3.3 North of Finland

Home , Bardufoss Air Station, Lotta (river), Municipalities of Kainuu, Murmashi, Nikel, Pechengsky District

ARCTIC BUSINESS FORUM YEARBOOK 2015

March 2015

Compiled and edited by Timo Rautajoki © Lapland Chamber of Commerce, 2015

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6 7 6. NORTHWEST RUSSIA ...... 144 TABLE OF CONTENTS 6.1 Murmansk Region...... 145 6.1.1 Investment potential...... 158 1. Foreword...... 10 6.1.2 Development of the region 2016–2020...... 161 6.2 Arkhangelsk Region ...... 168 2. ARCTIC COUNCIL, ARCTIC POLICIES 6.2.1 Investment potential...... 181 AND ARCTIC BUSINESS ...... 12 6.2.2 Development of the region 2016–2020...... 182 2.1 Arctic Economic Council ...... 12 2.2 Background and preparatory work of the AEC...... 14 7. SUMMARY AND CONCLUSIONS...... 186 2.3 US Chair in the Arctic Council...... 16 2.4 Arctic Council structure ...... 19 8. MAPS AND STATISTICS...... 191 8.1 European High North investment potential projects. . . . 191 3. NORTH OF FINLAND...... 26 8.2 Industry projects...... 191 3.1 Lapland...... 27 8.3 Mining industry projects...... 192 3.1.1 Investment potential...... 50 8.4 Energy projects ...... 192 3.1.2 Development of the region 2016–2020...... 53 8.5 Trade projects ...... 193 3.2 oulu Region...... 64 8.6 Tourism projects...... 193 3.2.1 Investment potential...... 78 8.7 Transport infrastructure projects ...... 194 3.2.2 Development of the region 2016–2020...... 82 8.8 Public investments...... 194 3.3 Kainuu Region...... 85 8.9 European High North investment potential 2015 by regions. 195 3.3.1 Investment potential...... 89 8.10 European High North investment potential 2015 3.3.2 Development of the region 2016–2020...... 91 by branches of business ...... 195

8.11 Main investment projects that start before 2020 by regions. 196 4. NORTH OF SWEDEN...... 94 8.12 Main investment projects that start before 2020 4.1 Norrbotten ...... 95 by branches of business ...... 196 4.1.1 Investment potential...... 102 8.13 European High North investment potential by regions and 4.1.2 Development of the region 2016–2020...... 104 branches of business...... 197 4.2 Västerbotten...... 109 4.2.1 Investment potential...... 119 4.2.2 Development of the region 2016–2020...... 121

5. NORTH OF NORWAY...... 124 5.1 Finnmark, Troms, Nordland ...... 125 5.1.1 Investment potential...... 134 5.1.2 Development of the region 2016–2020...... 137

8 9 This year the investment potential shown in the book consists of all pos- FOREWORD sible plans and projects in the regions. Some of them are clearly possible to implement after 2030. Closer analysis is targeted to investment The cover picture of this Arctic Business Forum Yearbook 2015 describes projects that could start before 2020. There are two scenario alternatives, very well the current situation in the European High North Business. “normal” and “growth+”. Normal means slow recovery of global economy Snow covered road is narrow and it is going over a mountain. There is and solution of political crisis. The second scenario describes the process a traffic sign showing a lower speed limit further up on the road. Eco- in case the growth is more dynamic than expected. nomic crisis was downshifting the business cooperation already a couple of years ago. Now we have also political crisis started from Ukraine ready Business Oulu and Kainuun Etu Oy have contributed information to this to spread to the Arctic if it is going to further escalate. Sanctions and yearbook. On behalf of Lapland Chamber of Commerce I want to thank counter sanctions are limiting business cooperation. This is not the right Mr. Alpo Merilä from Business Oulu and Ms. Karoliina Heikkinen from forum to do politics, but the political situation has its impact on business Kainuun Etu Oy for their assistance. and investments. Investment potential in the High North is growing all the time, but starting of the projects seems to be far in the future. March 11th, 2015 at Rovaniemi You are holding the 6th overview on the European High North investments and business development published in association with the Arctic Business Forum. This is the second time the name of the report is “Arctic Business Forum Yearbook”. The leading idea of this Forum is still to share information about the latest developments affecting the business in the Arctic and discuss the actions to be taken in order to overcome the known and foreseen barriers of business and trade. Timo Rautajoki President and CEO These six publications are not identical in nature as each year the report- Lapland Chamber of Commerce ing manner has gained more or less a new approach. This year the pres- entations of European High North regions is basicly the same as in last years edition. Regional development from 2016 is updated and analyses are based on latest reports and strategies.

10 11 Question regarding the secretariat of AEC has been on the agenda from 2. Arctic Council, the very beginning of the Task Force. First St. Petersburg was ready to Arctic Policies and take over it with big economical benefits to AEC within the first years. Then Norway has been offering Tromsö with economical benefits. Rus- Arctic Business sian government has confirmed that St. Petersburg is still ready to help with secretariat. And finally also Alaska has made its own offer for host 2.1. Arctic Economic Council the AEC secretariat.

Obviously AEC Executive Committee is going to decide about the sec- Arctic Economic Council (AEC) was the most important goal of the Ca- retariat in next AEC meeting during Arctic Council ministerial meeting in nadian Arctic Council chair. This council was established in September April 2015 in Ottawa and the location is probably Tromsö due to strong 2014 after more than one year active preparatory work by special Task economic support from Norway. Force. Founding meeting was in Iqaluit, Nunavut on 2.-3.9.2014. Meet- ing decided that the AEC is an independent organization created by the EAC is establishing also six working groups to analyze the arctic busi- Arctic Council that will facilitate Arctic business-to-business activities and ness. Working groups are for infrastructure with several subgroups, en- responsible economic development, as well as the sharing of best prac- ergy, tourism, fishing and human resources. tices, technological solutions, standards and other information.

Each working group is analyzing the business sector regarding main The AEC consists of 42 business representatives appointed by the Arctic themes as establishing strong market connections between the Arctic states and indigenous organizations. The AEC has selected a small inau- states; encouraging public-private partnerships for infrastructure invest- gural Executive Committee to guide its initial work to be lead by the chair ments; creating stable and predictable regulatory frameworks; facilitating Tom Paddonfrom Canada, vice chairs Tero Vauraste from Finland, Tara knowledge and data exchange between industry and academia; and tra- Sweeney from the United States who represents the Inuit Circumpolar ditional indigenous knowledge, stewardship and a focus on small busi- Council, and Evgeny Ambrosov from Russia. Initial administrative support nesses. for the AEC is being provided by Canada, and an offer by the Norwegian business community to support the AEC’s administrative costs going for- The work in groups should result in actionable recommendations to facili- ward was accepted in principle. tate trade, investment and industry collaboration, and to eliminate identi-

fied barriers. It should follow these four basic steps: by analyzing the During the work of the task force AEC was planned to be included to the current status of the business area in relation to one or two overarching Arctic Council as some kind of associate organisation reporting to minis- themes; by defining actionable recommendations and items that will ad- terial meetings. In spite of this the AEC was established as an independ- dress the current status quo; by starting executing on identified actions; ent organisation. Arctic Council website describes the relationship with and by reports and reviews. AEC so that as an independent body, the AEC will decide on its mem- bership, roles and responsibilities, governance, structure, and activities, while ensuring strong participation from indigenous businesses. It may inform the work of the Arctic Council through the views of business.

12 13 Some working groups have already began their work. Working group Fostering Circumpolar Business Partnerships members have been selected from outside the group of AEC representatives. The operating term for each working group will be 1-2 years de- The Arctic Council recognizes the central role of business in the sustain- pending on the need for analysis and implementation of recommended able development of the Arctic. During Canada’s Chairmanship (2013- actions. 15), the Arctic states and indigenous permanent participant organizations are facilitating the creation of a circumpolar business forum - the Arctic Economic Council. 2.2. Background and preparatory work of the AEC In the Kiruna Declaration, signed at the eighth Arctic Council Ministe- The Circumpolar Business Forum initiative was worked out in special rial Meeting in May, 2013, Ministers from the eight Arctic Council states Task Force simply called: ”Task Force to Facilitate the Circumpolar Busi- “recognize[d] that Arctic economic endeavors are integral to sustainable ness Forum” (TFCBF). The mandate of TFCBF has been to facilitate the development for peoples and communities in the region, desire[d] to fur- creation of a Circumpolar Business Forum (CBF) which would provide ther enhance the work of the Arctic Council to promote dynamic and sus- a mechanism to allow business and industry to engage with the Arctic tainable Arctic economies and best practices, and decide[d] to establish States and Permanent Participants. TFCBF had its first meeting in Sep- a Task Force to facilitate the creation of a circumpolar business forum.” tember 2013 and gave a report to SAOs by the end of 2013. Canada is chairing the TFCBF in cooperation with Finland, Iceland and Russia. The Task Force to Facilitate the Circumpolar Business Forum (TFCBF) is co-chaired by Canada, Finland, Iceland and Russia. Since May 2013, the The purpose of the proposed forum, as articulated in the Senior Arctic task force has been meeting regularly to pave the way for the creation of Officials’ Report to Ministers in Kiruna is to “provide a mechanism to allow this body. In December 2013, the Task Force proposed a new name for business and industry to engage with the Arctic States and Permanent the circumpolar business forum, which Senior Arctic Officials approved Participants. The CBF would provide a venue for businesses, industries in January 2014. The forum is now called the “Arctic Economic Council.” and indigenous enterprises to advance Arctic-oriented interests, share best practices, forge partnerships and engage in deeper cooperation.” The Arctic Economic Council will: • foster business development in the Arctic, The Task Force had its third face-to-face meeting in Helsinki on Decem- • engage in deeper circumpolar cooperation, and ber 4-5, 2013 to discuss the scope and mandate of the proposed body • provide a business perspective to the work of the Arctic Council. and how it would work with the Arctic Council. The meeting also included business participants from all of the Arctic States and a number of representatives from observers to the Arctic Council. The two-day meeting focused on reaching consensus on a framework document which outlines the Arctic Council’s expectations of the new business entity, as well as how the Arctic Council and the business entity will interact. The Task Force also reached tentative agreement on a new name for the circumpolar business forum, which will be called the “Arctic Economic Council”.

14 15 2.3. US Chair in the Arctic Council habitat declines in the globally unique Arctic marine environment. We are proud to report that all of these components were prominent in the U.S. USA is taking over the chair of Arctic Council from Canada in the next min- plans. isterial meeting of the AC in April 2015. The United States participates in the Arctic Council under the leadership of the Department of State. Many The U.S. priorities represent a significant move forward from the Eco- other agencies, including the Departments of Interior, Energy, Commerce nomic Development focus of the conservative Canadian government – (NOAA), Transportation (FAA), and Homeland Security (Coast Guard), the current Chair – and were well received by the eight Arctic nations and the Environmental Protection Agency, the National Science Foundation, six indigenous Permanent Participant organizations who sit at the table. the Arctic Research Commission, and the State of Alaska support or ac- While we cannot solve the multitude of issues confronting the Arctic dur- tively participate in the Arctic Council’s work. ing the two-year U.S. Chair, we can continue our progress in 2017 and beyond when the conservation-minded Finnish government assumes the At Arctic Council meeting in Yellowknife, Canada, the U.S. Department of Chair. State announced key initiatives that it plans on pursuing when it assumes the two year Chair of the eight-nation council in April 2015. These initia- There will still be a focus on improving living conditions and encouraging tives, presented under the theme of “One Arctic: Shared Opportunities, sustainable development in remote Arctic communities through programs Challenges, and Responsibilities,” will focus largely on reducing the caus- such as renewable energy initiatives and protecting freshwater resources of and impacts from climate change and will include projects ranging es. The U.S. conservation priorities, however, will help the Council, which from reducing emissions of short lived climate pollutants to developing a was founded in the 1990s as an outgrowth of the Arctic Environmen- circumpolar Arctic network of Marine Protected Areas. tal Protection Strategy, get back to its roots and address the ecological changes in the rapidly melting Arctic. This will occur with management The U.S. announced their priority programs in three distinct thematic and coordination through a regional seas agreement and program, and at areas: site specific levels, including enacting protections for important ecological 1. Addressing the Impacts of Climate Change in the Arctic, areas and habitat for Arctic wildlife. 2. Stewardship of the Arctic Ocean, and 3. Improving Economic and Living Conditions in the Arctic. The U.S. focus on climate change is particularly important now that other large emitters, including China, the European Union, and India, have As climate change is causing the remote Arctic ecosystems to change been admitted to the Arctic Council as Observers. This means that the more rapidly than any other region on the planet, Ocean Conservancy Arctic Council will be another venue for collaborative work on reducing applauds the ambitious and comprehensive nature of these initiatives. emissions of climate pollutants. With the recent announcement of a bilat- Ocean Conservancy previously undertook an in-depth review of the cur- eral U.S. and China program to reduce emissions, Ocean Conservancy rent state of Arctic science and management. We recommended that has high hopes that this work will continue and expand through focused the U.S. take this opportunity to begin the difficult but urgent process of dialogue at the Arctic Council. marine spatial planning and conservation by developing a regional seas program for the Arctic Ocean, protecting important ecological areas, and addressing climate pollutants that are the underlying cause of wildlife and

16 17 Further signaling the U.S. commitment to using the two year Chair of Fran Ulmer is another important person in the US Arctic Council chair the Arctic Council to achieve real progress in saving the Arctic was the team. She is chair of the U.S. Arctic Research Commission, where she announcement that Secretary of State John Kerry himself will act as the has served since being appointed by President Obama in March 2011. In Chair of the Council and that the U.S. will undertake both public outreach June 2010, President Obama appointed her to the National Commission and scientific initiatives to help us better understand the Arctic and the on the BP Deepwater Horizon Oil Spill and Offshore Drilling. From 2007 challenges that wildlife and communities are confronting with the impacts to 2011, Ms. Ulmer was chancellor of Alaska’s largest public university, of climate change. the University of Alaska Anchorage (UAA). Before that, she was a Distin- guished Visiting Professor of Public Policy and Director of the Institute of As one of only two conservation organizations accredited to work at the Social and Economic Research at UAA. She is a member of the Global Arctic Council, Ocean Conservancy looks forward to using our unique Board of the Nature Conservancy and on the Board of the National Parks. access to this high level intergovernmental forum to ensure that these ambitious initiatives to save the Arctic and its wildlife are achieved. The US Secretary of State, Mr. John Kerry announced already one year ago that a special envoy to the arctic is going to be appointed soon. Noth- The US chair program in the Arctic Council has nothing about business ing has so far happened. Neither Rober J. Papp or Fran Ulmer have no cooperation or Arctic Economic Council. Just established AEC is not rec- nomination to US arctic ambassador. It is very interesting to see if nomi- ognized by US Government. It looks strange that the most important goal nation happens before USA is taking the Arctic Council chair in April 2015. of Canadian chair, the AEC has to start the real work without any connection with the US chair in Arctic Council. This is going to be a problem for next two years. Finland is taking over the Arctic Council chair in 2017 after 2.4. Arctic Council structure the USA. Finland has been very active in the preparatory work of the AEC and it is obvious that connection between AC and AEC becomes at least The Arctic Council was formally established by Ottawa Declaration of as close as with the Canadian chair. But the question remains. What is 1996 as a high level intergovernmental forum to provide a means for pro- the AEC doing these two years? Can some kind of unofficial connection moting cooperation, coordination and interaction among the Arctic States, be found with the Obama administration? with the involvement of the Arctic Indigenous communities and other Arc- tic inhabitants on common Arctic issues, in particular issues of sustain- Admiral Robert J. Papp, Jr., USCG (Ret.) became the State Department’s able development and environmental protection in the Arctic. Special Representative for the Arctic in July of 2014, and will lead the effort to advance U.S. interests in the Arctic Region, with a focus on Arc- Arctic Council Member States are Canada, Denmark (including Green- tic Ocean governance, climate change, economic, environmental, and land and the Faroe Islands), Finland, Iceland, Norway, Russian Federa- security issues in the Arctic region as the United States prepares to as- tion, Sweden, and the United States of America. sume the chairmanship of the Arctic Council in 2015 according to the State Department. Admiral Papp visited Finland in the end of January 2015. Mr. Papp admitted that Arctic Economic Council is difficult for US Government.

18 19 In addition to the Member States, the Arctic Council has the category In the determination by the Council of the general suitability of an appli- of Permanent Participants. Out of a total of 4 million inhabitants of the cant for observer status the Council will, inter alia, take into account the Arctic, approximately 500,000 belong to indigenous peoples. Indigenous extent to which observers: peoples’ organizations have been granted Permanent Participants status • Accept and support the objectives of the Arctic Council defined in the in the Arctic Council. The Permanent Participants have full consultation Ottawa declaration. rights in connection with the Council’s negotiations and decisions. The • Recognize Arctic States’ sovereignty, sovereign rights and jurisdic- Permanent Participants represent a unique feature of the Arctic Council, tion in the Arctic. and they make valuable contributions to its activities in all areas. • Recognize that an extensive legal framework applies to the Arctic Ocean including, notably, the Law of the Sea, and that this frame- The following organizations are Permanent Participants of the Arctic work provides a solid foundation for responsible management of this Council: ocean. • Arctic Athabaskan Council (AAC) • Respect the values, interests, culture and traditions of Arctic indig- • Aleut International Association (AIA) enous peoples and other Arctic inhabitants. • Gwich’in Council International (GCI) • Have demonstrated a political willingness as well as financial ability • Inuit Circumpolar Council (ICC) to contribute to the work of the Permanent Participants and other • Russian Association of Indigenous Peoples of the North (RAIPON) Arctic indigenous peoples. • Saami Council (SC) • Have demonstrated their Arctic interests and expertise relevant to the work of the Arctic Council. This category is open equally to Arctic organizations of Indigenous peo- • Have demonstrated a concrete interest and ability to support the ples with a majority of Arctic Indigenous constituency representing: work of the Arctic Council, including through partnerships with mem- • a single Indigenous people resident in more than one Arctic State; or ber states and Permanent Participants bringing Arctic concerns to • more than one Arctic Indigenous people resident in a single Arctic global decision making bodies. State.

The Arctic Council has also observers. As set out in the Declaration on the Establishment of the Arctic Council and governed by the Arctic Coun- cil Rules of Procedure, observer status in the Arctic Council is open to non-Arctic States; inter-governmental and inter-parliamentary organizations, global and regional; and non-governmental organizations that the Council determines can contribute to its work.

20 21 Decisions at all levels in the Arctic Council are the exclusive right and Also nine Intergovernmental and Inter-Parliamentary Organizations have responsibility of the eight Arctic States with the involvement of the Per- been given observer status: manent Participants. 1. International Federation of Red Cross & Red Crescent Societies • Observers shall be invited to the meetings of the Arctic Council once (IFRC) observer status has been granted. 2. International Union for the Conservation of Nature (IUCN) • While the primary role of observers is to observe the work of the Arc- 3. Nordic Council of Ministers (NCM) tic Council, observers should continue to make relevant contributions 4. Nordic Environment Finance Corporation (NEFCO) through their engagement in the Arctic Council primarily at the level 5. North Atlantic Marine Mammal Commission (NAMMCO) of Working Groups. 6. Standing Committee of the Parliamentarians of the Arctic Region • Observers may propose projects through an Arctic State or a Per- (SCPAR) manent Participant but financial contributions from observers to any 7. United Nations Economic Commission for Europe (UN-ECE) given project may not exceed the financing from Arctic States, unless 8. United Nations Development Program (UNDP) otherwise decided by the SAOs. 9. United Nations Environment Program (UNEP) • In meetings of the Council’s subsidiary bodies to which observers have been invited to participate, observers may, at the discretion of In addition, the The Arctic Council receives the application of the EU for the Chair, make statements after Arctic states and Permanent Par- observer status affirmatively, but defers a final decision on implementa- ticipants, present written statements, submit relevant documents and tion until the Council ministers are agreed by consensus that the concerns provide views on the issues under discussion. Observers may also of Council members, addressed by the President of the European Com- submit written statements at Ministerial meetings. mission in his letter of 8 May are resolved, with the understanding that the EU may observe Council proceedings until such time as the Council acts At the Kiruna Ministerial Meeting in May 2013 an Arctic Council Observer on the letter’s proposals. Manual was formally adopted. Also in Kiruna the following 12 non-arctic countries have been admitted as observers to the Arctic Council: Eleven Non-government organizations are observers in the Arctic Council: 1. France 1. Advisory Committee on Protection of the Seas (ACOPS) 2. Germany 2. Arctic Cultural Gateway 3. The Netherlands 3. Association of World Reindeer Herders (AWRH) 4. Poland 4. Circumpolar Conservation Union (CCU) 5. Spain 5. International Arctic Science Committee (IASC) 6. United Kingdom 6. International Arctic Social Sciences Association (IASSA) 7. People’s Republic of China 7. International Union for Circumpolar Health (IUCH) 8. Italian Republic 8. International Work Group for Indigenous Affairs (IWGIA) 9. State of Japan 9. Northern Forum (NF) 10. Republic of Korea 10. University of the Arctic (UArctic) 11. Republic of Singapore 11. World Wide Fund for Nature-Global Arctic Program (WWF) 12. Republic of India

22 23 The Council’s activities are conducted in six working groups. The work- Principle of Consensus: All decisions of the Arctic Council and its subsidi- ing groups are composed of representatives at expert level from sectoral ary bodies are by consensus of the eight Arctic Member States. ministries, government agencies and researchers.Their work covers a broad field of subjects, from climate change to emergency response. The Arctic Council Secretariat supports the Chair of the Arctic Council. In the past, the location of the Secretariat was rotated biennially with the There are six Working Groups of the Arctic Council: Chairmanship of the Arctic Council. Prior to their consecutive chairman- 1. Arctic Contaminants Action Program (ACAP) ship periods, Norway, Denmark, and Sweden made a joint agreement 2. Arctic Monitoring and Assessment Programme (AMAP) to share the Secretariat for the duration of their chairmanship periods. 3. Conservation of Arctic Flora and Fauna (CAFF) Norway held the chairmanship from 2006-spring 2009; Denmark from 4. Emergency Prevention, Preparedness and Response (EPPR) 2009–2011; and Sweden from 2011–2013. During this period the tem- 5. Protection of the Arctic Marine Environment (PAME) porary Secretariat was hosted by the Norwegian Polar Institute located 6. Sustainable Development Working Group (SDWG) at the Fram Centre, Tromsø, Norway. At the Nuuk Ministerial Meeting May 2011 Arctic Ministers decided to establish the Standing Arctic Coun- Each Working Group has a specific mandate under which it operates. cil Secretariat at the Fram Centre in Tromsø. The Standing Secretariat Also working groups have a Chair hand Management Board or Steering became operational 1 June 2013. The Fram Centre houses many Arctic Committee, and is supported by a Secretariat. institutions and companies focusing on environmental research and cooperation in the Arctic. Working Group Management Boards are typically comprised of representatives of national governmental agencies of the Arctic Council Mem- ber States, connected to the mandates of the Working Groups; and representatives of the Permanent Participants.

Observer States and Observer Organizations are likely to attend Working Group meetings and participate in specific projects. In addition, Working Groups regularly have invited guests, or experts attending their meetings.

It is the responsibility of the Working Groups to execute the programs and projects mandated by the Arctic Council Ministers. These mandates are stated in the Ministerial Declarations, the official documents that result from Ministerial Meetings.

24 25 3. NORTH OF FINLAND - 3.1 Lapland LAPLAND Lapland is the northernmost county of Finland with about 183 000 inhabitants. About 4500 of inhabitants are indigenous Samí people. The total area of the county is 99 000 km2, which equals to 30% of the whole of Finland. Lapland is sharing borders with Sweden, Norway and Russia, Airport ARCTIC SEA altogether 1642 km. There are two international border crossings to Rus- Harbour sia, six to Sweden and six to Norway. Railway The six subregions of Kemi-Tornio, East Lapland, the Valley of Tornio, Northern Lapland, the Region of Rovaniemi and Fell Lapland form the region of Lapland.

Rovaniemi is the administrative capital of Lapland with appr. 60 900 inhabitants. The other cities in Lapland are Kemi appr. 22 300 inhabitants, Tornio appr. 22 500 inhabitants and Kemijärvi appr. 8 100 inhabitants.

Business in Lapland Clean nature and abundant natural resources provide a unique, solid FINLAND

ay russia foundation for the business sector in Lapland. The cornerstones of the w region’s economy are forest industry, metal industry, mining industry, for-

eden estry and tourism. The energy sector, too, will play an increasingly impor-

nor

s tant role in the economy in future.

Economic uncertainty caused by Global financial crisis and continuing poor demand in export industry has reflected in the economic development of Lapland. The decline in international demand has had a negative impact especially in the export industry and building sector. Economic growth of Lapland has, however, been more positive than the national level growth. The strong growth in Tourism and mining industry have af- fected also to other branches of business, like trade and business to business services.

26 27 The total turnover of the all companies in Lapland has climbed 4% over Industrial vision for Lapland in 2030: the year 2008 level, when the financial crisis started. The export from Lapland grows by nature. The cornerstone of industry in Lapland is the Lapland has reached also the level of 2008. Business to Business ser- sustainable refining of natural resources. vices have made biggest growth compared with the 2008 level. Growth • The industry and operating environment in Lapland have reached is more than 15%. Other growing branches of business are transport and a level where Lapland attracts new companies and employees by logistics (growth 14%), tourism (growth 13%) and trade (growth 12%). nature. Industry is still about 6% behind the year 2008 level with building and con- • Industrial actors in Lapland are internationally appreciated network struction (-4%). Compared with other Finnish regions the development of partners. Lapland has been almost unique. • Industrial growth in Lapland stems from innovativeness and arctic competence. Key economic figures of Lapland: • Population 182.800 The following strategic objectives have been set for the industrial devel- • Jobs 73.300 opment: • Total amount of companies 10.400 1. Growth and vitality based on value added: Growth in the value added • Total turnover of all companies 10 bln. € of industry in Lapland promotes vitality and well-being in Lapland. • Value of industrial export 3.7 bln. € (No. 5 of regions in Finland) 2. Fast reaction capacity/agility: Early identification of changes in the operational environment, reacting to them and using them as a com- Industry is the most important branch of business in Lapland. Total turno- petitive asset. ver of industry is 4.7 bln€ and it has about 8.000 employees. Number two 3. Best available technology: Industrial companies in Lapland always business is trade with turnover of more than 2 bln€ and over 6.000 em- apply and make use of the best available technology (BAT) in a com- ployees. Building sector is number three with 800 m€ turnover and over petitive manner. 4000 employees. Then is transport and logistics with 500 m€ turnover 4. Strategic partners: Actors in Lapland develop new applications in col- and almost 4000 employees. Tourism is next with 400 m€ turnover and laboration with the world’s leading actors. 3.700 employees. Mining is smaller with 300 m€ turnover and 1.200 em- 5. Growth in intellectual capital: The constant strengthening of intellec- ployees, but after recent openings of two mines and one mine expansion tual capital is the key to increasing innovativeness, improving cost- the numbers are rapidly rising. effectiveness, strengthening global competitiveness and boosting economic growth. The industrial strategy of Lapland provides guidelines for securing indus- 6. Respecting people and nature: Natural resources are refined with a trial growth and internationalisation, developing the operating environ- view to respecting people and nature, together with developing other ment and targeting public aid measures. The strategy assesses develop- means of living. ment prospects in the industrial sector over a long time span until 2030 and sets short and medium term objectives for promoting growth.

28 29 In the long term, sustainable industrial growth in Lapland relies on refin- More renewable and low-emission energy production, especially, is also ing Lapland’s own natural resources into high-quality products that attract needed in the whole of Finland, as a nation. On the other hand, energy demand on the global market. In addition to metal, energy, extractive, efficiency and new technology solutions should be developed further. forest, wood product, food and organic product industry, which are based Lapland’s large energy resources make it possible to increase produc- on refining natural resources, growth opportunities are also available to tion in a sustainable way and the northern conditions lay a good basis for machine and equipment manufacturers, maintenance service providers, development of new solutions and local know-how both in energy produc- logistics companies and industrial construction firms, which offer services tion and consumption. to the above types of industry. By 2030, the sectors investigated in the industrial strategy for Lapland aim to reach a total turnover of EUR 9.8 Sustainability and self-sufficiency are Lapland’s commonly agreed ener- billion and provide employment to 22 700 people. gy visions. The objective is to utilize Lapland’s large energy resources so that Lappish knowledge and regional economy will develop and energy Development measures are outlined in development programmes, which solutions support Lapland’s vitality. Lapland’s investments are channelled are targeted at developing companies, identifying growing markets, help- into competitive energy solutions, which also support means of livelihood ing companies enter markets and building an operational environment and regional economy, making use of northern abilities and creativity. that supports the development of companies and defines priority areas Energy resources are utilized respecting the environment and Lapland’s and measures for eliminating critical bottlenecks. Growth-impairing bot- unique nature. Energy production in the future will also be more diverse tlenecks will be eliminated through concrete development projects. based on several different production technologies and fuels so that all potential will be utilized. The objective is that Lapland’s own knowhow Energy and business activities are supported so that in the future Lapland will be known for its role as a developer and user of energy production and sav- The abundant energy resources of Lapland have long enabled it to pro- ing solutions which are suitable for northern conditions. duce energy for its own needs and for the rest of Finland, too. Lapland utilizes a plenty of hydropower, local wood fuels, peat and waste liquor To attain the agreed objectives the strategy outlines key projects which from the forest industry. At present, Lapland’s self-sufficiency in electricity focus on increasing the use of local energy resources, especially, forest production is slightly more than it needs, and renewable energy accounts energy, peat, hydropower and wind power and in addition, on developing for over 90 % of electricity production. In industry, particularly, heat gener- energy saving. To ensure the development of Lapland’s own knowledge ated is used for its own production and in population centres it is supplied and skill some key projects have been defined which support education to the district heat networks. and creation of innovations in schools, research institutes and companies. Developing networks of cooperation is particularly important. The The trend in future energy consumption is above all dependent on the de- implementation of the projects according to the energy strategy has a velopment of industry and the service sector in the Lapland. Forecasted direct effect on regional economy by bringing to Lapland more income development such as the investments of the Tornio steel mill, mining pro- from real estate and other tax revenues and by increasing employment. jects and growing tourism will increase energy consumption significantly. The most significant sources of real estate tax income are hydro power and wind power (in future to a more extent). The increase in the combined real estate tax of the energy projects according to the energy strategy is estimated at approximately EUR 16-17 million provided that all projects

30 31 are carried out. In Finland real estate tax money goes to the local mu- The most important strategic issues in Lapland’s tourism strategy include nicipalities. Remarkable employment and income effect will come due improved accessibility, growing international and all-year-round tourism to the construction of the mentioned investment projects and construc- demand through vigorous sales and marketing efforts. Lapland tourism tion, operation and fuel supply of a biofuel-based new power plants and will seek growth in international markets, and a major challenge is to gen- a possible biodiesel refinery. The construction of these energy projects erate more all-year-round demand for Lapland tourism products. A seri- could increase employment in Lapland with a total of even 7 000–10 000 ous hindrance to the development of all-year-round service supply is the man-years. The effects on employment figures during the operation of the fact that Lapland has occasionally poor accessibility, especially outside plants are also significant. According to the strategy, the use of local fuels, the high seasons of Christmas and midwinter months. The tourism strat- primarily forest chips and peat, could mean a direct increase in annual egy seeks solutions to improve accessibility, but it is equally important to employment figures by 1000 man-years, in case a new big power plant have an overall perspective on development measures. If international in the city of Rovaniemi and a biodiesel refinery in the city of Kemi were tourism demand could be guaranteed on an all-year-round basis, ac- implemented and the forest energy potential of Lapland were effectively cessibility would improve automatically. In order to increase successfully utilized. In addition, the direct increase in employment figures during the all-year-round demand from international markets, stronger emphasis on operation of a nuclear power plant is estimated to be approximately 400- sales and marketing measures will be necessary. Marketing development 500 man-years. Impacts on carbon dioxide emissions depend heavily will require joint commitment, long-term cooperation and ample resourc- on the quantity of forest energy which is used to replace peat and coal. es from municipalities and tourism industry. Without a huge increase in the use of wood fuels, carbon emissions from power and heat production will grow in Lapland slightly from the current One method to develop sales and marketing is e-commerce. Finland is level by the year 2030. Efficient utilization of wood fuels can reduce emis- regarded as high-technology country but in this field of business we lag sions by about 30-40 % from the current level. Increasing the production behind, although Lapland has positive prospects to develop into a strong of local renewable energy as specified in the energy strategy also sup- e-commerce actor. Intensive network cooperation between tourism in- ports significantly the achieving the objectives of Finland’s and the EU’s dustry, research and education, and other operators will be necessary, climate and renewable energy policy. It is important to notice, that already however. at the present situation, renewable energy accounts for over 90 % of all electricity produced in the region of Lapland. The need for extensive, accurate, and multiple research data is essential for tourism development. When planning effective foreign marketing Tourism measures, for example, it will be necessary to secure the continuous supply of updated information on consumer behaviour, market situation, Total income of Lapland tourism business is about 700 million €. Tour- and future trends within the industry. Similarly, we need information about ism impact on employment is more than 5.200 man-years. In 2012 total the development within tourism industry as well as the employment and turnover of all tourism companies (in Lapland 1.586) was 471 million €. revenue effects of the trade in order to direct public funding to suitable Amount of registered overnights per year is 2.5 million. In 2013 number projects, and to make reliable evaluations of their results. The tourism re- of registered international tourists was for the first time in history over one search programme of Lapland will provide an extensive network of opera- million. Great Britain is number one nationality in Lapland. Russia, Ger- tors and create excellent conditions for producing high-quality research many, France and Norway are following. The biggest growth has been in data to the industry. Within the present tourism boom, it will be obligatory groups coming from Japan and China.

32 33 to pay special attention to the standards of construction, planning, and secure daily operability and the organisation of moderately priced trans- natural surroundings. In tourism development, the major distinctive at- port services, taking into consideration the special features of Lapland tractions must be protected and the surroundings kept pleasant for both and the new development prospects for mining, for instance, which call visitors and local inhabitants. for large investments. Major investments are also important in view of the ability of Finland as a whole to profit maximally from the development of Transport system of Lapland the Arctic Region and the opportunities offered by the opening up of the North-East Passage. Major changes also requiring the development of the transport system have taken place in the international and national operational environ- Major road and rail investments decided at the national level are of key ment and in Lapland’s development prospects and development strate- importance to secure Lapland’s development prospects and the acces- gies. The most important changes are the strong development of mining sibility of Lapland in general. The increasingly prominent role of the north, and tourism and the increasingly prominent role of the Arctic Region. The with the new opportunities opening up in future, calls for large road and concentration of population in the sub-regions of Rovaniemi and Kemi- rail investments particularly in the long term. Investments in urban re- Tornio, decrease in the number of population in sparsely populated areas gions are also important with regard to combining transport and land use. and the simultaneous increase in the number of the elderly also impose Rail network investments benefit the business sector in particular, while growing challenges to the maintenance of Lapland’s transport system opening up new opportunities to mobility among Lapland’s local inhabit- and to targeting development measures. At the same time, scarce financ- ants and tourists, for instance. Considering that Lapland is characterised ing is available to the transport system, and the implementation of large- by long distances, major road network investments are important for safe, scale investments is becoming more difficult. fluent travel and for transport in the business sector. The transport system should be capable of supporting the development Major spearhead investment projects in Lapland are the improvement of prospects of the key business sectors in Lapland (the mining, metal and trunk road 4 at Rovaniemi and between Oulu and Kemi, of trunk road 21 forest industry and tourism), the safe everyday mobility of people, and between Palojoensuu and Kilpisjarvi, and of the service standard in the the accessibility of services in urban and sparsely populated areas. It Seinajoki-Oulu rail connection, which lies outside Lapland but is impor- is very important to improve the accessibility of the region and to utilise tant in view of Northern Finland as a whole. Lapland’s favourable transportation and logistics position as part of the broad, developing Arctic Region. There is also need to develop coopera- Mining and the logistic position of Lapland; important projects in the future tion and unanimously promote major investments in the region. will be the electrification and renovation of the Kemi-Kolari rail connection, development of Ajos Port, which will include deepening the maritime The development strategy underlying Lapland’s transport system is access route and developing road and rail connections, and the provision based on national and regional goals and guidelines, verified develop- of new rail and road connections required by new mines/ improvement ment needs and the goals set for developing the system. The guidelines of the existing connections. Connection alternatives important to mining, presented in the development strategy steer the defining of more specific involving the Arctic Ocean port and utilisation of the North-East Passage; measures, their prioritisation, and the choices to be made in the scarce an exhaustive account should be drawn up of the various alternatives, financing and resourcing environment. The key point of departure is to and the results will be used as the basis of land use and transport planning in future.

34 35 Safe, fluent travel facilitates people’s everyday life. Fluent travel is also Key development guidelines for developing safe, fluent travel: important to the business sector, including commuting and work-related • Developing long-distance travel chains to address the needs of tour- travel in the region, tourism and the accessibility of the region. ists and local people. • Developing air traffic together with the tourism sector, Finavia and Lapland’s external accessibility will be improved by developing air and rail traffic operators. traffic and the fluency of road traffic. Air traffic as a long-distance connec- • Improving the competitiveness of public transport broadly in cases tion plays the most prominent role in view of accessibility. where sufficient demand is available. Securing the accessibility of the most important places of work through public transport. In mobility within the region, account is taken of long distances and also • Securing the basic service level in public transport in low-demand of promoting the use of sustainable means of travel in cases where this areas and mitigating the growth of transportation costs in the society is realistic. It is possible to improve the accessibility of places of work and as a whole. services in urban regions and tourism centres by promoting public trans- • Securing daily operability in vehicle traffic. port and pedestrian and bicycle traffic. In other parts of Lapland, however, • Targeting pedestrian and bicycle traffic development measures to po- long distances essentially require the use of private cars, and the special tential areas. challenge there is to secure mobility among people who have no car and • Improving traffic safety and accessibility through prioritised means who live in sparsely populated areas. As for the accessibility of services, and by influencing attitudes more effectively. it is also important to improve electronic services and introduce services • Securing daily operability throughout the road and street network to sparsely populated areas through new means. through maintenance activities. • Clarifying administrative responsibilities in off road traffic. • It is vital that telecommunications connections and electronic services are developed in the region, which is characterised by long distances.

Business sector transports and logistics place a wealth of requirements on the transport system. Large investments will have to be made in order to improve the cost efficiency of transports and to offer new development prospects in the long term, and work done largely at the regional and areal level to enhance the efficiency of the logistic system. All in all it is important to develop the logistic position and competitiveness of Lapland as a whole.

36 37 Key development guidelines for developing transports and logistics in the Mitigating climate change and adapting to it will be taken into considera- business sector: tion as a precondition for all types of operation. However, it is important to • Improving the cost efficiency of transports by prioritising the needs of make sure that the mitigation measures are realistic and to point out that mining and other heavy industry. In development efforts, attention is the effects of measures concerning transport pricing, for instance, should paid to the position of Kemi-Tornio sub-region as the hub of transport be recognised at the national level. corridors and the increased importance of the Arctic Ocean as part of the development of the Arctic Region and the prominence of the Key cooperation and policy development guidelines: North-East Passage. • Lapland should be active in cooperation forums in the Arctic Region. • From the point of view of cost-effective transports, it is important to • Setting up a regional transport system working group in Lapland. The secure the fluency of winter navigation and to maintain the road and group will replace the current road transport working group and be street networks in good condition, in addition to large- scale road and responsible for coordinating regional transport system work in future. rail investments. The effects of a stricter sulphur limit to be imposed • Combining transport and land use planning and implementation at on transports on the Baltic Sea should be minimised. The stricter limit all levels. is scheduled to enter into force in 2025, i.e. at the same time as in • Developing the operation of transport and land use working groups other sea areas. and eliminating overlapping work. • Developing the hubs of the logistic system as a networked entity • Taking active measures to contribute to transport system financing (ports, logistics centres, concentration of logistic operations, com- and increase of regional decision-making power. bined transports, roundwood terminals, terminal network). • Committing decision-makers to the guidelines presented in the plan. • Developing logistics services, expertise and cooperation systemati- • Drawing up a regional letter of intent of the spearhead tasks for the cally (developing vocational logistics education and improving the next few years. attractiveness of the sector, developing regional logistics cooperation, combining transports in sparsely populated areas, developing The Finnish Transport Agency published in 2013 working group report procurement cooperation, introducing effective information systems, summary regarding the transport needs of Mining industry. According to telecommunications connections and electronic services). the summary conclusion it is essential in the immediate and future development of transport infrastructure how the transport and travel needs Developing cooperation and policies is an integral part of developing the of extractive industry and other industries develop, what is done in the transport system in the region. Through fluent cooperation, it is possible neighbouring countries of Finland to develop transport routes, and, for to react to quick changes in the operational environment and to support example, to use the Arctic Sea connections, and how the transport equip- continuous, coordinated regional transport system development work. ment develops. The needs must be covered in planning, and that requires Regional cooperation also supports a shift from competition between international co-operation. The transport needs become more specific sub-regions towards a regionally consistent overall approach. In addition, based on individual mine decisions, and then more detailed planning and when financing is collaboratively targeted more effectively and based on implementation needs can be programmed. In the near future, Northern users’ needs, it is possible to achieve better service standards with the and Eastern Finland mining transport between Europe and far-off coun- existing, scarce resources. tries will be implemented via the Bothnian Bay harbours, irrespective of the sulphur directive. Other transport needs of the industries in the area

38 39 do not alone significantly impact the mining transport and route selec- Medium-term 5–15 years tions, but it is expedient to integrate those. In regional zoning, it is good The track and road investments required by the Kolari and Sokli mines to already take into account the future needs that are visible. The follow- will be implemented, provided that the mines will be opened according to ing presents the most significant needs for further actions based on this plans and the funding of the lines have been agreed upon between the report. different parties. • After the possible Middle Lapland mine decisions, the further plan- Next 1–5 years ning and building needs of the Sodankyla–Rovaniemi/Kemijarvi line Improvement measures (in total about 50 million euros) related to elimi- will be clarified nating the bottlenecks of the existing services and transport networks of • Improvement measures required by the existing transport network current mines will be planned and implemented. will be implemented based on mining transport and the need for • Small improvements to transport services will be planned and imple- transport and travel needs of other industries. mented case by case when new mines are launched. • Further clarification and planning of current transport services will be Future after 15 years started for the increasing mining transports that are within sight. They The mining industry of the northern region will be in a lively development include e.g. phase and will have great economic significance. In transport functions, • Highway 4 from Middle Lapland to Oulu and highway 21 the current transport network will have been used as basis. Fast changes • The capacity of the railway network in sections Ylivieska–Oulu– of the transport network will not be possible. The development of new Kemi, Kemijarvi–Rovaniemi–Laurila, Vartius–Oulu and possible national transport connections may take years longer than starting mining new freight transfer terminals activities. New ore deposits are constantly being found, and the utilisa- • Kolari and Sokli rail links after the mine decisions tion of them is dependent on the transport possibilities. In this work it • Growing the capacity of the Bothnian Bay harbours (harbours’ could be stated that mining industry and its transport needs are difficult own decisions) and deepening of sea routes based on the de- to predict far into the future. For this reason, there should be continuous mand and the sea traffic strategy of Finland and project assess- co-operation between mines and mining transport both nationally and in- ments. ternationally. • The opportunities to use heavier than normal road transport and the impact on mining transport will be clarified. • A land use reservation will be made in the regional plan for a new railway line to Sodankyla.

40 41 • Future needs will be forecast in collaboration with the neighbouring University of Lapland has 4.685 students and 647 staff members. The northern countries mission of the University of Lapland is to promote sustainable develop- • The development of the Tornio–Haaparanta railway yard and freight ment, well-being and equality both regionally and internationally through terminal, as well as the development of the Narvik route will be inves- its research, artistic activity and research-led teaching. The core values of tigated together with Swedish authorities the University are: creative and impactful involvement, critical and eman- • Increasing the possibilities to use the Vartius route in Finnish mining cipatory perspectives, individual and community commitment. and Russian transit transport will be studied in co-operation with Rus- sian authorities In 2020 the University of Lapland will be an international actor in higher • The planning and implementation will take into account the changing education with a distinctive profile in the arts and the sciences. The Uni- traffic needs and possibilities, including the North-East Passage versity is an autonomous member of the Lapland University Consortium • Hauling equipment will be developed and the opportunities they offer and contributes in its areas of strength to delivering the Consortium’s will be use jointly agreed strategy. In international cooperation, the University’s key strategic partner will be the University of the Arctic, whose thematic net- The results of this work will be used in the mining working group project works will strengthen the expertise of the University in its focus areas. “Sustainable extractive industry - Energy, logistics and transport infrastructure” led by the Ministry of Employment and the Economy. Further- The University of Lapland is the northernmost university in the European more, the transport and logistics working group of Northern Finland will Union. The institution’s profile encompasses internationally recognised do follow-up as part of the working group activities. The situation will be research on the people, communities and environment of the Arctic and re-evaluated in 2015. the North, and the interaction of these elements. Another cornerstone of the University’s work is international tourism research, a focus valued for (Source: Regional Council of Lapland. The Finnish Transport Agency) its potential regional impact.

Education and Research The University’s strategic focuses are: service design, Northern well- being and the changing nature of work, sustainable development, law, University of Lapland was founded on 1st of March in 1979 and it is locat- and justice.These focus areas correspond to the strategic focuses of the ed in Rovaniemi. University has four faculties: Art and Design, Education, Lapland University Consortium. Law and Social Sciences. Other Units of the University are: Arctic Centre, Education and Development Services, Open University, Central Adminis- The changes occurring in the Arctic and the North, and the special social, tration. Lapland University Consortium shared units are: Multidimensional cultural, and economic conditions in these regions, offer a unique envi- Tourism Institute, Institute for Northern Culture, Library, Support Service ronment for research in the focus areas. Centre (R&D Support Services, IT Services, Educational Support Ser- vices). Service design draws on the opportunities arising from the interaction between art and science in research and development in the areas of tourism, industrial products, electronic services, well-being services, and safe and accessible environments.

42 43 As an expert in service design, the University creates conditions condu- Sustainable development, law, and justice comprise an area of multidis- cive to producing competitive and sustainable services for the public and ciplinary research. Analyses in this field focus on the interests of varied private sectors, as well as educational institutions. At the same time, it actors in relation to the conditions and regulations that apply in the envi- educates experts with the holistic perspective required for successfully ronment in which they must work. managing the creative context of service design. The research undertaken aims to generate information on future options In the regional innovation programme of the Lapland University Consor- for the Arctic and North that incorporate sustainable social, economic, tium (LUC), service design is strongly linked to the Consortium’s strategic ecological, judicial, and cultural development. Of particular interest are focus on creating a Lapland of tourism, culture, and experiences. themes related to sustainable tourism and indigenous peoples. The Uni- versity bears a national responsibility for research on Sámi law. Global-level social, economic, and political changes and patterns of migration – developments attributable in part to climate change – are felt In the innovation programme of the Lapland University Consortium (LUC), more acutely in Arctic and Northern regions, where they impact the well- sustainable development, law, and justice are closely linked to the Con- being of the people there and the foundation on which that well-being sortium’s strategic focus on creating a Lapland of industry and a Lapland rests. of natural resources.

To address these developments, the University is building up a strong The research problems addressed in the University’s research focuses multidisciplinary research effort on change, one thrust of which is to edu- are primarily related to Arctic and Northern research as well as tourism cate experts on the changing nature of work. Special attention is paid to research. factors endemic in Northern regions that promote or reduce well-being. By investing in the research theme “The changing nature of work” the In 2020 the University of Lapland will be an internationally attractive, cre- University strengthens its educational offerings geared to specific profes- ative, and multicultural academic and artistic community. sions. The University’s research and artistic activity in its stated strengths and One prominent research theme at the University is the social well-being focus areas will be recognised and influential at the regional, national, and changing livelihoods of indigenous peoples. The institution bears a and international levels. national responsibility for social-scientific research related to the Sámi people. The University will continue to strengthen its Arctic and Northern research orientation. It will conduct high-calibre Arctic and Northern re- In the regional innovation programme of the Lapland University Consor- search through cooperation between the Arctic Centre and the faculties. tium (LUC), Northern well-being and the changing nature of work form a The quality and impact of the research will be internationally assessed in research interest that closely serves the Consortium’s strategic focus on 2013 and 2018. creating a Lapland of well-being.

44 45 The Multidimensional Tourism Institute will be a significant player in its Global Change: The Arctic is particularly vulnerable to large-scale chang- field internationally, and its research will have a strong impact on the re- es in the climate and economy occurring throughout the globe. This region. The scientific research conducted at the Institute will represent cut- search group examines the effects of these changes and efforts to offset ting-edge research internationally in the field of ecologically and socially and adapt to them. sustainable tourism. Sustainable Development studies how people, communities and institu- The University will direct its research efforts to its focus areas: service tions in the Arctic manage and cope with changing environmental, eco- design; Northern well-being and the changing nature of work; and sus- nomic, social and cultural circumstances in order to promote a sustain- tainable development, law, and justice. able future.

The University will engage in scientific basic research and practice-orient- Environmental and Minority Law: The Northern Institute for Environmen- ed research side by side. Applied research attuned to the interests of the tal and Minority Law (NIEM) has expertise in legal research in the Arctic region will be conducted in cooperation with the Lapland University Con- and is specialized in the two branches of law that appear in its name - sortium and will contribute to and draw on the University’s programme of environmental law and human rights law. basic research. The Arctic Centre has an International Scientific Advisory Board which International networking will figure prominently in the research and artis- meets once a year and has an advisory and supervisory role. Chair of the tic activity at the University. International research funding will constitute Board is Professor David Hik from the University of Alberta. twenty-five per cent of the University’s outside funding. The unique strength of the University will lie in the interaction between its The Arctic Doctoral Programme Arktis is a multidisciplinary doctoral pro- research and artistic activity. gramme of the Academy of Finland. The one-year Arctic Studies program gives introduction to the issues that are relevant in the Circumpolar North. (Source: University of Lapland) The Arctic Centre’s science communications and library compiles, popularizes and communicates Arctic issues to increase the knowledge and Arctic Centre understanding of the experts, decision makers and the general public on Arctic issues. The Arctic Centre is internationally recognized for the quality and rele- vance of its multidisciplinary Arctic research, which is our key activity. The Science Centre is in the Arktikum House together with the Provin- Through this research, the Arctic Centre promotes increased knowledge, cial Museum of Lapland. Nearly 80 000 persons visit the Arktikum House awareness and understanding of the Arctic both within and outside the every year, half of them tourists from abroad. Science Centre exhibitions region. This research supports decision-making and sustainable develop- display the results of Arctic research interactively and inform about the ment in the Arctic. Arctic nature and people of the region. Research projects: on-going and completed projects. Arctic Centre representatives serve as specialists in many international and national tasks. We have also very wide and active network of con- tacts around the world.

46 47 The Science Communications compiles, popularizes and communicates European Union Arctic Information Centre initiative is the international information on arctic issues to national and international experts, different network of 19 leading Arctic research and outreach institutions from the target groups and the general public. Our goal is to increase the knowl- various European Union Members States, and the EEA countries. edge and understanding on arctic issues of the experts, decision makers and the general public by offering net services, theme portals and library The EUAIC initiative was made during years 2009–12 as the most ex- services by utilizing the expertise of the staff and partners. perienced professional network of European institutions for information, outreach and insight into Arctic issues. The network’s objective is to pro- The Science Communications develops and maintains databases and vide the European Union, its citizens, institutions, companies and Mem- portals on arctic research, northern environments and the Barents re- ber States with an Arctic information source and factual overview about gion. We have active cooperation with national and international part- the status and trends in the Arctic. The EUAIC initiative network aims to ners. Arctic Expertise in Finland publication was compiled by the Science act as a ‘boundary organization’ of information that facilitates two-way Communications for the Ministry for Foreign Affairs of Finland. communication between experts, decision makers, stakeholders and the public. The Library at the Arktikum serves tourists, researchers, students and local people. It has a collection of literature dealing with natural phenom- The initiative is organized using a network model to operate on the ba- ena, environment, expeditions, peoples, cultures, and livelihoods in the sis of existing expertise and infrastructures of its network members. The Northern regions, especially the Arctic. The collection also includes infor- network initiative has its headquarters located at the Arctic Centre (Ro- mation on legislation and research related to these subjects. vaniemi, Finland), currently there are nineteen partners in the network. The European Commission selected the consortium to carry out an one The Science Communications has collaborated with organizations in oth- million euro project to produce a “Strategic Environmental Impact Assess- er nations to develop a northern information services. The BarentsInfo.org ment of development of the Arctic”. The project will last eighteen months portal was done together with Norwegian, Russian and Swedish parters. during 2013–2014. The newest cooperation project is the Barents Mediasphere where the aim is to improve the cross-border communications in the Barents region. The initiative follows the Arctic statements of the European Union (Com- The University of the Arctic is a cooperative network with 90 universities, mission 2008 and the Council 2009) that have high importance for sus- colleges, and other organizations committed to higher education and re- tainable development of the Arctic regions. search in the North. The activities of the UArctic include e.g. the multidisciplinary Circumpolar Studies Program (BCS), north2north Mobility Pro- (Source: Arctic Centre) gram which is a mobility program for students, and Northern Research Forum that was started to activate dialogue between students, scientists and policy-makers.

The Arctic Centre actively participates in developing the operational con- tent of the University of the Arctic and in its mobility programs. The Arctic Studies Program (ASP) delivers U Arctic’s Circumpolar Studies.

48 49 3.1.1 Lapland investment potential Wind power Impax Asset Management, Kuolavaara-Keulakkopää 110 m€ Industry Impax Asset Management, Joukhaisselkä 55 m€ Outokumpu Oyj, Tornio, postponed investments 400 m€ Tuuliwatti Oy, Löylyvaara 15 m€ MangaLNG Oy, Tornio, LNG-terminal, first phase 100 m€ Tuuliwatti Oy, Kitkiäisvaara 50 m€ MangaLNG Oy, Tornio, LNG-terminal, second phase 300 m€ Tuuliwatti Oy, new projects, Simo/Tervola 210 m€ Stora Enso Oyj, Veitsiluoto, recovery boiler 75 m€ Tuulikolmio Oy, Rajakangas 100 m€ Bio refinery, Kemijärvi 800 m€ Tuulikolmio Oy, Pakisvaara 190 m€ Total: 1.675 m€ Taaleritehdas Oy, Posio 180 m€ Innopower Oy, Ajos 390 m€ Mining industry Rajakiiri Oy, Tornio 270 m€ Agnico Eagle Finland Oy, Kittilä gold mine expansion, first phase 100 m€ Wpd Finland Oy, Kemijärvi 55 m€ Agnico Eagle Finland Oy, Kittilä gold mine expansion, second phase 200 m€ Wpd Finland Oy, Salla 100 m€ First Quantum Minerals, Kevitsa mine expansion 300 m€ Wpd Finland Oy, Palovaara-Ahkiovaara 150 m€ Yara Suomi Oy, Sokli mine 1.000 m€ Posion Energia, Aneenkumpu 40 m€ Gold Fields Arctic Platinum, Suhanko mine 1.500 m€ UPM Kymmene Oyj, Reväsvaara 90 m€ Anglo American /AA Sakatti Oy, Sakatti nickel mine and smelter 5.000 m€ Total: 2.005 m€ Mawson Resources, Rompas gold mine 400 m€ Hannukainen iron mine project 600 m€ Bio energy Total: 9.100 m€ Rovaniemen Energia Oy, Mustikkamaa bio power plant 220 m€

Hydro power Energy transfer networks Kemijoki Oy, Sierilä power plant 135 m€ Fingrid Oyj, Sokli and Hannukainen lines 270 m€ Kemijoki river salmon ladder projects 30 m€ Kemihaara project 140 m€ Trade Total: 305 m€ Rovaniemi South Center 50 m€ Kemi-Tornio region projects 50 m€ Total: 100 m€

50 51 Tourism Public investments Laatumaa /Lapland Hotels Oy, Ylläs, new resort 600 m€ Lapland Central Hospital expansion 100 m€ Saariselkä resort expansion 450 m€ Lapland total: 19.316 m€ Levi Summit, center and hotel expansion 200 m€ Hotel Santa Claus, Rovaniemi, expansion 30 m€ City Hotel, Rovaniemi, expansion 10 m€ 3.1.2. Development of the region 2016–2020 Lapland Hotels Oy, Pallas, hotel expansion 20 m€ The fastest growing sector in Lapland has been the mining industry. The YIT, Kemi Sarius hotel project 120 m€ preconditions for the development of the mining industry in the region are Rinimex Oy /Noitatunturi project start, Pyhätunturi 500 m€ sustainable solutions to environmental issues and a conflict-free exist- Santa Park, hotel and tourism resort, Rovaniemi 30 m€ ence alongside the tourism industry. After the Kevitsa Mine came in to Sallatunturi slalom slope project 10 m€ production and the expansion of the Kemi Mine of Outokumpu was com- Suomu ski flying hill and infrastructure, Kemijärvi 30 m€ pleted the start of new investments seemed to be very difficult to define. Aavasaksa ski flying and jumping climate hall, Ylitornio 60 m€ Mineral raw material prices have been coming down and stayed on low Total: 2.060 m€ level already for some years.

Transport infrastructure There was a long wait for the decision concerning the expansion of the VT 4, Rovaniemi highway project 25 m€ Kittilä Gold Mine, but the realisation of its initial stage was announced in VT 4, Kemi-Pohjois-Ii highway 91 m€ February 2012 and the expansion is still under construction. Kevitsa mine Sokli mining roads 140 m€ started expansion project in summer 2014 after almost three years waiting for environmental permits. Suhanko mining road 20 m€ VT 4, Rovaniemi south to Loue highway 90 m€ The decision on the Sokli mine is still not done. Yara Suomi Oy announced VT 4, Rovaniemi-Sodankylä highway 160 m€ that finally decision should be ready before summer 2015. Disagreement Laurila-Tornio, railway reconstruction and electrification 30 m€ with Finnish Government regarding the transport of phosphate ore has Tornio-Kolari, railway reconstruction 255 m€ been the main reason for the prolonged decision process. Finally, in the Rovaniemi-Sodankylä railway 325 m€ end of 2014, Yara and the Government made an agreement to plan the Arctic Railway, Finnish side 1.900 m€ transport of mining products by road transport. This is now finally speed- Kolari-Pajala- railway, Narvik connection 120 m€ ing up the process. According to the Ministry of Transport and Communi- Kolari-Kilpisjärvi road reconstruction 160 m€ cation, roads between Sokli and Kemijärvi are reconstructed and loading Palojoensuu-Hetta-Kivilompolo road reconstruction 40 m€ terminal is going to be built to Rovaniemi-Kemijärvi railway. Total cost of Sevetti road reconstruction 100 m€ this investment is 140 million € and Government of Finland is financing it totally. Finavia Oy, Lapland airport investments 25 m€

Total: 3.481 m€

52 53 Hannukainen Mine project in Kolari is delayed due to economical prob- The problems of Talvivaara mine have reflected to the mine permitting lems and finally, the bankruptcy of Northland Resources mining compa- processes in Lapland. At the moment the situation seems still to be al- ny. Iron ore price is at the moment exceptionally low and it seems to be most critical with two projects and this is due to authorities like ELY Cen- evitable that Hannukainen project is postponed with at least ten years. tre and Metsähallitus, which are continuously appealing about the deci- Discussion about the conflict between tourism and mining was arisen in sions made by TUKES to give exploration permits to Anglo American in Ylläs resort. The opposition became stronger and voices louder against Sakatti and Mawson Resources in Rompas area. This is strange because the mining project. Now this discussion is going to fall silent during the both authorities have been involved with the decision making process following years. itself and after legal decision they appeal. Geological Survey of Finland is in the same situation in the Enontekiö with exploration permits. Business Community has discussed about this problem with the Prime Minister who promised to take measures to solve the situation.

Mawson Resources has already been in court of justice accused of dam- aging vulnerable terrain in nature protection areas. This process is continuing probably many years in higher courts. Fraser Institute has ranked Finland as number one in several annual surveys of mining companies. Now this position is threatened because of stronger bureaucracy in permitting. Mining industry is not the only branch of business suffering of this. According to the Confederation of Finnish Industries (EK) investments with total value of 3.8 billion € are not implemented due to too long permitting and licensing processes. Government of Finland has noticed this and nominated a special commission to renew processes and shorten duration of permitting. If this problem is not solved by the next government after the parliament election in April 2015, the competitiveness of Finland is continuing to decrease especially in mining.

The next in line seems to be the decision to implement the Suhanko pal- As Outokumpu completed its new ferrochrome plant at its Tornio Mill, ladium mine in Ranua. Gold Fields Arctic Platinum company announced Lapland can probably expect more industrial investments. The company already in 2013 that they are seeking financing to this 1.5 billion € pro- still holds a reserve of approximately 400 million euros of investments, ject. Continuing financial crisis was not making this process easier. Po- which were announced before the financial crisis that hit in 2008. The litical crisis might change this situation. Norilsk Nickel is world leader in expansion of the Kemi Mine and the construction of the second ferro- platinum production. If crisis escalates sanctions or counter sanctions, chrome plant included in the investment plan are now to be implemented. this could even speed up Suhanko project. Some movement has already These are expected to be initiated once the merger of Outokumpu and been noticeable. Inoxum is now finalised. In fact, with the potential new smelting plant,

54 55 the investments in Tornio can rise in excess of a billion euros. Last year, terminals. For LNG shipments a joint venture is planned with a shipping Outokumpu and its partners also announced plans to construct the LNG company specializing on LNG. The size of the vessel will be from 18.500 terminal in connection with the Tornio Factory. m3.

Outokumpu plc., Ruukki Metals ltd, Gasum ltd and EPV Energy ltd have Manga LNG Oy’s subsidiary Manga Terminal Oy made in December 2014 established a development company called Manga LNG ltd. The pur- the decision to invest in the new liquefied natural gas import terminal. An pose of Manga LNG ltd is to build an import terminal for liquefied natural efficient surrounding logistics chain will be created around the terminal. gas (LNG) and to create an effective logistics chain to supply the LNG. The LNG terminal diversifies Finnish gas markets, since Finland does The terminal is planned to be ready for operations early 2018. The con- not have LNG import terminal at the moment. Swedish LKAB ltd (Luos- struction phase of the import terminal has been estimated to employ 260 savaara Kiirunavaara Ltd) has been offered the possibility to become a man years. Upon completion, the terminal will provide directly 7 new po- shareholder later this year. sitions locally and indirectly 30 new openings with the subcontractors. Manga LNG Oy has received from the Finnish Ministry of Employment The use of LNG will improve the competitiveness of the participating com- and the Economy, an LNG-terminal investment aid of 33,2 million euros panies, since the price of LNG has during the recent years been more for building the terminal. stable and price development more moderate than prices of the fuels to be replaced with LNG. LNG is also more environmental friendly than fos- The investments into tourism in Lapland were around a billion euros over sil fuels used currently in industry, maritime transport and energy produc- the last decade, with most investments focused on the western Lapland, tion. LNG reduces carbon dioxide, nitrogen oxide and particulates emis- Levi and Ylläs districts. It was believed that the investment boom was sions considerably. over, but a positive boost in tourism following the financial crisis has turned things around. The investments will rise to another billion within Manga LNG has signed a turnkey engineering, procurement and con- next ten years if the projects are implemented. The biggest projects in- struction (EPC) contract to purchase a liquefied natural gas (LNG) receiv- clude the new centre for Äkäslompolo, the Saariselkä investment project ing terminal to be built in Tornio, Northern Finland. The contract, valued and the Koutalaki expansion in Levi. at approximately EUR 100 million, has been made with Wärtsilä Corpora- tion, a global leader in complete lifecycle power solutions for the marine Tourism in Lapland seems to be a continuing success story in spite of all and energy markets. The contract is conditional on receipt of investment political crisis. Amount of Russian tourists has strongly been decreasing support and Manga LNG Oy’s contracts with other parties, including the in Finland due to the collapse of Russian rouble. This process has had gas suppliers. a big impact in Helsinki and Southern Finland. Increasing flow of tourists from other countries has made the impact small in Lapland. Especially Tornio Manga LNG started co-operation with Gasum Ltd on LNG procure- British and Asian travellers have increased travelling to Lapland even in ment and logistics in April 2013. The co-operation will continue in joint spite of the chronic lack of necessary flight connections. development company. The co-operation is aiming on substantial cost savings and to improve LNG security of supply for Pansio and Tornio

56 57 Wind power seems to be only energy projects to be started within the Lapland has survived quite well during the ongoing recession in Finland next five years. Process is slower than expected due to many appeals re- which started in the end of 2008. Almost all branches of business have garding the wind parks. Hydro power project in Sierilä is slowly awaken- been reaching the results of 2008. Only building and construction is still ing. Appealing processes have been long and appealing court decided to suffering of delayed investments. Tourism recovered within a couple of restart the application process. Finally court decided to accept the project years after the big recession year 2009. Mining investment projects have in February 2015. Now the building decision can be done even before been postponed, but two ongoing mine expansions in Kittilä gold mine 2020. and Kevitsa copper-nickel mine have revived business community. Also strong investment projects of neighboring Norrbotten have created op- Arctic Railway has been the most popular investment plan in Lapland. portunities and new openings for business. This railway has three main options, one in west, one in north and one in east. Eastern Lapland announced that Russia is now interested in build- According to the latest statistics Lapland is fourth or fifth biggest export ing railway between Salla and Alakurtti. This would be according to them region in Finland. Export of Lapland was in 2012 totally 3.7 billion euro, the cheapest alternative. Ukraine crisis has rapidly changed this situa- which was 6.4% of the export of Finland. In recession year 2013 export tion. Russian military troops are returning to Alakurtti. In spite of smaller from Lapland was still 3.5 billion euro. Export statistics of Finland don´t radio intelligence unit a modern and strong motorized brigade has al- show the real situation in the country. A big part of products made in re- ready arrived to this old base only 65 km from Finnish border. Opening of gions is placed to head offices in Helsinki Region. This creates a false new railroad seems to be postponed to distant future. reality about Helsinki as a leading export region in Finland with more than 40% of all exports. This might be also one reason for big mistakes in Finn- City of Oulu has been active in Tromsö and announced that the only way ish industrial policy in the new millenium. to solve this problem is to build the railway from Kolari to Skibotn and from there to Tromsö. City of Oulu needs this connection, but this project Ukraine crisis is visible in Lapland. Border crossings from Murmansk re- from Kolari to Tromsö need financing 6-8 billion euro due to very difficult gion have decreased last year with about 15% and this trend seems to mountain terrain on the Norwegian side. be continuing also this year. Biggest impact has been seen in shopping centers, but total amount of border crossings is still over 300.000 an- The Government of Finland has been silent and the Ministry of Transport nually. This is three times more than ten years ago. The resurrection of and Communication and the minister have so far not been willing to dis- Alakurtti base about 65 km from Finnish border was expected due to the cuss about the project. Finnish Transport Agency has started cooperation new Arctic Strategy of Russian Federation. So far no signs of growing with Norwegian authorities regarding road construction in the northern tension between neighbors has been seen. Alakurtti without military pres- part of Lapland. Norway is interested in cooperation regarding roads from ence has on the contrary been exception in last 70 years. Muonio to Kilpisjärvi leading to Tromsö, from Palojoensuu to Hetta and Kivilompolo leading to Alta and Hammerfest and the famous Sevetti road A major problem in defining the economical cooperation between Finland leading to Kirkenes. Truck transport through Lapland to Northern Norway and Murmansk Region have been unclear statistics by Finnish Customs. has been rapidly increasing creating during winter time dangerous situations and accidents on the Lapland roads.

58 59 According to the Russian Federation Customs export from Finland to One of the most typical problems with junior mining companies in invest- Murmansk Region has been powerfully increasing in the end of the first ment projects has been the underestimation of the real costs to build a decade of new millenium. From 2009 to 2013 total value of Finnish export mine. Yara company is big enough to be able to finance the project and was more than 1.1 billion €. Record year was 2013 with almost 300 mil- also finish the started implementation. lion € export which is about 10% of Finnish export to St.Petersburg. This is very interesting, because about 750 Finnish companies are registered Mining industry and technology have been changing business community in St. Petersburg and only one in Murmansk. Finland is not very effective in Lapland. It seems to be clear that investment projects both in Lapland in exports to the metropoles of Russia. and neighbour regions have developed several centers for companies which sell services to projects and mines and are doing all kinds of main- Main reason to increasing export to Murmansk region seems to be mining tenance. This process has been seen in three latest inquiries to South- technology. Norilsk Nickel has opened a new terminal in the commercial ern Finland companies by Lapland Chamber of Commerce. In all three sea port of Murmansk. Company is buying technology, spare parts and inquiries more than 60 Finnish companies are planning to open a branch other equipments from Finland and they are first transported by trucks office in Lapland. In 2015 the number was the highest of all time, even 97 through Finland to Salla and then to Murmansk where they are lasted companies from South Finland are planning to establish a unit to Lapland. on Arctic Express- class ships and shipped to Dudinka and from there to Kemi-Tornio region has a long time been a center for maintenance com- Norilsk. panies. This year 27 companies are planning to open office in the region. The biggest surprise is that Rovaniemi was this year almost as popular Also the mining industry of Murmansk Region has been investing in Finn- location for companies as Northern Norway or Sweden. Total of 33 com- ish mining technology. Kovdorskiy GOK, Olenogorskiy GOK and JSC panies are planning to be placed to Rovaniemi. Also Sodankylä-Kittilä Apatity have been upgrading their technology. Also a new mine of Rutshij region and North Lapland were more popular than ever. This is already a Oleni in Kirovsk has been opened in 2012. This demand of Finnish mining national megatrend that should be noticed in Helsinki by Finnish Govern- technology seems to be continuing. Hopefully the political crisis is ending ment and other authorities. or at least decreasing so this important economic cooperation between Finland and Murmansk Region through Lapland is able to continue and grow.

Positive decision by Yara Suomi Oy to start the Sokli project would be very important both for Lapland and for the whole mining industry in Fin- land. After Talvivaara problems began mining industry has been in big need for positive investment decisions. Discussion about mining industry has been vivid in Finland, but mostly about problems. The connection between high class mining technology industry in Finland and the mines has not been largely noticed.

60 61 Most important factor in the future development of Lapland is the parlia- Main investment projects that start before 2020 ment election of Finland in April 2015 and the new Government which is Manga LNG-terminal in Tornio, first phase 100 m€ to be built up after the election. Finland has been in continuing economic Sokli Mine by Yara Finland Oy 1000 m€ and political crisis from the end of 2008 to the present day. Government Kittilä gold mine expansion second phase 200 m€ built up after the 2011 parliamentary election has made serious mistakes Sierilä hydro power plant by Kemijoki Oy 135 m€ in deciding about the program of the government. Program paper had 89 Wind power parks, Sodankylä, Simo, Tervola, etc. 525 m€ pages and was very detailed. Green party together with environmental Tourism investments in Rovaniemi, Pallas and Salla 100 m€ activists took over the main decisions made by the government. Biggest Sokli mine roads 140 m€ problem was the strong increasing of environmental taxation for the business community. Prime minister and most of the ministers believed that VT 4 Rovaniemi road 25 m€ the long expected upswing of Finnish economics is repairing this weak- VT 4 Kemi-Pohjois Ii-road 91 m€ ening in competitiveness of Finnish export companies. But the upswing Railway electrification Laurila-Tornio 10 m€ never came. In spite of that Finnish export started to dive. The exit of Rovaniemi South Center shopping 50 m€ Nokia mobile phones from the country made this dive even more serious Total: 2.376 m€ and deeper. Export balance turned negative for the first time after the big recession in the 1990´s. Runner ups - projects that can start if growth is stronger than expected New Government must make the upswing of economy to happen. In- Wind parks in Central Lapland 520 m€ creasing national debt is worsening the situation. At present day the debt Levi Summit expansion 200 m€ is 95 billion € and the 100 billion € limit is approaching with high speed. Saariselkä expansion 450 m€ Competitiveness of Finnish companies must be restored. Export has Rovaniemi-Sodankylä railway 325 m€ to be led to positive growth. The actions of European Central Bank are Outokumpu Oyj Tornio postponed investments 400 m€ slightly helping Finland. Euro has been in practice devalued by some 10- 15 % during last months. Growth of inflation is one of the main goals of Total: 1.895 m€ ECB. That helps also Finland, but on the other hand euro countries have All total: 4.271 m€ a major problem in solving the economic and also political crisis created by Greece.

Lapland is becoming more and more important part of Finnish economy. So the national development is defining the speed of the expected upswing and also the start of several investment projects. It seems to be inevitable that national growth is very slow and in the beginning very thin. This all postpones investments and political crisis has its impact on that too.

62 63 3.2 NORTH OF FINLAND - Text by Business Oulu OULU REGION The Oulu region is the metropolitan area of Northern Finland and the largest urban centre in the northernmost regions of Scandinavia.

The Finnish region of Oulu (in this article Oulu region refers to ‘Northern ARCTIC SEA Airport Ostrobothnia´) extends across Finland from the Gulf of Bothnia coast to Harbour the Russian border and has an area of 37 000 km² and is about equal in Railway size to the whole of Netherlands.

Oulu region is a growing and developing region that has a population of about 380 000 people (7,2% of the Finnish population) and 80% of whom live in urban areas (2008). The population is well educated and Oulu has the youngest population in Europe (median age 34,6).

The total population of the Northern Ostrobothnia is 405 511. Five surrounding municipalities have joined Oulu from the beginning of year 2013 and the population of the city is now about 200 000.

FINLAND The Oulu Province belongs to a sub-arctic climate. The City of Oulu has a ay russia moderate climate due to its maritime location. At latitude of Oulu the aver- w age monthly temperatures range from -11°C in January to 16°C in July. eden The mean temperature in January is -16°C in the northeast of the area. nor

s Oulu is ideally situated in the junction of the main roads and railways of Northern Finland. Oulu Airport is the second largest airport (1 million travelers) in Finland, and the Port of Oulu is the largest port for unitized cargo transport in the Bay of Bothnia.

Business in Oulu Region The Oulu region is an internationally recognized centre of technology and expertise where conscious efforts have been made to develop ideal ecosystems for new technology and practical cooperation between training, research and private enterprises. Oulu has a total of about 17 000 high tech jobs. In addition to the information and communication technology (especially radio technology) the Oulu region is also well known for its cleantech and medical technology.

64 65 The few more densely populated centres in the area have significant in- BusinessOulu helps companies in the different stages of internationaliza- dustrial facilities specialized in forest, steel, chemical, construction and tion: in compiling internationalization plans, planning and securing fund- food industries. ing, and utilizing international networks in finding new business opportunities. BusinessOulu has extensive international networks and cooperation Oulu is surrounded by some major Northern European investments (more partners both globally and in the nearby markets: Sweden, Norway, Tur- than 100 billion). As the biggest city and the most significant logistics hub key, USA, Canada, Germany, Russia, Kazakhstan and Japan, to name in Northern Scandinavia, Oulu provides an excellent location for the com- a few. In total, Oulu has a cooperation relationship with 16 partner cities panies working for major projects. on four continents. One important part of BusinessOulu operation is the activities that take place in the target countries. City of Oulu has been ranked twice among the TOP 7 finalists of the smartest community in the world survey (ICF 2012, 2013). Oulu was also The City of Oulu and several companies and research institutions have rated as one of the best innovation and technology cities (FORTUNE and been working closely together with the biggest city in Silicon Valley, San CNBC 2012) and one the most promising start-up entrepreneurship cities Jose, since the beginning of 21st century. For several years now, Oulu (CNN 2012). and the Cities of Sendai and Fujisawa in Japan have worked closely together. The newest opening in Japan is the cooperation agreement be- BusinessOulu and OIA tween Oulu and the area of Kanagawa. BusinessOulu is a business development organization of the City of Oulu. A very important part of internationalization for Oulu is the nearby coop- The main mission is to be a driver of business transition and a partner in eration area of the Nordic Countries and Russia. In the nearby northern business growth by supporting enterprises and strengthening their com- regions, Oulu’s network includes Boden, Luleå and Umeå in Sweden, petitiveness in global markets. Together with its partners, BusinessOulu Alta in Norway and Arkhangelsk and Petrozavodsk in Russia. Busines- offers comprehensive services to companies operating in ICT, Cleantech, sOulu aims also to boost collaboration between the companies in Fin- Industry, Life science, Trade & service, Travel & Logistics and Creative land, Norway and Sweden by opening Suomi-talo-concept in Tromsø and Industry sectors. Gällivare. Internationalization and invest in services Among others, significant targets are: BusinessOulu offers a number of services for the companies planning • Mining and construction projects in Northern Sweden to go international and companies willing to invest in Oulu or relocate • Energy and construction projects in Northern Norway and North-west themselves in Oulu. Russia • Energy, construction and mining projects in Northern Finland and the improvement of their prerequisites • The logistics corridors of Barents Region: railway, road and shipping routes and flight connections

66 67 In the near future, significant investments concerning energy, construction Over the past couple of years the ICT ecosystem in Oulu has diversified and mining, for example, are expected to take place in Northern Finland considerably. Earlier it depended on two drivers, the mobile phone and and the Barents area. The Company networks enabling internationaliza- mobile network knowledge and knowhow. Today it is complemented by tion project aims to support the companies in order to improve their op- clusters producing finance, health tech and automotive solutions. portunities of gaining access to major national and international projects. Oulu Innovation Alliance (OIA) is a unique collaboration, which integrates One example of the advanced local ecosystems is the decision to be one top know-how of printed intelligence, wellbeing technology, wireless of the first constructors of 5G test networks in Oulu. VTT will open the technology, Cleantech and 3D internet. It connects research institutions, network for all enterprises and Oulu University shall set up a public 5G businesses and public sector organizations. OIA generates cutting-edge network for researchers, companies and students. Future products and global business from research, development and innovation projects and service innovations can be developed in an open test environment. ventures. High-tech ICT leverage from long-term asset, HILLA-program, focuses ICT on doubling Oulu’s 2 billion hi-tech exports. Oulu ecosystem has established itself as the hot bed of wireless tech- As Finland’s fastest growing city, Oulu is an international city full of oppor- nologies. The pool of skilled workforce trained by world class companies tunities. At the moment there are major business and development pro- and educated by the local universities has attracted many companies to jects in the Oulu region and the confidence in Oulu’s growth is stronger invest and build their business on the roots of wireless industries. Area of- than ever. fers an opportunity to be a part of the development of future technologies. Oulu - the Capital of Northern Scandinavia - has the basis of 30 years of Basic industry technological success stories. The Oulu ecosystem covers the creation of wireless products and systems, from the design phase right up to produc- The growth engine behind the basic industry in Oulu is the large invest- tion. Processes are carried out in a uniquely rapid and productive fashion. ments in Northern Finland and nearby regions. The most significant in- Global ICT players are making strategic investments in Oulu. vestments are intended for energy production, construction and the mining industry. Today, Oulu is an even stronger R&D community of several global companies. Oulu is the best place in the world for developing hi-tech-based Traditionally strong industry fields in Oulu region are the forest, metal, products from an idea to a complete product for the global market and for chemistry, wood products and food industries. Large integrated pulp and companies and consumer-clients to use. paper mill operates in Oulu. Raahe and Tornio have two large steel plants. Furthermore, the region is a leading production area for log houses and A significant number of international corporations relocated to Oulu dur- prefabricated homes. ing the second half of 2014. This surely must be a record in the Finnish industrial history that such a major contribution was made to the field of The extensive network of education and services and the great logistic development in hi-tech in such a short period of time. Eleven of these cor- connections support the industrial sector’s growth. A significant share of porations are in ICT sector and almost the same number in other fields. industrial production in Oulu is exported. The varied technological competence and the educational institutions in the area offer opportunities for creating the new solutions of the future.

68 69 Key figures of the basic industry in Oulu: Fennovoima´s Nuclear power plant investment 6,5 billion euros • over 550 sites Finland has four nuclear power plants. Fennovoima is a Finnish nuclear • turnover of over EUR 1.7 billion power company established in 2007. The Hanhikivi area of Pyhäjoki was • nearly 5,300 employees selected as the location of the new nuclear power plant in the autumn of 2011. Another important milestone was the delivery contract signed by Cleantech Fennovoima and Rusatom Overseas, a subsidiary of the Russian com- Environmental technology, i.e. Cleantech is one of the most rapidly grow- pany Rosatom, on December 21, 2013. ing industries on a global scale. Behind the fast growth in cleantech sector are factors such as decreasing natural resources, shortage of water, According to the schedule agreed with Rusatom Overseas, the plant will climate change, as well as legislation and international agreements. Oulu produce electricity in 2024. The massive project includes a considerable has selected cleantech as one of the most important focus areas. There number of subprojects, the schedule of which will be specified as the are large investment plans in Cleantech such as renewable energy pro- project progresses. Designing and building a nuclear power plant takes duction in Northern Europe. Cleantech products from Oulu are used and years, and the service life of such a facility is at least 60 years. well known all over the world and its success is supported by the area’s strong ICT expertise. The economic impacts of Fennovoima’s nuclear power plant project are felt throughout Finland. The project will vitalize its home municipality and The strongest Cleantech competences in Oulu: the surrounding operating environment, including Oulu. As the construc- • Renewable energy and smart energy solutions tion proceeds, a significant amount of foreign labor is expected to arrive • Resource efficiency in the region. • Emission control According to Fennovoima’s current estimate, the number of workers on In addition to companies, the University of Oulu and the Oulu University site at the same time will be between 3,000 and 4,000. In the operating of Applied Sciences also invest heavily in R&D work in the Cleantech. phase, the plant’s employees will number between 400 and 450. The nuclear power plant investment will also bring extensive indirect effects: the Major investments in the Oulu region project will employ the service sector and transport businesses. Oulu region is expecting around 30 billion euros of investments within the next ten years. The biggest current investment is the nuclear power The project will have permanent effects on the structure of trade and in- plant project in Pyhäjoki. In addition major investments are planned for dustry, as well as the regional economy. In addition to this, nuclear power wind power, bioenergy and other renewable energy plants, construction has an important role in energy production. Oulu has an essential role in and mining. the project as the largest city in Northern Finland. It is also possible that operators related to the project will open offices in Oulu.

70 71 Other major investments projects in Oulu region Key figures of the creative industries in Oulu: • Nearly 1,000 companies Investment boom creates remarkable business opportunities for com- • Turnover of approximately EUR 200 million panies in many different fields. Oulu region is the most important wind • Approx. 2,000 employees power production area in Finland. Expansive wind power parks worth • About 100 new companies annually over a billion euros have been planned for the coastal region of Northern

Ostrobothnia, close to Oulu. Life science Despite the declining trend in mining investment, there is still big invest- Life science sector in Oulu consists of around 1,700 companies in the bio, ment plans in Northern Finland in mining sector. Sotkamo Silver’s main health and welfare industries. The total revenue amounts to around EUR development project is the Silver Mine project in the municipality of Sot- 700 million. In Oulu, there is world class competence in the next genera- kamo. The Mustavaara Iron-Vanadium Mine in Taivalkoski is planned to tion health technologies and the emerging bioeconomy. be reopened, with ore concentrated in Raahe. Dragon Mines is doing further research concerning planned gold mines in Kuusamo area. Dis- Oulu offers a world class ecosystem in Life science sector. Expertise cussions are certain to continue due to important travel industry in the arises from co-operation with research, public operators and private com- Kuusamo region. panies. ICT expertise found in the city is utilized in the development of Life science applications e.g. wireless biosensors and medtech devices. Despite there has been a production stop at the Laiva mine, the overall Oulu’s medical technologies ecosystem is a multifaceted network consist- goal of Nordic Mines is to restart operations in a manner that creates ing of the universities, public organizations like the city hospital and the conditions for profitable mining. The updated action plan is based on a VTT Technical Research Centre, and various health-tech manufacturers geological model and mineral resources and it focuses on an improved and biopharmaceutical companies. Active promotion of this health eco- mining method and capacity expansion in the processing plant adjacent system is managed by the organization OuluHealth, which has formed a to the mine. strong network between the city’s key players in Life science and health- related sectors. Creative industry Oulu is now preparing for a technological makeover, spearheaded by The diversity of the creative industries in Oulu ranges from architectural Business Oulu and Oulu University Hospital. The goal is to utilize exper- services and the communications sector to design and adventure ser- tise in the bio, health and wellness sectors to create a veritable boom of vices. During the last few years online, mobile and SaaS services have health and wellness know-how in Oulu. started to emerge as new branches. Oulu is also one of the central clusters of the Finnish game industry.

The creative industries offer new opportunities, perspectives and inspira- tion for other business sectors and the community around them. Some top international events are also organized in Oulu, such as the widely- known Air Guitar World Championships.

72 73 Located in Kontinkangas, near Oulu city centre, Oulu Health is a com- Oulu is the 5th largest travel destination in Finland and the number of lei- petence cluster of companies, professionals and research communities sure travellers has already reached 60%. The city attracts tourists by the specializing in the fields of information and communications technology, selection of shopping and services as well as its lively display of culture biotechnology, health and wellness. Oulu Health represents a physical and events. Just a stone’s throw away from the city centre is the Nallikari meeting place for the entire health ecosystem. The campus already hous- area, which is particularly well known as a summer destination amongst es more than a hundred organizations, including Oulu University Hospital, the international visitors. Oulu City Hospital, Oulu University Faculty of Medicine, Oulu University of Applied Sciences and a large number of companies. The competence The new city plan enables investments of more than 100 million euros in cluster of Kontinkangas currently employs more than 8,000 people. hotels, holiday village and amusement park in the Nallikari area. Other investments in the travel sector are in Kuusamo, Syöte, Rokua Geopark Investments worth several billion euros are being planned for Kontinkan- and Kalajoki. gas. Oulu University Hospital alone has decided to invest 500 million euros over the next 20 years. Transport Oulu’s location, right in the middle of Northern Europe’s developing mar- Oulu has, for a couple of years now, been living an innovation boom in kets and its active business life, is excellent. Traffic and transport to and the bio, health, wellness and the ICT sectors. A number of promising en- from Oulu works effortlessly. The city is the most significant logistics hub terprises have been created. in Northern Scandinavia: it is a junction for road, railway, sea and air transport. Examples of innovations and products produced by the Life science sector in Oulu include the world’s leading brand of heart rate monitors, the Oulu Airport is the second busiest in Finland. The recently expanded and world’s first production method for recombinant collagen, products for completely renewed airport serves over one million passengers annually. faster development and scaling of biotech production processes, selec- The regular domestic and international flights of several airlines connect tion of diagnostic tests and real-time online methods for improving food Oulu with the rest of the world. Direct flight to Helsinki (Finnair, Norwe- safety at point of production in food processing plants. gian) takes only 50 minutes. Arctic Airlink started to operate the route Oulu-Luleå-Tromssa in January 2015. Altogether Oulu Airport offers 15- Trade, Service and Travel 20 flight daily and over 100 flights per week. The opening of the underground parking hall Kivisydän (Stone Heart) will develop the accessibility of the City Centre of Oulu, speed up the current Oulu Port is one of the leading ports in the Bothnian Bay and 500-600 investments and attract new trade companies to Oulu. The increase in ships visit to Oulu annually. The port has regular connections all over population and purchase power combined with active economic develop- Europe. The annual amount of cargo shipped through Oulu is between 3 ment create a sustainable platform for the development of service and and 3.5 million tonnes. The most significant export product is paper, and trade in the city. The current investment plans in the city centre are valued the main import products are fuel and raw materials for the forest indus- at a couple of hundred million euros in the next decade. try. Oulu Port is open all year round, and it is the biggest port in North- ern Finland in terms of containers and unit traffic. Port of Oulu includes four separate harbour areas: Vihreäsaari oil and bulk docks, Nuottasaari docks, Oritkari docks and the Toppila docks.

74 75 Railway transport of both goods and passengers between Oulu and eve- Founded in 1958, the research and education community is 16 000 stu- rywhere in Finland functions efficiently. The modern Pendolino and Inter- dents and 3000 employees strong, and one of the biggest and the most City trains guarantee a pleasant and rapid journey. Oulu is also easy to multidisciplinary universities in Finland. The ten faculties, the many de- access by road. partments and the specialized research units of the University of Oulu create the foundation for multiscientific research, innovation and training In addition, Oulu has a high quality and fully functional terminal for com- of experts for demanding professional tasks. bined goods transport. It is located in the logistics center for road, railway and sea traffic in the Oritkari area. The University of Oulu conducts scientific basic research in over 70 branches of science. Open-mindedly combining technical sciences, natu- Education and Research ral sciences and human sciences creates a unique foundation for new multidisciplinary research knowledge, innovation and education. Oulu is a research hub with a capital R: the local Technical Research Centre of Finland (VTT) is the largest organization in Northern Europe The research areas of strength include four focus areas and four develop- involved in applied research. Research is also conducted at the univer- ment areas. sity of Oulu, Oulu University of Applied Sciences and numerous research institutions such as Finnish Food Safety Authority Evira, the Finnish Geo- Focus areas: detic Institute (FGI), MTT Agrifood Research Finland, the Finnish For- • Biosciences and health est Research Institute Metla, the Finnish Game and Fisheries Research • Information technology Institute (FGFRI) and the Finnish Environment Institute SYKE. The edu- • Cultural identity and interaction cational offering is further complemented by vocational institutions and • Environment, natural resources and materials; private education providers. • Development areas Oulu University • Business and economy • Steel research The University of Oulu is an international science university which creates • Research-based teacher education innovation for the future, well-being, and knowledge through multidiscipli- • Mining and mineral field nary research and education. The research organizations of the focus and development areas are Future innovation is about seeking, utilizing and applying new knowledge. typically multidisciplinary, and they encourage researchers to make new The University of Oulu researches people and culture in a changing living scientific initiatives and discoveries. The University of Oulu conducts re- environment, as well as opportunities that new technology provides for search in close cooperation with sector research institutions and corpo- improving the well-being of people and the environment. The University rations. Acting in the international scientific network is the foundation of of Oulu is a multidisciplinary expert in Northerness. renewal.

76 77 Oulu University of Applied Sciences Hydro power Oulu University of Applied Sciences has more than 30 programmes, in Pohjolan Voima Oy, Kollaja project 155 m€ which theory and practice are in balance. University has an active role in Pyhäsalmi pump power plant 300 m€ research, both internationally and regionally. Total: 455 m€

Oulu University of Applied Sciences works in close cooperation with Wind power regional business life. All regional projects 10200 m€

(Source: BusinessOulu) Nuclear power Fennovoima Oy, Pyhäjoki 8.000 m€ 3.2.1 Oulu Region investment potential Bio energy Industry Oulun Energia, new power plant, bio fuel and technology 500 m€ Data centers and cloud services, Oulu 500 m€ Sievi biofuel plant 150 m€ Printed intelligence, Oulu 50 m€ Bio gas plant, recycling and filling, Oulu 10 m€ SSAB Raahe, power plant and coal injection technology 208 m€ Total: 650 m€ Valio/Pohjolan Maito, Oulu, dairy mill expansion 40 m€ Kotivara Oy, Oulu, food industry expansion 10 m€ Energy transfer networks Akzo Nobel Oy, Oulu, chemical industry 20 m€ Fingrid Oy 100 m€ Haapajärvi bio refinery 1.000 m€ Caruna Electricity 50 m€ Stora Enso Oyj, Oulu, environment technology 14 m€ Total: 150 m€ Lappwall Oy, Pyhäntä, expansionf of wood element factory 5 m€ Flexbright Oy, Oulu, production expansion 5 m€ Total: 1.852 m€

Mining industry Mustavaara mine and smelter Posio/Taivalkoski/Raahe 450 m€ Daragon Mining Oy, Kuusamo gold mine 120 m€ Belvedere Mining Oy, Hitura mine, open pit expansion 20 m€ Belvedere Mining Oy, Kopsa mine, start of gold production 20 m€ Nordic Mines Oy, Raahe gold mine reopening 15 m€ Total: 625 m€

78 79 Trade Transport infrastructure Osuuskauppa Arina, Valkea shopping center, Oulu 150 m€ Seinäjoki-Oulu, railway project, phase 2 344 m€ Ritaportti shopping center, Oulu 100 m€ Ylivieska-Kokkola, second railway track 310 m€ Kaakkuri shopping center expansion, Oulu 45 m€ Ylivieska-Iisalmi-Kajaani, railway electrification 90 m€ Zatelliitti shopping center, Kempele 375 m€ VT 4, Oulu-Kuivaniemi highway 116 m€ Raahen portti shopping center, Raahe 150 m€ VT 22, Oulu-Kajaani highway 50 m€ Oulu city shopping centers (CUBE, Pallas, Casterninkulma etc.) 100 m€ VT 8, Pyhäjoki nuclear power plant transport connection 30 m€ Cor Grou p Oy, Wellbeing centers 100 m€ Oulu and Ylivieska railway yards 46 m€ Office centers, Hiironen/Peltola, Oulu 50 m€ Oulu deep sea port and expansion 60 m€ Retail park, Oulu 135 m€ Hailuoto bridge 64 m€ Raksila shopping centers and arena expansion 150 m€ VT 4, Oulu-Jyväskylä highway 160 m€ Ankkurinlahti, Liminka 3 m€ VT 8, Oulu-Vaasa highway 143 m€ Total: 1.358 m€ Total: 1.413 m€

Tourism Public investments Nallikari tourism center expansion, Oulu (hotel, theme parks) 100 m€ Oulu University hospital 500 m€ Nallikari expansion second phase, Oulu 35 m€ Oulu University dentistry unit 10 m€ Oulu city, Kauppatori Hotel project 80 m€ City of Oulu investments, underground parking etc. projects 1.300 m€ Oulu city, other hotel expansions (with Lapland Hotels Oy) 50 m€ Laguna project, Pyhäsalmi 600 m€ Linnakangas tourism and recreation center, Kempele 30 m€ Total: 2.410 m€ Oulu Zone, recreation center 20 m€ Other recreation and tourism center projects 20 m€ Oulu Region total: 27.448 m€ Total: 335 m€

80 81 3.2.2 Development of the region 2016–2020 years ago. In the beginning of 2015 Stockmann told that Oulu center is by Timo Rautajoki unprofitable and they are closing it in 2016. Real problem is not Oulu, but Stockmann has generally had strong structural economic problems City of Oulu has been going through big structural changes during last for many years. Also strong investment policy in Russia has strained the five years. City has been growing rapidly after 2010 especially two years development of the company. Bare shopping center sales have turned ago when several neighboring municipalities joined Oulu. Today city has down in all Stockmann centers also in Southern Finland. Ukraine crisis, almost 200000 inhabitants and it is one of the biggest in the European collapse of Russian rouble and strong decrease of Russian tourists in High North. Only Murmansk and Arkhangelsk are bigger and Severod- Helsinki has pushed Stockman to act before total collapse. vinsk is as big as Oulu, but population there seems to continue decreasing and Oulu is growing further. The growth of Oulu can be seen also in residential construction. Peo- ple are moving from countryside to Oulu and also from different parts of Oulu was one of the biggest Nokia center in the whole world. Problems Northern Finland. The value of new apartments and houses is estimated with mobile phones were visible in Oulu several years ago. Total exit to be more than 3.7 billion €. Residential investments are not listed in this of mobile phones planning and manufacturing left thousands of highly yearbook. skilled people in Oulun without a job. But Nokia still remains in the city. New Nokia which was based on former Nokia Siemens Networks has Pyhäjoki in Raahe, about 120 km south of Oulu, is today very important been strong in Oulu for decades and the situation is still the same. Base place in Finland. The nuclear power plant of Fennovoima Oy should be for future growth remains strong. there ready in the first years of next decade. Project is very important for Finnish industry and importance is even bigger for Oulu Region. City has however been fighting back. According to Business Oulu, investments have started to run back to Oulu especially in ICT-sector. In 2014 The Pyhäjoki project is huge. Total value of this investment is about 6-8 nine foreign and three Finnish companies opened branch office or pro- billion €. Fennovoima changed two years ago the project structure and duction in Oulu. Two of these were from Norway, China and USA and one made agreement with Rosatom regarding reactor and other nuclear tech- from Germany, Taiwan and Italy. According to biggest Finnish Economic nology. Company succeeded in the new application process and the sup- newspaper Kauppalehti Oulu Region has got during last two years almost plement to the valid Decision-In-Principle was accepted in parliament and as much venture capital than South Finland. Difficult structural change the final financing of the project became ready when Finnish energy giant seems to turn slowly to success story. Fortum joined to Pyhäjoki project. Building and construction start is going to boost all possible investment plans in the region. Investment potential is huge in the region compared with other parts of Finland. Speciality of the region seems to be trade sector with over 1.3 Start of the investment boom in Oulu Region depends also on the long billion € investment potential. That is clearly largest in the whole Euro- expected recovery of Finnish economy. City of Oulu is one of the target pean High North. Arina cooperative is at the moment building enormous regions of Finnish Government to develop ICT and it is getting special Valkea shopping center in the very city. Value of this project is 150 million subsidies for some years. This probably speeds up some projects. €. However, the trade sector has also got negative results in the city. Fa- mous Finnish shopping giant Stockmann opened big center in Oulu some

82 83 Main investment projects that start before 2020 3.3 NORTH OF FINLAND - Valkea shopping center by Arina in Oulu 150 m€ Dairy expansion by Valio in Oulu 40 m€ KAINUU REGION Power plant and coal injection in Raahe by SSAB 208 Data centers and cloud services in Oulu 500 m€ Regional wind energy projects 2.000 m€

Pyhäjoki Nuclear power plant by Fennovoima 8.000 m€ Airport ARCTIC SEA

Ritaportti shopping center in Oulu 100 m€ Harbour Wellbeing centers by Cor Group in Oulu 100 m€ Railway Nallikari tourism center expansion 100 m€ Other hotel projects like Lapland Hotels in Oulu 50 m€ Oulu Zone 20 m€ Seinäjoki-Oulu railway project second phase 344 m€ VT 8 Pyhäjoki nuclear power plant transport 30 m€ VT 4 Oulu-Kuivaniemi road 116 m€ Total: 11.758 m€

Runner ups - projects that can start if growth is stronger than expected Oulu and Ylivieska railroad yards 46 m€ Expansion in Kaakkuri shopping center 45 m€ FINLAND ay russia

New power plant by Oulun Energia 500 m€ w

Kollaja project by Pohjolan Voima 155 m€ eden

nor

Mustavaara mine and smelter in Taivalkoski/Raahe 450 m€ s Other mining (Hitura, Kopsa and Raahe gold mine) 55 m€ all these total: 1.251 m€ All total: 12.909 m€

84 85 Kainuu is located in the Oulu province and it borders the regions of North- Kajaani is a location that has existing infrastructure perfectly positioned ern Ostrobothnia, North Karelia and Northern Savonia. In the East it also for Data Center business so much so that the Finnish Government chose borders Russia. to locate its new Super Computer Data Center on a UPM site that used to house a paper mill. The Super Computer project is due to establish The region consists of eight municipalities and two cities. The administra- the world’s 1st zero-emissions Super Computer, utilising the local envi- tive capital is Kajaani. Municipalities of Kainuu: Hyrynsalmi, Kuhmo, Ka- ronment in terms of 100% non-mechanical cooling (water and/or air re- jaani, Paltamo, Puolanka, Ristijärvi, Sotkamo, Suomussalmi, Vaala and sources). The Finnish government is working with the Green Grid and Vuolijoki. others to open up and share best practice of design, build and operation to maximise energy efficiency, adhering to similar objectives as the Open The total population of the region is 84 350, Kajaani being the biggest city Compute program. with nearly 38 000 inhabitants. Land area is 24 452 km2 and population density 3,51 km2. The transformation of use to a Data Centre has brought significant benefits to further investors to the region by establishing local expertise and The town of Kajaani was founded by Count Per Brahe in 1651. The River easy routes to develop and commission data centers. The site benefits Kajaaninjoki and the ruins of the historical Kajaani Castle are situated from the availability of significant power capacity (120MW on site renewa- in heart of the town. Kajaani Castle celebrated its 400th anniversary in ble & 400MW diverse grid connectivity) and immediately available zoned 2004. greenfield land adjacent to the ex-paper mill site. The very secure, sustainable and extremely commercially attractive power and 50 hectares The turnover of companies within the technology industry of Finland has of zoned land ’spade ready in 4 weeks’ means the site is available today continued its growth during 2006. The same trend exists in the region for Data Center development. The power contracts can be fixed for at of Kainuu. Currently there are more than 2,300 people employed in the least 7 years, providing certainty for the most obnoxious cost elements of regions ICT and metal industries. running data centers and it is Carbon Neutral ’Green’ generation to boot. Furthermore the area benefits from excellent diverse fibre connectivity to The economical development in Kainuu Region was favourable in the first the European international exchanges and a unique untapped fibre con- years of the new millenium. The beginning of global financial crisis in the nection direct from site to the Russian market. last months of year 2008 changed rapidly the situation. Biggest impact of the new recession has been the total exit of forest industry from the As the world’s data requirements continue to increase in terms of volume, county. UPM company decided to close the mills in Kajaani. speed and frequency there is a natural progression for the increased demand for data centers to facilitate the delivery of these expanding infor- Kainuu Region started rapidly to prepare to this enormous structural mation services. change. Base from the new growth was found on new ideas. One of the most interesting projects have been the plans to establish data centers in the old premises of closed paper mill right in the center of Kajaani. Kajaani has been competing with two neighbors in the west: Luleå in Sweden and Oulu.

86 87 The increase in demand is happening at the same time as the pressure Tourism is one of the key business areas determined in the regional pro- on the World’s electricity capacity and pricing, which are decreasing and gramme. Kainuu already has plenty to offer for visitors: Vuokatti, Ukko- increasing respectively. Furthermore the pressure of lowering the Carbon halla and Paljakka ski resorts, shimmering Lake Oulujärvi, the unspoilt emissions from the electricity production is forcing organizations to look nature of the whole region, various sports activities and cheerful cultural for sustainable renewable energy sources, ideally within geographically events, just to name a few attractions. suitable areas for fiber connectivity to markets. In the following years, tourism in Kainuu will be developed further for There is a plethora of locations around the world stating that they have example by: all the major points covered for the high level criteria to facilitate commer- • Developing individual tourist centres cially, politically and environmentally sustainable data centers. Given the • Drawing up tourist centre or tourist area-specific Master Plans technology is now available to create zero mechanical cooling in all coun- • Cooperating in marketing, particularly on an international level tries in Northern Europe and the expertise of staffing is easily sourced, • Increasing the level of know-how – education & training the key siting criteria for most Data Center operators and users is based • Improving the accessibility of Kainuu – transport connections on the following and can take anything up to 5 years to identify and clarify before a data centre goes live: (Source: Invest in Kainuu, Kainuun liitto) • Power – Secure, Available, Sustainable and competitively priced, preferably with long term contracts for TCO planning 3.3.1 Kainuu Region investment potential • Land – Available secure environmentally and geo-politically stable with planning approved Industry • Fiber – Diverse routes within acceptable latency parameters to mar- North European Biotech Oy, Cellunolix -etanol plant 40 m€ kets ICT sector investments 10 m€ • Tax – Commercially and Politically sustainable combined with the Total: 50 m€ ease of doing business Mining industry The main objective for the Kajaani Data Centre Cluster is to enable the Solidium/Talvivaara nickel mine, 500 m€ operational environment for the knowledge-intensive data center cluster environmental investments and business continuity in Kajaani and to ensure the regional multiplier effect. The project coop- Sotkamo Silver Oy, Taivaljärvi silver mine 40 m€ erates and networks with companies and institutions in the information Otanmäki mine Oy 450 m€ technology field, creating visibility for the Kajaani data center. Kajaani DC Cluster will provide the operational framework for new companies, spin- (Regional Council of Kainuu estimate) offs, R&D operations and companies that are placing their operations in Total: 990 m€ the data center. Cooperation with the local educational institutes is helping to build a curriculum for data center-specific education within the area and thus ensuring a skilled data center workforce in the area.

88 89 Wind power Transport infrastructure Loiste Energia/Taaleritehdas, Kivivaara-Peuravaara, Vartius rail and border crossing construction, Kuhmo 12 m€ Hyrynsalmi-Suomussalmi 150 m€ Raw wood terminals, Suomussalmi and Sotkamo 10 m€ Otsotuuli, Teerivaara, Paltamo 100 m€ Kontiomäki-Kajaani-Sukeva, rail construction (Kainuu) 15 m€ Otsotuuli, Kokkosuo, Kajaani 90 m€ Kontiomäki-Suomussalmi, rail construction (Kainuu) 50 m€ Otsotuuli, Iso Tuomivaara, Hyrynsalmi 36 m€ Oulu-Kontiomäki-Vartius, rail construction (Kainuu) 38 m€ TuuliSaimaa, Metsälamminkangas, Vaala 122 m€ Vt 22 / Kt 89 Oulu-Kajaani-Vartius, road construction (Kainuu) 15 m€ Solidium/Talvivaara Mining Co., Talvivaara mining area, Other important road construction investments 10 m€ Kajaani-Sotkamo 90 m€ Total: 150 m€ Otsotuuli and Prokon Wind Energy, Lumivaara, Hyrynsalmi 81 m€ Metsähallitus Laatumaa, Piiparinmäki-Murtomäki, Kajaani 95 m€ Kainuu Region total: 2.360 bln € Total: 683 m€

Tourism 3.3.2 Development of the region 2016–2020 Holiday Club Vuokatti expansion 45 m€ by Timo Rautajoki

Sokos Hotel Vuokatti expansion 20 m€ The mining industry investments in Sotkamo gave a powerful growth for Other sector investments, several operators 205 m€ Kainuu almost ten years ago. Talvivaara nickel mining project was the Total: 270 m€ number one investment project in whole Finland. Global financial crisis had strong impact on nickel prices and after wet and rainy winter came Public investments more wet and rainy spring and summer. Rain continued in the fall and New central hospital, Kajaani 120 m€ all the water gathered in the mine started to spill over. Worst of all was Hauhola-Lehtikangas community center 24 m€ that rain spilled also production sewage waters to surrounding lakes and Other investments in education and culture sector 29 m€ small rivers. Helsinki authorities noticed that new mine had created in Investments / Kajaani city center 15 m€ Finnish scale a huge environmental problem that fortunately didn’t turn to Small investments in social and health care (buildings) 19 m€ a catastrophe, because the damages happened inside the mining area. Bio Energy, Municipality of Suomussalmi 10 m€ Winter 2014-2015 has got a lot of wet snow and rain from the end of Feb- Total: 217 m€ ruary. Situation in the Talvivaara mining area is still crucial.

90 91 Talvivaara mining company has drifted to almost bankruptcy. State owned Other sectors experiencing development in Kainuu are tourism and other Solidium Oy has taken over the project and tries to solve all outcoming forms of energy production. Resolving Talvivaara’s problems is also a problems. Government has already decided to subside Talvivaara with key issue for tourism. Expansion investments exceeding 50 million euros almost 200 million €. Main task for Solidium is to solve environmental are planned for Sotkamo which is only some tens of kilometers from the problems and prevent more damages. Almost as important task is to find problematic mine. The focus for energy production is on wind power, and an international mining company to partner in mining company and then a number of wind power plans are in place for the region. after successful recovery sell the share of Finnish state totally to new owner. So far rumour has it that at least two companies are interested Main investment projects that start before 2020 in this. One is Nyrstar, a big mining company with origins from Belgium, 1. Continuation of Talvivaara mine 500 m€ which has previously been a customer of Talvivaara. Other interested 2. Cellunolix ethanol plant by North European Biotech Oy 40 m€ company is Swedish mining giant Boliden. 3. ICT projects in Kajaani 10 m€ 4. Wind power projects 376 m€ Resolving these issues and restoring the reputation on the international 5. Sotkamo hotel expansion (Holiday Club and SOKOS) 65 m€ markets is a vital prerequisite for implementation of the proposed expan- 6. New Central hospital in Kajaani 120 m€ sion plans. One reason for the problems has been new chemical technology used in the mining process. The extraction from mine has been put Total: 1.111 m€ on big piles on the ground. After some months chemical process nickel could have extracted finally from the stone material. Rain has a certain Runner ups - projects that can start if growth is stronger than expected role in this process and if it rains too much, the process stops. This has Taivaljärvi silver mine by Sotkamo Silver Oy 40 m€ happened in Talvivaara and processes have been stopped, but some big Kainuu railway projects 103 m€ piles still exist and restarting of process gives nickel worth of some bil- Total: 143 m€ lion €. That is why the project will survive and is interesting from mining companies point of view. All total: 1.254 m€

Talvivaara has had an expansion plan called “Overlord”, which would be worth over a billion euros. At this moment the expansion seems to be impossible. It is almost tragicomic that the financing which is crucial for a company to survive is also some kind of investment and it is all the time growing.

In addition to this massive survival project, the Taivaljärvi Silver Mine near Sotkamo is opening, which was listed on the Helsinki Stock Exchange in July 2012. By size, the project is significantly smaller than Talvivaara. The date of the implementation start is unknown, but project is still active.

92 93 4. NORTH OF SWEDEN - 4.1 Norrbotten NORRBOTTEN/SWEDISH Norrbotten County (Norrbottens län) is a county in the North of Sweden. LAPLAND It borders to Västerbotten County and the Gulf of Bothnia. It also borders the counties of Nordland and Troms in Norway, and Lapland Province in Finland.

Airport ARCTIC SEA Norrbotten has some 248 545 inhabitants, which represents three per Harbour cent of Sweden’s population. There were people in this part of the country Railway as far back as the Stone Age, 9 000 years ago. Reindeer husbandry and the Sami culture are couple of thousand years old.

The mountain area in Norrbotten, which is part of the Scandinavian mountain chain, is a near 100 km wide zone running from North to South. All of Sweden’s mountains above 1800 meters are located in this area. Many of them are in the Sarek area and the Kebnekaise mountains, which are the two most extensive high mountain regions.

The county railway network, both in a north-south direction and to Finland and further on eastwards is a vital link, both for goods traffic and passen- FINLAND ger traffic. The Ore Railway between Luleå and Narvik in Northern Nor-

ay russia way is one of the country’s most important goods routes. Half Sweden’s w tonnage of railway freight is transported from Kiruna to Riksgränsen and

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nor w on to Narvik in Norway.

s In Norrbotten County there are five airports with scheduled flights: Luleå Airport, the fifth busiest in Sweden, Arvidsjaur, Gällivare, Kiruna and Pa- jala. The county is crossed by a national road network, which links to Norway and Finland.

94 95 The roads in Norrbotten are important also to link together this vast coun- Production of raw materials may be the main driver of Norrbotten’s ty. Nine per cent of Sweden’s road network is in Norrbotten County, a economy, but small and medium-sized enterprises are assuming a role region where the rate of car ownership is among the highest in Sweden. of ever greater importance. The willingness of existing companies to in- The harbour in Luleå is Sweden’s leading bulk goods terminal. An effec- vest has never been so high. LKAB mining is investing thousands of mil- tive ice-breaker service enables the ports of Piteå and Luleå to remain lions of SEK in Kiruna and Malmberget. Boliden AB mining is investing open all year round for the intensive shipping. The Port of Kalix is open to similar amounts in Aitik Copper Mine near Gällivare. The IKEA start-up in shipping during the ice-free period. Haparanda is attracting retail chains to the area, and housing and hotels are under construction. Because of the geographical location, companies Luleå University of Technology is Scandinavia’s northernmost technical there have their customer base in both Sweden and Finland, and even in university, with world-class research and education The university today Norway and Russia. has more than 12,000 students, 1,400 employees, and an annual turnover of more than 1,000 million SEK. Testing operations in the inland municipalities of Arjeplog, Arvidsjaur, Gällivare, Kiruna and Älvsbyn are constantly growing. Multinational com- Cooperation with the surrounding community is one the university’s panies here test car components, aircraft and missiles. characteristics. Luleå University of Technology is now widely known as a ”business university”. Luleå University of Technology offers courses at Polarbröd in Älvsbyn delivers frozen bread all over Sweden and also ex- basic, advanced and research level in engineering, business administra- ports to European countries. Älvsbyhus is the largest manufacturer of tion, social sciences, health, music, media, teaching and drama. prefabricated homes in the Nordic region. Polarica in Haparanda deals in berries and game meat for the European and world markets. Among The university recruits students from both in and outside Sweden. The Norrbotten companies, Polarica has been a pioneer in trade with Russia university’s regional remit includes cooperation with among others the and the company has a production plant in Poland. Polaris Eyewear AB municipalities in the region to offer customised education, not least in Boden manufactures eyewear and has subsidiaries in England and through the campuses in Skellefteå, Piteå and Kiruna. Japan. Liko AB in Luleå is a world leader in patient lifts for the care sector. Luleå is northern Europe’s main metallurgical development centre. SSAB Research is carried out at the university in close cooperation with com- is one of the world’s leading producers of steel. Gestamp Hardtech sup- panies that include Shell, Ericsson, Ford/Volvo, LKAB, Airbus, Volvo Aero plies the European and North American automotive industries with colli- and IBM, and with international partners such as Monash University in sion protection components and Ferruform makes chassis components Australia and Stanford University in the US. The university’s research for trucks and buses. has an annual turnover of more than 500 m SEK in six priority areas: mining technology and metallurgy, customised construction,mechanical Research and skills development are creating new industries in the coun- engineering, process IT, product development and environmental engi- ty. At Luleå university’s School of Music in Piteå, the focus of the Acusti- neering. cum Business Park is on music and media. Gällivare has concentrated on medical technology; Kalix and Pajala on computer technology and elec- tronics. The basis of Boden’s local economy has shifted from the public to the private sector. International space and environmental research is carried out in Kiruna.

96 97 The Gross Regional Product (GRP) is the regional equivalent of the na- The county has three pulp and paper industries: Smurfit Kappa Kraftliner tional yardstick - Gross National Product (GNP). GRP is the aggregate AB and SCA Packaging Munksund AB, both in Piteå and Billerud Karls- value of all goods and services produced in a region in a given year. GRP borg AB in Kalix. The plants in Piteå manufacture brown and bleached shows how great production is, reckoned in SEK. The average GRP for kraft liner. The plant in Kalix manufactures bleached sulphate pulp, sack Sweden was 319,000 SEK per capita in 2006. This amount was given the paper and kraft sack paper. index value 100. The index for Norrbotten County was 99, i.e. one per cent lower than the national average. The reason why Jokkmokk Munici- The county’s five largest sawmills all produce more than 70,000 cum pality has such a high GRP is that some of Sweden’s largest hydropower sawn and processed wood products annually. They are located in Kalix, plants are in the municipality while the municipality has few inhabitants. Luleå and Piteå. The county has the second highest productivity after Stockholm County expressed as GRP per employee. In the years 2007-2009, industry an- There are 20 hydropower plants in Norrbotten County producing over 14 nually invested an average of 6,800 SEK per inhabitant in Sweden. The TWh of electricity. That represents 11 per cent of Sweden’s total electric- biggest industrial investments were in Norrbotten County, at 36,000 SEK ity production. The biggest power plants are on the two rivers Lilla Luleälv per inhabitant. and Stora Luleälv. The county is self-sufficient in electricity and half of the electricity produced here is transmitted to other parts of the country. Norrbotten County has roughly 2,340 import companies and about 890 export companies. Most of the export and import companies in Norrbot- Investments in wind power have increased significantly in the county. In ten County trade with other EU States. The county has a smaller propor- Piteå Municipality, major investments are being made in new plants which tion of export companies trading within the Nordic region than the aver- will produce approximately 12 TWh of electricity a year. The primary in- age for Sweden. dustries in the county are highly energy intensive and their energy consumption is 75 per cent of Norrbotten’s total consumption. About 42 per The harbours in Luleå and Piteå are open to shipping year round, thanks cent of the supplied energy in the county comes from fossil fuels, while to the national icebreaker service, which assists vessels all along the renewable fuels constitute 38 per cent of the total energy supply. For coast of northern Sweden during the winter. In terms of tonnage, the port 2006, energy consumption in the county amounted to around 31 TWh. of Luleå is among Sweden’s five largest, largely thanks to its handling of raw materials for the mining and steel industries. Piteå is a shipping port Luleå airport is Sweden’s fifth largest airport with 20 arrivals and 20 de- for wood and paper. Both harbours handle petroleum product imports. partures daily (weekdays). Domestic destinations are Göteborg, Kiruna, Forestry is of major economic importance to the development of Norrbot- Pajala, Stockholm, Sundsvall, Umeå och Östersund. International flights ten County. Almost 40 per cent of the county is forested. More than half to London. Geographic position, good service and high level of safety is owned by different forestry companies. In all, the forestry industry em- make Luleå Airport an attractive airport for air cargo. The strategic loca- ploys around 4,000 people in the county. tion in the Barents region makes Luleå Airport interesting for the world’s air freight carriers. Within the airport’s geographic market region are the Norwegian fisheries and oil industry, world-leading engineering compa-

98 99 nies in northern Sweden and Finland, and enormous gas, oil and mineral The Node Pole is at the same latitude as Fairbanks, Alaska, USA, and reserves in northwestern Russia. Kallax Cargo develops air cargo ser- is the coldest region in Sweden. The climate enables fresh air cooling all vices at Luleå Airport in cooperation with LFV, forwarders and logistics year round. Read more about how nature’s combined forces can enable companies in the Barents region. cost savings and more efficient cooling operations. Norbotten can also show results of promotion the Node Pole idea. Facebook has already (Source: Facts about Norrbotten, Länstyrelsen i Norrbottens Län) opened first data center in Luleå and is preparing to build two more centers in the neighborhood. Future Development of Norrbotten Cold, dark and sparsely populated Norrbotten converts the natural ad- Business opportunities in Norrbotten are based on climate and raw mate- vantages to competitive advantages. The region’s potential for cold cli- rial assets that are unique from an international standpoint. Great invest- mate testing, with strong collaboration between academia and industry. ments have already been made, but there is an enormous potential for Main part of this activity is concentrating to Arvidsjaur region, west from business associated with investments that are also planned and secured Luleå. for the next ten-year period.

Norrbotten can provide the market’s most energy-efficient solutions, and The Node Pole region in northern Sweden, close to the Arctic Circle, as what’s more, they are 100% green. The lowest energy costs, free low Norrbotten calls itself, holds a combination of ideal inherent qualities for temperatures, good communications, attractive start-up locations and major data centers and high-tech industry. In northern Sweden, the elec- well-qualified personnel are also what Norrbotten has to offer. tricity grid has an extremely high redundancy and capacity, which is vital for powering for instance data centers. Among the lowest electricity prices Svevind company is engaged in wind power in the north of Sweden, and in Europe, 100% renewable hydropower and a highly developed infra- its project in Markbygden, Piteå Municipality, has the potential to become structure are three other aspects that make The Node Pole unique. one of the largest wind farm networks in Europe, and maybe even the world. Once fully developed in 2022, its accumulated production output is The Node Pole is one of the most secure and stable places in the world expected to reach 8–12 TWh. This is equivalent to one-third of Sweden’s – geologically, politically, socially and digitally. Sweden has not been to total hydro power production, and involves investment in the region of war since 1814, the seismic activity is extraordinarily low, and the country EUR 80 million. is ranked as number one in Europe regarding technology readiness, ICT use and broadband quality. Several stakeholders have joined forces to realise the gigantic Mark- bygden wind power project in Piteå Municipality. A key player in the ini- The region is well known for its higher education. Luleå University of tiative is German company Enercon, which features among the world’s Technology conducts research and innovation within diverse fields such largest wind turbine manufacturers. Enercon currently employs 60 staff as distance-spanning technology, long-term digital preservation and low- in Piteå, a figure which is set to climb as the project continues to expand. er energy consumption of web technologies. In addition, Luleå Science Norrbotten is home to Europe’s largest iron ore production with more new Park, the University’s next-door neighbor, is one of Sweden’s fastest mines waiting in the wings. LKAB’s underground mining operations are growing science parks. The region is already one of Scandinavia´s lead- carried out using world beating technology. A century of high tech devel- ing skill centers in ICT – Information and Communications Technology.

100 101 opment has also led to a number of world beating products. Magnetite Mining industry ore (the rock) is transformed into the worlds’ most eco-friendly iron ore LKAB finalizing iron mine expansion project 2.500 m€ pellets (the roll). Hannans Reward/Rakkurijoki iron mine 1.000 m€ Hannans Reward/Lannavaara iron mine 1.000 m€ Just over 40 years of age, Luleå University of Technology – LTU – is one Hannans Reward/Pahtohavare gold-copper mine 500 m€ of Sweden’s youngest higher education institutions. The emergence and Jokkmokk Iron Mines AB, Kallak iron mine 1.000 m€ development of the university is closely linked with the region’s extensive Boliden AB, Laver copper mine 1.300 m€ mining and mineral industry – today, LTU is renowned as one of Europe’s Pajala iron mining expansions 600 m€ most comprehensive universities in the field. Total: 7.900 m€ The mining sector is crucial for Norrbotten. LKAB has been carrying out mining operations in the region since the end of the 19th century. Accord- Hydro power ing to a recent survey, both directly and indirectly, through subcontractors Vattenfall AB, power plant capacity upgrade Luleälv 1.500 m€ as well as related industries, LKAB has contributed towards the creation of 54,000 jobs in the Cap of the North. Wind energy Piteå, Markbygden wind park 6.720 m€ SGU – has been mapping the geology of Sweden for over 150 years. The WPD Luleå 300 m€ national drill core archive, in Malå, is one of the world’s largest, featur- WPD Kalix, Bergön 170 m€ ing over 3000 kilometres of drill cores from across the nation. The cores Kraftö Vind AB, Piteå 140 m€ have been accumulated by the Government as well as private prospect- Kraftö Vind AB, Arvidsjaur 95 m€ ing companies. Total: 7.425 m€ (Source: Invest in Norrbotten) Energy transfer network 4.1.1 Norrbotten investment potential Norrbotten network 200 m€

Trade Industry Barents Center, Haparanda 120 m€ SSAB, Luleå, blast furnance 200 m€

Facebook, Luleå Porsön, project 2 500 m€ Tourism/winter testing Facebook, Luleå Porsön, project 3 500 m€ Arjeplog, car test climate center 560 m€ Total: 1.200 m€ Railtest Nordic, Jörn/Arvidsjaur, trains testing center, Norrbotten side 150 m€ Träkronan hotell, Piteå 35 m€ Spaceport Sweden, Kiiruna space tourism 220 m€ Total: 965 m€

102 103 Transport infrastructure LKAB is finalizing investments during next five years and some plans are Regional road projects 85 m€ cancelled. Company has also told that they must lay off temporary some Pajala-Svappavaara road 150 m€ hundreds of employees if the situation is not getting better. Pajala-Svappavaara railway 400 m€ Kiruna-Narvik railway, bypass tracs Kiruna 90 m€ The province will also have other large mines, including Kaunisvaara for the Pajala Municipality close to the Finnish border. Mining company Kiruna-Narvik railway, second track Kiruna side 1.300 m€ Northland which is operating in Pajala has been a long time in big eco- Norrbotniabanan railway Umeå-Luleå, Norrbotten side 1.500 m€ nomical problems which have been leading the company to bankruptcy Luleå sea port 55 m€ in the end of 2014. Pajala mine is at the moment closed. Bankruptcy Total: 3.580 m€ administration is maintaining only the most important actions in the mine so that possible new owner could continue mining without any longer Norrbotten total: 22.890 m€ interruption. Pajala mine has still expansion plans, but implementation of those depends on much better times for mining sector and a lot bigger demand of iron in the world market. 4.1.2 Development of the region 2016–2020 Two iron mine projects are also ongoing in the neighbouring areas of The economic development in the northernmost Sweden has been very Kiruna, one of which is located close to the town of Jokkmokk. This pro- rapid during last five years. Norrbotten in particular has entered a new ject has had problems with indigenous people in the region. Saami com- age, thanks to mining industry investments. Government of Norrbotten munity is against the mine and main reason for this has been problems published in January 2015 a survey made by Luleå Technical University with reindeer herding. Norrbotten County Government has also decided about the role of Norrbotten in Swedish national economy. The region due this contradiction to resist the project. Final decision about the li- has been during last five years one of the most dynamic growth regions cense for project is going to be made in Stockholm. in Sweden. Between 2011 and 2013 about 15% of the industrial investments in Sweden were implemented in Norrbotten and the region was One of the newest mining project is in Älvsby where Boliden has promis- seventh biggest export region in the country. ing copper project. Latest published mining project is Lannavaara iron mine which is located north from Karesuando near Finnish border. The The investments for the next ten years are still expected to be around owner of this project is Hannans Reward and its subsidiary Scandinavian 20 billion euros. The mining company LKAB alone has responsible for Resources. Project is also interesting from Lapland point of view. Com- investments totalling more than three billion euros into Kiruna, Malm- pany has told that one option for transporting the ore could be railway on berget and Svappavaara. The company has decided to double its iron Finnish side to Skibotn in Norway. This could speed up the western Arctic production from the current 19 million tons a year to approximately 37 Railway project of Finland. million tons. Even the town centres of Kiruna and Malmberget will have to be relocated to make way for the expansion of the mine. Recently the problems in global iron production has changed a little bit the situation.

104 105 Jokkmokk iron mine project problems are new in Sweden. Iron mining Most wanted railway project in the region, the Norrbotniabanan project has more than one hundred years tradition in Norrbotten. Mining busi- seemed to be postponed to distant future, but it found resurrection af- ness has been very popular in Swedish society due to thousands of jobs ter the parliamentary election in Sweden last year. New social democrat with good salary. The confrontation between mining project and reindeer leaded minority government mentioned this railway project in the state herding escalated in summer 2013 to small riots. Local Sami population budget for 2015 and promised to make start decision before 2016. Gov- states that mining is destroying the reindeer herding and mining company ernment was in serious political problems due to state budget and new claims that both parties can live together. Problem is about to grow be- parliament elections seemed to be inevitable. Swedish political showed cause most of the new deposits seem to be in the regions where Saami once again that difficult political decisions can be made in the country community in Sweden lives. Governor of Norrbotten, Mr. Sven-Erik Öster- and the budget was approved and government continues also with Norr- berg was nominated to mediator to this new problem. Results of his work botniabanan. Latest news tell that government has decided to apply EU- are sure worth of evaluation also in Finland. financing to project which is totally almost three billion €.

The largest investment sector is nevertheless wind power. A massive The Norrbotten forest industry has also made smaller investments on a wind power park with over 1100 wind turbines is currently under con- continual basis. Some kind of industry are also big data centers that are struction for the Markbygden area west of the town of Piteå in the inland planned to be build in Luleå. First center for Facebook is ready and in regions of Norrbotten. Hydropower investments are seen in the province full use. Facebook has started second center project in 2014 and third is by increasing the efficiency of the power plants along the Norrbotten riv- coming a couple of years later when number two is finished. According to ers at a cost of over one and a half billion euros. The electricity distribu- Invest in Norrbotten there are also other same type of project in Luleå and tion network is also being greatly expanded. Boden coming to implementation during following years.

Investments into the mining industry require functioning traffic connec- The biggest expectations for the future of the province lie with tourism. tions. Together with the company, the requirements of LKAB have been The big increase in tourism to Lapland has been noticed in Norrbotten, met by updating the Kiruna track and rail yards. In the near future, the which has led to substantial investments made into marketing Swedish bypassing areas of the Kiruna – Narvik track will be improved and over Lapland. As a result of intense national investment, the main attractions the next few years project continues. The construction of the second track of tourism in the province, the Jukkasjärvi ice hotel and Kiruna space was speeding up in July 2014. According to the report of swedish-norwe- centre are expected to make a big appearance on the markets. gian working group double track between Kiruna and Narvik is necessary and profitable. Due to mountain region investment cost is high up to 2.5 Car testing is growing branch of business in Norrbotten and it supports billion €. Swedish part of this is about 1.3 billion €. tourism. Testing companies need accommodation, new hotels and even new airports. Arjeplog has been a leading car testing center in European The Swedish Government has made enormous investments into traffic High North. Due to climate change winter seasons are not so cold as for the mining industry. For instance, in September 2012, the government before and they have become shorter. Arjeplog has a major plan to build alliance decided on the construction of the Pajala – Svappavaara road year around open tunnel or huge climate hall for winter testing. In spite of and an increase in the junction points with the ore track. According to the this Test World Oy opened in Ivalo Lapland first climate hall in the world decision made, a massive 12.5 billion euros has been reserved for invest- with 360 meters long track. Arjeplog plans are much bigger, but competi- ing into the traffic requirements of the mining industry up to 2025. tion between Norrbotten and Lapland continues.

106 107 Railtest Nordic is totally new innovative idea in Northern Sweden. An abandoned railway between Jörn in Västerbotten and Arvidsjaur in Norr- 4.2 NORTH OF SWEDEN - botten is 70 km long and according to the company suitable for train and västerbotten locomotive testing especially in winter conditions. Total value of this investment is about 300 million €.

Main investment projects that start before 2020 Airport ARCTIC SEA Finalizing the LKAB project 2.500 m€ Harbour SSAB Luleå blast furnace 200 m€ Facebook 2 and 3 in Luleå 1.000 m€ Railway Vattenfall AB hydro power projects 1.500 m€ Wind power projects 3.500 m€ Norrbotten energy networks 200 m€ Barents Center Haparanda 120 m€ Winter testing projects (Arjeplog,Jörn/Arvidsjaur) 710 m€ Regional road program 85 m€ Pajala-Svappavaara road 150 m€ Malmbanan bypass 90 m€ Norrbotniabanan 1.500 m€ Luleå Sea port 55 m€ FINLAND

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Total: 11.610 m€ w

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nor Runner ups - projects that can start if growth is stronger than expected w

s Pajala- Svappavaara railway 400 m€ Kiruna-Narvik second track 1.300 m€ Träkronan hotel Piteå 35 m€ Laver copper mine by Boliden 1.300 m€ Total: 2.335 m€

All total: 14.645 m€

108 109 Västerbotten has a population of around 260 000 where 80% live along The region has three universities, Umeå University, including the world the coast and the remaining live in the sparsely populated interior and known Umeå Institute of Design, Luleå University of Technology and mountain areas. One can say that 70% of the population is concentrated the Swedish University of Agricultural Sciences. The universities all of- to 20% of the total area. The population in the interior is concentrated to fer inspiring environments for students, researches and scientists, whom the chief city in each municipality and it has decreased significantly over are world leaders in many fields. The region’s universities are constantly the past 20 years. In sharp contrast, Umeå has been one of the most evolving and improving through regional, national and international coop- dynamic cities in Sweden with a population growth of 27% during the eration with trade and industry, research institutes and authorities. period of 1980-97. The other coastal municipalities have decreased in population. The region’s well-developed infrastructure with seven airports, deep sea ports, railroad communications, trucking service and an excellent road Västerbotten is a productive region with strong and diverse business sec- network with three European highways make it easy to travel and carry tors. It is at the forefront of R&D, has abundant natural resources and freight. Västerbotten also has a world-renowned development of both is an attractive location as a gateway to Northern Scandinavia and the mobile and fiber-based broadband, and an extensive GSM and 3G net- Barents region. Companies locating in Västerbotten benefit from a strong work coverage. For example, Umeå has the fastest broadband connec- entrepreneurial tradition, competitive costs for personnel, operations and tion in Europe. facilities, an excellent infrastructure and a reliable, well-educated work force. The region offers readily available land and premises at affordable In Västerbotten, life is family-friendly with very high standard of living at costs. Companies establishing businesses in Västerbotten may also ap- an affordable level, whether you choose the city life or the countryside ply for financial and employment incentives from the government. calm. There are sunny summers and snowy winters. Beautiful and unex- ploited nature and wildlife are just around the corner, and the opportuni- Västerbotten has experienced one of the highest GDP growth-rate of all ties for sports, entertainment, outdoor activities and culture are endless. Swedish provinces for the last six years, with an increase of 48% com- Västerbotten has the lowest crime rate in the country. Streets are safe, pared to the national average of 40%. A strong industrial culture, based and people are honest and helpful. on forestry, mining and pulp and paper, is making way for new high-tech industries, creative companies and a high-productivity manufacturing and processing sector. Since the region hosts most of Sweden’s energy resources, there is also an active development of eco-friendly power and heating solutions. Västerbotten has a collaborative spirit with many established networks and consortiums, business incubators and cross border research and development.

110 111 More Västerbotten advantages: scale projects. Suppliers and subcontractors cooperate with a mutual • Low corporate taxes interest in developing the region, and are prepared to make the invest- • Lowest electricity prices in Sweden ments and modifications necessary to take on new types of products. • Energy tax in the province is only 66% of the normal Swedish rate The opportunities to recruit staff locally are excellent thanks to the many • Green and energy-saving solutions for a dependable power supply courses available at secondary school and university levels developed • Gateway to Northern Scandinavia and the Barents region in close cooperation with the local trade and industry sector. The region • Access to world-class R&D also has a well-developed infrastructure adapted to the needs of heavy • Highly educated and skilled work force industry, including railway, deep-water ports and excellent roads. • Low labour costs • Low absence due to illness The roads have always played a significant role in the growth of the re- • Most citizens speak fluent English gion and are still one of the most important means of transport for both • Advanced users of new technology goods and people. Västerbotten has a well-developed transport and com- • Highly sophisticated health care munications infrastructure. Accessibility of the region by road is good. In • Good schools fact, Västerbotten has Sweden’s longest road system–10,000 kilometres • Snowy winters and sunny summers of public roads to which can be added an expansive network of private • Low living costs roads.

Manufacturing industry Forest industry The manufacturing industry in Västerbotten is a wide-ranging network of With a long forestry tradition and a strong supply of raw material – 3 innovative and flexible companies with a joint capacity for, and experi- 041 000 hectares of productive forest – Västerbotten in north Sweden ence of, extensive supply contracts. has generated exceptional craftsmanship as well as unrivaled know-how in large wooden constructions, solid wood frames and glulam products. Based on the region’s long traditions and strong clusters in forestry, min- World-class institutes like Luleå University of Technology, Umeå Institute ing and pulp and paper, several major manufacturing companies have of Design, the Swedish University of Agricultural Sciences and SP Trätek evolved and reached a global market. Among the subcontractors, there (the Swedish National Testing and Research Institute for wood technol- are a large number of small and medium size engineering companies ogy) are constantly taking R&D to new heights in fields like wood and bio- characterized by advanced technologies and successful collaborations. fuel technology, wood physics, ultra structure, forest biotechnology and Thanks to a low staff turnover, many of the companies have been able to industrial design. Västerbotten also hosts the world’s densest cluster of build unparalleled levels of competency over a long period of time. forestry machine manufacturers and developers, including the headquarters and production plant of Komatsu Forest in Umeå and an R&D center With a strong industrial culture and a strategic position as a gateway to for intelligent off-road vehicles. Northern Europe and the Baltics, Västerbotten is a perfect place to start new manufacturing processes or find qualified partners, even for large-

112 113 Umeå Plant Science Center (UPSC), a centre of experimental plant bi- Thanks to the dominating role mining has played in trade and industry for ology, is the world leader in forest biotechnology and attracts hundreds centuries, mining infrastructure is well developed, with highly advanced of international scientists. Companies like SweTreeTechnologies provide mining and metallurgy R&D. Sophisticated technology with a high level of technologies for improved productivity and performance properties of automatisation makes our mines among the most efficient and profitable trees and wood fibers, creating new business opportunities for forestry, in the world. paper- and pulp industries as well as packaging and textile. The region is home to several competence centers and two universities With the forest biotechnology as an emerging market, Västerbotten offers with world-class research institutions. 90% of Sweden’s academic and an educated workforce and unique access to academic research through vocational units related to mining, metallurgy and geology are located tech transfer establishment, as well as many forest research sites and within a radius of 130 kilometers. Both the Geological Survey of Sweden strong links to the processed wood industry. (SGU) and the Mining Inspectorate of Sweden are located in the region. SGU assists mineral explorers with exploration-related information and Mining industry data. The world’s largest collection of drill core, more than 3 500 000 m from all over Sweden, is available for research – free of charge! Sweden is by far the largest producer of iron ore and also number one for lead in the EU, the second largest silver, gold and zinc producer, and the There are also a number of specialized companies linked to the min- third largest copper producer. Some of the most important ore deposits ing industry, such as world-class manufacturers of mining equipment and and interesting geological regions are found in the Skellefteå district in machinery, mining software developers and drilling services companies. Västerbotten. Ever since the 1920’s, the mining and smelting company With an ever-growing industry there is a high demand for technical con- Boliden has been the major force behind the development of the mining sultants and environmental expertise. industry in the mineral rich Skellefteå field. Today, Boliden is the third largest copper supplier and the third largest zinc supplier in Europe. The As one of Europe’s largest concentrations of mining and mine related processing plant Rönnskär is one of the most efficient copper and zinc industries, we aim to expand even further. The prospects for a profitable smelters in the world. Rönnskär is also a specialist in the recovery of base business establishment in Västerbotten have never looked better! and precious metals from electronic scrap.

Tourism Mining industry is growing rapidly. New mines open almost annually, and a significant number of new exploration permits have been granted. Yet, With four full seasons– each of them as beautiful as they are different – it is estimated that only 20% of the mineral assets in North Sweden have the potential for tourism business to grow in Västerbotten, North Sweden, been exploited. Potential for new findings is still very good and there is a is practically unlimited. continuous establishment of new operators. Some of the current exploration and mining companies are New Boliden, Elgin Mining, Canada, Travel and tourism is expected to double in Sweden by 2020 according Dragon Mining, Australia, Blackstone Ventures, Canada and Lapland to the Swedish National Strategy for Tourism – which indicates a bright Goldminers, Sweden. future for the travel industry. The northern parts of Sweden already attract visitors from all over the world and the growing interest has led to an increased need for high-quality accommodation and activities.

114 115 In 2011, Sweden was ranked the 5th best country for tourism, according Transport to the World Economic Forum 2011. The north of Sweden is of great inter- The main axis runs along the coast (E4 motorway linking the South of est to the global market and tourism is expected to grow by 100 percent Sweden and Finland). In an east-west direction the E 12 links the coun- by 2020, from SEK 252 billion to SEK 500 billion, according to Sweden’s tries of Russia, Finland, Sweden and Norway. The main road in the west- National Strategy for Tourism. ern part, going in a north-south direction is the E45, starting in Gothen- burg and ending in Karesuando. The exotic north attracts visitors thanks to a unique blend of experiences and surroundings, beautiful and untouched nature, the northern lights and much more. Västerbotten, a central part of Northern Sweden, is experiencing rapidly growing international interest, and the opportunities to meet the demand are manifold. With investments in ski resort destinations, hotel and accommodation, real estate development, activity companies and medical tourism; anyone from large capital investors to small scale private companies can discover new markets and grow in Västerbotten.

Västerbotten has four distinct seasons, each one with its own exceptional features widening the potential of the region and providing an extra advantage. But the potential of Västerbotten also resides in the people who live and work here. With a service minded attitude, pleasant manners and good language skills, they make the difference.

But Västerbotten isn’t all about nature. The cities offer shopping, excellent restaurants and various cultural activities. A unique cultural feature of northern Sweden is one of the few remaining indigenous people in Eu- rope, the Sami. Their strong heritage influences the culture of the entire region of Västerbotten. Moreover, in 2014 Umeå will be the European Rail services are well established. The Swedish National Railway’s main Capital of Culture – an honour that further reveals the viability of the re- line to northern Sweden runs through Västerbotten, connecting the north- gion. ern part of Sweden with Europe, along with several regional railway lines. Branch rail lines provide access to the main industrial sites. The Bothnia Line along the coast will significantly cut rail travel times, it will be opened for traffic in August 2010. The Bothnia Line is the biggest railway project of modern times in Sweden. It is a single-track railway being laid from the bridge over Ångermanälven, north of Kramfors airport, via Örnsköldsvik, Husum, Nordmaling, to Umeå.

116 117 The Bothnia Line will link together a highly productive region, where a The port has all the resources to serve as a gateway to the rest of the series of significant industrial locations are all situated along the Swed- world. Skellefteå Hamn has excellent links with other transport systems ish coastline. This new link will mean efficient transport of freight and including the national road and rail networks and air services. Another key the halving of travelling times for passengers. The Bothnia Line will be advantage of Skellefteå for mixed consignments is its proximity to ports able to cope with speeds of up to 250 km/hour. Inlandsbanan (“the inland in northern Finland. railway”) runs from Kristinehamn in the south to Gällivare in the north – a total distance of 1300 km. Västerbotten has several airports in Umeå, Skellefteå, Lycksele, Vilhelmi- na, Storuman Hemavan and Arvidsjaur. All the regional airports have Shipping is important to the existing companies and those looking to in- regular connections with Stockholm airport (Arlanda). Hemavan in the vest in northern Sweden, particularly for the forest and mining industry mountains has an airstrip for taxi-, charter- and private aeroplanes. (export and import of raw materials and products). In the Västerbotten province there are industrial seaports in Umeå, Skellefteå and Rundvik, (Source: Västerbotten Investment Agency) together with smaller ports all along the coastline. The continuity of service is a major goal and year round accessibility is guaranteed by efficient ice breaking during the winter. 4.2.1 västerbotten investment potential

Umeå Hamn is a year-round port which is located at the north of Swe- Industry den’s fastest expanding part and is known for its high quality and a strong SCA Obbola, new digester 60 m€ customer orientation with a high level of service. The port is located stra- Kåge/Sävor saw mill technology 10 m€ tegically at the natural shortest route across the northern Gulf of Both- Total: 70 m€ nia. Geography provides the port with a natural harbour sheltered by the unique conditions in the winter. Despite being located far north in the Mining industry northern Gulf of Bothnia’s narrowest part with mostly northern winds the Nickel Mountain AB, Rönnbäcken nickel mine 1.5 mrd € Umeå port as well as the other seaports along the coast are open all year Lappland Goldminers AB, Fäboliden gold mine 200 m€ round. Tertiary Mining, Storuman fluorspar mine 40 m€ The port of Skellefteå (Skellefteå Hamn) is one of the gateways for sea Total: 1.840 m€ transport in Norrland. The port is located in Skelleftehamn, adjacent to the industries of Rönnskär and Kuusakoski. It is also strategically locat- Hydro power ed close to sawmills, mines and engineering companies and acts as an Vattenfall AB, modernization 100 m€ important link between Norrland’s industry and its assets: minerals, for- EON AB, technology upgrade 100 m€ ests and energy. Many years of working with the region’s industries have Total: 200 m€ given Skellefteå Hamn a solid base of experience in the transportation of goods.

118 119 Wind power Transport infrastructure Storuman wind park 2.100 m€ Umeå road projects 240 m€ Skogsmark wind park 900 m€ Skellefteå road projects 200 m€ Blaiken wind park 550 m€ Storuman logistical center 225 m€ Vattenfall AB Fäboberget 715 m€ Norrbotniabanan railway Umeå-Luleå, Västerbotten region 1.500 m€ Nordisk Vindkraft AB Malå,Hovaberget, etc 310 m€ Total: 2.165 m€ Nordisk Vindkraft AB, Lycksele 330 m€ Wpd Västerbotten 250 m€ Public investments Vattenfall AB Sorsele 550 m€ Skellefteå Culture center 45 m€ Fred Olsen Renewables, Botsmark 190 m€ Kraftö Vindkraft AB, Nordmaling 200 m€ Västerbotten total: 11.800 m€ Kraftö Vindkraft AB, Ava 105 m€ Kraftö Vindkraft AB, Täfteå 60 m€ 4.2.2 Development of the region 2016–2020 Kraftö Vindkraft AB, Sorsele 280 m€ Total: 6.540 m€ The completion of the Botniabanan track has, among other things, improved the transportation connection and logistic status of business. Dur- ing the next years, construction of the coastline track is expected to con- Energy transfer networks tinue to Luleå in Norrbotten as the Norrbotniabanan project. The region Svenska Kraftnät AB 300 m€ has good logistical location and connections to Mo i Rana in Norway and Vaasa in Finland are increasing international transport in the future. Tourism /winter testing Hemavan-Tärnaby, expansion 500 m€ Industry in Västerbotten is upgrading technology in forestry and forest Railtest Nordic, Jörn-Arvidsjaur, Västerbotten side testing center 100 m€ industry. Skellefteå, new hotel 40 m€ Total: 640 m€ The biggest project for Västerbotten in recent years is the construction of the wind power park in the province. The construction of wind power parks is concentrated on Storuman municipality in the western part of the region. Investment potential in this branch of business was in 2014 about 3.7 billion €. Now potential is almost double thanks to new projects in Sorsele and also other parts of Västerbotten.

120 121 The area also has a mining industry and the opening of new mines is also Main investment projects that start before 2020 expected in the next few years. The largest and most interesting mining Industry investments in the region 70 m€ investment project is the Rönnbäcken nickel deposit located in the Storu- Hydro power projects in the region 200 m€ man municipality. The construction costs for the mine are estimated to in- Wind power projects 3.000 m€ crease to around 1.5 million euros. Sweden is traditional mining country, Energy transfer network 300 m€ but today the discussion about nature, reindeers and mining has been Railtest Nordic project 100 m€ increasing also in Västerbotten. Biggest obstacle for mining projects im- Regional road projects 440 m€ plementation start is the low conjuncture of mining industry and low global Norrbotniabanan 1.500 m€ market prices. Skellefteå Culture center and new hotel 85 m€ Tourism is a very important industry in the region. The Hemavan-Tärnaby Total: 5.695 m€ downhill skiing centre is located in the western section of the province, mainly in the Storuman Municipality on the Norwegian border. This fell Runner ups - projects that can start if growth is stronger than expected region resort has been constructed continuously over the past few years Storuman logistic center 225 m€ and it is expected to continue expansion. Winter testing is also present in Hemavan Tärnaby expansion 500 m€ Västerbotten. Railtest Nordic project in Jörn Västerbotten and Arvidsjaur Fäboliden gold mine by Lappland Goldminers AB 200 m€ in Norrbotten is big opening for this branch in the region. Total: 925 m€

Ports of Umeå and Vaasa in Finland have opened cooperation under All total: 6.620 m€ name of Nordic Logistic Corridor. New transport link is reaching in east to Republic of Karelia in Russian Federation and in west to ports of Mo i Rana and Mosjöen by the Atlantic Ocean in the southern parts of Nord- land County in Northern Norway.

Norrbotniabanan is reinforcing this connection.

122 123 5. NORTH OF NORWAY 5.1 Finnmark, Troms, Nordland The Norwegian High North consists of three counties: Finnmark, Troms and Nordland. Population of Finnmark is 75 207 and the total land area is 48.618 square kilometres. Most of the population live along the coast. However, the indigenous people (Sami), about 10% of the population - Airport ARCTIC SEA have a special status with its institutions and live mainly in the inland. Harbour 5% of the population in Finnmark is of recent foreign origin and mainly Railway from Russia and Finland. The Sami people constitute the majority in Finn- mark’s interior parts, while the fjord areas have been ethnically mixed for a long time. The Finnic Kven residents of Finnmark are largely descend- ants of Finnish immigrants who arrived in the area during the 19th century or before from Finland, suffering from famine and war.

68º-70º North, Troms is a county in North Norway bordering Finnmark to the northeast and Nordland in the southwest. To the south is Norrbotten Län in Sweden and further southeast is a shorter border with Lapland Province in Finland. To the west is the Norwegian Sea (Atlantic Ocean). The entire county is located North of the Arctic Circle. The Gulf Stream FINLAND running up the cost gives the county a temperate climate. Area is 25.877 ay russia

w square kilometres.

eden

nor w Troms county has a total of around 158 000 inhabitants. Major cities and s municipalities are Tromsø (71 295), Harstad (2640), Lenvik (11 345), Mål- selv (6 599) and Balsfjord (5 502). More than third of the county’s population lives in the City of Tromsø. In Troms, three different cultures meet: Norwegian, Sami and Kven cultures. Approximately 10% of the population is of Sami heredity.

Nordland is located along the northwestern coast of the Scandinavian peninsula and extends about 500 km from Nord-Trøndelag to Troms. From the county border in the North to the southern border the distance is about 600 kilometers. At the narrowest the county is only 6 kilometers wide from the coast to the Swedish border. Area is 38.456 square kilometers.

124 125 Population in Nordland is 238 124 which of 49 400 reside in Bodø and 18 different from other types of economic activities as their main input fac- 473 in Narvik cities. Nordland has population of about 3000 Sami people, tors are not dependent on raw materials, energy, machines or equipment. of whom 8% are engaged in reindeer herding. In such competence based firms the main input factor is competence as such. Business in Finnmark Living and working far north in our country has a lot of economic advan- The economy of Finnmark grows about just as much as in the country as tages. Some of these are aimed at private persons while other measures a whole. As a result of this growth there is a lack of workers, notably in the aim at companies in Finnmark or in the northern part of Troms county. building industry. Problems are biggest in the western part of the county. The reason for this is that the Norwegian Parliament in 1990 ratified a Finnmark is a big exporter of seafood, minerals and LNG gas. The value special enterprise zone for Finnmark and North Troms. of all export seen under one was according to figures given by The Con- federation of Norwegian Enterprise (NHO) of Finnmark 18 milliards of The measures for companies provide good framework conditions for both Norwegian crowns in 2010. Such figures put Finnmark at the first place in companies which already exist and for new ones. Most types of compa- added value pr. county inhabitant. nies are exempted from Employers’ National Insurance Contribution and there is no tax on used electricity. Measures aiming at individuals give Finnmark is geographically situated close to rich energy resources while inhabitants of Finnmark advantages such as lower income taxes and an- prospecting activities for oil and gas in the Barents Sea are being stepped nual reductions of student loans. This last mentioned measure is often up. Local economic entrepreneurs and scores of subcontractors are in- considered the best existing private economy support. volved in this. At the same time work goes on with the development and production of wind and water based power stations. An own company Annual reduction of one’s student loan is given with up to 25.000 Norwe- was recently founded with the purpose to build and operate wind and gian crowns a year. Calculations show that these different support meas- water based power stations in Finnmark in cooperation with local power ures taken together have a value of up to 100.000 Norwegian crowns a producing companies and Finnmark Estate Agency which is owner of the year for a 4 persons household. ground.

Hammerfest Reindeer husbandry is intrinsic to Sámi culture and identity. In Finnmark more than 2.000 persons are somehow associated with reindeer hus- Hammerfest is the host municipality for Statoil’s LNG facility (Snøhvit) and bandry. A number that has been stable for a while, although the number ENI’s regional and local office and operating organisation for the Goliat of units as well as the number of reindeer has decreased. field. As a result of the introduction of petroleum activities in the Barents Sea, both national and international suppliers have opened offices in the Finnmark is one of the most tantalizing destinations in Europe. After many region, opening the door to a number of new and interesting jobs. Since years with a big flow of tourists during the summer season, winter tour- the final decision was reached to develop Snøhvit and until the time of ism has increased after a lot of efforts were made by the tourism industry. writing, the region of Hammerfest has gained more than 1,000 new jobs But also the competence industry, consisting of many different types of and the town’s population has risen by approx. 1,000 persons, with the economic activity, is on the increase in Finnmark. Firms busy with this are highest rate of growth identified within the age group of 19 to 39 years.

126 127 Polar Base is the main hub for oil-and gas-related activities in the Barents Business in Troms sea is located in Hammerfest, in Rypefjord, 5 km from Hammerfest cen- Principal industries are fishing and fisheries, agriculture, services, tour- tre.The Polarbase area is a powerhouse in Finnmark with varied industry ism and public service industries. The county is rich in resources and the and other mercantile companies. The supply business for the oil and gas location offers particular advantages, especially in the fields of fisheries industry plus service companies for other businesses are localized in Po- and aquaculture, extraction of mineral resources, energy production and lar Base. A small part of the area is reserved for the fishing industry, cold tourism. With the University of Tromsø and the colleges in Tromsø and storage, fish-processing plants, etc. Harstad the county has a considerable number of jobs within education and research particularly in the fields of science and medicine, particu- Kirkenes larly telemedicine. Kirkenes town has a population (2012) of 3,444. When the neighbouring suburban villages the urban area reaches a total population of almost The Norwegian armed forces is a vital employer in Troms, having the 8,000 people. seat of the 6th army division, Bardufoss Air Station, helicopter wings and radar stations in the county. The armed forces employ over 2,000 people The International Barents Secretariat is located in Kirkenes. One of its in Central Troms. tasks is to create cross-border cultural, educational and business relations in the Barents Region. There is now substantial optimism in the Agriculture town as a consequence of the increased petroleum-drilling activity in In the south of the county there are areas with a long agricultural tradi- the Barents Sea. Kirkenes is the Norwegian Gateway to Russia. Border tion. Farther north there are more and more instances of farms combin- crossing station Storfjord/Borisogelbsk is just outside the town. Closest ing agriculture with other business activities. Much of Norway’s goat’s neighboring towns in Murmansk Region are industrial centers Nikel and cheese is made from the milk of more than 20,000 dairy goats in the Zapoljarnyi. Road to Murmansk is in excellent condition and the distance county. Traditional agriculture is being re-adjusted as farmers develop is only about 150 kilometers. supplementary industries, such as tourism and the production of high- class niche products. Kirkenes port is the center of business in the Norwegian High North. The port is an important center for passenger traffic and the end point of Hurti- Fisheries gruten: regular, all-year traffic operations between Bergen and Kirkenes. Kirkenes port has ore transport (2,9 million tonnes), fish transport and The population of Troms has harvested from the resources of the sea service transport of oil and gas industry (total volume of other transport since time immemorial. A lot of the county’s trade is still related to the sea. is 112 000 tonnes. Deep-water channel and all-year ice-free transport The number of fishermen has been reduced, however, due to larger and service , ready-made plans and ongoing investments exist for developing more efficient fishing fleets. It is also evident that many consumers are the port for unit load transport and already made 2-3 billion crown invest- willing to pay more for the highest quality seafood. ments are the basic factors in the future development plans of Kirkenes port.

128 129 Industry The road network is well developed throughout the county. The county has no railway system. The closest railway station is situated in Narvik. Troms industry is mainly tied to the fishing industry and related industries. Within the field of fisheries and aquaculture, development, research and The largest airports, Evenes at Harstad, Bardufoss and Tromsø, connect an increase in competence will be large-scale areas of commitment in the county with the rest of Norway and the world beyond. Tromsø airport years to come. has a direct service to Murmansk and Archangel in north-west Russia. New business Tromsø is the biggest city in North Norway with over 71.000 inhabitants. The research in Tromsø plays a major role in the development of new It is famous tourism center and now also developing to one of the busi- business opportunities in the county. Competence and research have ness centers of Norwegian High North offshore activities. Aker Solutions provided a breeding ground for development within fields such as marine has opened an engineering office in Tromsø in 2012 starting with 50 em- biotechnology, information and communication technology, earth obser- ployees. Company has plans to expand the office up to 300 persons. vation, satellite monitoring and space research. The office will work with maintenance and modifications projects and field development projects in cooperation with other Aker Solutions offices in Marine biology is an area of commitment with a huge potential. Busi- Norway. In future Aker Solutions office expansion is included in Nordom- ness and industry in Troms has gradually become more integrated within rådesenter- project in the southern part of the city. Tromsø University, the global economy, due to the fact that these new industries are mostly UIT The Arctic University of Norway is the northernmost university of the export industries. Consequently, business and industry are ever more de- world. Its location on the edge of the Arctic implies a mission. The Arctic is pendent on global markets and international business conditions. of increasing global importance. Climate change, the exploitation of Arctic resources and environmental threats are topics of great public concern, Transport by land, sea and air is well developed with Tromsø as the cen- and which the University of Tromsø takes special interest in. tral point of the county´s transport system. Troms is the main port to the Arctic waters. Harstad is another town in Troms county which is developing as a Norwe- gian High North business center. Statoil has decided to locate the Barents The multitude of islands and deep fjords presents great communicational Sea operations center in the town which has about 23.000 inhabitants. challenges. Previously, the boat was the only alternative. Today, bridg- It´s location is about 300 km south from Tromsø. Town is also planning to es and tunnels provide an increasing number of mainland connections. build a new base for offshore business called Nordlysparken within next However, the terrain still presents major challenges because of factors five years. such as the volume of snow and danger from landslides. Express boats and small aircraft cut down travel time to a minimum. Business in Nordland Nordland is one of the country’s largest export counties within raw ma- Fast boats carry goods and passengers up and down the coast. The terials and industry. Nordland is also the economic hub of Northern Nor- coastal steamer is also an important means of transport that links many way. The industrial area of Helgeland – concentrated in particular around coastal communities together. Hurtigruten line has become internation- Mosjøen and Mo – is the main such area north of Dovre and the second ally very popular tourist attraction. biggest in Norway. The processing industries at Mo industrial park have a

130 131 combined annual turnover of around 3 billion Norwegian kroner. In total, City of Narvik in the northern part of Nordland County is one of the most Nordland’s processing industry encompasses close to 20 businesses. In important transport hubs in the High North. Iron ore products from LKAB 2004 these firms exported goods to a value of around 9 billion kroner. are transported by train from Kiruna to Narvik and shipped via LKAB’s own port facilities at Narvik. In the port all handling of pellets is done in The trade and industry in Nordland consist of metallurgical, cement and door in covered silos and ware houses. fertiliser industry, fisheries, fish-farming, agriculture, forestry and timber, services, tourism, assorted light industry and small shipyards. The sea also provides a living for the people of the region. Nordland has the country’s largest fishing industry with more than 3,000 active fishermen (2006). Large quantities of fish are brought ashore with an export value of close to four billion Norwegian kroner. The enormous growth in fish farming has been a major addition to the trade in local natural resources. Nordland is the country’s second biggest fish-farming region.

Nordland is Norway’s largest producer and supplier of electrical power. The development of the Svartisen hydroelectric facility in the 1980s and 90s was at that time the biggest in the country. The quantity of available energy attracted several major industries to the area. Elkem and Hydro all have large production facilities in Nordland.

Oil and gas have raised great expectations in Nordland. Reserves have been found in several fields that are still unopened to development. The oil industry brings together considerable knowledge and expertise. The new logistics structure also includes complete modernization of the Nordland is connected to international markets by a network of air, rail, Narvik ore port (project SILA), which was completed in the autumn of and ferries. Bodø is a communications hub for aeroplanes, trains, buses, 2009. This includes construction of a whole new storage and discharging the coastal express boat and fast-going ferries. facility with 11 underground silos in Narvik. The Narvik ore port is free of ice all year round. In 2012 LKAB shipped about 18,6 Mt from the port in Nordlanders are a people of ferries, and the famous Hurtigruten is also Narvik. based in Nordland. Over the past few decades big investments have been made to improve infrastructure within the county. New roads and bridges bring people and the various parts of the county ever closer together. Twelve airports make Nordland still more accessible for those who live and work here.

132 133 New mining company Northland Resources is also shipping iron ore from Oil and gas the Narvik Port. Company uses already existing roads (150 km) and rail- Statoil & Co, Johan Castberg oil field 15.000 m€ way (226 km) from Kaunisvaara to the Port of Narvik. At the ice free Port Statoil & Co, Veidnes oil terminal 1.000 m€ of Narvik the Iron Ore Concentrate will be reloaded on Cape Size Ves- Statoil, Aasta Hansteen gas field 5.000 m€ sels. On December 1, 2011 Northland received construction permit for a Statoil & ENI Norge, Skarv, Skuld, Goliat-oil fields 7.000 m€ new iron ore terminal in Narvik, Norway. The terminal, which is expected Lundin Petroleum, Alta oil field 7.000 m€ to efficiently load vessels of up to 180,000 tonnes, will consist of a quay, Lundin Petroleum, Gotha oil field 5.000 m€ an unloading facility for the railcars, a storage building and a ship loader. Kirkenes Oil terminal 300 m€ The first shipment from Port of Narvik took part 25 th of February 2013. Sandnessjön base, Nordland 150 m€ (Sources: finnmark.no, Hammerfest kommune, Kirkenes näringshan) Bröndre base, Nordland 150 m€ Nordlys project, Harstad 120 m€ 5.1.1 North of Norway investment potential Polarbase, Hammerfest 30 m€ Total: 40.750 m€ Industry Aluminium smelter and plant, Hammerfest 1.500 m€ Hydro power DRI steel mill, Hammerfest 1.000 m€ Finnmarken mountain plants and small power 3.000 m€ Gas power plant, Hammerfest 300 m€ Nordland and Troms projects 1.000 m€ Carbon black plant, Hammerfest 150 m€ Total: 4.000 m€ Fishing industry investments 100 m€ Total: 3.050 m€ Wind power Statkraft Development AS 2.000 m€ Mining industry Varanger Kraft AS 700 m€ Sydvaranger Gruve AS, Kirkenes, iron mine expansion 300 m€ Statoil ASA Finnmark 850 m€ Nussir AS , Kvalsund, copper mine 350 m€ Norsk Miljökraft AS 1.100 m€ Arctic Gold, Bidjovaggen gold-copper mine reopening 70 m€ Vindkraft Nord AS 350 m€ Total: 720 m€ Nordkraft Vind AS 200 m€ Finnmark Kraft AS 1.400 m€ Fred Olsen Renewables AS 1.800 m€ Troms Kraft AS 3.000 m€ Nord-Norsk Vindkraft AS 1.500 m€ Nord-Norsk Havkraft AS 3.500 m€ Total: 16.400 m€

134 135 Energy transfer networks 5.1.2 Development of the region 2016–2020 Nordland network 350 m€ Ofoten-Hammerfest network 400 m€ Norway is still number one area in European High North regarding in- Finnmarken network 600 m€ vestment plans and projects. Total costs of planned investments is more Statnett, other network projects 1.000 m€ than 75 bln€. That is about 20 billion € more than last year. In spite of low Total: 2.350 m€ oil prices, exploration is continuing with old speed in the Barents sea. Energy sector is constantly on the top of the investments list including Tourism offshore and onshore, wind power and hydro power. The fjords of the Målselv Fjellandsby ski center 500 m€ region are ideal for wind power, and hydro power, which is integral to the energy production framework for the entire nation, utilises the vast water Other hotel and resort projects 300 m€ resources of mountain lakes. Total: 800 m€ At present, the electricity transmission network of northern Norway does Transport infrastructure not facilitate use of energy produced today and in the future in its own Regional road projects 815 m€ region. Consequently, the construction of new transmission networks is Narvik port expansion 1.200 m€ currently being planned for all three counties. Energy transfer investment Other port and terminal projects 285 m€ potential is today clearly over 2 billion €. Gimsöy airport 225 m€ Helgeland airport 225 m€ Grötnes airport, Hammerfest 300 m€ Narvik-Kiruna railway, second rail, Norwegian side 1.200 m€ Arctic Railway, Norwegian side 1.000 m€ Total: 5.250 m€

Public investments Regional hospital and health care projects 2.000 m€

North of Norway Total: 75.320 M€

136 137 There will also be substantial investments into the traffic network, as the owns Kvalsund project is a very small company and needs to find major terrain on North of Norway is extremely challenging. The only form of investor before the mine could be opened. transport that is problem-free is seaborne transport. The internal freight transport in the area is primarily handled by road. One railway project is Tourism in Norway has experienced a boom. The Hurtigruten cruises also proceeding in Northern Norway. Swedish-Norwegian working group along Norway’s coastline have been particularly popular. The route is recommended in its report to build second railtrack to Kiruna-Narvik rail- also significant for the logistics for its own region and the increase in way. This is necessary due to the soon completed huge expansion pro- foreign passengers has caused a few problems. North Norway is also ject of LKAB. New production and increased transport requires also big, popular destination for international cruise business. Tourist resorts are over one billion € expansion project in the port of Narvik. also being built. Målselv municipality close to the City of Tromsø has been constructing a Norwegian version of a fell resort with its own Santa Claus The official national railroad network only runs as far as Bodø in the north, Land. This project has not been successful, because the main company the administrative centre of Nordland County, and the Swedish rail net- of the project was bankrupted in 2013. Anyhow the project is continuing work travels along the Kiruna ore haulage track to Narvik, from which with a little bit lower ambition level. City of Tromsø itself is investing a lot freight has to be transported by road. Flight connections are vital for pas- to tourism business. New hotels are reconstructed and planned all the senger traffic. The State is significantly subsidising regional flight con- time. nections. Norwegian authorities are also interested in cooperation with Finland in some road projects. If cargo transport is continuing to grow Oil and gas projects have been the flagships of North Norway investment through Sweden to Kiruna and Narvik, some of the cargo could be un- plans. In March 2014 ENI Norge is still finalizing the Goliat project, which loaded in Kiruna and transported by car through Lapland to Tromsö, Alta, has delayed from the original plan. The floating platform should have ar- Hammerfest and Kirkenes. rived in summer 2014 to Polar Base in Hammerfest to be finalized. Now this is expected to happen in summer of 2015 so two years later that was The previously closed iron mine in Kirkenes was reopened in 2009 and planned. has been working fine. Plans for expansion were evaluated and expected. Now the situation has totally changed. Iron ore market prices are at Statoil announced in 2012 that two enormous projects will be implement- the time very slow and the mining company in Kirkenes is in serious eco- ed. The first to commence is the construction of the Aasta Hansteen gas nomic problems. Employees of the mine have reduced even their salaries field, located in the Norwegian Sea off the coast of Nordland. Gas is con- to avoid the company to drift to total bankruptcy. ducted southwards via a pipeline and further on to the network linking to Europe. This project is continuing as planned. The opening of a large copper mine is being planned for Kvalsund, close to Hammerfest, and at the same time preparations are being made for The other project which should have been implemented is Skrugard/ reopening of the former Finnish-owned Bidjovagge gold-copper mine Havis oil field, which by scale should be nearly three times the size of near Kautokeino. The environmental impacts of the mining industry have the Goliat project. Statoil published details on the construction of the fu- also hit the headlines in North Norway, and the Sámi have questioned the ture field’s terminal for Veidnes, north of Honningsvåg and near the North opening of mines. Also the low price level of raw materials in the world Cape. A pipeline stretching 280 kilometres was planned to run from the market have been postponing the implementation of these projects. Bid- field to the shore, where should be built big terminal with estimated to cost jovagge seems to be postponed at least for a decade. Nussir AS which around 800-1000 million euros. This enormous oilfield was renamed to

138 139 Johan Castberg. Some months later in June 2013 Statoil announced to when the planned projects like Johan Castberg could be implemented. postpone this project. According to the announcement Statoil has contin- Statoil directors confirm only that the company has come to the Arctic and ued to mature the resource base and development plans for the project. they are going to stay there the next 40 years. There are still uncertainties related to the resource estimate and investment level. Company named also decision of the Norwegian government If the Norwegian offshore projects are postponed long over 2020 the de- to reduce uplift in the petroleum tax system, which reduces the attrac- velopment in the region is going to slow down because they are the back- tiveness of future projects, particularly marginal fields and fields which bone of expected development programs like some made by SINTEF require new infrastructure. This is why it is necessary to review the Johan research institute has issued. In a preliminary strategy is described on Castberg project. how North Norway can be industrialised based on Barents Sea gas and raw materials from neighboring regions. If projects are not implemented This announcement happened only a few months before the parliament the strategy is postponed to 2030 or even behind. election in Norway. Some specialists assumed that Statoil tried to push the Government and postponing was a political stunt. Success of the The significance of Hammerfest as an offshore centre has not suffered Government was very bad in the parliament election in September 2013. because of the aforementioned decisions. ENI Norge established its own New government with winning parties started in October 2013. All the northern centre in the city and Aker Solutions continues to develop its ser- time everyone has been expecting decision from the new government to vice base activities in the city, as well as investing into the development abolish the harmful legislative amendment that postponed Johan Cast- of underwater technologies. Snow white gas field is still producing gas to berg project. Nothing happened and the discussion continued as long as Melköya LNG-plant. Probably Statoil is going to invest in Snow white to Statoil announced to re-evaluate Johan Castberg project in 2016. increase gas production. Pipeline is there ready and does not need any investments. From Statoil point of view the biggest problem has been that the possible pipeline from oilfield to Veidnes in Honningsvåg municipality is not any- Other town that continues to grow is Kirkenes. Statoil has entered into more profitable. Statoil counted that government gives same size subsi- agreement with Rosneft for further exploration of the so-called border dies to pipeline like in Snow white project in the beginning of the 2000s. agreement area. For the first time, this will shift the focus of offshore Without this subsidy the whole plan is probably not profitable. Taking the projects on a practical level in the direction of East Finnmark. Kirkenes is oil from Johan Castberg directly from the platform or platforms requires here natural base for actions and the Kirkenes Port has enormous devel- new plans and extra costs. With current low oil prices profitability seems opment possibilities. Ukraine crisis has had impact on this cooperation. to be even more questionable than ever. Norway was more than 20 years leading country in the business of Mur- Profitability of oil wells and gas in Barents Sea has become controver- mansk region. Now it looks like that Norway is withdrawing from Kola sial already after the success of shale gas and oil in the USA. Shtok- Peninsula. Natural explanation for this decreasing national interest was manovskoje is not realistic maybe for decades and the situation in North the de facto closing of Shtokmanovskoje Gas field project. Statoil was a Norway begins to have resemblance with the Shtokman project if nothing stockholder in Shtokman Development AG together with Gazprom and happens and if the oil price stays long time at present low level. Repre- Total. Ukraine crisis and decision of Norway to join to EU sanctions has sentatives of Statoil have not given any dates in recent Arctic conferences been speeding this process. DnB bank of Norway owned former Montshe-

140 141 bank in Murmansk. DnB pulled out from Murmansk earlier in 2014 and Main investment projects that start before 2020 Sparebank Nord Norge followed with big losses in January 2015. Norwe- Fishing industry investments 100 m€ gian business development organisation SIVA is also closing business Aasta Hansteen gasfield 5.000 m€ centers in Murmansk. From Finnish point of view this is not welcome North Norway offshore bases with Nordlys project 450 m€ development. Norway and Norwegian companies are needed as partners Regional hydro power 1.000 m€ in Murmansk Region. Regional wind power 2.000 m€ Energy transfer networks 2.350 m€ Norway is a promised land for strategies and major development plans. Some hotel and tourism center projects 300 m€ With good financing possibilities most of the strategies can also be implemented. In November 2015 Northern Norway gathered to Tromsø Regional road projects 815 m€ to participate to big conference named Agenda Nord Norge. The result Narvik port expansion 1.200 m€ of this conference was published in the beginning of 2015 by the name Kiruna-Narvik railroad second track 1.200 m€ “Nord-Norge i verdensklasse- en mulighetsstudie”. It is a very good report Regional hospital and health care projects 2.000 m€ regarding the future development of Northern Norway. It has also an es- Total: 16.415 m€ timation about the investment potential of the region. With huge housing and apartment building programs the potential rises up to 233.6 billion €. Runner ups - projects that can start if growth is stronger than expected Up to 2022 this housing investment is about 11.7 billion €. Kvalsund copper mine by Nussir AS 350 m€ Johan Castberg oil field 15.000 m€ Using the same branches of business evaluation as in this yearbook the Grötnes airport in Hammerfest 300 m€ investment potential is following: Total: 15.650 m€

Oil and gas 7.600 m€ All total: 32.065 m€ Transport infrastructure 4.500 m€ Electric power 4.100 m€ Public investments total 4.300 m€ Trade 1.700 m€ Industry 70 m€ Fishing and fish industry 76 m€ In total all of this: 21.346 m€

This report and evaluation is worth of deeper analysis. There are some differences compared with Norwegian and Finnish point of view and they can be seen below.

142 143 6. NORTHWEST RUSSIA 6.1 Murmansk Region Murmansk Region is situated in the North-West of European Russia and it is one of the strategic areas of the country in the North-Western Federal District. The Region borders with the Republic of Karelia in the southwest and with Finland and Norway in the west and north-west. The Mur- Airport ARCTIC SEA mansk Region is one of the few Russian regions to share the border with Harbour the European Union and NATO countries. Railway The strategic importance of the Murmansk Region is based on enormous raw material resources and also military political importance. The Region is the base for Northern Navy ensuring defence capacity of the northern frontier. Headquarters of the Navy is located in Severomorsk about 20 km north of Murmansk.

Murmansk port is open all year round and it is the biggest Russian port situated to the north of the Arctic Circle. The products of Kola Peninsula mining industry is shipped to the world market from Murmansk. Nuclear icebreakers have ensured year-round Arctic navigation. FINLAND

w The Region occupies an important geopolitical position in relation to regions with a developed industry connected to it with land, sea and air eden russia

nor w routes. The location close to the border, significant exporting capabilities s and available transport links establish good conditions for enhanced cooperation with other countries. The Murmansk Region is an active member of the international Barents Euro-Arctic cooperation.

As of early 2012, the Region includes 12 urban okrugs (Murmansk is the regional capital), 5 municipal districts and 23 settlements, 13 of them urban and 10 of them rural.

Population of the Region has decreased in 20 years from 1.2 million inhabitants to less than 800.000 inhabitants. People have moved back to their home regions or to cities like St. Petersburg and Moscow. The population density is 5.4 / sq. km. Population has concentrated in cities where live almost 93% of the inhabitants. Rural areas have only 7% of

144 145 population. Nationalities are (2002): Russians are the majority in Mur- JSC “Apatit” extracts and processes apatite and nepheline ores of the mansk Region with 85.%, Ukrainians 6.4% and other nationalities 8.4% Khibiny deposits which are part of the largest and richest deposits in the are minority. Sami people are living in Lovozero area and total population world as well as the basis of phosphorous raw materials in Russia. JSC of Sami is less than 2000 people. Apatit is part of Fosagro company.

The total amount of inhabitants in the Murmansk Region was in 2012 JSC “SZFK (North West Phosphorous Company)” is new industrial com- 787 900. The biggest towns are Murmansk (305.000 inhabitants), Apa- pany in the Murmansk Region. It opened the first mine in Rutshij Olenij tity (59.200 inhabitants), Severomorsk (50.000 inhabitants) and Monche- near the town of Kirovsk two years ago. The company belongs to Akron gorsk (44.600 inhabitants). group JSC “Kovdorsky GOK” develops the Kovdor deposit and produces iron-ore, apatite and baddeleyite concentrates. It is part of EuroChem Business community company. Kovdor is near Finnish border and the company has been interested about the Sokli mine deposit on Finnish side only 54 km from the Mining industry is the backbone of Kola Peninsula economy. In the Mur- town of Kovdor. mansk Region, there are over 60 large deposits of various raw minerals where 30 types of useful minerals are extracted. Most deposits of the JSC “Olkon” extracts banded iron formations and sells high-quality iron- minerals are of national significance, and of international significance as ore concentrate. It is a part of Severstal company which is the second far as apatite, nepheline and cyanide ores and rare metals are concerned. biggest steel company in the world. The economic specialisation of the region includes extraction and processing of ferrous and nonferrous metal ores, industrial production of “KAZ-RUSAL”, a branch of United Company RUSAL, the biggest alu- copper, nickel, cobalt, semi-fabricated precious metals products, primary minium company in the world. KAZ smelts aluminium from aluminium aluminium and apatite concentrate that is a raw product for phosphate oxide delivered there. The smelter and the plant are in the town of Kan- fertilisers. dalaksha. The share of the Kola land of the total Russian production is 45% in nick- The major production facilities were built decades ago, and the enter- el, 11 % iron-ore concentrate and 7% of refined copper. The Region is the prises currently aim at deep-level mining and underground mineral ex- only producer of apatite, nepheline and baddeleyite concentrates (100% traction which requires upgrading and expanding the mining industrial are produced in the Murmansk Region). infrastructure. Main industrial companies Change of policy in investment strategies JSC “Kolskaya GMK” is a single complex for extraction of sulphide cop- Shtokmanovskoje gas field project was prioritized in every development per and JSC ores and production of precious metals. Company is a divi- strategy of the Murmansk Region for over 10 years. In 2013 the imple- sion of Norilsk Nickel located in the Murmansk Region. Most important mentation of the vast project seemed to been postponed to 2030 or later. mines of Kola GMK are in Zapoljarnyi, Pechenga area and smelters in This influenced to the policy of Regional Administration which decided to Nikel and in Monchegorsk which is the headquarters of the company. support the development of existing industrial companies.

146 147 Investment projects for replacement of decreasing yield at the existing Coordination board on development of investment and innovative activi- deposits and for new regional production types are being currently im- ties in the Murmansk region (established on 05.11.2013) has assigned plemented in the Murmansk Region. These are the projects of building a strategic and priority status for the investment project «Construction mining and processing plants on the basis of the “Oleniy Ruchei” apatite of the ore-dressing and processing enterprise on the base of apatite- and nepheline ore deposits, the “Fyodorova Tundra” platinoid deposits nepheline deposit «Oleniy ruchey» and adopted a decision to provide and the “Sopcheogorskoye” chromite deposit. state measures for the project implementation.

The construction project for the “Oleniy Ruchei” mining and processing On the 18th of November 2013 Governor of the Murmansk region and plant is prioritised in the North-Western Federal District. A distinctive fea- CJSC «North-West phosphorus company» have signed agreement on ture of the new mining and processing plant will be an integrated extrac- state support of the investment activity on the territory of the Murmansk tion of useful component from the ore. region during the implementation of the strategy priority project «Con- struction of the ore-dressing and processing enterprise on the base of The overall investment provides for RUB 30 bln and 3000 jobs. The ca- apatite-nepheline deposit «Oleniy ruchey». State support measures con- pacity of the facility is one million tonnes of apatite concentrate a year cern the tax concession on property, lowered rate on income tax during after commissioning the 1st stage of the plant that took place in July last 5 years. year and increasing the capacity of the processing factory to 2 m tonnes after commissioning the 2nd stage of the plant. Industrial development of the apatite and stafellite ore deposit to replace the depleting amount of apatite concentrate is a priority task of the Kov- State-of-the-art energy-saving materials are used on the compound of the dor mining and processing plant modernisation. The project provides for mining-and-processing plant which makes it possible to improve energy/ reconstruction of the existing JSC “Kovdorsky GOK” industrial facilities output ratio in the difficult conditions of the far north. In order to reduce on the basis of the complex for processing of technological deposit sands adverse environmental impacts, modern waterworks have been built: and the apatite and baddeleyite factory of the processing complex to build the enterprise will use a closed water circulation technology to protect a new processing complex for apatite and stafellite ores. bodies of water from contamination. A storage facility for tailings using eco-friendly state-of-the-art pollution control is under construction. Over The project implementation will ensure increased amount of iron-ore, ap- 60 contractors from various regions of the country are involved in the atite and baddeleyite concentrate production by more than 900 thousand construction. tonnes a year. The amount of processed ores from the main open mine will increase by 2 m tonnes. The project is being implemented within a public-private partnership including investment in social projects for reconstruction of the school, culture centre and residential buildings in the Koashva settlement in the amount of RUB 30 m.

148 149 On the 18th of November 2013 Governor of the Murmansk region and Tourism CJSC «North-West phosphorus company» have signed agreements There are 100 active tourism companies in the Murmansk region, 34 of on state support of the investment activity on the territory of the Mur- the being orientated at domestic tourism. The main attractions of the Kola mansk region during the implementation of the strategy priority projects Peninsula are sport fishing, alpine skiing and cruises to the North Pole. «Modernization of production capacity of the JSC «Kovdorsky GOK»» and «Apatite-staffel ore-dressing complex». State support measures con- More than 20 companies are active in organising sport and amateur fish- cern the tax concession on property, lowered rate on income tax during ing. There are about a hundred of bodies of water allocated for use by 3 years. those companies. 78 of these bodies of water are Atlantic salmon rivers. Atlantic salmon fishing traditionally takes place in the most popular rivers: Fishing industry Ponoi, Varzina, Rynda, Karlovka, Yokanga, Varzuga, Umba and Kola. An Fishery is one of the traditional economic sectors of the Murmansk Re- increasing number of smaller salmon rivers have become available for gion and plays an important part in the socio economic specialisation of sport and amateur fishing. Wild Atlantic salmon has become a sort of the region. Murmansk Region fishermen account for 16% of the overall “tourist brand name” of the Murmansk Region. Russian catch. About 90% of fish is processed immediately at sea.

The sector is based upon the fisheries fleet and the onshore complex that includes port facilities, onshore fish-processing enterprises and shipyard companies. Total of 141 organisations employing about 7.4 thousand people are active in fishing, fish farming, processing and tinning fish products and seafood in the Murmansk Region. 105 organisations are active in industrial and coastal fishing.

About 600 thousand tonnes of aquatic bioresources are harvested each year. The annual amount of fish production is 500 thousand tonnes, 60% of the production going to the Russian domestic market.

At the end of 2012, the Murmansk Region took the first place of all Rus- sian federal entities in the amount of shipped fish production – over RUB 30 bn.

The Strategy of Murmansk Region Socioeconomic Development until 2025 prioritises a comprehensive upgrade of fisheries and aquaculture sector development.

150 151 The town of Kirovsk is a centre for alpine skiing and other active outdoor tourism. There are three alpine skiing complexes in the town. The “Bolshoi Vudyavr” complex is the highest not only in the Khibiny Mountains but also for the whole north-western Russia. The elevation difference is 550 metres. A distinctive feature of the resort is its wide European-standard FIS-certified pistes suitable for both professional alpine skiers and begin- ners.

The Region is the only place where it is possible to go to the North Pole aboard a nuclear icebreaker. Two-week tours are very popular with en- thusiasts of exotic tourism worldwide. The most popular routes include tours to Svalbard and Franz Josef Land where one can see walruses, seals and whales, visit picturesque harbours with bird colonies and where polar bears sometimes come to the icebreaker surrounded with ice.

Transport Murmansk is the only port in European Russia with an open access to major oceanic routes. Port of Murmansk has direct access to the North- ern Sea Route, that links the Atlantic to the Pacific through the arctic waters and provides access to natural resources of the Far North, Siberia The Murmansk seaport is one of the ten biggest Russian ports in the and the Far East. amount of cargo transhipment. It is the only port in the country capable of receiving vessels of up to 300 thousand tonnes deadweight any time of The Murmansk Region located at the junction of transnational routes and the year due to non-freezing deep water area of the Kola inlet. having reliable sea, railway, road and air links with industrial Russian regions can surely be called a northern gateway of Russia. Cargoes going through the Murmansk port include general cargoes, liquid cargoes as well as containers, fish and fish products. The total cargo There are three seaports in the Murmansk Region. The main port of the turnover is above 25 m tonnes a year. Region is the Murmansk Port located in the Kola Bay. It is also the core port of the Arctic Basin as far as transporting goods to the Far North and Coal prevails in the overall amount of transhipped goods. The coal is han- far abroad is concerned. dled in terminals of JSC “Murmansk Commercial Seaport”, the biggest stevedore company of the Murmansk Region. The company also suc- The necessary infrastructure for receiving, servicing and repairing ves- cessfully handles apatite and iron-ore concentrates, non-ferrous metals, sels is in place in the Murmansk port. It is a base for Russian shipping manganese ore, containers and other cargoes. companies, the emergency and rescue fleet and the unique fleet of nuclear icebreakers which arrange piloting ships along the routes of the Northern Sea Route.

152 153 Two ports – Kandalaksha and Vitino – are located in the southern part of Murmansk Transport Hub the Kola Peninsula in the water area of the Kandalaksha Bay. The Kan- The project of “Complex Development of the Murmansk Transport Hub” dalaksha port specialises in transhipment of bulk and general cargoes, is the main transport infrastructure development project in the region.The and the Vitino port is orientated at transhipment of oil products. The total project is being implemented within the sub-programme “Development cargo turnover of the Kandalaksha Bay ports is over 4.5 m tonnes. of Transport Services Export” of the federal targeted programme “De- velopment of The Russian Transport System (2010–2020)” with the aim The Murmansk Region is of significant interest for tourists from around of increasing competitiveness and further development of the regional the globe. The vessels of the FSUE “Atomflot” icebreakers fleet provide transport infrastructure. tourist cruises to the North Pole, islands and archipelagos of the Central Arctic. In the project implementation, a year-round marine hub will be created for processing container liquid cargoes and transhipment of coal and mineral The Arctic Harbour project is being implemented in the framework of fertilisers. It will be integrated into the North–South international transport preparation to the 100-year anniversary of Murmansk in order to build the corridor. needed infrastructure for receiving and servicing cruise ship and ferries, create a regular ferry link with Norway and increase the number of foreign The project provides for development of the Kola inlet water area, the cruise vessels entering the port. sea, rail and road transport infrastructure development as well as logistics and warehouse infrastructure development. Development the regional port infrastructure is closely connected with development of the railway transport infrastructure. The general railway In the framework of the new project, it is planned to build a new branch transport is a leading element of the regional transport system. It takes up line and a cargo terminal on the western shore of the Kola Bay, recon- a considerable share of the cargo and passenger transport market. Total struct the existing coal terminal and build a container terminal, a logistics length of railways in the Murmansk region is about 870 kilometres. centre and a distribution zone on the eastern shore of the Kola Bay.

A reconstruction of passenger transport infrastructure facilities and crea- The project is being implemented in a private-public partnership, the total tion of a single transfer complex uniting the sea, railway and bus pas- funding being over RUB 130 bn. The state funds the construction of an senger terminals are planned to be carried out in Murmansk in the future. auxiliary utility infrastructure for investment projects to be implemented There are two operational airports on the Kola Peninsula providing ser- by private investors. The project, when implemented, will increase the vices for aircraft and passengers and handling of luggage, post and car- Murmansk port cargo turnover to 70 m tonnes. goes: in Murmansk and Apatity. There are also landing grounds for local airlines. The Northern Sea Route underlies the Arctic transport system of Russia and the importance of Murmansk Transport Hub. It ensures economic Up to 550 thousand passengers pass through the Murmansk Airport each integration of the Arctic territories both with developed areas of Russia year. The reconstruction of the runway, apron and lighting has been final- and with other countries, gives access to major petroleum deposits and ised by now. Reconstruction of the passenger terminal, cargo terminal aquatic bioresources of the Arctic zone and to other strategic raw materi- and engineering networks of the maintenance zone is planned finalised als. by 2015.

154 155 The presence of a powerful nuclear icebreakers fleet predetermines the Main investments of the region are following: use of the Northern Sea Route for transnational transit between the coun- • commissioning of the ore processing plant on the basis of deposits tries of North-West Europe and the Pacific areas (Japan, China, the USA of apatite- nepheline ores “Deer creek” (Rutshij Olenij, JSC SZFK); and Canada) and its integration into the global transport system as an • implementation of integrated development of the Murmansk Trans- independent Eurasian transport corridor with year-round transport of export Hub; port cargoes. • creating e transport hub based on train, bus arrangement with adjacent areas, airport network, road approaches to Marinas, FSUE “Atomflot” where an integrated icebreaker technology complex for • building on ore processing plant based on deposits of platinum group the Russian federation civil nuclear fleet is based provides icebreaker metals “Fedorova-Tundra”; pilotage for vessels along the Northern Sea Route, for exploration, sci- • building on ore processing plant on the basis of chromite deposits entific and research activities in the arctic seas and for emergency and “Sopcheozerskoe”; rescue operations in the ice. • building and on the modernization of the mining and mineral processing I production of vermiculite, phlogopite and pegmatite in Kovdor; (Source: Murmansk Regional Government, Ministry of Economic Development of the Mur- • beginning of the active phase of implementation of integrated master- mansk Region) ing I Shtokman field, including the construction of a liquefied natural gas plant and pipeline; Future development of the Murmansk Region • building on the Kola Nuclear Power Plant - 2; • building of the refinery on the Kola Peninsula; Murmansk Regional Government has published a new forecast of the • construction of wind farms; regional development to 2020-2030. According to the forecast for the pe- • building and reconstruction of power grid energy system I Murmansk riod up to 2030 is projected to create new kinds of economic (industrial) region (the “National Rate” (modernization and construction of boilers activities, such as mining and quarrying of energy resources and oil refin- in the Murmansk region); ing; new form x s products: LPG, petroleum products, processing of chro- • building on North PES in Long Bay of the Barents Sea, the substation mite ore, platinum group metal ores; creation of a modern large transport “North” and the combined heat and power in Kovdor; and logistics center, including modernization of existing and creation of • building on Ships nuclear icebreaker fleet new port facilities to initiate the operation I special port economic zone, • implementation of the project and the “Russian Lapland”. construction refinery and a plant to liquefy natural gas.

For transportation of goods for export, including production and refinery plant to liquefy natural gas will be used mainly by sea. Provides for the formation of active open space for international exchanges, tourism development, the use of transit potential of the Northern Sea Route, which will contribute to upgrade the nuclear icebreaker fleet.

156 157 The forecast includes also the Shtokman Gas field which seems to be Mining industry postponed up to 2020. There is also a plan to renew the power grid sys- JSC Kovdorsky GOK, mining and processing technology 190 m€ tem of Murmansk Region. Especially the city of Murmansk has been suf- OAO Pana/Barrick Gold, Fedorova Tundra, platinium mine 1.000 m€ fering of the limited power transfer from Kola Nuclear Power Plant. JSC Akron/SZFK, Olenyi ruchej, Kirovsk, mine expansion 600 m€ JSC Akron/SZFK, Kirovsk, processing plant 1.100 m€ Cross regional product is going to increase from the level of October 2013 Norilsk Nickel, Grmyakha titanium mine 600 m€ totally 2.1 times higher. GRP growth will be achieved mainly the growth Norilsk Nickel, Vuruchaivench copper-nickel mine 600 m€ of the economy conditioned m positive dynamics of investment and con- Norilsk Nickel, Sopcheozerskojen chromium mine 500 m€ sumer demand, preserving state support areas of social and economic development. Industrial production is forecasted to grow in the same time Arcmineral Service MC, Afrikanda titanium project 200 m€ frame totally 3.2 times higher. The mining industry is leading this produc- Sevredmet, Revda, mining technology 45 m€ tion growth. Total: 4.835 m€

Implementation of major investment projects aimed at creating new jobs, Oil and gas diversify the economy, defining the growth of entrepreneurial activity, the CJSC Sintez Petroleum, Lavna Murmansk, oil refinery 800 m€ development of social and infrastructure will create the foundation for the OAO NK Rosneft, Rosljakovo, shipyard, terminal, base 400 m€ region to attract migrant workers, to keep out-migration of working age Total: 1.200 m€ population and, accordingly, reduce the rate of decline in population of the region. Hydro power JSC Leningradskaja GAES/JSC Rusgidro, todal power plant 160 m€ 6.1.1 Murmansk Region investment potential TGK-1, Kola power plants modernization 850 m€ Total: 1.010 m€ Industry CJSC Ruski Losos, fish arming plant 110 m€ Wind power Norilsk Nickel, Montshegorsk, nickel refinery center 1.000 m€ Windlife-Energy BV, Tumanny wind park 320 m€ Norilsk Nickel, Montshegorsk, cobalt plant technology 50 m€ Norilsk Nickel, Montshegorsk, mini metallurgigal plant 20 m€ Nuclear power Montshegorsk Industrial Park 150 m€ Rosatom, KAES-2, Polarnye Zori, 2 new reactors 8.000 m€ Total: 1.330 m€

158 159 Tourism 6.1.2 Development of the region 2016–2020 Kirovsk and Polarnye Zori winter sport centers 20 m€ Kirovsk gondol lift 20 m€ Everything was looking nice with the future expectations in Murmansk Vudjavrchorri winter sport center 26 m€ region still a little bit than one year ago. Escalation of Ukraine crisis has Lovtsori skiing slope 20 m€ made the future quite uncertain regarding all strategies and development Russian Lapland, Revda 30 m€ plans. Sanctions and counter sanctions have changed the volume of Apatity and Nikel hotel repair 6 m€ business. Even the start of new European union cross border program ENI seems to be uncertain. According to the representatives of EU com- Other projects 19 m€ mision the start could happen earliest in the beginning of 2017 but if the Total: 141 m€ sanction discussion returns to these programs the implementation can be even cancelled for political reasons. Finland stopped this discussion Transport infrastructure in 2014 and opinion is still the same. All options, however, must be evalu- Murmansk Transport Hub 3.200 m€ ated in the situation like we have today in Europe. Murmansk railway and bus stations 75 m€ Murmansk port cruising terminal 125 m€ Murmansk Region has been during the last 30 years an area of giant KIP/MMPP Liinahamari port project 1.500 m€ investment plans and visions. Mikhail Gorbachev himself gave speed in Other projects 30 m€ October 1987 to all visions in his speech in the city of Murmansk. After Total: 4.930 m€ that Soviet Union has collapsed and having suffered from negative migration for a couple of decades, the Murmansk region has gradually man- Public investments aged to balance its economy and the wellbeing of the area has improved. Murmansk central heating plant 1.200 m€ Nikel, Montshegorsk ja Zapoljarnyi heating centers 60 m€ The Kola Peninsula is strongly dependent on two factors: the non-ferrous metallurgy industry of the region and Military Forces of Russian Federa- Apatiitti-Kirovsk heating pipe 75 m€ tion. Metallurgy industry due to the global process of raw materials, has Vascular disease hospital Murmansk 31 m€ fared well over recent years. The salary levels of people living in the re- Murmansk hospital for children 110 m€ gion have clearly increased in industry as well as with civil servants and Culture and sport 12 m€ soldiers. Also military section has had revival in the Region after hard Water supply 38 m€ times in the first decade after the collapse of the Soviet Union. Salaries Waste management 30 m€ have been raised according to federal policies. A raise in living standards Energy 13 m€ can clearly be noticed in Lapland due to the dramatic increase in the bor- Polarnye Zori greenhouse center 25 m€ Other projects 18 m€ Total: 1612 m€

Murmansk Region total: 23.378 m€

160 161 der crossings by Russians at the Raja-Jooseppi and Salla border cross- Arctic cooperation has so far been outside the current political crisis. In ing points. The figures for the border crossings for 2013 were expected European High North the growth of tension is a fact. Russian Federation to have increased by over fifty percent from approximately two hundred is increasing military power in Kola Peninsula. The military significance thousand to somewhere between 300,000–450,000. On the national lev- of Arctic regions was mentioned in the new Arctic Strategy of Russia in el, the number of border crossings is still minimal, but the increase from February 2013 but the speed has been growing within last months. Kola the just over one hundred thousand visitors in the early 2000s has been Peninsula has been ad is still one of the most important military areas in enormous. Low value of Russian rouble has turned these numbers down Russian Federation. Northern fleet, nuclear submarines, arctic brigade in with about 20% in 2014 and from the statistics of the first months of 2015 Pechenga and air force in Monchegorsk belong to the backbone of Rus- this is further continuing. sian Army.

Visa freedom belonged to the great expectations in the European High Old military base in Alakurtti about 65 km from Finnish border has been North in spite of all political obstacles risen during past one year. Nego- opened again. First news told that a radio intelligence unit with about 3000 tiations between the EU and Russian Federation proceeded so well that soldiers with their families are coming to this small border town. Today a year 2018 was mentioned as the time when passengers don´t any more motorized arctic brigade is moving in with about 7000 soldiers and with need visas in travelling between the Schengen area and Russian Federa- not so many family members. Old Alakurtti airport is rebuilt to the total tion. This would have meant explosion in the border crossings also in the length of 4500 meters. It is still unknown if town of Alakurtti is still open for High North and would have stimulated also cross border business. Euro- foreign visitors. Salla-Kandalaksha road is finalized later this year. Road pean union has decided to stop the visa freedom talks with Russia as one passes Alakurtti with some kilometers so the base is not disturbing traffic. of the sanctions if Russia is not withdrawing from its political positions in Situation on Norwegian Russian border could be different. Pechenga and Ukraine. This has brought much tension in all relations with the EU and Sputnik bases are very important for Russian Army. During Soviet time Russia. The damage is not yet definitive, but the real solutions in solving road from Nikel to Murmansk was closed for foreign visitors. Even a new the Ukraine crisis must be found soon. road was built for the needs of Norwegian border crossings from Nikel to Rajajooseppi-Lotta-Murmansk road. Hopefully this is not happening this time.

The uncertainty regarding the fate of the Shtokman gas field has also put pressures on the Murmansk regional administration. Project is postponed, but anyhow Barents Sea is not completely forgotten. Gazprom finally opened the Prirazlomnye oil field to production. Rosneft has many agreements for cooperation in the Barents Sea. First with Statoil about the exploration of the new border area between the two nations. Rosneft has also agreed cooperation with the Italian ENI for working with oil and gas in the Barents Sea. A little bit further out in the Kara Sea, Rosneft is commencing cooperation with the American Exxon Mobil. All these projects are suffering of Ukraine crisis and the sanctions. Oil technology is classified as products belonging to sanctions list.

162 163 Today the main project of the Murmansk region is the Murmansk Trans- international player is also entering the Kola Peninsula. The Canadian port Hub, which entails the renewal and expansion of the city port. Now owned Barrick Gold Company has long time been planning the opening the Transport Hub is one of the key projects in the Region. Construction of its palladium/platinum mine together with Russian Investor company work is expected to started in September 2014. First operations belong OAO Pana at Fedorova Tundra located in the centre of the region. Like- to new railway line from Murmashi to Lavna river. According to the news wise, the Kovdorslyuda mineral mine in the town of Kovdor has been in the beginning of March 2014 Companies Stroygazkonsulting and Sto- expanding its production. ry-Trest have been approved to take part in a tender on the construction railway line along the western shore of the Kola Bay. Finnish enterprises have also expressed an interest in the mining industry and its required technologies during last years. The Finnish companies Norilsk Nickel is the biggest taxpayer of the Kola Peninsula as well as already involved in the projects include at least Metso, Pöyry, Ahma in- being a key player. The company planned to renew the Monchegorsk sinöörit Oy, Firotec Oy and Paakkola Conveyors Oy. The Kovdor mining smelting plant and start to refine nickel which has been extracted in No- and processing facility owned by chemical industry giant Eurochem was rilsk. Norilsk Nickel accepted new strategy in May 2014. According to this interested in the Sokli Project of Yara Suomi Oy, but left the project in strategy company is closing nickel refinery in Norilsk and upgrading nick- February 2013 for technological reasons. The company needs new raw el production in Monchegorsk and refinery is becoming a significant part materials for its operations during the course of this decade. Its plans are of Polar Division production chain. New strategy names Monchegorsk to to reprocess the mine waste and potentially open a new mine at Vuorijärvi “Nickel Refinery Center” of the company. close to Alakurtti and the border of Finland which is a long perspective project. The production of cobalt has also increased in Norilsk Nickel Kola Di- vision. The company concentrates its mining operations to the town of Total value of mining industry investments seems to be growing in Mur- Zapolyarny located in the Pechengsky District. As far as concerns Pe- mansk Region. JSC Acron and its subsidiary JSC SZFK opened new chenga, Norilsk Nickel also has plans to modify its smelting of nickel to mine in December 2012 in Kirovsk. This Ruchej Olenyi mine is operating refine metals recovered from the new Gremyakha Mine, e.g. titanium. well and company is planning to expand the mine and build refinery plant. The company is also involved in the planned chrome mine project to the Total value of these investment plans is almost two billion €. west of Monchegorsk together with Severnaya Khromovaya Kompaniya. Tourism has long been the focus of development schemes of the Mur- The mining industry of Kola Peninsula has been making some substantial mansk Regional Administration. Despite efforts, breakthroughs have yet investments into the Murmansk region. The high prices for raw materials to be achieved. The region has a lack of sufficiently high standard ac- on the global markets did provide a welcome boost for these projects. commodation facilities, and even though the Khibiny Mountains have the Companies expanding their operations include at least the Olenegorsk possibilities for the construction of a high standard ski resort, the projects Mining and Concentration Works (OAO Olkon) owned by Severstal, and have not really taken off. the fertiliser company SZFK owned by Akron that saw the inauguration of its million ton-producing Oleniy Ruchey apatite mine on 24 July 2012. Economic development of Murmansk Region depends on the long await- Furthermore, the Apatite Group, which has recently resolved its long- ed solution to Ukraine crisis and return to less tensed relations with EU standing contract dispute with Akron, is renewing step by step its technol- and USA. Offshore industry still exists in the region. Gazprom is not any ogies and planning to open a new mine in the Kirovsky District. The first more leading company, because Rosneft has replaced it. Company is

164 165 going to open offshore base in Roslyakovo. Oil and gas technology is Main investment projects that start before 2020 on the sanction lists and promising cooperation with foreign partners is 1. Norilsk Nickel projects in Monchegorsk 1.070 m€ postponed to distant future. This might mean also change in Russian 2. Mining technology projects by JSC Kovdorsky GOK 190 m€ offshore strategy. 3. Roslyakovo base by Rosneft 400 m€ 4. TGK-1 hydro power projects 850 m€ Former prime minister of Russian Federation Yevgeny Primakov made a 5. Tourism projects of Murmansk Region 141 m€ significant speech in Moscow at Mercury club 15.1.2015. In his speech 6. Murmansk Transport Hub 3.200 m€ Primakov talked also about Arctic offshore. According to Rossiyskaya Gazeta Primakov said that “the profitability of extracting oil on the Arctic Total: 4.851 m€ shelf is guaranteed only at a price of $100-120 a barrel. Should we then, in such conditions, force extractions from the shelf of the Arctic Ocean? Runner ups - projects that can start if growth is stronger than expected Shouldn’t Russia, even with all the importance that this region has for Expansion of Ruchej Oleni mine of SZFK in Kirovsk 600 m€ the country, take a break from exploring arctic oil and gas deposits? Our Murmansk City railway and bus stations 75 m€ competitors have already taken such a break. The U.S. drilled its last well Total: 675 m€ in the Arctic shelf in 2003, and Canada in 2005.” All total: 5.526 m€ Yevgeny Primakov had his 85th birthday in the end of October 2014. Both, president Vladimir Putin and minister of foreign affairs Sergey Lav- rov congratulated him and praised his career both as prime minister and foreign minister. This brought once again the Primakov Doctrine to world political debate.

Primakov Doctrine consists his idea in 1996 as minister of foreign affairs of Russian Federation to build a Eurasian counterbalance USA-led Trans Atlantic alliance proposing closer cooperation between Russia, China and the Middle East. This old policy was also essential part of his Mer- cury club speech: “Russia would like to normalize relations with the U.S. and Europe, but it would be unreasonable to ignore the increasing significance of China and other countries that are part of the Asia-Pacific Eco- nomic Cooperation organization (APEC). Certain countries often frighten us by saying that Russia will be only a raw material supplier to China. With all its opportunities, Russia cannot and will not ever be anyone’s raw material supplier.”

166 167 Arkhangelsk Region belongs to the northern part of North West Russia. 6.2 NORTHWEST RUSSIA - It has 3000 km coast by the White Sea, Barents Sea and Kara Sea. The ARKHANGELSK REGION region includes the Nenets autonomous district, the Novaya Zemlya and the Franz Josef Archipelago. Total area of the region is 410.700 square kilometers.

Airport ARCTIC SEA Population in Arkhangelsk region is 1 230 000 which is 0.8% of Russia’s Harbour population. The population density is 2,2 per sq. km. and 74 % of the Railway inhabitants live in cities and 26% live in rural areas. Ethnic groups are: Russian 94.2%, Ukrainians 2.tä1%, Nenets 0.6% and other nationalities 3.1%.

City of Arkhangelsk is the capital of the region and it has 356.000 inhabitants. Other bigger cities are Severodvinsk in the neighborhood of Arkhangelsk with 192.000 inhabitants, Kotlas with 60.500 inhabitants, Novodvinsk with 40.600 inhabitants, Koryazhma with 39.600 inhabitants and Onega with 21.300 inhabitants.

Industrial production FINLAND Industry is the key factor of Arkhangelsk Region economy. Main branches ay

w of business are forest industry and machine building industry. The Arkhan-

eden russia gelsk region ranks eighth in Russia and second in the North-western Fed-

nor w eral District in the volume of forest resources. Total square of commercial

s forests is 22 mln. hectares, timber reserves — 2,8 billions m3. Timber reserves of the Arkhangelsk region are recognized to be of high quality. Total forest reserves include 82% of coniferous forests and 18% — de- ciduous forests. Available cutting area is 48% of the total forest area.

The region produces 30% of Russia’s exported sawn material and 25% of paper and cellulose exports. Forestry, wood processing and pulp & paper are very important sectors of the economy—contributing over 40% to the regional production volume. Woodcutting in 2002 totaled 8 million cub meters (80 million cub feet), but 23 million cub meters can potentially be cut. According to regional administration, there are over 200 wood cut-

168 169 ting enterprises in the region and some 30 wood processing companies. These companies are constructing and repairing nuclear and diesel sub- According to expert estimates, regional enterprises produce 1.5-2 mil- marines, oil and gas platforms, ship vessels and others. The unique Rus- lion cub meters of sawn timber, plywood, glued blanks, fireproof plywood sian center for construction, repairing and utilization of nuclear power slabs and other wood products, approximately half of volume being ex- submarines was founded here. The enterprises have facilities and tech- ported. There are also furniture manufactures. One of the most success- nologies for construction of oil and gas platforms and necessary unique ful is Aquatechnika. competence for implementation of the project of construction of floating nuclear thermal power station. An impediment to increased production is poor road infrastructure, especially bad access to forests. Modernization and productivity enhance- There is an infrastructure for preparation of specialists for machine-build- ment on existing sawmills are the priorities for development of logging ing sector. Today in Arkhangelsk region there are two higher educational and wood processing sectors. Active processing and trading companies establishments which train such specialists: Arkhangelsk State Technical include Arkhangelsk Plywood Plant, Dvinosplav JSC, Primorsky Sawmill, University and Sevmashvtuz which is a branch of the St.-Petersburg Ma- Onega Sawmills, Solombala Sawing and Woodworking Combine, Timber rine Technical University. Mill N3 and Timbex. Sevmash has build an offshore ice-resistant platform for “Prirazlomnaya” The three pulp & paper manufacturing facilities in the region are Kotlas oil field in the Pechora Sea. The total cost of the project was $1 billion. (part of St. Petersburg-based Ilim Group), Arkhangelsk (part of Titan hold- Sevmash is also a contractor of several oil companies to manufacture ing), and Solombala mills. In average, their output totals 728,000 tons of sea shelf platforms for oil and gas development in Sakhalin. Zvezdoy- pulp, 320,000 tons of paper and 674,000 tons of cardboard. The mills chka has a contract from the Finnish shipbuilding company, Azipod, to have their own logging capabilities and cut a significant share of needed supply screw propellers for civil ships. The company is also Norway’s timber themselves. For example, Kotlas pulp & paper mill has 16 logging contractor to build bearing structures for tidal electrical power stations. companies, which are using Timberjack logging machines. Products in- Zvezdyochka has experience in designing and manufacturing of floating clude sulfate pulp, cardboard, coniferous sulfite bleached cellulose, offset bridge piers, pontoons, pontoon bridges of different length, ships, fishing printing and bag paper, Kraftliner, foliage sulfate bleached cellulose etc. trawlers, jack-up drilling rigs for exploration and exploitation of oil and gas Arkhangelsk pulp & paper mill is part of Titan Holding with nearly 25,000 offshore wells in the Russian Arctic. However, attraction of investment is employees. Titan produces 35% of Russia’s cardboard. Its logging com- difficult due to the fact that the enterprise is still government property and panies cut two million cub meters of timber every year (25% of logging is engaged in Russian military programs. in the region). Transport A strong machine-building industry has developed in the Arkhangelsk re- Advantageous geographical position of the Arkhangelsk region gives im- gion and it is specialized in shipbuilding. Shipbuilding is an important part portant role in the transport system of the North-western Federal District of the regional economics because of high competence and unique pro- and Russia. The region has a considerable transit potential. Arkhangelsk duction assets. The largest enterprises of this sector are «Sevmash» and is the most optimal transport junction for cargo transfer between Europe «Zvezdochka» which create near 90 % of proceeds of the sector. and Asia. Nowadays two transport corridors go through Arkhangelsk: Northern Sea Route and International Euro-Asian transport Corridor: North-South.

170 171 Sea transport plays the major role in international trade of Arkhangelsk Future Development of Arkhangelsk Region Region, as well as in supplying some settlements along the seashore and on the islands. The main ports are located in Arkhangelsk—Narjan-Mar, The Government of the Arkhangelsk region has assumed some meas- Onega and Mezen’. The seaport in Arkhangelsk has 124 berths and is ures to increase investment attraction of the region. able to handle all types of cargo including timber, cellulose, containers, oil, metal, etc. Vessels with 9.2 meters depth can use the port. The port 1. The regional law «On state policy of the Arkhangelsk region in the has also container terminal, the only in Russia’s European North (Rus- sphere of the investment activity» has been adopted. This law will sia’s regions west of the Urals), where over 5.000 TEUs can be stored establish uniform standards and rules for organization of investment simultaneously. The owner of the Arkhangelsk Commercial Sea Port is activity in the region. It is the basis of investment legislation of the Norilsk Nickel. region. 2. The regional law «On tax benefits for investment activity on the terri- In case implementation of the project of construction of the railroad Syk- tory of the Arkhangelsk region» has been adopted. According to this tyvkar-Perm (Belkomur) the Arkhangelsk region will get a shortest access law, new companies registered on the territory of the Arkhangelsk re- to the regions of the Urals and the railroad Transsib which will open sup- gion in the form of legal entities are given corporate income tax ben- plementary advantages for cargo transit. efits for that part of the tax, which goes to the regional budget, and property tax benefits in case of implementation of large investment The main railway goes from Arkhangelsk through Vologda and Yaroslavl projects. At present amendments simplifying the procedure of provid- to Moscow. There is a rail link between Arkhangelsk and Murmansk. No ing facilities to big investors are worked out and will be introduced in fast and short rail, river or road link exists between Arkhangelsk Region regional Assembly of deputies. with eastern parts of Russia. East-West railway connection is problematic 3. The Procedure of support of investment projects, implementing and in Arkhangelsk Region. The Belkomur project is improving the situation, planning for implementation on the territory of Arkhangelsk region but the investment is very expensive. Only railroad connection from east has been adopted. It establishes uniform universal procedure of in- to west runs in the south of the region, from Komi Republic through Kotlas vestors’ and applicants’ support with cooperation with executive au- in Arkhangelsk Region to Pudozh in Karelia Republic. thority of the Arkhangelsk region within implementation or preparation for implementation of investment projects. Talagi airport in the city of Arkhangelsk is the main civil airport. Also inter- 4. Committee of investment policy under the Governor of Arkhangelsk national flights to Tromsö, Norway are two times a week. There were also region has been created and functions today. It is created for solving flights to Rovaniemi, Finland and Luleå Sweden, but they were ended any problems of investors with which they meet during implementa- about 10 years ago. There are regular flights to Moscow, St. Petersburg tion of investment projects. and some other Russian cities, carried out by Nordavia, local air company 5. The investment portal of the Arkhangelsk region (www.dvinainvest. owned today by Norilsk Nickel. Other companies flying to Arkhangelsk ru) has been created in Internet and it functions today. It is created to are Aeroflot, Rossija and Utair. There are also small airports in many re- provide investors with on-line access to information about investment gional cities as well as several military airports. The flight time from St. proposals and production areas which are perspective for implemen- Petersburg to Arkhangelsk is 80 minutes. The flight time from Arkhan- tation of projects. gelsk to Moscow is slightly longer.

(Source: Arkhangelsk Region Administration)

172 173 The goal of the Regional Government: to construct a new deep-sea har- The development of the deep-sea harbour in the Arkhangelsk sea port is bour to the North of Arkhangelsk with a direct and independent access to in close connection with the implementation of the Belkomur project (the the World Ocean, to meet the demands of Russian and foreign shippers White Sea–Komi Republic–the Urals), i.e. construction of the railroad So- for extra harbour facilities. Location – north-eastern part of the Dry Sea likamsk– Gajny–Syktyvkar–Arkhangelsk (1155 km long). The Belkomur bay in the Dvina gulf. The construction of a new deep-sea harbour in the project is included in the «Strategy of the Railroad Development of Rus- port will make it possible to provide: sia up to 2030», which is approved by the RF Government on June 17, • independent departure of large vessels to any foreign harbour of the 2008 and will be implemented on the basis of private and public partner- world; ship. The project goal is: • intensification of the economic activity in the northeastern region of • to get rid of infrastructural dead ends, to provide access to the min- the eral resources which are not in use at present, • European part of Russia; • to make a new short transit route connecting the Urals and Siberia • solutions for many challenges related to the oil and gas develop- with the northern Russian harbours. ments on the Arctic shelf, operation of production units, development • Total length of the railroad – 1252 km of coastal shipping; • establishment of industrial facilities for the processing of hydrocar- On August 7, 2009 Belkomur project was approved by the Investment bons in the North of Russia; Commission for selection of projects claiming to get budgetary alloca- • significant improvement of the investment attraction of the Arkhan- tions from the Investment Fund of the Russian Federation. The Belkomur gelsk Region; project and the Deep-sea harbour «Severny» in the Arkhangelsk sea port • development of industrial, innovation, technical, living, entertaining, are included in the «Integrated program for industrial and infrastructural cultural and service facilities near the harbour; development of the Komi Republic, the Perm Krai and the Arkhangelsk • 9000 new work places in the Arkhangelsk Region; Region». The Memorandum about joint implementation of the program • extra taxes to the federal budget – about 400 mln. rub., to the re- was signed in June 2007 by the Heads of participating regions. However, gional budget – about 800 mln. rub., to the local budget – about 280 the project is especially relevant for shippers only if it is implemented mln. rub. simultaneously with the construction of the new deep-sea harbour in the Arkhangelsk sea port, thus providing the best transshipment and logistic The project has been considered and approved by the Federal Agency scheme (the shortest railroad, cheap and efficient modern harbour giving «Rosmorrechflot» in the Ministry of Transport of the Russian Federation. convenient access to the Northern Atlantic) aimed at the development of There is a positive resolution from the FSU «Directorate of State Contract- relations between the Russian Federation and its business partners in ing Authority for Marine Transport Development Programs». The Ministry the European Union, Northern and Southern America, Central and South- of Regional Development of the Russian Federation has included the pro- eastern Asia. ject in the Conception of long-term social and economic development of the Russian Federation: «to provide, among other things, operation of the Northern Sea Route and involve huge mineral and natural resources of the northern Russian areas».

174 175 Basic advantages of the Belkomur railroad construction are: • repairing and upgrading of nuclear submarines and surface vessels • A shorter route for cargo delivery from the Urals to the Arkhangelsk • manufacturing of marine equipment and facilities for oil and gas pro- and duction • Murmansk harbours • civil shipbuilding • A solution for the problem of dead-end railroad junctions on the ter- • manufacturing of industrial and technological products for mechani- ritories of three regions of the Russian Federation cal • Involvement of unreachable natural resources in the economic life, • engineering, metallurgical, oil and gas, and other industries development of uncultivated areas. • utilization of nuclear submarines and surface ships • manufacturing of propellers Arkhangelsk region has a developed machine-building complex with a • faceting of diamonds, manufacturing of jewelry. great potential which creates attracting conditions for investments. The main engine of regional machine-building is shipbuilding enterprises. JSC Arkhangelsk region is one of the leading timber-industrial regions in Rus- “PO “Sevmash” is the largest shipbuilding complex in Russia. At present sia. Total area of forest land is 29.1 mln. hectares, including commercial it is the only shipyard in Russia where nuclear submarines are built. The forests – 21.6 mln. hectares (74%). Arkhangelsk region ranks second in shipyard was founded in 1939 and it has 25 000 employees. The yard the North-western Federal District of the Russian Federation in terms of performs the following works: timber reserves. Total reserves of forest forming species are 2.5 bln. cu- • construction of submarines and surface ships and vessels with nu- bic meters, including old-growth and over-mature forests – 1.7 bln. cubic clear power installations meters (65,3 %), coniferous forest – 2.1 bln. cubic meters. • construction of vessels, pontoons, barges, and other floating facilities of different classes and functions Timber reserves available for commercial use and processing are 1.8 bln. • construction of oil and gas offshore ice-resistant jack-up platforms cubic meters. Coniferous trees in reserves – 83.0 % (of which fir-trees • design, manufacturing and testing of the equipment for production, are 70 %), soft-wooded broadleaved – 17%. Annual allowable calculated transportation and processing of oil and gas cutting area in the region is 22 mln. cubic meters, including coniferous forest – 16.7 mln. cubic meters. Maximum possible volume of harvesting, JSC “SC “Zvezdochka” is a leading Russian shipyard specialized in re- with tending of forest, is 5.3 mln. cubic meters. pairing and re-equipping of submarines, surface vessels and ships of any class and function. In recent years the yard has mastered construction of Vast timber reserves make possible to develop manufacturing of fiber- vessels, fishing trawlers, jack-up drilling rigs for oil and gas production on boards and furniture, as well as construction of wooden houses, manu- the Russian Arctic shelf. The yard was founded in 1954 and it has 14 000 facturing of different things of wood and wood wastes, including alterna- employees. The yard performs the following works: tive fuels.

176 177 Key regional timber-industrial enterprises are: Regional construction complex is presented by construction, installation and specialized organizations, which are capable to provide whole range Pulp-and-Paper Mills: of construction and repair works, companies producing construction ma- • Filial of JSC “Ilim Group” in Koryazhma (Kotlas PPM) terials, engineering and survey organizations. The potential of the con- • JSC “Arkhangelsk PPM” struction complex in the Arkhangelsk region is rather high. Construction • JSC “Solombala PPM” companies have qualified personnel, high-capacity machines and equipment and can construct facilities of any complexity level: from multi-storey Large Wood-working Factories: blocks of flats and industrial buildings to complex out-of-class bridges • JSC “Timber Plant No25” and hydro technical structures. Engineering organizations employ highly • JSC “Onega Wood-working Plant” qualified specialists who use advanced technologies for design and up- • JSC “Solombala Wood-working Plant” to-date materials for construction. • JSC “Timber Plant No 3” • JSC “Timber Plant No2” There are factories in the region producing construction structures and • JSC “Arkhangelsk Wood-working Plant No 3” materials. They manufacture whole range of steel and reinforced con- • JSC “Arkhangelsk Plywood Manufacturing Plant” crete structures for industrial and civil construction, supplying sufficient amount of them for all the regional construction projects. Their production The priority Investment Projects for Development of Forests in the capacities allow increasing the volume of manufactured construction ma- Arkhangelsk Region are: terials more than three times. • Upgrade of manufacturing facilities for production of cardboard and white paper (Filial of JSC “Ilim Group” in Koryazhma). Volume of in- The region has considerable mineral and raw material resources which vestments: 9900 mln. rubles. make it possible to develop long-term strategic planning within this in- • Renovation of manufacturing facilities for production of cardboard at dustrial sector. The development of the mineral resources complex of the JSC “Arkhangelsk PPM”. Volume of investments: 5451.9 mln. rubles. Arkhangelsk region is firstly connected with such minerals as diamonds, • Upgrade of wood-working facilities owned by “Solombalales Hold- bauxites, various building materials and underground waters. The largest ing” and establishment of objects of forest infrastructure. Volume of diamond-field area in Europe is explored in the Arkhangelsk region (18% investments: 2718 mln. rubles. of reserves of Russian Federation). This is implication for development of • Construction a wood-working plant in Arkhangelsk with production faceting manufacture. On the territory of the region there are possibilities capacity 95 thousand cubic meters of laminated veneer lumber and for developing of basalt extraction (reserves – near 4,6 bln. tones), and planed elements for carcass house-building per year (“KharviSever- also manufacture of crushed chippings and paving tiles. On the territory Les” ltd.) Volume of investments: 1235.4 mln. rubles. of the region there are deposits of limestones, which is convenient for or- • Establishment of a wood-working complex on the basis of “Ustjyan- ganization of cement plant with production capacity of more than 1,8 mln. sky Forestry Enterprise”. Volume of investments: 800 mln. rubles. tons. There are also clay deposits which give opportunity for creation of • Establishment of manufacture of oriented strand boards (OSB). Vol- brick manufacture. ume of investments: 7158,4 mln. rubles.

178 179 Arkhangelsk region has a potential for develop oil-and-gas fields on the 6.2.1 Arkhangelsk Region investment potential shelf of the Arctic seas, including the greatest gas distillate deposit Shtok- man. The Arkhangelsk region can offer the following. Local companies Industry can be involved as suppliers of materials, goods and services. Distribu- JSC Onezshki PPM, sawmill expansion 65 m€ tion centre and integrated logistic base for the project development can JSC New Timber technologies, wood processing plant 250 m€ be located on the territory of the region. Background: well-developed in- ZAO Peterkom. Karpogoryn wood board plant 150 m€ frastructure of the Arkhangelsk seaport, vacant production sites, reserves Saw mills Arkhangelsk/Bereznik 50 m€ in energy supplying capacity and upcoming gasification, proximity to the large industrial centers of the country. Shipyards of Severodvinsk with JSC HarviSeverLes, Arkhangelsk, wood processing technology 25 m€ their potential can construct offshore and subsea facilities: drilling rigs, Solombales, new production technology 70 m€ supplier vessels on the “turn-key” basis, specialized oil and gas equip- Arkhangelsk PPM, Novodvinsk, card board mill 125 m€ ment. In cooperation with foreign partners these plants can manufacture Savinsk furniture plant 35 m€ templates, manifolds, subsea completion equipment, etc. Mobilization of Krasnaja Kuzhetsan ship yard 20 m€ local construction companies for participation in projects can be used. JSC Velskaya, food industry 200 m€ Local qualified personnel and potential of educational establishments can OOO Veliskiy Kombikormoviy Zavod, food industry 60 m€ be used to train oil and gas specialists for the project. At present regional Ilim Paper, Kotlas Koryazhma, recovery boiler 25 m€ companies are already involved in servicing huge oil and gas projects in Total: 1.075 m€ the Arctic and Siberia, and Arkhangelsk transportation hub is the largest transshipment base for such supplies. Mining industry (Source: Arkhangelsk Region Government, Economic and Investment potential) Alrosa/JSC Severalmaz, Lomonosovin diamond field expansion 500 m€ Arkhangelsk-Geoldobycha/Lukoil, Verkhotinsky diamond field 1.000 m€ Total: 1.500 m€

Hydro power JSC Malaya Mesen, Mezenskaja tidal power plant 250 m€

Bio energy JSC Ustyanskaya, pellet plant 45 m€ JSC Club Wildlife, Letne-Zolotskie project 30 m€ Municipa bio fuel projects 110 m€ TGK-2/Huadian, CHPP-plant Arkhangelsk 350 m€ TGK-2/Huadian, CHPP-plant Severodvinsk 350 m€ Total: 885 m€

180 181 Transport infrastructure The city of Arkhangelsk competes with Murmansk for which city will suc- Belkomur railway, Solikamsk-Syktyvkar-Arkangeli 6.300 m€ ceed in becoming the operative centre of Russia’s Arctic and northern JSC Onega Sea Port, new deep sea port project 3.200 m€ regions. Both are potential main port locations for the Northern Sea Route Arkhangelsk deep sea port Sever 700 m€ (Northeast Passage), although Murmansk has a year-round deep har- JSC RZD, Arkhangelsk railway terminal and logistics center 300 m€ bour and Arkhangelsk has not. However, in regard to the Northern Sea Route, the Russian Government decided that its administrative centres Highway Kyanda-Letnyaya Zolotitza 100 m€ are located in Moscow and Arkhangelsk, so the competition continues. Total: 10.600 m€ NSR Center in Arkhangelsk was officially opened in June 2013.

Arkhangelsk region total: 14.310 m€ The Arkhangelsk region has a number of mega-class investment plans. The investments associated with the renewal of the forestry industry technology in the region appear have been the most probable to be imple- 6.2.2 Development of the region 2016–2020 mented. Koryazhma mill of Ilim Paper opened new paper mill in 2014 and is now continuing technology upgrading with new recovery boiler. Ukraine crisis has its effects also in Arkhangelsk Region. Effect could be even positive because the region has strong military industry. Companies There are also things happening in the mining industry. Subsidiary of Al- Sevmash and Zvezdochka are world famous in building military ships and rosa, JSC Severalmaz is expanding the diamond field and a totally new nuclear submarines. Increasing tension in world politics could be seen in diamond field project is in Verkhotinsky. Subsidiary of Lukoil company, these factories and shipyards. Arkhangelsk-Geoldobycha is a billion euro project.

Located on the eastern edge of the European High North area, the However and without a doubt the main project in the region is still the Arkhangelsk region almost completely differs from the Murmansk region, so-called Belkomur railway connection which, when completed, will con- even though it too is located along the Northeast Passage, or the North- nect the city of Perm in the Ural Mountains with the Komi Republic and ern Sea Route. Arkhangelsk is an old Russian town and all activities in the Arkhangelsk Port. It is an enormous investment that includes the the Region have much longer history than Murmansk Region which is construction of a new track in the Arkhangelsk region from Karpogory mostly product of Soviet Union period. Arkhangelsk has an abundance of to Vendinga in the Republic of Komi. This rail track will also assist with forestry industry and the oil industry is located in its northern part, in the development in the forestry industry, as the region has expansive forest Nenets Autonomous Okrug. Severodvinsk, close to the city of Arkhangel- resources. sk, has shipbuilding yards and a mechanical engineering industry. Geo- graphically, the region is closer to Moscow than Murmansk.

182 183 Norilsk Nickel owns the seaport of Arkhangelsk and for the future increas- Arkhangelsk Region has got also a significant Chinese partner Huadian to ing Northern Sea Route transport must be build more port capacity, espe- build two bio energy plants. Agreement regarding cooperation was signed cially deep sea port. Port Sever is planned for construction on the coast in Sochi Investment Forum in the end of September 2014 by president of the White Sea in the estuary of the northern Dvina River. The current Vladimir Putin and his Chinese colleague Xi Jinping. port is located along the Dvina River, but shallow channel depths are its constant headache. Furthermore, the channels have to be continuously Main investment projects that start before 2020 dredged due to the flow of the river. According to experts the ownership Recovery boiler Ilim Group Koryazhma 25 m€ of Norilsk Nickel creates also problems. Company only allows the use JSC Severalmaz Lomonosov diamond field expansion 500 m€ of the best piers for its own ships, thereby complicating the development Arkhangelsk-Geldobycha Verhotinsky diamond field 1.000 m€ of the existing port. A deep harbour would enhance the importance of TGK-2/Huadian CHPP plant Arkhangelsk 350 m€ Arkhangelsk along the Northern Sea Route, but icebreakers still will be TGK-2/Huadian CHPP plant Severodvinsk 350 m€ needed to enable year-round functioning. Deep Sea port Sever in Arkhangelsk 700 m€

Arkhangelsk also has significant development plans for air traffic.The Total: 2.925 m€ main airport for Nordavia that services Aeroflot’s northern routes is the Ta- lagi Airport in Arkhangelsk. Nordavia belongs also to Norilsk Nickel. The Runner ups - projects that can start if growth is stronger than expected airline used to fly international routes from Arkhangelsk via Murmansk to Sawmill projects in the region 460 m€ Tromsø, and it used to operate services to Rovaniemi and Luleå. Now PPM Novodvinsk cardboard mill 125 m€ this Tromsø line is closed both for economic and political reasons. In spite Total: 585 m€ of all this Talagi Airport has a significant investment plan to become a type of northern hub for Russian air traffic, which would somewhat ease the All total: 3.510 m€ immense pressure put on the Moscow airports of Sheremetyevo, Domod- edovo and Vnukovo.

Forest industry and forestry are the most important branches of business in Arkhangelsk Region. Strongest actor is Ilim Group which had also a significant paper mill investment in Koryazhma mill in Kotlas. Governor Igor Orlov asked in 2013 Ilim Group to make Arkhangelsk Region Forest Sector Development Strategy to 2020.

184 185 gelsk Region are dealing fourth position with almost 5 billion € growth. 7. SUMMARY AND CONCLUSIONS Then comes Västerbotten slightly under North West Russian regions, Norrbotten with about two billion € growth and Kainuu Region with almost Economic crises have slowed down the investment process in the Euro- 1.5 billion €. pean High North. This could be seen already in 2014. Crisis in Ukraine was just about to escalate when previous edition of this yearbook was Investment projects to start within next five year are worth total of 56.601 published. Today we know the EU and US sanctions and counter sanc- m€ and if the growth is stronger than expected 79.910 m€. So the effect tions by Russian Federation. This is also decreasing economic coopera- of more dynamic growth is 23.3 billion €. Number one region is of course tion and business in the High North. North of Norway with more than 16 billion € investments. In the dynamic growth scenario the sum is double with 32 billion €. Number two is Oulu Economic growth is globally slower than a couple of years ago. Raw ma- Region with 11.7 billion € and in the growth scenario just under 13 billion terial prices are still on low level due to decreased global demand. Mining €. Number three is Norrbotten with 11.5 billion € and growth adds it to al- investments have been postponed and some of them are turned down. most 14 billion €. Then are Västerbotten 5.6 billion € ( growth + 6.5 bln€), Extremely low oil price compared with prices in 2008-2014 is one factor in Murmansk Region 4.8 bln€ (5.5 bln€), Arkhangelsk Region 2.9 bln€ (3.5 postponing the offshore projects in Barents Sea. Shale oil and gas have bln€), Lapland 2.3 bln€ (4.2 bln€) and Kainuu Region 1.1 bln€ (1.2 bln€). been casting shadows of doubt on the profitability of Arctic offshore. Wind power seems to be number one branch of business, but in dynamic International exploring cooperation regarding oil and gas in Barents sea growth scenario oil and gas grows more, even up to 20 bln€. Transport has stopped. Even strong Norway is silent about new oil and gas pro- infrastructure is next, then nuclear power and mining industry. Bio energy ject starts. Nothing seems to be happening, but exploration continues by and trade are only branches under one million € investments. Biggest po- western companies and the future investment potential is growing. tential growth in dynamic version is in oil and gas, number two is transport infrastructure and then mining industry. Smallest growth is in trade and There is a huge rise in the European High North investment potential nuclear power and public investments are as big in both scenarios. compared with last year. In 2014 total potential was 143.987 m€ and now in 2015 total of 195.982 m€. North of Norway is once again number one The regions and investments of the regions regarding investment potential with 75.320 m€. Number two is Oulu Region with 27.448 m€ and number three Murmansk Region North of Norway is as expected number one region in investment po- with 23.378 m€. Former number two Norrbotten is now fourth with 22.135 tential. Oil and gas projects have the biggest potential. Wind energy is m€. Then are coming Lapland with 19.316 m€, Arkhangelsk Region with also important branch of business regarding investments. Total sum of 14.310 m€ and Västerbotten with 11.715 m€. Last is the smallest region more than 16 billion € is huge, but wind energy boom is rather slow in Kainuu, now proudly with 2.360 m€. the region. Next five years bring more and more energy transfer network projects. Biggest potential growth has been in North of Norway with about 20 billion €. Number two is Oulu Region with almost 10 billion € growth. Third is Lapland with more than 5 billion € growth and Murmansk and Arkhan-

186 187 Offshore projects seem to be postponed up to 2020 if the global econom- but it will be reopened within some years. New mining projects are mostly ic growth start to boom and raise oil prices over 100 USD barrel prices. in Saami regions or in close neighborhood. This could create some con- Public financing is driving the investment boom. Health care and hospital flict situations that must be solved quickly. projects are proceeding together with transport infrastructure and electricity grid. Boom is not at the moment so strong as it seemed to be, but The next investment boom in Norrbotten happens in transport infrastruc- in no way business possibilities could become smaller. Northern Norway ture. Huge new railway project Norrbotniabanan and construction of sec- is still worth of observing. ond track to Kiruna-Narvik railway are totally more than 5 billion €. Wind power projects are proceeding steadily and business potential in the re- Oulu Region is number two in investment potential. City of Oulu is rapidly gion is still very good. growing in challenging structural change situation. It may take some time, but Oulu is coming back. Number one investment project is Fennovoima Investment potential of Lapland has been growing from last year. At the Oy nuclear power plant project in Pyhäjoki some 120 km south from Oulu. moment Sokli mining project is about to start. Finnish government has It is also biggest single project coming under implementation in the whole decided to finance roads to this 1.5 billion € project. Mining company Yara European High North. is making final decision latest in summer 2015. When this project starts the investment boom returns to Lapland. Follow up for Sokli project is not Total amount of wind power projects is surprisingly big in Oulu Region. coming very soon. More tight regulation and prolonged permission and Low-lying coastal region is ideal for wind parks. Oulu is hunting data cent- license times have been weakening the competitiveness of Lapland in ers like neighbour city Luleå on the other side of the Bothnian Gulf. So far foreign direct investments. Almost unbearable energy taxation with sul- there has not been bigger success, but Oulu is ideal location for centers phur emission control in Baltic Sea are about to suffocate business devel- with suitable climate and globally high class ITC-community. opment in Finnish High North.

Murmansk Region is in a very special situation. Everybody expected that Slow and indefinite political decision making is also obstacle for more dy- offshore is going to be number one business in 2020. Economic and po- namic investment development. Lapland is number four in potential, but litical crises have postponed oil and gas projects to future. Shtokman gas second last in investments before 2020. Only the smallest region Kainuu field project probably comes back latest on 2030´s but other businesses is after Lapland. If growth is stronger than expected, tourism investments are driving the development. Mining industry is neither in a good eco- probably start to move up. Transport connections are problematic and if nomic situation. Big part of the extracted ore is going to domestic industry existing projects don´t start it can create a new obstacle. in other parts of Russia, so demand is more stabile. Mining technology is the key to economic cooperation with Murmansk Region up to 2020. The three regions with smallest investment potential are Arkhangelsk Region, Västerbotten and Kainuu Region. However we must remember Norrbotten in northern Sweden is developing steadily and investment that globally each region has huge potential. Västerbotten seems to in- potential is constantly high. Biggest investment is coming to final stage. vest in wind power during the next five years. Mining investment projects LKAB mining project in Kiruna, Svappavaara and Gällivare is ready in are very interesting, but global demand must grow before implementation 2020 or right after it. Opening of new iron mines is very challenging at the starts. Tourism has great potential and it is very interesting to see what moment with extremely low market prices. Pajala mine is today closed, happens with winter testing for trains in Jörn/Arvidsjaur project.

188 189 Main business in Arkhangelsk Region is forest industry and forestry. This gives base also to very interesting new bio energy projects with Chinese 8. MAPS and STATISTICS investor. Diamond fields have good potential, but the investment boom 8.1 European High North starts when Belkomur project comes to implementation. investment potential projects

Kainuu Region is very small compared with other European High North projects. There is however no need to combine to e.g. Oulu Region as it was during old administration. Investment potential over 2 billion € is huge. Mining is number one in good and bad. Talvivaara damages must be repaired and best way to do it is to find new mining company and continue production.

8.2 Industry projects

190 191 8.3 Mining industry projects 8.5 Trade projects

8.4 Energy projects 8.6 Tourism projects

192 193 8.7 Transport infrastructure projects 8.9 European High North investment potential 2015 by regions

Region million € Lapland 19316 Oulu region 27448 Kainuu region 2360 Norrbotten 22890 Västerbotten 11800 North of norway 75320 Murmansk region 23378 Arkhangelsk region 14310 Total 196822

8.10 European High North investment potential 2015 by branches of business 8.8 Public investments Branch of business million € Industry 10302 Mining industry 27510 Oil and gas 41950 Hydro power 7720 Wind power 43573 Nuclear power 16000 Bio energy 1755 Energy transfer networks 3270 Trande 1578 Tourism 5211 Transport connections 31569 Public investments 6384 Total 196822

194 195 8.11 Main investment projects that start before 2020 by regions Arkhangelsk 1075 1500 0 250 0 0 885 0 0 0 10600 0 14310

Region/ million € Normal Growth + Lapland 2386 4281 Murmansk 1330 4835 1200 1010 320 8000 0 0 0 141 4930 1612 Oulu Region 11758 13009 23378 Kainuu Region 1111 1254 Norrbotten 11610 14645 Västerbotten 5695 6620 Northern Norway 16415 32065 Northern Norway 3050 720 40750 4000 16400 0 0 2350 0 800 5250 2000 75320 Murmansk Region 5851 6526 Arkhangelsk Region 2925 3510 Total 57751 81910 Västerbotten 70 1840 0 200 6540 0 0 300 0 640 2165 45 11800

8.12 Main investment projects that start before 2020 by branches of business Norrbotten 1200 7900 0 1500 7425 0 0 200 120 965 3580 0 22890

Branch of business/ million € Normal Growth + Industry 3373 4358 Kainuu R egion 50 990 0 0 683 0 0 0 0 270 150 217 2360 Mining industry 6590 8885 Oil and gas 5850 20850 Hydro power 3685 3840 O ulu R egion 1852 625 0 455 10200 8000 650 150 1358 335 1413 2410 Wind power 11401 11921 27448 Nuclear power 8000 8000 Bio energy 700 1200 Lapland 1675 9100 0 305 2005 0 220 270 100 2060 3481 100 19316 Energy transfer networks 2850 2850 Trade 420 465 Tourism 1726 2911 European High North investment potential business of branches and regions by Transport infrastructure 11691 14465 Public investments 2165 2165 Total 58451 81910 Industry Mining industry Oil and gas Hydro power Wind power Nuclear power Bio energy Energy transfer networks Trade Tourism Transport infrastructure Transport Public investments Total

8.13 8.13 R egions and branches of business/million €

196 197 References and sources of information PROMOTING BUSINESS IN THE NEW NORTH

Arkhangelsk Region: Lapland Chamber of Commerce (est. 1939) mission is to create en.dvinainvest.ru success in the North.

Murmansk Region: Representing views and opinions of trade and industry the Chamber is Ministry of Economic Development of Murmansk Region working on better business environment, offering business related services and building networks in order to maintain and enhance business North of Norway: competitiveness. International cooperation and networking plays an ac- Agenda Nord-Norge tive role of the Chamber activities in the European High North not forget- ting the worldwide context. North of Sweden: NHO Norrbotten Members of the Chamber include a variety of companies from big indus- Invest in Norrbotten trial companies to SME’s from different industries and branches of busi- Västerbotten Investment Agency ness, municipalities and other business related services.

Kainuu Region: We are open for cooperation and see that each new contact is a chance Invest in Kainuu of new business opportunities. Please don’t hesitate to contact us for more information. Oulu Region: BusinessOulu LAPLAND CHAMBER OF COMMERCE Oulu Chamber of Commerce www.lapland.chamber.fi www.arcticbusinessforum.com Lapland: Lapland Chamber of Commerce

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