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News archive 2001

Construction of the tall oil fraction plant in Rauma to start

01.05.2001

Press bulletin, Rauma Forest Chemical

Rauma Forest Chemical Oy has made the decision to build a tall oil fractionation plant at Rauma, Finland. The overall value of the total investment is about FIM 400 million. This is a significant investment in the forest chemical industry, and the decision has been preceded by quite an extensive period of preliminary planning with regard to technology and business operations. Starting the business operation within the framework of a new company and a new organisation to be built, without the participation and acknowledgement of big industrial enterprises contributes to the significance of the investment. The investment will be completed by the end of the year 2002, at which time production will commence.


Finnish capital investors Bio Fund Management Oy, Merita Capital Oy and OKO-Venture Capital Oy, representing their funds, and Suomen Teollisuussijoitus Oy are the owners of Rauma Forest Chemical Oy. In addition to this, the company management has some ownership in the company.

Mr. Martti Fredrikson and Mr. Hannu Näsi, who both have extensive experience in the forest chemical industry, are in the management of the company. Mr. Fredrikson?s most recent posts were Marketing Manager of Arizona Chemical Europe and CEO of Arizona Chemical Oy. Prior to the founding of Rauma Forest Chemical, Mr. Näsi also worked as European Financial Controller of Arizona Chemical in Brussels and as a member of the Board of Arizona Chemical Oy. In addition to Fredrikson and Näsi, Mr. Juhani Saviainen has now been appointed to the group as director responsible for the investment project and production, effective from the beginning of April. Mr. Saviainen also has extensive experience in various tasks in the forest chemical industry, including being Plant Manager at the Valkeakoski Works of Arizona Chemical.

"The dominant market position of the largest company in the industry will allow us to take advantage of the demands of our raw-material suppliers and customers. Despite the evenly increased production of crude tall oil, the industry has not seen fit to invest in this branch for years. Simultaneously, our investment will guarantee employment in the industry, which lately has been decreasing, in Finland. We shall also create conditions for versatile up-grading, as well as domestic research and product development in an industry which currently has no research and development at all. Increasing the size of business share from 0 to over 30% in Europe, requires not only skilled personnel and the most advanced technology in the world, but also alliances in customer and up-grading chains," states Mr. Martti Fredrikson, CEO of the company.

"In addition to the implementation of this investment, and the start-up of the operative business, the company management must start re-evaluation of the company's future. The chemical forest industry is, especially at the moment, living through an exceptionally strong period of change and Rauma Forest Chemical has at this stage already been the target of interest of many co-operation partners. A central objective of the company is to grow to an important unit in the chemical industry in the near future by utilising the basic investment now being carried out and the bio-based, renewable raw material, tall oil," says Senior Vice President Hannu Näsi, who is, among others, responsible for company planning.

The plant will be the world's largest so-called dry distillation unit and will exploit the latest know-how and technology in the industry in its design. The over-all capacity of the plant will be 150,000 tonnes of distilled raw tall oil per annum. With this capacity, Rauma Forest Chemical will be able to process about 10% of the world?s production of crude tall oil.

In the design of the factory, special attention will be given to environmental impacts and risks. These include, among others, the minimisation of odours and disturbing emissions with the help of new technical solutions and modes of application; reducing noise pollution to meet the strictest contemporary requirements; decreasing the disadvantages of traffic by drawing new passage routes, and to prevent accidents in advance with the help of separate risk analysis. As a part of this process, the company is currently preparing an evaluation procedure for the environmental impact in accordance with the new environmental legislation in co-operation with the authorities.

Rauma Forest Chemical has recently made a Supply and Construction Management Contract with Rintekno Oy, Espoo Finland. The contract includes the technology, overall services, the supply of equipment and systems together with all engineering needed, services for the authority permits, the procurement and supervision of the construction and installation contracts. Rintekno has during its 30 year of operation gained an appreciated role as an engineering contractor for The Forest Chemical Industries.

The town of Rauma in southern Finland proved to be the optimal solution for our company. The town offers an excellent property for rent, where the company also can implement future expansions. The property is located in the vicinity of a port and crude tall oil producing pulp mill of Metsä-Botnia. In addition to this, all the raw materials required by the Rauma Forest Chemical can be obtained within a reasonable distance.

The company offers direct employment for about 35 to 40 persons and the indirect employment effect will be about 100 persons. The selection of personnel will take place during the year 2002. The investment is about 80% domestic.

The plant will separate tall oil rosin and tall oil fatty acid from crude tall oil, and also produce tall oil pitch as a by-product. Being generated during the growth process of the tree, these are naturally valuable, renewable, biodegradable raw materials, which cause no danger to the environment, and thus correspond to the demands of the modern end user.

Tall oil rosin is a basic raw material for the chemical industry and its most extensive area of application is in various adhesive solutions, such as hot-melt adhesives, hydrophobic sizes for the paper manufacturing process and ink-binders for printing inks. Natural rosins are also used in, among others, the rubber industry and the manufacture of chewing gums. The rosin accounts for about 20 to 25% of the overall production of fractionation.

Tall oil fatty acid is used, among others, in the paints, as a binder for oil-based paints, as a raw material for surface coatings, metal working fluids, lubrication and hydraulic oils, in the manufacture of detergents, collector chemicals in mining processes, and as fuel additives. The share of fatty acids accounts for about 30 to 35% of the manufacture.

Tall oil pitch is mainly used as a bio-fuel in the production of energy, an excellent use for tall oil pitch, because it is a low-sulphur, renewable raw material. Smaller amounts of tall oil pitch are also used as binders for printing inks, in the manufacture of asphalt, as well as in the processes of the rubber and mining industries. Pitch also includes a significant amount of the sterols required in the food and chemical industries.

The company will market its products mainly to Europe, whilst the sales are concentrated in Sweden, Great Britain, Germany and in the Benelux countries. Export accounts for about 90% of the manufacture. The main markets will be handled by the company?s own sales organisation and other areas with the help of agents.

The market share of Rauma Forest Chemical in Europe is targeted to be about 30 to 33%, measured by the fractionation capacity. The biggest competitor in the branch is Arizona Chemical, who operates in the U.S.A. and Europe and whose market share in Europe today is about 85%. Other companies operating in the branch are DRT in France and Krems in Austria, owned by Kemira.

The company's board of directors is formed by Dr. Timo Petäjä of Bio Fund Management Oy, Mr. Jouko Helomaa of Merita Capital Oy, Ms. Riitta Jääskeläinen of Suomen Teollisuussijoitus Oy, Mr. Reijo Grönholm of Oko-Venture Capital Oy, Mr. Heikki Erkinharju, Mr. Hannu Näsi and Mr. Jaakko Rislakki, who is the chairman of the board.

For additional information please contact

Mr.Martti Fredrikson, President and CEO, phone number +358-400-63 53 87 or Mr.Hannu Näsi, Senior Vice President, phone number +358-50-360 61 84.


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