public transport plays a minor role in the region compared to southern parts of Finland and Sweden. One reason for this might be that the opportunities are fewer. Länstrafiken in Norr- and Västerbotten, Sweden, carries both goods and passengers, which is one way to produce more frequent services. It is not possible to have routes between the countries because of legislation. However, there is a local route between Haparanda and Tornio that takes passengers to and from the shops.

Naturally, travel from Lapland and the Tornio region to Helsinki and other southern cities, as well as to foreign countries, is mainly done by air or by train.

Trains serve travellers reasonably well along route Rovaniemi-Kemi-Oulu and onwards to the south. There is also a feeder bus service to Rovaniemi railway station from Northern Lapland. Tornio is served with seasonal trains running from cities in Southern Finland to Kolari in Western Lapland. Tourists continue the last 30-60 km to mountain resorts from there by coach. These trains run during weekends and some weekdays, mainly during skiing season from February to April.

33 There is no local train service. Some local bus services available, mostly in and between cities. School bus services run all over Lapland on every schoolday, and inhabitants in rural areas can use them when visiting municipal centres. There is almost no public bus service in rural areas left.

Some years ago a trial service was started between the Municipality of Pajala and the public transportation company (Länstrafiken AB). The trial service was named “Commuter bus” (Pendlarbussen) and operated between Swedish Kolari and the centre of Pajala. Both men and women started commuting on this commuter bus. Four year later the bus is still in use. The developed commuter bus was a way to get individuals to change their behaviour. This shows that it is important to work with all individuals and let them know about the ongoing projects.

In brief, passenger transport in Lapland and in Tornio region relies almost totally on cars. The number of cross-border bus trips is 80,000 per year, 25,000 of which are scheduled services.

4.4 Discussion There is a large transportation exchange between the whole Finland and Sweden, from Karesuando in the north to Stockholm and Gothenburg. Shipping is important for the regions around Stockholm and Umeå. The alternative is to send goods on lorries that cross the border at Haparanda-Tornio. This means an increasing number of vehicles on the roads which influence the environment, traffic safety, etc.

As regards rail services, there are two alternatives for crossing the border by rail, at Värtan and Haparanda in Sweden. In Haparanda there is a problem with the tracks because of different gauges.

Apart from shipping, goods transportations on lorries are important especially in the northern part of the region, the large flow of goods on lorries could be a sign that transportation by train could be a realistic alternative.

Cross-border traffic at Haparanda-Tornio and Karesuando is important for the infrastructure and opportunities to cross. There is potential for more traffic.

34 5. Issues for an interactive transport system for goods and persons An efficient and well functioning transport system for goods and persons is prerequisite to the standard of living that we have today. Without smooth and cost efficient transport, living standards will not be at a level that we all consider normal. This gives a base for, among others, accessibility to work, education, service, good quality of life, tourism, extended cooperation between universities and commercial and industrial life.

The whole transport system with different transport modes (maritime, road, rail and air) has to be interconnected in an efficient way to achieve well functioning transport chains - good intermodality. The sparse population, long distances and low cargo and passenger flows are the challenges. The cooperation between different actors must be optimizsd because of the limited resources. Land use planning is a challenge when the extraordinary impact of mining operations will change the whole socio-economic way of living. Cooperation must be supported by other partners than is normally necessary.

In many ways the bilateral connections are satisfactory but to some extent there are room for improvement.

5.1 Maritime Generally speaking, shipping is a truly international transport mode. Consequently, the sector is predominantly regulated at an international level. Basically, the same rules apply independently of whether a ship calls at Finnish or Swedish ports or whether it sails Finnish or Swedish waters. There are obvious and historical reasons for a fairly parallel development of the two countries´ maritime sectors.

The capacity of the Baltic Sea, including the Gulf and the Sea of Bothnia, as transport infrastructure is practically unlimited. Most often port accesses represent any limitations when it comes to draught and ship size.

The maximum draught in Kemi Harbour currently is 10 m. To allow larger vessels to call, a dredging operation is needed. Existing hydrographic data suggests that very large vessels would be able to use the full potential of a port in Storön, Kalix. To allow for Baltic Max vessels, the largest vessel that can pass through the Danish Belts into the Baltic, some minor dredging operations in the Northern Quark are needed. However, very large vessels cannot freely operate in the Gulf of Bothnia during the winter season.

All in all, winter navigation is a specific Baltic challenge. Finland and Sweden have been forerunners in cooperation in this field.

5.1.1 Icebreaking The nature of icebreaking provides obvious scope for international cooperation. When weather conditions are favourable a single icebreaker can assist a convoy of ships along a route, independently of their exact port of origin or destination. An icebreaker dedicated in a straight or in an area where ice has piled up typically has the capacity to assist vessels to and from more than one nation. Pooling resources implies efficiency, hard ice condition will not occur along all coasts at a given time

A first historical agreement, still in force, was settled by Finland and Sweden, together with Denmark, Norway in 1961 in Helsinki. In 2004, the icebreaking authorities around the Baltic Sea decided that the cooperation in the field should continue within the framework of BIM (Baltic Sea Icebreaking

35 Management). The establishment of BIM is a manifestation of the Baltic States’ (Estonia, Latvia, Lithuania, Poland, Germany, Finland, Sweden, Denmark but also Norway). Today, there are plans to take further steps to develop the icebreaking cooperation between Finland and Sweden.

The Finnish as well as the Swedish national icebreaker fleet counts eight vessels, including the contracted Viking icebreakers. The Swedish work vessels Scandica and Baltica are also used for icebreaking purposes. The tug boat Viscaria is a useful non-governmental resource. There is more information about the Finnish and Swedish icebreaking resources in Annex 5.1.

5.1.2 Maritime charges Finland and Sweden have long traditions of charging commercial vessels for their use of fairways. The purpose has been to fund the comparatively extensive fairway networks (due to large archipelagos) and ice breaking services. In Sweden this is still a legal charge, levied by the Swedish Maritime Administration (SMA).11 In Finland the fairway charge is considered to be of a fiscal nature, but the traditional charging structure remains. The Finnish Maritime Administration is budget funded. In both countries pilot services are charged specifically.

The tariff systems have been developed to provide incentives and to raise funding without distorting transport patterns and hampering transport efficiency. In both countries, an element of this has been to provide rebates for frequent users and services for transit traffic. Both tariff systems have been developed with national perspectives. Historically, ferries have been the dominating traffic between the two countries and this category has been given due attention when the systems have been developed. Container lines and other system transport involving both countries have been most rare or almost non-existent.

With mergers of Finnish and Swedish industry and joint projects like the Pajala/Kolari ore, we can now notice a slight change where industry is tending to pay attention to potential “bi-national” logistic synergies. The this end, the Swedish Forest Industries Federation has approached the SMA and suggested a joint Swedish/Finnish review of the fairway charges in order to remove potential disincentives to the development of modern logistics involving transport to and from both countries. It has been concluded that current rebates and charge caps can be inefficacious when routes are made longer (more ports involved) and that single calls in one of the two countries are relatively expensive.

Potential winter logistics for the Pajala/Kolari ore can illustrate some such effects. If the ore is shipped from Storön via a hub in Oxelösund only one tariff system is involved and the rebates can be fully employed. The same applies when the transport take place wholly on the Finnish side (Kemi, hub port in Finland). If, however, the ore is shipped from Storön/Kemi via a hub in the neighbouring country, charges have to be paid in both countries. Still, seen from a pure logistic point of view, the two transport chains are very much the same, and the marginal costs caused are most similar.

During wintertime four 30,000 tonne vessels are assumed to be employed as ore shuttles between Storön/Kemi to a hub port where the ore is reloaded into very large vessels (100,000 tonnes) for further transport to the market. In the Swedish hub port example above (Oxelösund), independently of the shuttles´ origin (Storön or Kemi) the total Swedish fairway charge for a four-month winter season will be about 580 000 euro. When using Kemi as departure port, however, the transport will be debited the full Finnish fairway charge as well. This may amount to 480 000 euro (given that the vessel has not received a rebate by other calls at Finnish ports during the year).

Clearly, the fairway charges are not the dominating cost for shipping goods of this kind. In relative terms the difference still is remarkable, charges may well be doubled when both countries are

11 From January 1, 2009 a part of the revenue is transferred to the Swedish Transport Board for covering their activities related to maritime shipping. The SMA has some governmental funding specifically dedicated for channel traffic and leisure boating.

36 involved. At the margin this may be of importance. It may signal lack of harmonisation between the two countries. Without going into any details, it is concluded that fairway charges should not hamper the pace of innovation in joint Finnish/Swedish transport. If charging procedures prove to be an anomaly of importance it should be dealt with properly. A pragmatic approach is suggested where shippers are invited to describe and discuss their potential problems when they occur or are about to occur, for joint analysis at a case by case basis. In Finland, any adjustments of legislation regarding fairway charges demand parliamentary decisions while any Swedish adjustments to a larger extent can be handled at an administrative level. As experience suggests that a comprehensive review of the fairway charges is justified, the issue should be jointly dealt with by the two countries.

Pilot services are charged separately in both countries and charges are related to the vessels’ size and, directly or indirectly, the length of the piloted route. Every single turnout is charged, but there is a possibility to avoid the costs by qualifying for pilot exemption. Exemption demands that the captain has proven knowledge of the fairway, skill in manoeuvring his vessel properly and has passed a test. It is unlikely that a very large vessel could be operated under a pilot exemption, but not unlikely that a shuttle in question would. Thus, the pilot charges may be in the range of €130 000 - €700 000, and seem to be very similar for the two alternatives, Storön and Kemi.

Estimated national maritime charges in the above mentioned example are summarized in Table 5.1.

Table 5.1 National fairway and pilot charges for the transpors of 10Mt from Kemi and Storön, respectively, given winter traffic with shuttles to an on-shore hub in Sweden, Oxelösund. Swedish charges are converted into € with an exchange rate of SEK 10 = € 1. Port of departure Kemi Storön Swedish charges Vessel related 320 000 320 000 Freight related 260 000 260 000 Pilot charge 130 000 – 390 000 130 000 - 690 000 Finnish taxes and charges Vessel related 480 000 - “Lästavgift” 1 000 - Pilot charge 0 - 310 000 - Total 1 191 000 – 1 761 000 710 000 – 1 270 000

5.1.3 The Umeå-Vaasa link – the Quark region The issues concerning communications and transport of goods and passengers in the Quark region are fundamental for maintaining and advancing the cross-border interaction in an east-westerly direction. The ferry connection is a part of the E12, the road connection between Norway (Mo i Rana) in the west and Finland/Russia/the Baltic States in the east.

The ferry line Umeå–Vaasa is the only remaining connection for passengers between Sweden and Finland north of Stockholm. Duty-free sales (an important source of financing) ceased when Sweden and Finland joined the European Union in 1995 and this changed the number of passengers significantly.

37

Figure 5.1 The Umeå-Vaasa connection.

5.2 Rail The Finnish and Swedish railway systems are different, which means that the Finnish rolling stock cannot operate on the Swedish railway network and vice versa, the same applies for the locomotives. The most crucial difference is the track gauge. Moreover the nominal voltages of electrification differ significantly. Also the signalling systems are somewhat different.

5.2.1 Differences between the Finnish and the Swedish railway infrastructures Sweden has the standard track gauge of 1435 mm whereas Finland has a broad track gauge of 1524 mm. Because of this difference all the dimensions along the line also differ. The structure and loading gauges are both higher and wider on the Finnish side of the border. The height of the nominal contact wire above the top of rail is also greater because of the higher structural gauge. If the track is electrified there has to be a transition zone where the contact wire height is adjusted to the local catenary system.

The difference between the two track gauges is very small, only 89 mm. If a three rail dual gauge track system is chosen there will be less than 15 mm spacing between the two rails next to each other because the head of the standard 60E1 rail is 74.3 mm wide. Instead of three rails there have to be four rails, two for each rail gauge system. The four-rail system gives longer sleepers and makes the maintenance and tamping more difficult. Moreover this kind of dual gauge system presents problems with the contact wire zigzag and the pantograph.

38 Table 5.2 Comparison of the interacting railway techniques. Finland Sweden

Track gauge 1524 mm 1435 mm

Structure gauge 6750 mm (height, V ≤160 6500 mm (height) km/h) 7000 mm (height, V >160 2600 mm (half-width) km/h) 3100 mm (half-width) Nominal voltage of 25 kV/50 Hz AC. 15 kV / 16 2/3 Hz AC electrification Normal contact wire height 6150 mm (5600 … 6500) 5200…5700 mm (4800…6100)

There are also other differences between the two railway systems which are solvable.

The Haparanda Line will be provided with a new signalling system called ERTMS12). In the long term this system will be implemented all over Europe.

5.2.2 Track charges The basic principle is that the Finnish Rail Administration is to levy a basic infrastructure charge from railway operators on a fair and non-discriminatory basis for the minimum access package and track access to service facilities, calculated on the actual level of use. The basic infrastructure charge shall always be based on the costs directly attributable to the operation of railway traffic. The infrastructure tax consists of a charge for external costs and a supplementary charge in accordance with the Capacity and Infrastructure Charge Directive. In the charge for external costs, the environmental effects caused by the operation of rail traffic can be taken into account. The supplementary charge can be levied to cover the full amount of the costs caused by the use of the infrastructure. Furthermore, investment tax will be levied for the Kerava-Lahti line section until 31 August 2021 in order to cover the long-term investment costs.

The infrastructure charge consists of the charges given in table 5.3.

Table 5.3 The Finnish infrastructure charges in euro.

12 ERTMS (European Rail Traffic Management System) is a standardized European signalling system for railways aimed to make cross-border train traffic easier and more effective.

39 Finland does not use a detailed scheme to describe the Finnish railway network performance. All compensation for the rail network availability and possible down time will be agreed in the rail network access contract.

Table 5.4 show the different parts of track charges that are used in Sweden. The Swedish system with track fees is now under review and this includes for example studies of the possibility to have differentiated charges.

Table 5.4 The Swedish track charges in euros. Swedish fees are converted into € with an exchange rate of SEK 10 = € 1. Fees Fee 2008 Fee 2010 (from Dec 13 2009) Track charge 0,00029 0,00033 (€/gross tonnes – kilometre) Accident charge 0,065 0,070 (€/train - kilometre) Emissions charges - Railcar (€/litre) 0,022 0,033 - Locomotive (€/litre) 0,039 0,058 Train path charge (€/train - kilometre) 0,025 0,027 Passage charge, freight transports (€/passage) 232,5 251,1 Other specific charge for passenger traffic 0,00078 0,00084 (€/gross tonnes - kilometre)

5.2.3 The Värta rail line (Värtabanan) Currently, there is a single rail ferry line between Finland and Sweden. It runs between Turku and Värtan in Stockholm. When transport policy suggests that transport users preferably should be offered a variety of transport option to choose among and supports a modal shift from road to rail, rather than the other way around, this connection is of strategic interest to both the countries. It is seen as important to offer the infrastructure needed and to facilitate the traffic. This makes the Värta rail line important. It is a prerequisite for the rail ferry. The line also is included in the TEN-network and the Nordic Triangle. The City of Stockholm has nevertheless questioned the future of the link due to land use aspects. We can conclude that the Värta port is a good location for the train ferry traffic in question. The location enables one return trip within 24 hours and that is important for a well functioning and attractive timetable. Thus, the Värta Line is important and should not be abolished as long as no alternative port is provided [or the traffic is permanently closed for commercial reasons]. Currently there is no similar port on the east coast of Sweden and there is no plan to develop such a port, therefore the Värta Line is needed for the foreseeable future. If the Värta line and the rail ferry traffic were closed it should imply that shippers have fewer ortions and that the traffic, first and foremost, would shift from rail to road. Within a few years it would mean that the number of heavy goods vehicles on the roads would increase by 30,000 annually. It would cause environmental and traffic problems, particularly in the vicinity of the ports. Currently SeaRail is making efforts together with itsr owners, Green Cargo AB and VR Ltd, to increase the ferry capacity at the line. To summarise, the rail ferry provides an important function in the intermodal transport system and the Värta rail Line is a fundamental part of the infrastructure.

5.3 Road Road infrastructure is well represented and distributed on both sides of the border. The border follows the Torne River and road system are connected by several bridges. Sweden and Finland have a shared coastal road European road 4 (E4), this is a major artery not only for the northern region but also for the both countries and Europe. Both countries plan for safe and high accessibility transport on E4. The road standard varies between 9 metres´ width to a four-lane motorway close to the border. Two plus

40 one road standard (mid fence preventing head-on collisions) on E4 or safer road type is identified in the respective countries´ long-term plans. E45 stretches from Italy in south to Swedish/Finnish border Karesuando in north. The last section is split in the E8, E6 and E69 before we arrive at North Cape, the northernmost mainland in Europe. The last 100 km of the Swedish E45 is not TEN-T classed. The traffic flow goes in the direction between Haparanda/Tornio, Kolari/Pajala and Kiruna and on towards Narvik in Norway. Road 99 diviates from this general traffic flow path, Road 99 continues along the border between Finland and Sweden with very low traffic flows.

Bearing capacity is of vital importance for heavy goods transport in the region. There is a need to upgrade the road system on both sides of the border in order to serve a growing volume of heavyweight transport. For some years there have also been increasingly frequent applications for super-heavy transport that need dispensation (special permit) from the road authorities.

There is a need of further investigations concerning roads. A socio-economic study for several projects in the region, for example a new bridge at Huuki (north of Kolari) and matching road with possible new rail line between Sweden and Finland. Also a new port in Kalix will require additional investments for road infrastructure. A review of the whole road system in the Pajala/Kolari region should be carried out and the need for complementing roads, both cross-border and intra-regional, should be investigated.

In connection with the electrification of the railway from the mine areas to Tornio, several overpass bridges must be rebuilt, because they are too low for the electric power lines. This will be done together with the Rail Administrations and the mining company.

5.4 The construction and maintenance industries in the Nordic countries The rail network in Finland is divided into 12 maintenance districts. The rail network maintenance industry was gradually opened for competition in the year 2004. The maintenance is carried out by four main maintenance contractors: VR-Track Ltd, Veli Hyyryläinen Ltd, Destia and Eltel Networks. Added to these, there are contractors maintaining and developing technical systems. The maintenance contracts run for 3 to 5 years.

Norway, Denmark, Sweden and Finland have carried out a joint development project concerning the construction industry in the Nordic countries (GNA). The project was limited to investments and the operation and maintenance of roads and railways. The work has been carried out in three phases between 2003 and 2008. Areas for development have been for example: common requirements for health, environment and safety; a Nordic vision for the future contracting sector; development of functional requirements; common competence requirements and common railway engineering and safety requirements for machinery used in railway construction. The project is completed and will be implemented in the authority’s normal work13).

The project FIA (”Förnyelse I Anläggningsbranschen”) deals with renewal in the construction industry in Sweden. This was an initiative from the Swedish Road Administration and the Swedish Rail Administration in December 2003. The objective was to gather all the concerned parties (from customers to individual contractors) around the insight that an improvement and renewal of the construction industry is necessary. This concerns for example tranparency, the way to work and quality, areas where good ideas can convert to practical improvements in the day-to-day working procedures. At present FIA represents two-thirds of the construction market´s staff and turnover14.

13 For more information - www.nvfnorden.org , click on GNA. 14 For more information - www.fiasverige.se.

41 5.5 Haparanda –Tornio Haparanda - Tornio is the only place where the Finnish and Swedish railway systems meet and because of the different systems the border is a significant obstacle and a technical transport bottleneck. There are two rail yards, one in Haparanda (Figure 5.2) and one in Tornio (Figure 5.3) comprising both standard-gauge tracks and broad-gauge tracks. Both border crossing stations have platforms for trans-shipment. Both border crossing stations take care of their own share of this task. The railyards are connected by a dual-gauge track where the two tracks of different gauges are placed adjacent to each other on common sleepers (Figure 5.4). The dual-track section is not electrified, but the shunting is taken care of by diesel locomotives.

Figure 5.2 Track diagram in Haparanda border-crossing station.

Finnish gauge 1524 mm Swedish gauge 1435 mm Dual gauge 1435/1524 mm Track gauge switch

Figure 5.3 Track diagram in Tornio border-crossing station.

42

Figure 5.4 The dual gauge track between Haparanda and Tornio.

5.5.1 The terminal issue 2005-2006 a study was carried out that addressed the question of a joint terminal for trans-shipment of goods and management of logistics in the Haparanda-Tornio region (”RailPortGränsen”).

The intention with this study was to investigate different alternatives for localisation of a new terminal for trans-shipment between the different track systems and between rail and other transport modes. This investigation was the first step and more detailed studies have to be carried out in the near future.

The twin railyard system is a major obstacle today. The capacity is limited and the facilities are no longer adequate for competitive train transports. The additional cost for trans-shipment is 5-15 per cent of the total cost of the transport. The goal with a joint terminal is to halve this additional cost.

The logistics would be better with one joint terminal for Haparanda-Tornio. This would support a better cooperation between different transport modes and create a better solution for cross-border traffic in the region.

5.5.2 Track gauge switching system An automatic track gauge switching system is installed in Tornio border crossing station in order to connect the two railway systems (Figure 5.5).

Figure 5.5 The track gauge switch in Tornio border crossing station.

43 The system with a track gauge switch requires special wagons and enables the trains to adapt another track gauge. A train can drive through the device at a speed of 5-20 km/h.

The advantage of this system is that the cross-border transport is made faster and demands less personnel than trans-shipment. There is no need to switch wagons and it is not necessary to have a fleet of different wagons or bogies. Other advantages are that this system demands less terminal area and will decrease the quantity of damaged goods. The disadvantage with this system is that the special wagons are more expensive and heavier meaning smaller net load-carrying capacity.

There is no existing technique for managing heavy goods like iron ore with a track gauge changing system. This is a functioning technique for passenger traffic already, there are experiences from other parts of Europe.

5.5.3 Common coach station for Haparanda-Tornio Haparanda and Tornio are becoming more and more integrated into one community through the planning that is carried out in both cities. The need of better public transport increases when the cooperation between Sweden and Finland increases. A common coach station is one step to an extended cooperation and this would create better possibilities to travel in the region and further in Finland or Sweden.

There is one coach station in Tornio and one in Haparanda. There is one coach line over the border (“Ringlinjen”), this is the only Swedish coach line that goes to Finland. There is no direct link between Sweden and Finland along the roads E4/E8. Some of the Finnish coaches to/from Kemi and Oulu go to Haparanda and pick up/drop passengers. It is possible to travel between Luleå and Oulu by coach, but the passengers have to change coaches at least once. This is a system that can be difficult to understand and get information about which means fewer passengers. Under a period of 3-4 years, ending in February 2004, a test with a direct coach service between Luleå and Oulu was carried out. There were two daily round trips between the cities, one in the morning and one in the afternoon in both directions. During this test the number of passengers were few on average.

One advantage of a common coach station is that a changing place for public transports between Sweden and Finland is created and this will make it easier to travel across the border because the systems for public transport will be connected. It will be easier to get information about coach traffic. This will also make it possible for better service to the passengers because the resources will be concentrated to one place.

The Municipality of Haparanda has already adopted a detailed development plan for the new coach station. It is strategically situated in the central part of Haparanda-Tornio (Figure 5.6). This area will be easy to access for all travellers regardless transport mode. Special attention has also been paid to pedestrians and cyclists.

44

Figure 5.6. Location for a common coach station, in Haparanda-Tornio.

5.5.4 E4/E8 On the border Tornio and Haparanda have been integrated with their urban centres with shopping and commercial facilities. The E4 has been adapted to this change and serves as a good transport alternative.

5.6 Discussion The main reason for investing in new or better infrastructure is the demand for better conditions for goods transportation. But this will also mean better pre-requisites for passenger transports and new/better possibilities for public transport between Sweden and Finland in the future.

• New connection between Pajala and Kolari for road and rail transports With a new bridge over Muonio River there will be better possibilities for public transports (coach) within the Pajala-Kolari region as an alternative to the private car.

• The new Haparanda Line The new railway will be completed in 2012. The main reason for building this new line is for the transportation of goods but of course this will mean new and better possibilities for passenger traffic on the railway. At present there are no plans for passenger traffic on the Haparanda line but the new railway is being prepared for passengers so it will be possible in the future. The existing railway bridge over the Torne River in Haparanda/Tornio must be upgraded to a 25-tonne axle load and a metric load of 12 t/m. The fact that the rail connection between the railyards in Tornio and Haparanda is not electrified is a problem.

• Haparanda-Tornio For a better cross-border connection it is important to have an efficient solution between Sweden and Finland. The present two-station solution is old-fashioned and inefficient. If the ore trains are heading to Kalix, the present system is inadequate because of lack of capacity. It

45 is necessary to further study the possibilities of building a new common railway terminal in the region. This study should also address the alternative of upgrading the existing terminals.

For passenger traffic, experiences from other parts of Europe shows that a track gauge switching system is already possible. A common coach station in the central part of Haparanda/Tornio should be developed in the future. When there is passenger traffic on the railway, good connections to this coach station are needed.

For regular heavy traffic a track gauge switch, axle shift or trans-shipment are too time- and manpower consuming and risky. An efficient railway system for the iron ore transport requires a dual gauge track between Tornio and Kalix/Storön.

The dual-gauge track system has several problems arising from the different infrastructures. Most of the problems can be solved by equipping the locomotives with double electrification and signalling systems. Other problems concerning for example structural gauge, meeting stations, loops in harbour, zigzag on overhead line and maintenance are also solvable.

• Upgraded railway between Tornio and Kolari The need for better conditions for the transportation of goods motivates the railway investments. This will also mean a potential for extended passenger transport to the ski resorts north of Kolari, Ylläs and Levi.

• Umeå – Vaasa An idea could be to give higher priority, for example TEN-T network status, for the east-west connection E12 from Mo i Rana in Norway to Vaasa in Finland (and further to Helsinki) via Umeå in Sweden.

• Roads improvements As a consequence of increasing rail transport there will be a growing number of road transports, bringing a need of improvements in both bearing capacity and traffic safety measures. Maintenance costs will be a growing item for road administrations because of increased wear and tear of the roads.

• E4/E8 E4/E8 is prioritised from both countries and lack of funding is the only obstacle for upgrading to higher bearing capacity than 60 tonnes gross weight per vehicle transport. Already today, there is an increase in transport of 90 tonnes gross weight between Överkalix and Piteå on the Swedish side. This will be evaluated during the coming year and industry is already asking for other road routes to give priority for these super heavy transports.

46 6. New mining operations will change the Finnish-Swedish transport patterns and make new demands on the common infrastructure and society

6.1 Mining operations The Pajala-Kolari iron mines and the Sokli phosphate mine are projects requiring massive investments. These mines are situated in Lapland (Finland) and Norrbotten (Sweden) and are currently in preparation. The construction of these mines, however, is conditional upon investments in railways, roads, ports and fairways.

Northland Resources Inc., a Canadian mining company, has planned to open iron ore mines in the municipalities of Pajala in Sweden and Kolari in Finland. These mines could achieve annual production of up to 10 million tonnes iron concentrate. The concentrate would in its entirety be transported to the world market.

Figure 6.1 Production volumes.

The company has already been granted by the Swedish authorities a mining concession for the Tapuli ore mine and is applying for the necessary environmental permit.

Another extraordinary mining project in the Finnish Lapland is Yara’s phosphate mine in Sokli, Savukoski, in the east near the border to Russia The estimated annual transport volume is 1,5 million tonnes of phosphate.

Yara Oy has started outlining a general plan for the rail line and environmental impact assessment. Preparation of the regional plan is ongoing and its ratification is possible at the earliest by the end of the year 2010.

47 6.1.1 Pajala – Kolari Fulfilled planning will lead to a considerable raise of the transport volumes which will affect both countries.

The main parts of the transport chain would be railway and sea transport. Alternative harbours for loading would be the harbours in the north of the Gulf of Bothnia or the harbour of Narvik on the Norwegian Sea. Transport to the harbours of the Gulf of Bothnia should initially be carried out on the railway between Kolari and Tornio. In an earlier study15, Kemi Harbour was found the most cost- efficient of the Finnish alternatives. The mining company has signed a letter of intent with the port of Kemi and city of Kemi, under which the company will be committed to ore shipments through the port of Kemi for volumes up to 6 million tonnes per year. The best Swedish alternative was found to be the construction of a new harbour south of the town Kalix at Storön.

Existing railway 2012

New railway

Upgraded railway

Red: 1435 mm gauge

Blue: 1524 mm gauge

Figure 6.2 Transport model.

According to current plans, the first extraction will be at Swedish Tapuli in 2011. In the first phase, the iron concentrates need to be transported on special trucks to Kolari to be transshipped to the railway. Later, it is planned to replace the truck transport by a transport pipe, conveyor belt or railway across the border river, the Muonio. From the company’s perspective the rail alternative is the best long-term solution.

From the point of view of the mining company, which buys the services, the opportunity to divide the transport between two or more harbours could give business advantages. It could trigger competition between harbours and assure services in case of disruption. The qualities of the transport routes are also important. Measures that will reduce the number of transports are of special importance (both trains and ships).

6.1.2 Sokli Yara Oy plans to start mining operations in area of Sokli in year 2012 or 2013. The planned transport weight is 1,5 Mt per year. From the mining area there will be a need for railway connections to

15 Kolari District Mining Projects Transportation Study.

48 transport the concentrate ore to the costumers. The railway connection will be needed from Kemijärvi to Sokli Savukoski or a new connection to Russia. There is an existing railway line from Kemijärvi to Kelloselkä. Yara is preparing the environmental consequence analysis for four different railway line alternatives. The export harbour will be one of the ports in the Gulf of Bothnia.

6.1.3 Other activities Nordkalk is Northern Europe’s leading producer of high quality limestone-based products which are used for example in the paper, steel, and building materials industries, and also in conservation and agriculture. Nordkalk has studied the possibility of transporting pre-crushed limestone from Äkäsjokisuu to Talvivaara. The annual traffic volume has been estimated at 200,000 – 500,000 tonnes a year.

There are other new transport potentials for the rail network of northern Finland and Sweden. Elijärvi mine is situated close to the railway between Kemi and Tornio. Currently, transportation is by truck. The transported annual tonnage is about 0.5 Mt. Border traffic between Haparanda and Tornio may increase also due to transit transport, e.g. from Russia (through Finland) or due to the future transport needs of the steel factory in Tornio.

6.2 Demands on the infrastructure Construction of the transport route demands extraordinary investments in the infrastructure. The costs will partly depend on the use of the harbours: whether to concentrate the transports in one harbour or to divide them between harbours. Additionally, the volume of investment will depend on the standard of rail tracks and the fairways.

Figure 6.3 Studied area and infrastructure needs.

49 6.2.1 Railways Loading straight from the mine location requires total renewal on the Finnish side of the existing but unused track sections from Kolari to Äkäsjoki and Rautuvaara and loading facilities to be built in Rautuvaara. On the Swedish side a new broad-gauge rail connection from Kaunisvaara to Äkäsjoki and loading facilities in Kaunisvaara have to be built.

The railway between Kolari and Tornio is currently undergoing renewal and this is planned to be finished in 2011. The renewed line structure is estimated to be able to handle about 3 Mt per annum traffic volume. Moreover, the capacity of the track must be increased significantly when the mining operation develops. To be able to carry the estimated amounts of traffic the rail infrastructure work should be completed before the actual traffic increase over 3 Mt p.a. The economic output also requires electrification of the route and strengthening the track to allow higher axle loads and metric weight of wagons.

The Haparanda Line is under construction now and will be finished in 2012. This includes a new electrified line of good standard between Haparanda and Kalix. The existing line between Kalix and Boden is upgraded with electrification and higher axle load (25t).

Figure 6.4 State of the existing rail infrastructure concerning mine traffic year 2011.

From Kalix, the distance to the proposed harbour in Storön is about 20 km. To allow efficient transport from the mines to a port south of Kalix, the new track between Haparanda and Kalix needs to be equipped with an additional track with Finnish gauge.

A Storön port requires a new rail connection to the Haparanda-Kalix main line. The connection to Storön could be made after the main line has crossed the Kalix river c. 16 km upstream from Kalix. This would require a c. 27-30 km long connection to a future port. The alternative could be to build a new rail bridge across the river just SE of Kalix which would reduce the distance required for a connection to 18-20 km. This alternative, which is preferable for reasons of cost and distance, may also open for a 2-guage track between Storön and Haparanda. This distance would be c. 60km and make it possible to serve the port from the Finnish and the Swedish rail network without any special equipment for gauge change.

50 See more about double gauge and the technical differences in the railway systems in chapter 5.

Figure 6.5 Rail connection to a future port.

Studies have been made of the effects of increasing axle and metric loads in section Kolari-Kemi. Increasing axle loads has effects especially on steel beam bridges and if loads are increased to 250 kN (25 tonnes) these bridges have to be replaced. If the axle load is increased to 300 kN (30 tonnes), also a large number of concrete steel bridges have to be replaced. If increasing axle loads to 250 kN, only a few culverts should be repaired, but if axle loads are increased to 300 kN about 200 culverts should be replaced.

Increasing metric load from 8t/m to 12t/m requires improvements only in the substructure.

Axle load 250 kN seems to combine traffic economy benefits with a reasonable implementation process and quite low risk. More information can be found in Annex 6.1.

The legal issues and the land use issues have been estimated with fast handling process and no complaints. The timetable shows that for 250 kN axle load upgrade, the earliest finishing time is by the end of the year 2014.

Figure 6.6 Implementation timetable for upgrading to 250 kN (25 t) axle load.

51 New line segments on the Swedish side take 2-3 years of planning and legal issues handling before actual construction can start. The Kaunisvaara Line can be constructed in about two years, and can thus be ready for traffic at the earliest by the end of 2013.

The amount of trains is calculated assuming that the maximum length of a train is 750 m.

Table 6.1. The number of trains in different alternatives. Alt3 Alt2 Alt1 Basis 12t/m – 300 kN 12t/m- 250 kN 8t/m – 250 kN Total wagon weight [t] 120 100 100 Wagon length [m] 10,3 8,3 12,5 Wagons / train 68 84 56 Train weight [t] 8 160 8 400 5 600 Train sets 6 6 9 Max transport amount [t] 10 057 200 10 155 600 10 269 000

Six different timetable structures were drawn up based on the calculations. The traffic models studied require about 10 new meeting places to be constructed in Finland as well as meeting stations for mine trains in Sweden. The feasibility of the implementation of all planned meeting stations in Finland has been ensured, but that has not yet been done in Sweden.

The need for rolling stock for different alternatives has been calculated by graphical timetables and number of wagons.

Table 6.2 Number of wagons in different alternatives. Studied alternatives Amount of wagons 10 Mt (all) to Kemi Alt1 300 kN/ 12t/m 272 Alt2 250 kN/ 12t/m 364 Alt3 250 kN/ 8 t/m 336 10 Mt (all) to Kalix Alt1 300 kN/ 12t/m 340 Alt2 250 kN/ 12t/m 420 Alt3 250 kN/ 8 t/m 336 3 Mt to Kemi and / 7 mt to Kalix Alt1 300 kN/ 12t/m 340 Alt2 250 kN/ 12t/m 420 Alt3 250 kN/ 8 t/m 336 5 Mt to Kemi and 5Mt to Kalix Alt1 300 kN/ 12t/m 340 Alt2 250 kN/ 12t/m 420 Alt3 250 kN/ 8 t/m 336

The route alternatives including transport to Kalix end in an identical number of wagons. It is the travel time that produces the need for five set of wagons (340-420 wagons in Alt 2 and Alt 3). In Alt 1, six sets of wagons corresponding to 336 wagons are needed. Nine sets of wagons in Alt 1 enables an extremely efficient daily circulation of the rolling stock. This is why the number of wagons needed is not increasing in relations to the daily number of trains needed.

The operation using alternatives Alt 2 or Alt 3 is the most efficient if all the transport is routed to Kemi. This way the number of wagons (272-364) and locomotives needed for the operation is decreased by 20 per cent compared to the other route alternatives.

Transport from Sokli Mine requires a new railway connection in Finland or a new railway or transport pipe connection over the Russian border to Kovdor. Because of the Natura 2000 reserves, routing alternative number one out of the four studied railway alternatives is the most feasible.

52 Figure 6.7 Needs for Sokli Mine connections.

6.2.2 Ports and sea transports The port of Kemi consists of two different parts, Veitsiluoto and Ajos. There is currently rail line both at Veitsiluoto and at Ajos. The line to Veitsiluoto branches off from the line to Ajos. Traffic to both parts of the port is handled as shunting from the railway yard at Kemi. Directing mining traffic from Kolari through Kemi would require the construction of a completely new section of the port to meet its needs.

Figure 6.8 General map of the port of Kemi and outline of the extension options.

The depth of the fairway is only 10 m in Kemi. The Finnish Maritime Administration (FMA) has studied a number of alternatives to deepening the channel, ranging from a maximum vessel depth of 11 to 14 meters. Based on the projected transport volumes, all alternatives seem to be socio- economically profitable. In any case, the mining project needs the transport of the iron concentrate via Kemi initially, since there are no other feasible alternatives.

53

Table 6.3. Deepening of Kemi Ajos fairway.

Deepening of Kemi Ajos Fairway Comparison of suggestive timelines

maximum draught of design ship Phase 11,0 12,0 12,5 13,0 14,0 Surveys completed 09/09 09/09 10/09 10/09 10/09 Soundings completed 09/09 09/09 09/10 09/10 10/10 General planning completed 10/09 10/09 10/09 10/09 10/09 Environmental impact assesment start - - 10/09 10/09 10/09 Application of environmental permit 12/09 12/09 05/10 05/10 05/10 Environmental impact assesment completed - - 10/10 10/10 10/10 Detailed planning completed 12/10 12/10 12/11 12/11 12/11 Granting of environmental permit 12/10 12/10 05/11 05/11 05/11 Tenders in 03/11 03/11 09/11 09/11 09/11 Selection of contractor 04/11 04/11 10/11 10/11 10/11 Start of construction phase 06/11 06/11 06/12 06/12 06/12 Implementation of new fairway 12/11 12/12 12/13 12/14 12/15

For a port on the Swedish side to be considered for the transport in question it has to have at least as good, probably better, seaward potential as Kemi. Due to differences in rail standard, land transport will be more expensive when the Finnish and Swedish rail systems have to be combined. The nearest port at the Swedish side, Karlsborg, is out of question. The current draught is only six meters and the channel is narrow. The port area is small and the surrounding depth around is severely limited. The waterside costs to make the port compatible with Kemi are preventive. Existing Swedish ports further south suffer from limited draught (Luleå 11 meters) and long expensive land legs from the Finnish border. At Storön in Kalix on the other hand there is an excellent potential port location. It has the best hydrographic conditions. Existing hydrographic data suggests that very big vessels (Baltic Max) can make their way to a potential port without any, or very little, dredging. This considers the need for dredging measures in the Northern Quark.

Considering the planned throughput of the 10 Mt/y, a preliminary estimate of the time required for implementation of such a large port development project considering the ideal conditions would be 3 to 4 years measured from the present time to fully operational. The channel to a potential harbour in Kalix will be deep enough to allow Baltic Max (15,3 m) without any major investments.

For both port alternatives, winter navigation is a challenge. Today, the traffic through the Northern Quark amounts to about 120 vessels a week, 60 vessels northbound and 60 vessels southbound. Full implementation of the Pajala/Kolari transport would imply a traffic increase of somewhat more than 10 per cent. It would make demands for additional icebreaking resources, but not necessarily investments in new icebreakers. Currently some resources are leased out for other purposes. The alternative to the allocation of additional icebreaking resources to the area would be increased average waiting time for traffic.

54

Figure 6.. Shipping and typical distribution of ice breakers during a normal winter.

Icebreaking services have proven capacity and experience to assist ships up to a size of 30,000 tonnes, given ice-coat capacity 1A or 1A super, under all weather conditions. To assist bigger vessels during the most demanding ice conditions, new investments in icebreakers are probably needed. The concepts study “Technology for the assistance of large tankers in heavy ice “suggests the possible design for an icebreaker to assist very large vessels. The study, however, indicates that the costs to build such a vessel are considerable. The costs are likely to be prohibitive.

All in all, this implies that any logistic scheme employing larger vesses is likely to need alternative winter logistics. E.g. a hub (off-shore or on shore) could be developed south of the restricted area, where the iron concentrate is reloaded from smaller vessels to larger vessels, for further transport overseas.

A scheme can be developed where full-size vessels call in the ports when ice conditions permit. The large vessels perform direct transports overseas. In parallel, 30,000-ton ice classed vessels depart for Rotterdam for trans-shipment. When ice conditions prevent the large vessels to call into the Gult of Bothnia, a temporary hub is utilised for trans-shipment. The 30,000-tonners are used as shuttles for the shorter distance, while the larger vessels perform the longer transport to the customer.

Concerning the planned Sokli Mine, a 10 m fairway is deep enough for the transport from Sokli. Alternative harbours in Finland are Kemi, Oulu and Raahe. The transport distance to the port of Kokkola is too great. Phosphate cannot be handled with the same devices as iron ore concentrate (i.e. additional investments would be needed in Kemi or Kalix). This may cause problems in the limited space available, e.g. in Ajos, the outer harbour of Kemi. The rail capacity needed for phosphate transport, and the possible needs for investments may also have impact on the optimal solution from the social point of view.

The general price fluctuation is a risk factor to the costs of sea transport. Pollution control is a predictable cost driver. To this end the most important decision is that of IMO to reduce sulphur proportion in the fuels used in the Baltic Sea and in the North Sea transport to 0.1 per cent from the year 2015, compared to current 1.5 per cent. From the year 2010 an interim step will be taken by reduce the sulphur content to 1,0 per cent. Secondly, maritime transport could in the future be included

55 in the EU emission trading system. Studies propose that the fuel should be changed to gas oil, which might raise transport costs by tens of percentages. When taking the emission trading into account, the role of sea transport will gain an additional edge in the comparison of alternative transport routes.

6.2.3 Road Infrastructure measures connected to mining in the Pajala and Kolari region The first phase is to ensure that the road system can take other transport than a gross load of 60 tonnes per vehicle. Bearing capacity on road system is a first priority and already feasibility studies have started on road 99 and road 880 in the Swedish region.

Figure 6.10. Road connections from mining area to Finnish rail network.

A road from Kaunisvaara to Finnish rail network is needed in the short term as follows:

• 20 km private road from mine to road 403 (Northland) • 0.3 km public road 403 and bridge over the river to Finland (Swedish Road Administration) • 0.3 km public road 943 to road 9381 (Finnish Road Administration) • 3 km new private road to the railway (to be built by the mine operator) • New private road between Tapuli and Kolari (Honkavaara/Sahavaara - Kolari)

Since mining operations will initially be on Swedish soil for several years, the requirements on the public road network on Finnish side come from the growing need for transport of persons as well as some goods transport. The road network can carry the additional traffic on both sides without major improvement. However, there are minor needs of bearing capacity measures.

In total it have been estimated that between 3 and 8 million euro should be invested in a near future in order to secure mine transports from the Pajala/Kolari region. Later, there will be complementary

56 investigations to discern the additional need of actions. The preliminarily estimated costs of improving the road system are about 3 million euro on Swedish side and about 5 million euro on the Finnish side. A new railway from the mine area in Kaunisvaara to the Finnish railway in an early stage means that these road improvements will not be needed for iron ore transport.

Later on, when the mines on Finnish territory are also operational, the road between Hannukainen and Äkäsjoki (road 19722) must probably be improved. If the company decides to use some sort of horizontal elevator lines for transportation, the need for an improved road is not certain.

6.2.4 Land use Land use planning is based on the needs of the councils and municipalities. Plans shall include empty space or enable changes in land use for railway, road or other needs of reserves. Railway planning and connections to the land use planning on the Finnish side railway described in Figure 6.11.

Figure 6.11 Interrelated procedures of the land use planning and railway planning in Finland.

There is an ongoing regional planning process for the area of Tunturi-Finnish Lapland. There are indications that the regional plan will be approved in the end of December 2009. Kolari Municipality is in that area.

Another regional planning process will start in 2009 for Länsi-Finnish Lapland. In both cases there have to be reservations for the different railway sections in the regional plan.

57 In the area of Tornio there is an ongoing town planning and also in that process it is important to show railway needs.

Railway Road Land use planning planning planning (rail (road (municipalities) administration) administration)

Overall objectives, visions, idea studies

Pre study Pre study Comprehensive plan

Deepen comprehensive Railway Road plan investigation investigation

Detailed development Railway plan Road plan plan Figure 6.12 Planning of roads/railways and the connection to land use planning. Road- and railway projects of a certain extent need government permission Building Building Building permit/ according to the Environmental Code and documents documents building documents this is a separatel procedure.

6.2.5 Environment New infrastructure will have effects in many ways and it is of particular importance to consider noice, vibration issues, barrier effects and traffic emissions. Where necessary, effects must be evaluated from different aspects. There are several Natura areas nearby where the operation will have impact. Groundwater areas and pumping plants will also require more detailed analysis if mining operations start.

6.3 The regional effect of infrastructure investments required by mining projects Northern Finland Large railway investments are significant to the growth of the sub-regional units in Finland. The construction of the Kolari-Kemi railway line would assist Tunturi-Finnish Lapland, The Torne Valley and Kemi-Tornio sub-regional units through the recession. The economic growth could increase 0,6- 2,2 per cent by the year 2011 and up to 1,3-4,3 per cent by the year 2016 in the sub- regional units of Finnish Lapland totally, a yearly average of 0,1-0,5 per cent. As regards the Sokli Mines the effects of Kemijärvi-Kelloselkä-Sokli railway line to the sub-regional units of East-Finnish Lapland and North- Finnish Lapland would be significant. Proceeding investments the economic growth of the sub- regional unit of East-Finnish Lapland could strengthen cumulatively by 8,3 per cent by the year 2013, an yearly average of 2,8 per cent. The effects of the railway to the economic growth of North-Finnish Lapland would be smaller, totally 3 per cent by the year 2014, a yearly average of 0,8 per cent.

The transport infrastructure investments would have positive effects on employment. The railway investments of the Pajala-Kolari mine would generate 418 new jobs in Western Lapland by 2015. The

58 share of Fell Lapland would be 147, The Torne Valley 114, and Kemi-Tornio sub-region 157 new jobs. The corresponding annual averages would be 52, 18, 14 and 20 new jobs.

If the Sokli and Pajala-Kolari mines were reviewed together, the effect on the employment would be the greatest in 2015. By 2015 the transport infrastructure investments would create altogether 1,288 new jobs. The corresponding annual average would be 161 new jobs. Along with the economic growth, the employment figures emphasise the positive regional economic significance of the transport infrastructure investments.

The evaluation shows that the transport infrastructure investments of both Pajala-Kolari and Sokli Mines are feasible considering their regional economic effects. The investments would increase production, employment, income, consumption and tax revenues in many sub-regions of Lapland.16.

Northern Sweden Since the 1950s the business sector in Pajala has gone through major restructuring. The situation in Pajala today is that both the population and the employment are decreasing. In the last 10 years employment has decreased by 11 per cent.

The average age in Pajala is 48.3 years (end of 2008) which is the highest in Sweden. Just over 30 per cent of the population is 65 years and older. This is well over the average in Sweden. Furthermore the out-migration is the biggest in the ages between 20-25 years and there are not that many that return before the age of 50.

The estimated amount of permanent jobs relating to mining is totally 1,800, about half in Finland and half in Sweden, The mining company is currently analysing the need of personnel and more exact information will be available during 2009. There will still be uncertainty depending on the amount of iron ore and the economic situation. The mine-related jobs will also make the situation for commercial and public services better and more provide job opportunities in this sector17.

6.4 Cost-efficient and benefit-cost calculations The objectives of the study are to compare the transport routes of the mines in Pajala and Kolari from the socio-economic point of view.

When estimating the relative benefits of alternative routes from the socio-economic point of view, all costs to all parties have to be taken into account. The socio-economic costs to be studied were investments in transport infrastructure and harbours, the residual values of the investments at the end of studied period, the maintenance costs of the transport infrastructure, transport costs, emission costs as well as accident and disruption costs.

Cost estimates for the alternatives have been based on the same technique and method as that used in long term planning 2010 – 2021 in Sweden. It is similar to the method also used by Finnish long term planning guidelines.

16 ”Pajala – Kolarin ja Soklin kaivoshankkeisiin liittyvien rautatie- ja tieinvestointien ja Kemin satamainvestointien aluetaloudelliset vaikutukset, Raportteja 38 17 ”Pajala – utvecklingsprogram” Prel. Slutrapport version 2, 2009-04-25

59

Figure 6.13 The investments used in calculations.

The transport costs for rail transport were based on the guidelines of Swedish Rail Administration Handbook (Banverket Handbok 706) for tracks of ore transport: Axle weight 250 kN (25 tonnes): 0,7500 SEK/train and km, Axle weight 300 kN (30 tonnes): 0,7500 SEK/train and km. The transport costs for maritime transport were based on the vessel costs used by the Finnish Maritime Administration.

The emission of rail transport and that of shipping were estimated based on the energy consumption of the vessels and engines by use of the Finnish emission coefficients. Carbon oxide emissions were calculated from the total trip length but the other emissions only from sea zone limited to Sweden and/or Finland. The price for one ton of carbon dioxide was 91 euro/tonnes in the calculations. Accident and disruption costs were estimated only for railroad transport.

In the calculations it was assumed that one extra icebreaker is needed to assist traffic in winter for 100 days on average. Average extra costs are about 20,000 €/day (2.0 million euro a year).

The different cost components have been discounted, which has resulted in the present values for the base year 2012. The interest rate used in the calculations has been 4.5 per cent, the calculation period 30 years starting from the base year (i.e. the estimated starting year of mining) and the salvage value 25 per cent of the investments after the 30 year period.

60 All costs have been defined without value added tax and without special taxes, fees and levies, which are normally paid by the transport. Also regional economic effects are not included. Calculations are made in euros (€). The currency exchange rate used is 10 SEK = 1 €.

The alternative harbours are Ajos in Kemi, a new harbour south of Kalix (Storön) or the port of Narvik as a more long-term alternative. Transport will start using Kemi Harbour in any case. The use of Kalix will not be a relevant option before the transport volumes exceed 3 Mt. Also the long term possibility of investing in the transport route via Narvik is studied.

The calculations for the different transport routes and investment alternatives have been compared to a base scenario were the transport of iron ore is carried out through the port in Kemi. This base scenario is shown as ‘Kemi 10 m 225 N no electrification’ (0+ alternative) and illustrates the alternative including only the minimum investments that have to be made to be able to transport the planned amount of iron ore.

The 0+ alternative consists therefore of the present infrastructure completed with the necessary railway capacity investments between Kolari and Kemi and capacity investments in Kemi Harbour. In the 0+ alternative the railway between Kolari and Kemi is not electrified and the axle load is 225 kN (22.5 t) and metric load 8 t/m. The depth of the fairway to Kemi is 10 m. Railway and road investment between Kaunisvaara and Kolari are excluded from the 0+ and also from the development alternatives.

As can be seen in Table 6.4, several transport route alternatives have resulted in positive socio- economic outcomes. The most cost efficient alternative is to transport the iron ore via Kemi Harbour, although the differences between the transport routes (Kemi, Kalix, Kemi/ Kalix combination and Narvik) are not considerable. The Kemi alternative with a 14 m sea channel depth has the least total costs when calculated with the maximum transport volumes (10 Mt/year).

4000

Investments (M€) Reset values (M€) Maintenace costs (M€) Transport costs (M€) Emissions and accidents (M€) 3500 Kalix Kemi 30 %, Kalix Kemi 100 % 100 % Narvik 70 % (Kalix 15,3 m) 3000

2500

2000 € M

1500

1000

500

0 Kemi 10 m, 225 kN, no Kemi 12 m Kemi 13 m Kemi 14 m Kalix 15,3 m Kalix 15,3 m/ Kemi 12 Narvik/ Kemi 12 m electr. m (open 2022) -500 All alternatives in years 2012-2014: Kemi 10 m, 225 kN (not electrified track), volumes 1-3 Mt/a All alternatives in years 2015- : axle load 250 kN (except Narvik 300 kN), volumes 10 Mt/a

Figure 6.14 Chosen alternatives for further study.

The same result applies for the cost-benefit calculations made for the different transport routes (Table 6.5). From a socio-economic point of view, the most favourable alternative is to concentrate the transports via the Kemi route. From a pure transport cost point of view the most favourable alternatives are Kemi 14 m, Kalix and Narvik routes.

61 Sensitivities have been handled as lower production growth than wanted/expected, 25 % and 50 % lower respectively. The relative position of the route via the port of Kemi improves when using smaller transport volume scenarios.

Table 6.4 The benefit-cost calculations for volumes 10Mt/a in different alternatives. (Million euros) Route alternative Reset Emissions+ Benefits + BC-ratio Investments values Maintenance Transports accidents reset values Kemi 10 m, 225 kN, no electr. 271 25 54 1870 578 - - Kemi 12 m 367 34 44 1489 447 530 5,5 Kemi 13 m 437 40 44 1414 483 577 3,5 Kemi 14 m 493 45 44 1349 440 689 3,1 Kalix 15,3 m 628 57 47 1327 400 761 2,1 Kalix 15,3 m/ Kemi 12 m 646 59 46 1376 414 700 1,9 Narvik/ Kemi 12 m (open 2022) 883 135 30 1353 318 912 1,5

Table 6.5 The benefit-cost calculations for volumes 7,5Mt/a in different alternatives. (Million euros) Route alternative Reset Emissions+ Benefits + BC-ratio Investments values Maintenance Transports accidents reset values Kemi 10 m, 225 kN, no electr. 271 25 41 1487 390 - - Kemi 12 m 367 34 41 1182 336 368 3,9 Kemi 13 m 437 40 41 1128 362 403 2,4 Kemi 14 m 493 45 41 1077 330 491 2,2 Kalix 15,3 m 628 57 43 1066 300 542 1,5 Kalix 15,3 m/ Kemi 12 m 646 59 42 1102 311 497 1,3 Narvik/ Kemi 12 m (open 2022) 883 135 26 1100 238 664 1,1

6.5 Discussion about different infrastructure financing alternatives for new mines in Pajala/Kolari The prerequisites for the necessary infrastructure investments to support the planned mining operations are complicated. The main goal when finding a financial solution should be to divide the financial risks between the parties that are best equipped to handle them. For example, business risks normally should be handled by a private company and bureaucracy risks should be handled by a public party in charge of the actual routines. When suggesting a financial solution in this report this has been a main principle.

The iron ore findings represent huge values, especially after the price rises on the world market since 2004. This means payback possibilities from future mines. However a mine has to be started up and to survive its first years to be able to develop and have a long life. One of the basic conditions from the very beginning is the transport possibilities via rail and sea. This means that the starting period is a main issue for the moment.

In the Pajala/Kolari case the principal transport solution for the first period is defined. The iron ore transports are dependent on the existing railway Kolari-Kemi, the harbour in Kemi and the fairway to the port. The harbour is owned by the city of Kemi. The mining company has signed a memorandum of understanding with Kemi and its port authority about the development and usage of the harbour with a long term capacity of at least 6 million tonnes iron ore per year. The railway between Kolari and Tornio is state-owned and is upgraded to carry an axle load of 22,5 tonnes. The railway lines north of Kolari are also state-owned but in bad shape and are not in use for traffic. On the Swedish side of the border there is no railway or rail connection across the Muonio River. The mining company plans to carry out its initial iron ore transports by road and has studied a transport pipe or a conveyor belt as the mode but has found a rail connection to the Finnish railway to be the most efficient solution. A cost estimate for the rail connection is 120 million euros and for the transport pipe, 40 million euro. The work with a pre-study for the rail connection from the mining area in Sweden to Finnish railway will be done this year.

62 It is necessary to divide the question about rail investments for this first phase of the mining operations into two parts, the railway line Kolari – Kemi and the new connection from Sweden to Finland.

The first part is Kemi-Kolari, where the Finnish state (through the Finnish Rail Administration) and the mining company are the parties and the question concerns investments for upgrading from 22,5 t axle load to 25 t and 12 t/m and access to the upgraded harbour in Kemi.

The second part is the bridge over the Muonio River and necessary rail and road connections. The involved parties are both states (through the Rail and Road Administrations) and the mining company.

Both parts have to be handled in the same context but can be solved in different ways.

63 7. Conclusions

7.1 Background and general demands The mission for the Finnish and Swedish rail, road and maritime administrations is to describe the cross-border infrastructure between Sweden and Finland in order to indicate measures to enable the smooth transport of goods and people also in the future and to support economic growth in the border region.

The Swedish and Finnish tasks are formulated slightly differently. When they are combined it is obvious that the emphasis is on new, planned mining activities in northern Finland and Sweden and the joint land border. The implementation of these plans assumes possibilities to create efficient transport chains from mine to market.

Regarding both countries in a wider perspective, they are highly industrialised, rich in raw materials and dependent on exports and imports. They are however peripherally situated in the European Union and are depending on efficient transport and the extent and design of the Trans European Transport Network. This perspective also gives the starting point for looking at the joint maritime questions and other connections between the two countries.

A great number of investigations regarding these mentioned areas are produced earlier and they have contributed with input to this report and its conclusions in combination with studies made especially for this project.

Northern Scandinavia and the Baltic States need to secure its competitive advantages in for example raw materials by supporting an efficient transport infrastructure and minimising the administrative, cultural and physical demarcation lines between the countries.

This study concentrated on iron ore transports in Pajala-Kolari area because the mines cannot be opened without an efficient chain of logistics. The transports from and to the planned mines will also mean considerable changes of the transport patterns in the North. The potential of other needs for passenger and goods transport of the region using the same railway lines, roads and sea fairways were investigated at the same time.

The cost benefits of the different alternatives of the whole chain of transport from mine to customer, as well as the models of implementation suitable for large infrastructure construction projects, were evaluated and compared. In addition, the socio-economic consequences of the mining operations, construction of infrastructure and transport were assessed. This was done in Finland as a part of Sokli- Kolari mine project survey leaded by the Finnish Ministry of Transportation and Communications and in Sweden by the Municipality of Pajala with support of the County Administrative Board.

This study is based on several technical sub-surveys made during this study as background studies. The most important sub-studies concerning railways are the capacity analysis of the mine track made by RHK and the mine transportation studies made by NRI, on which the common assessment of the design bases of the mine train and the mine track is based. For the sea transport the different vessel types and channel depths are evaluated considering conditions and especially ice conditions wintertime. Moreover the construction costs of infrastructure have been assessed in both countries with respect to roads, railways, harbours, fairways and rolling stock. The starting point of the assessments is present and approved upgrading and the additional costs required in cost estimates and cost benefit analysis by mining operations and by other transport.

64 7.2 How to read and understand the conclusions Efficient transports builds on co-operation between the different modes of transport. That makes it necessary to take into consideration the other modes of transport when looking at measures for any single mode.

However to make it easier for readers to gain an overview of the large number of conclusions and statements from this study, they are divided into three groups. The first one views the Finnish-Swedish infrastructure as a whole. The other concentrates on infrastructure questions regarding the mining plans around Pajala and Kolari. The third part concerns the financial questions that are connected to mining plans.

In order to facilitate the overview, the content of the first two parts is classified according to mode of transport.

7.3 The Nordic Triangle, the Motorways of the Sea, and the Bothnian corridor are joint Finnish-Swedish interests

7.3.1 Demands The Nordic Triangle and the Motorways of the Sea has proven their importance as two of the TEN priority projects. The Bothnian Corridor is a strategically important transnational link of the European freight transport system and should be regarded as a part of the TEN-T network. This corridor also connects the densely populated and industrialised areas in Finland and Northern Sweden around the Gulf of Bothnia. This corridor connects the Nordic Triangle with one of the Northern Axis. It also means new possibilities to connect corridors from Norway and Russia from Trondheim, Mo i Rana, Narvik, Murmansk, Archangelsk, Petrosavodsk, S:t Petersburg and Moskow.

In both Finland and Sweden, heavy investments have been made and /or planned in this corridor which means improved conditions for efficient transport.

In this context it is important to regard the efficiency of the border crossing facilities and the maritime co-operation.

The railway connection in particular has room for improvements.

7.3.2 Conclusions regarding transport corridors in the North in an EU- perspective General questions • The Bothnian Corridor is a joint Finnish –Swedish framework skirting the Gulf of Bothnia connecting the Nordic Triangle with the Northern Axis. With improved capacity it will support the EU´s supply of raw and refined natural resources and should be given priority as part of the TEN-T network.

• The Bothnian corridor crosses the Finnish-Swedish border between Haparanda and Tornio. Improved capacity for this corridor means a need for improved capacity also for the border crossing infrastructure. This will also make the regional cooperation across the border easier and increase the value especially of the railway investments in the area.

Maritime questions • A general finding is that the sea traffic between Sweden and Finland is served in a sufficient way by the concerned harbours.

65 • Another general finding is that ferry berths close to city centres are favourable for the ferry traffic with focus on ferries with passenger transports and cruises.

• The on-going icebreaking cooperation between Finland and Sweden has further possibilities to be improved.

• There may be a potential to coordinate the Finnish and Swedish fairway charges in order to promote increased sea traffic efficiency. The Finnish and Swedish Maritime Administrations should jointly investigate and propose or implement measures on a case-by-case basis.

• The ferry between Vaasa and Umeå a historically important connection between Finland and Sweden and has kept its importance through the years. It is important not only for the region around the North Quark and its industries but also as an international connection between Norway and Finland and Norway and Russia. A ferry line is a basic condition for the possibilities to maintain these connections. There is no realistic alternative (the road connection adds around 800 km). Thus the ferry connection has to be regarded as part of the infrastructure (E12) even if it today is partly depending on subsidies.

• A joint ambition for Finland and Sweden is for the ferry connection between Umeå and Vaasa to develop into a viable business concern as a long term part of the infrastructure (E12).

• The on-going planning for the Horsten fairway by the Swedish Maritime Administration should be followed through. Implementation means reduced emissions and time savings for the south and east bound sea traffic with large vessels from Stockholm, for example to Riga.

Railway questions • The Finnish and Swedish Rail Administrations should jointly propose measures in order to upgrade the bearing capacity of the existing railway bridge over Torne River to 25 t axleload and 12 t/m

• The Finnish and Swedish Rail Administrations should jointly propose measures to improve the efficiency of the goods terminals in Tornio and Haparanda in view of expected future demands.

• In Stockholm there is a land use conflict between exploration interests and transport interests around an existing railway through the city, the Värta rail line, which also is a part of the Nordic Triangle. The railway is necessary for transports to and from Finland via this harbour. The Värta rail line should be kept until other transport alternatives are available.

Road questions • The Finnish and Swedish Road Administrations should jointly propose measures to secure a uniform standard of E8/E4 regarding traffic safety and an even traffic flow.

• Despite rail capacity there is a need of 2+1 road standard or better to secure both traffic safety and continuously standard in heavy freight transports.

Public transport questions • A joint coach station for Haparanda and Tornio will improve the public coach service along the coast of the Gulf of Bothnia.

66 7.4 The planned mines in Pajala and Kolari

7.4.1 Requirements During the period of work for this report, different actions by the mining company, Northland Resources Inc., have been going on in preparation for the planned mining. The most visible actions are test drilling and analyses in the iron ore locations, procedures to obtain necessary permits, an agreement with a potential customer, an agreement with Kemi Harbour Authority on arrangements for transport of the first volumes of iron ore concentrate and preparations to acquire the rolling stock for the railway transport from mine to harbour.

It is a big challenge for the Finnish-Swedish communities as a whole to meet the demands of the planned mining activity and it is especially challenging regarding the public infrastructure in railways, roads, fairways and harbours. The predicted transport volumes around the planned mines are of a size that will result in a considerable change in the transport patterns in northern Finland and Sweden and in the Gulf of Bothnia. These changes require investments in expanding the road, railway and fairway networks and in harbour capacity.

Questions for the infrastructure managers to handle are:

• To identify necessary cost-effective measures (out of a joint Finnish-Swedish societal perspective) to improve and extend the transport networks step by step in cooperation with the mining company, • To identify necessary investment costs and the investment responsibilities, • To find financing sources and financing solutions, • To organise efficient cooperation between the concerned transport administrations and the mining company and • To identify and complete in time the planning processes for the measures to be done.

In order to give input to the answer to first two questions, new documentation has also been produced specifically for this report: a cost estimation for different rail solutions for alternative iron ore transport routes, a comparison of the different harbour alternatives for the iron ore sea transports (Kemi, Kalix, Narvik) and a cost analysis comparing different options for iron ore transports from mine to market. A special study has also been carried out for the railway through Haparanda/Tornio.

7.4.2 Conclusions and proposed measures It is in the joint interests of Finland and Sweden that the planned mining operations will be implemented. If the plans will be developed into a viable business concern they will bring radically new conditions for municipalities with a decreasing and aging population. New mines will also strengthen the European capacity for raw material support.

However, implementation requires heavy investments both by the society and by the iron ore company. (Costs are specified in the cost analysis.)

General questions • The iron ore deposits represent huge economic values and would enable considerable positive socio-economic development for a region for decades burdened with a shrinking economy. Instead of a possible continued development in the same vein, fulfilled mine plans means new employees and an increasing population and local economy with possibilities to use existing social investments. The mining activities will create up to 1800 new jobs in Sweden and Finland and the investments in the necessary infrastructure will add the job opportunities during the construction period.

67 • New iron ore mines in Pajala and Kolari, with a size comparable with the Swedish iron ore mine in Malmberget, demands access to an efficient combination of railways, harbours and fairways.

• To ensure a quick start for mining activities, cost efficiency and good development possibilities, the road connections are already being constructed at this stage, Kolari track is already under rehabilitation, planning is under way for the enlargement of Kemi Harbour for loading iron ore including relevant systems, and there are plans to dredge the channel to Kemi port.

• In this way, 3 Mt of iron ore can be transported from Pajala mine to Kolari by truck and on to Kemi by train during the year 2012, after which a track to Pajala mine area has to be constructed. The track between Kolari and Tornio has already been upgraded to carry a 22.5- ton axle load. To ensure the cost efficiency of the mine transport, the track from Kolari to Kemi shall be rehabilitated at least for a 25-ton axle load, 12 ton metre load and 750 m long train sets. The tracks have to be electrified and necessary noise and vibration protection installed. The rehabilitated track may need rerouting near population centres.

• For these baselines without lengthening the railway yards, three daily freight trains will be needed to carry 3 Mt per year and after the rehabilitation six daily freight trains will be needed to carry up to 10 Mt per year. The above described tracks and fairways enabling transport heavier than today show good profitability according to cost benefit calculations.

• As a start up period road infrastructure has capacity to take those transports. Probably will a company built road (private) be in place, decision on that will be on the mining ore company itself.

• According to socio-economic calculations made by Ruralia Institute, the national economic effects of mining operations with the construction of related roads, railways and fairways are significant. Similar conclusions are made in a study made for Pajala Municipality supported by the County Administrative Board of Norrbotten County.

• The transport of phosphates from the planned mine in Sokli must be handled separately from the iron ore handling, which may lead to increased costs. However this is not expected to have any influence on the choice of rail/harbour alternative for the iron ore transport.

• A land use reservation east of Tornio is proposed in order to keep future possibilities to reroute the railway and the road E8.

• Land use planning issues is needed in order to support the complex situation in the area. Mutual interest in good and sound planning from Pajala and Kolari is wanted and should be supported by respectively administrations.

Maritime questions • In any eventuality, Kemi Harbour is needed in the first phase to enable the mining operations. The economic analysis conducted in connection with this study indicates that in the second phase, all the port alternatives Kemi, Kalix and Narvik alone or combined are possible and reasonable. However, according to the analysis, Kemi Harbour, having the highest cost benefit ratio, appears to be a better alternative from a socio-economic perspective.

• Regarding a new harbour in Kalix no other potential customers than the iron ore company have been identified during this investigation.

68 • Transport routes using the harbours in Kokkola, Raahe, Oulu, Luleå or Skibotn mean considerably higher transport infrastructure investments and/or iron ore transport costs than the routes included in this study.

• The need for a harbour complementing Kemi in Kalix or in Narvik is depending on the development of the planned mines and the development of the harbour in Kemi including dredging of the channel to the harbour. This will mean added total investments in infrastructure of about 300 (Kalix) or 700 (Narvik) million Euro.

• The development of Kemi harbour will be the responsibility for the iron ore company and the harbour authority.

• The planning of the dredging of the channel from the sea to the port of Kemi is the responsibility for the Finnish Marine Administration.

• The ice-breaking for the increased ore transports can be carried through without additional, new icebreakers when using smaller, ice classed bulk vessels during the winter season.

• The depth of the Northern Quark will permit vessels up to Baltic Max size in the northernmost Gulf of Bothnia if minor dredging is carried through.

Railway questions • At the beginning of 2015 it will be possible to carry out further upgrading, mentioned above, of the railway between Kolari and Kemi.

• The upgrading of the railway will include necessary noise and vibration protections and removal of some level crossings.

• Iron ore has to be transported from the Swedish part of the planned new mining field to Kolari. The most efficient and environment-friendly solution for this seems to be by railway. The infrastructure around the mining field is a question for the mining company but concerns the rail and road administrations in both countries. Close cooperation between all parties is necessary. A preliminary planning has started and the results will be put into practice the end of 2009. The cost-benefit ratio for a rail solution compared to other transport alternatives has to be verified during this planning period.

• Loading straight to the railway from the mine location requires on the Finnish side total renewal of the existing but unused track sections from Kolari to Äkäsjoki and Rautuvaara

• A rail connection to a harbour in Kalix has to bridge over the technical differences between the Finnish and Swedish railways. This is possible, but regarding the gauge difference it has to be done with a dual gauge track. No other reliable technique for heavy transports is developed so far.

• The technical challenge to equip the locomotives for double electrification and signalling systems and adapt the infrastructure with double gauges, zigzag on overhead line and maintainability are solvable.

• The on-going construction of the new railway between Kalix and Haparanda should be analysed by the Swedish Rail Administration regarding the technical/economical possibilities to prepare it for a dual gauge track in the light of the conclusions of this study. Cost-effective measures should be carried through in the on-going project.

69 • The planning processes for new infrastructure are time consuming. In order to have the possibility to meet future demands and keep the options open for the complementing harbours pre-studies are proposed to be made by the Swedish Rail Administration for possible rail connections for the iron ore transport from Kolari/Pajala to Kalix or Narvik. The result will be preconditions for future decisions and planning.

Road questions • In the beginning of 2015 minor road questions regarding bearing capacity should be carried through.

• The need of bridge crossing Muonio river and road construction has a rough estimation been approximated to up to 8 million euros.

• Road system connecting local support of transports and trips need in a very first place be probed so traffic safety can be secured in a proper way.

Other • The analysis carried through during this project concerning the costs and benefits of different infrastructure and transportation alternatives have given the basis for the proposals of the report. However there are differences between Finland and Sweden concerning input data and the way to describe the results. This is an area for improvement. Using the same models would stimulate the development of the models and increase the possibilities to compare results.

7.5 Conclusions especially regarding financing • The start-up period for the new mines is critical and motivates public support. However a viable business concern will create pay back possibilities. That motivates the use of risk- sharing models between the company and the states concerning the financing of the needed infrastructure improvements.

• The Parties - the states, municipalities and the private company - have a common interest in infrastructure investments that are not only in private but also in public use. The long term investments in question are huge. The Parties must receive a return on the investments as well as social gains.

• The Parties commit themselves to long-lasting cooperation that must be reliable and explicit. There are several agreement models available. The model chosen should be the one that brings most benefits to all the Parties.

• When giving support, the state and the municipalities should take the social risks that can best be underwritten by the state. The private sector should take the business risks.

• The planning should be jointly financed by the states, municipalities and the private company.

70 • There are different financial solutions for the construction of the railways and waterways:

1. One possibility is the normal solution, that Finland and Sweden finances the main lines, and the company or transport operators pays raised access charges or investment taxes. The risk is if the mining company will start the mining operations and if the freight traffic develops according to the plans. Concerning the Finnish fairway dues, the current legislation does not include the opportunity to have raised charges for a specific traffic flow. This would require a change in legislation. Swedish fairway investments are financed by charges and often co-financed by ports or other local parties.

2. The second solution is a PPP-model, where both states and the mining company establish a client company that procures the railways and the fairways from service producer companies. A PPP model is used with a payback period of e.g. 20 years. The challenge also here is how the mining company can be made to commit itself to this and whether the mining company meets high funding costs, if the states do not guarantee the project.

3. A third solution is that the mining company constructs and the state pays the funding back during 5 to 10 years, if the tracks and fairways fulfill the demands and there is enough traffic available. In today’s economic situation it is almost impossible for the mining company to get funding for this kind of financing model.

• If the railway will be used only by the mining business, the railway between the mines and the Finnish mail line near Kolari should be financed by the company, but the state can offer to repay, over a certain number of years, part of the investment during years when the business is running. This is a solution according to what is used for the new mine in Talvivaara.

• If investments are made in a harbour in Kalix (including rail investments) or investments in a partly new railway line to a harbour in Narvik they could, after further investigation and planning, probably be financed by a combination of raised access charges, and private, municipal and state financing. However it is must be noted that even if the Swedish access charges for the railway traffic are raised to the Finnish level, they will barely cover the maintenance costs.

71 References Analys av norrbottniska och västerbottniska naturresursers betydelse för hållbar tillväxt. Länsstyrelsen Norrbotten och Länsstyrelsen Västerbotten, 2008.

Botniska korridorren – översiktlig, inledande studie av förutsättningar och samhällsekonomi. Slutrapport. ÅF-Infrastuktur AB, Infraplan, juni 2008.

Development Scenarios Assessment for the Port of Kemi. BMT, August 2008

Forstudie Ny malmhavn i Narvik. Norconsult, juni 2008

Färjeförbindelsens betydelse för Västerbottens län. PowerPoint-presentation. Länsstyrelsen Västerbotten, Kvarkenrådet, 2009-02-04.

Förstudie Luleå Hamn, Sverige. Hamn för Pajalamalmen. WSP, september 2008.

Idea study - Iron ore rail transport from Kaunisvaara to main port in Kalix or Narvik. Railize international, August 2008.

Idéstudie Railportgränsen. Gemensam omlastning Haparanda – Tornio”. Slutversion. Nordkalottens logistik, Banverket, Ratahallintokeskus, juni 2006.

Informationsbroschyr om Botniska korridoren. December 2007.

Infrastrukturplaner 2010-2019. Positionsdokument för Västerbottens och Norrbottens län. ÅF- Infraplan Nord, oktober 2007.

Järnvägstrafik på Nordkalotten. Faktaunderlag och analys. Ofotenbanan-Malmbanan- Haparandabanan-Torneå/Uleåborg/Vartius. Slutrapport. ÅF-Infrastuktur AB, Infraplan, mars 2009.

Kalix New Iron Ore Port Storön, Sweden. BMT, March 2008.

Kartläggning av Sveriges malm- och mineraltillgångar i syfte att utveckla en kunskapsbas. Regeringsuppdrag. Sveriges geologiska undersökning (SGU), 2008.

Kolari District Mining Projects Transportation Study (translation from original Report in Finnish). Oy VR-Rata Ab, Rautatiesuunnittelu, A8/2008.

Kommunikationsvision Kvarken-MittSkandia. Infraplan AB, 2000.

Kort om Prognoser för person- och godstransporter år 2020. Rapport 2005:10. SIKA 2005.

Pajala- utvecklingsprogram. Prel. slutrapport version 2. ÅF-Infraplan Nord, april 2009.

Railway Network Development Study in the Tornio-Haparanda region. Liidea, 2009.

Regional systemanalys. De fyra nordligaste länen. Slutrapport. ÅF-Infrastuktur AB, Infraplan, september 2008.

Skogsindustrin i norra Sverige – översiktsstudie. Preliminär slutrapport. ÅF-Infraplan Nord, april 2008.

Skrivelse från SeaRail till Stockholms stad angående utredning kring Värtabanan, 2008-10-24.

72 Skrivelse från Vägverket Region Norr, Behov av utredningar och åtgärder för exploatering av gruvverksamhet i Pajala Regionen. PP 10-A 2009:14235. 2009-04-06.

Socio-economic Comparison of the Alternative Transport Routes of Kolari and Pajala Mines. Ramboll, 2009.

The new transport strategy of northwest Russia. Martti Miettinen, 16 June 2008.

The Northern Transport Axis- Pilot for the analytical support framework to monitor the implementation of the infrastructure and “soft” measures proposed by the High Level Group. Final Report. WSP Finland, December 2007.

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Internet addresses Eurostat (European Commission, statistics) http://www.epp.eurostat.ec.europa.eu/portal/page/portal/statistics/themes

Finnish Maritime Administration www.fma.fi

Finnish Rail Administration www.rhk.fi

Finnish Road Administration www.tiehallinto.fi

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Swedish Rail Administration www.banverket.se

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73 Annex

Annex 1.1 Steering group and working group for the project “Joint Finnish-Swedish infrastructure”

Annex 3.1 Number of employees in different branches of industry

Annex 4.1 Maritime, Total amount of passengers/goods between Gothenburg and Finland, both directions

Annex 4.2 Maritime, Total amount of passengers/goods between Värtan, Stockholm, Mariehamn and Grisslehamn and different destinations in Finland, both directions

Annex 4.3 Maritime, Total amount of passengers/goods between Stockholm; Nynäshamn and Kapellskär and different destinations in the Baltic States, both directions

Annex 4.4 Maritime, Total amount of passengers/goods between Gävle to and from different destinations in Finland, both directions

Annex 4.5 Maritime, Total amount of passengers/goods between Härnösand, Umeå and Luleå and different destinations in Finland, both directions

Annex 4.6 Harbours in Sweden and Finland

Annex 4.7 Tonnes of goods, between Sweden and Finland

Annex 4.8 Total amount of passengers/goods between Värtan and Åbo and Haparanda to and from Tornio, both directions

Annex 4.9 Road, Total amount of passengers/goods between Sweden and Finland, both directions

Annex 4.10 Volumes and number of passengers and trains on railway lines, a selection

Annex 4.11 Handling of goods in harbours in the Gulf of Bothnia

Annex 4.12 Reasons of travelling in the Northern region

Annex 4.13 Cross-boarder, frequencies of car trips and freight transport in the Northern region

Annex 5.1 Finnish and Swedish icebreaking resources

Annex 6.1 Rail and sea transport costs

Annex 6.2 225 kN, 250 kN and 300kN axle loads- strengths and weaknesses

Annex 6.3 Structure of the present values of the costs in years 2012-2041,10 Mt/a

Annex 6.4 The sum of the present values of the total costs in years 2012-2041, 10 Mt/a

Annex 6.5 Conclusion of the comparisons, Transport volumes -50 % (5 Mt/a)

74

Function Transport Finland Sweden mode Steering Rail Kari Ruohonen, Finnish Rail Katarina Norén, Swedish Rail Group Administration Administration “ Maritime Risto Lång, Finnish Maritime Gunnar Eriksson, Swedish Maritime Administration Administration “ Road Tapani Pöyry, Finnish Road Gunnar Tunkrans, Swedish Road Administration Administration

Working Rail Siru Koski (Deputy Project Jan Hertting (Project Manager) for the Group Manger), Finnish Rail Swedish Rail Administration, Annika Administration and Ilkka Kieri and Charlotte Reinholdt- Sinisalo for the Finnish Rail Hageback, Swedish Rail Administration Administration Maritime Taneli Antikainen, Finnish Gunnar Eriksson (see above) Maritime Administration Road Jorma Leskinen, Finnish Road Per Eriksson, Swedish Road Administration Administration

Annex 1.1 Steering group and working group for the project “Joint Finnish-Swedish infrastructure”.

Number of employees in different branches of industry

260 000 240 000 220 000 200 000 Mining and quarrying 180 000 industry 160 000 Steel, metal and production 140 000 industry 120 000 Wood based industry 100 000 80 000 Total 60 000 40 000 20 000 0 Total län Kajaani Lapland North Norrbottens Ostrobothnia Ostrobothnia

Annex 3.1 Number of employees in different branches of industry.

Maritime Gothenburg-Finland-Gothenburg

Number/Tonne

800000

700000

600000

500000 Passenger Goods 400000

300000

200000

100000

0 Oulu Kemi Kotka Gothenburg- Gothenburg- Gothenburg-

Annex 4.1 Maritime, Total amount of passengers/goods between Gothenburg and Finland, both directions.

Maritime Number/Tonne Stockholm-Finland

1 600 000 1 400 000 1 200 000 1 000 000 Passengers 800 000 Goods 600 000 400 000 200 000 0 Värtan-Åbo Åbo-Värtan Värtan-Helsinki Helsinki-Värtan Stockholm-Åbo Åbo-Stockholm Kapellskär-Åbo Åbo-Kapellskär Grisslehamn Stockholm-Helsinki Helsinki-Stockholm Kapellskär-Nådendal Nådendal-Kapellskär Grisslehamn-Eckerö- Stockholm-Mariehamn Mariehamn-Stockholm Kapellskär-Mariehamn Mariehamn-Kapellskär

Annex 4.2 Maritime, Total amount of passengers/goods between Värtan, Stockholm, Mariehamn and Grisslehamn and different destinations in Finland, both directions.

Maritime Sweden-Baltic States Numer/Tonne

400000

350000

300000

250000

200000 Passengers Goods 150000

100000

50000

0 Riga Riga- Tallin Tallin- Paldiski Paldiski- Ventsp Ventsp.- Kapellskär Stockholm Stockholm Kapellskär- Stockholm- Stockholm- Nynäshamn Nynäshamn-

Annex 4.3 Maritime, Total amount of passengers/goods between Stockholm; Nynäshamn and Kapellskär and different destinations in the Baltic States, both directions.

Maritime Number/Tonne Gävle-Finland

140 000

120 000

100 000

80 000 Passengers Goods 60 000

40 000

20 000

0 Gävle-Kotka Kotka-Gävle Gävle-Borgå Borgå-Gävle Gävle-Tornio Tornio-Gävle Gävle-Kaskö Kaskö-Gävle Gävle-Pargas Pargas-Gävle Gävle-Rauma Rauma-Gävle Gävle-Hamina Hamina-Gävle Gävle-Mustola Mustola-Gävle Gävle-Kokkola Kokkola-Gävle Gävle-Joensuu Joensuu-Gävle Gävle-Koverhar Koverhar-Gävle Gävle-Uleåborg Uleåborg-Gävle Gävle-Lappohja Lappohja-Gävle Gävle-Färgsund Färgsund-Gävle Gävle-Björneborg Björneborg-Gävle

Annex 4.4 Maritime, Total amount of passengers/goods between Gävle to and from different destinations in Finland, both directions.

Maritime Härnösand/Umeå/Luleå - Finland

Number/Tonne

3 500 000

3 000 000

2 500 000

2 000 000 Passengers 1 500 000 Goods

1 000 000

500 000

0 Vaasa Umeå Umeå- Vaasa- Luleå- Luleå Luleå- Luleå Kaskö Kaskö- Koverhar Koverhar- Brahestad Härnösand Brahestad- Härnösand-

The amount of goods (in tonne) is value for February 2009 multiplied with 12 months.

Annex 4.5 Maritime, Total amount of passengers/goods between Härnösand, Umeå and Luleå and different destinations in Finland, both directions.

Annex 4.6 Harbours in Sweden and Finland.

Annex 4.7 Tonnes of goods, between Sweden and Finland.

Rail Värtan/Haparanda-Finland Number/Tonne

600000

500000

400000

300000 Passengers Goods 200000

100000

0 Tornio Tornio- Haparanda Värtan-Åbo Åbo-Värtan Haparanda-

Annex 4.8 Rail, Total amount of passengers/goods between Värtan and Åbo and Haparanda to and from Tornio, both directions.

Road Number/Tonne Sweden-Finland

7000000

6000000

5000000

4000000 Passenger

3000000 Goods

2000000

1000000

0 Pello Tornio- Kolari Ylitornio- Finland- Haparanda Övertorneå Haparanda- Övertorneå- Muonio- Karesuando Karesuando- Pello-Finland- Kolari-Finland- Muoduslompolo Muoduslompolo-

**ÅDT för gränsöverskridande transporter är multiplicerat med 365 dagar ”Samgodsmodellen” one lorry including trailer 20 tonne Annex 4.9 Road, Total amount of passengers/goods between Sweden and Finland, both directions.

Section of line Number of Million Number of Number of Utilization goods trains/ tonnes of passenger passengers/ rate/day day goods/year trains/day year (%) Sweden Boden – Kalix 4 0,5 0 <60 Kalix - Haparanda 24 0,7 0 <60 Finland Tornio – Kolari 0,3 65 000 Tornio - Haparanda 0,5 0 0 <60 Tornio - Laurila 9 0,7 0 0 <60 Laurila – Kemi 9 1,7 0 0 <60 Kemi – Oulu 19 1,8 12 585 000 <60 Laurila - Rovaniemi 24 1,0 10 400 000

Annex 4.10 Volumes and number of passengers and trains on railway lines, a selection.

Country Harbour Million tonne Main article 2007 Sweden Luleå 8,7 Iron ore pellets Piteå 1,8 Forest products Skellefteå - Umeå - Finland Tornio 1,5 Iron ore, metal products Kemi 2,6 Bulk: Wood, Paper Oulu 3,4 Bulk: Wood, Paper Raahe 6,5 Metal, paper Total 24,5

Annex 4.11 Handling of goods in harbours in the Gulf of Bothnia.

Reasons of travelling in the Northern region Per cent 100 90

80 70

60 Private (Car) Bus 50 Train 40 Water 30

20

10 0 Total Work Leisure Visiting Personal To cabins Buisiness Education

Annex 4.12 Reasons of travelling in the Northern region.

Frequencies cross-boarder Per cent

80

70

60

50

40 Muonio Ylitornio Tornio 30

20

10

0 Daily Weekly Monthly Fewer Daily Weekly Monthly Fewer Cars Frights

Annex 4.13 Cross-boarder, frequencies of car trips and freight transport in the Northern region.

The table reports some technical data on the icebreakers. Where Category A are large icebreakers suited for off-coast operations. Category B relatively powerful, somewhat smaller icebreakers, well suited for operations near the cost. Category C are less powerful icebreakers, with a medium icebreaker capacity and category D are smaller vessels with icebreaking capacities.

Name Engine power, Length, Beam, Draught, Year of Owner kW m m m manufacture Category A Oden 18000 108,0 31,5 8,5 1988 SMA Atle 16200 104,0 23,8 8,3 1974 SMA Frej 16200 104,0 23,8 8,3 1975 SMA Ymer 16200 104,0 23,8 8,3 1977 SMA Urho 16200 106,6 23,8 8,3 1974 Finstaship Sisu 16200 106,6 23,8 8,3 1975 Finstaship Otso 15000 98,6 24,2 8,0 1986 Finstaship Kontio 15000 98,6 24,2 8,0 1987 Finstaship Fennica 15000 116,0 26,0 8,4 1993 Finstaship Nordica 15000 116,0 26,0 8,4 1994 Finstaship

Category B Tor Viking 13440 83,7 18,0 6,0 2000 B&N Balder Viking 13440 83,7 18,0 6,0 2000-2001 B&N Vidar Viking 13440 83,7 18,0 6,0 2000-2001 B&N

Category C Botnica 10000 96,7 24,0 8,5 1998 Finstaship Voima 10200 83,5 19,4 7,0 1954 Finstaship

Catergory D Ale 3500 47,0 13,0 5,0 1973 SMA Viscaria 4500 35,8 12,0 6,7 2000 Port of Luleå Baltica 2 610 56,8 12 4 1 982 SMA Scandica 2 588 56,8 12 4 1 983 SMA

Annex 5.1 Finnish and Swedish icebreaking resources.

Rail transport costs

Route and axle load €/ton

Pajala/Kolari-Kemi, 250 kN 1,9

Pajala/Kolari-Kemi, 300 kN 1,7

Pajala/Kolari-Kalix, 250 kN 2,2

Pajala-Kolari-Kalix, 300 kN 1,9

Pajala/Kolari-Narvik, 300 kN 2,3

Kolari-Kemi, 225 kN (not electrified track) 3,1-3,7

Sea transport costs

Rotterdam (50 % of transports) Alexandria (50 % of transports) 3,5 months 8,5 months average 3,5 months 8,5 months average TOTAL

Alternative 1: Kemi 100 % €/ton Detpth of channel to Kemi (m) 10 7,8 7,5 7,6 12,1 11,9 11,9 9,8 12 6,9 5,5 5,9 11,8 11,2 11,3 8,6 12,5 6,9 5,2 5,7 11,8 10,9 11,2 8,4 13 6,9 5,0 5,6 11,8 10,3 10,7 8,2 14 6,9 4,7 5,4 11,8 9,2 10,0 7,7

Alternative 2: Kalix 100 % €/ton Depth of channel to Kalix (m) 14 6,9 4,7 5,4 11,8 9,2 10,0 7,7 15,3 6,9 4,4 5,2 11,8 8,3 9,3 7,2

Alternative 3: Kemi 30 %, Kalix 70 % €/ton Depth of channel to Kemi/Kalix (m) 12/14 6,9 5,0 5,5 11,8 9,8 10,4 8,0 12,5/14 6,9 4,9 5,5 11,8 9,7 10,3 7,9 13/14 6,9 4,8 5,4 11,8 9,6 10,2 7,8 14/14 6,9 4,7 5,4 11,8 9,2 10,0 7,7 12/15,3 6,9 4,8 5,4 11,8 9,1 9,9 7,7 12,5/15,3 6,9 4,7 5,3 11,8 9,1 9,9 7,6 13/15,3 6,9 4,6 5,3 11,8 8,9 9,7 7,5 14/15,3 6,9 4,5 5,2 11,8 8,6 9,5 7,4

Alternative 4: Narvik 4,14,14,16,96,96,95,5

Annex 6.1 Rail and sea transport costs.

Annex 6.2 225 kN, 250 kN and 300kN axle loads- strengths and weaknesses.

Alt 0+

2900 Kemi 100 % Kalix Kemi 30 %, Kalix 70 % (Kalix 15,3 m) Narvik 100 % 2800

Alt 6 2700 Alt 5

Alt 4 2600 Alt 1 Alt 2 Alt 3 2500 €

M 2860 2400 2791 2785 2759 2708 2710 2673 2638 2657 2638 2666 2300 2586 2611 2587 2606 2610 2535 2560 2560 2519 2503 2491 2480 2465 2456 2426 2449 2447 2200 2393

2100

2000 Kemi 12/250 Kemi 12/300 Kemi 13/250 Kemi 13/300 Kemi 14/250 Kemi 14/300 Kemi 12/250 Kemi 12/300 Kemi 13/250 Kemi 14/250 Kemi 14/300 Kalix 15,3/250 Kalix 15,3/300 Kemi 12,5/250 Kemi 12,5/300 Kemi 12,5/250 Kemi 12,5/300 Kemim/ 13 300 Narvik/ Kalix (open 2025) Narvik/ Kalix (open 2022) Kemi 10 m, 225 kN,no electr. Narvik/ Kemi12 m (open 2025) Narvik/ Kemi10 m (open 2025) Narvik/ Kemi12 m (open 2022) Narvik/ Kemi10 m (open 2022) Narvik/Kemi 14 m, (open 2025) Narvik/Kemi 14 m, (open 2022) Narvik/Kemi 12 m/ Kalix (open 2025) Narvik/Kemi 12 m/ Kalix (open 2022)

All alternatives in years 2012-2014: Kemi 10 m, 225 kN (not electrified track) Volumes 2015-> 10 Mt/a

Annex 6.3 Structure of the present values of the costs in years 2012-2041,10 Mt/a.

Investments (M€) Reset values (M€) Maintenace costs (M€) Transport costs (M€) Emissions and accidents (M€) Kalix Kemi 100 % Kemi 30 %, Kalix 70 % Narvik 100 %

3500 Alt 0+ Alt 5 Alt 6 Alt 1 Alt 2 Alt 3 Alt 4 3000

2500

2000

€ 1500 M

1000

500

0

-500 Kemi 12/ 250 Kemi 12/ 300 Kemi 13/ 250 Kemi 13/ 300 Kemi 14/ 250 Kemi 14/ 300 Kemi 12/ 250 Kemi 12/ 300 Kemi 13/ 250 Kemi 14/ 250 Kemi 14/ 300 Kemi 12,5/250 Kemi 12,5/300 Kalix 15,3/ 250 Kalix 15,3/ 300 Kemi 12,5/250 Kemi 12,5/300 Kemi 13 m/ 300 Narvik/Kalix (open 2025) Narvik/Kalix (open 2022) Kemi 10 m, 225 kN, no electr. Narvik/ Kemi12 m (open 2025) Narvik/ Kemi10 m (open 2025) Narvik/ Kemi12 m (open 2022) Narvik/ Kemi10 m (open 2022) Narvik/ Kemi m, 14 (open 2025) Narvik/ Kemi m, 14 (open 2022) All alternatives in years 2012-2014: Kemi 10 m, 225 kN (not electrified track), volumes 1-3 Mt/a Narvik/ Kemi12 m/ Kalix(open 2025) Volumes 2015-> 10 Mt/a Narvik/ Kemi12 m/ Kalix(open 2022)

Annex 6.4 The sum of the present values of the total costs in years 2012-2041, 10 Mt/a.

(Million euros) Route alternative Reset Emissions+ Benefits + BC-ratio Investments values Maintenance Transports accidents reset values Kemi 10 m, 225 kN, no electr. 271 25 38 1120 260 - - Kemi 12 m 367 34 38 881 224 283 3,0 Kemi 13 m 437 40 38 849 241 305 1,8 Kemi 14 m 493 45 38 811 220 369 1,7 Kalix 15,3 m 628 57 39 797 200 414 1,2 Kalix 15,3 m/ Kemi 12 m 646 59 39 820 207 385 1,0 Narvik/ Kemi 12 m (open 2022) 883 135 22 855 159 492 0,8

Annex 6.5 Conclusion of the comparisons, Transport volumes -50 % (5 Mt/a).