(Adds background on Finnish forest industry)
HELSINKI, Nov 17 (Reuters) - Boreal Bioref Oy, a new Finnish company, said on Thursday it had signed a letter of intent with China’s CAMC Engineering over an investment in a new 780-million euro ($836 million) pulp mill project.
CAMC Engineering would become the majority owner of the new plant in Kemijarvi, northern Finland which is scheduled to start in 2020 with an annual pulp capacity of around 400,000 tonnes. Most of the pulp is likely to go to China, Boreal said.
“We have agreed on the timetable, and aim to make the final investment decision by the end of 2017,” Boreal CEO Heikki Nivala told Reuters.
The Finnish forest industry is recovering from a long slump because a shift to online publishing hit demand for paper. Several paper plants had to close and thousands of jobs were axed.
The paper market continues to decline in Europe, but pulp made from northern spruce and pine has a brighter outlook as it is needed for tissue and packaging board - products seen growing on the back of Chinese demand.
Boreal’s project is one of several new plants in the pipeline in Finland.
Sunshine Kaidi New Energy Group, another Chinese company, plans to invest about 1 billion euros in a new biodiesel plant in northern Finland.
Finland’s Metsa Fiber and Finnpulp are both looking to put up new pulp mills that will each cost more than 1 billion euros.
$1 = 0.9332 euros Reporting by Tuomas Forsell; Editing by Jussi Rosendahl and Alexander Smith