Dear reader!

2021 was a year of important strategic choices for Viru Keemia Grupp. Despite the rather confusing development of the European Green Transition and the continued COVID crisis, VKG initiated several projects that are of decisive importance for the company in this decade. The decision to launch a project to open the Uus-Kiviõli mine and to initiate the preparation of a special spatial plan in order to take the first step in establishing a bioproducts production complex sets a direction for the development of VKG as Estonia’s own large industrial enterprise.

On the level of everyday work, the coronavirus also touched us in the past year. Despite the level of vaccination of over 80%, every fifth employee was away from work at the peak moments of the virus outbreak and ensuring full-scale production was a real challenge. Still, we managed to process 4.53 million tonnes of oil shale in 2021 and produced 618,000 tonnes of shale oil products and 918 GWh of various forms of electricity for our customers. The financial results of the year reflect the growing demand for low sulphur content shale oil in the ship fuel market and the increasing prices of energy carriers. Although the carbon tax expense grew steeply, we ended the year with a net profit of 49.78 million euros.

The foreseeability of the Estonian business environment is very poor for making strategic decisions. The roadmap for moving towards Europe’s net zero carbon emissions goal has not become any clearer. The Fit for 55 regulations package presented by the European Commission was based on pre-COVID data and has lost any topicality and believability. Proposals concerning the emission trade system did not take into account the fact that the prices of carbon quota that have become a trading item of speculators had tripled in a year. If we add the lack of clear positions of the Estonian state, we are facing a full-blown storm in terms of regulations.

Viru Keemia Grupp is a form advocate of the market economy and wishes to operate in areas where natural demand and free competition exist. As a participant of the volatile oil market, we are always forced to assess various risks and make decisions in the conditions of deficient information. We understand that the Green Transition is the state’s intervention in the economy in an unprecedented extent, which will not leave any companies in this area untouched. However, it is also clear that no technologies currently exist for a full Green Transition, Europe’s own green energy production does not even come close to covering the needs of its industry and households and Europe cannot afford losing the destruction of the competitiveness of its industry in the mid-long-term perspective.

Considering the above, we passed a decision to launch a project for opening the Uus-Kiviõli mine that ensures a raw material supply for Viru Keemia Grupp at least until 2038. We started establishing the aboveground infrastructure immediately, but the majority of investments will be made in 2023–2025. As we value economic management, we will use the existing Ojamaa production complex to the maximum possible degree and the establishment of a new mining operation will not entail a significant additional environmental impact.

The maximum reuse of the industrial infrastructure existing in Ida-Viru County is one of the key components also in the new bioproducts production complex project initiated by Viru Keemia Grupp. The current low level of added value of Estonian timber or the export of Estonian timber even without adding value, the industry traditions and the existing infrastructure in Ida-Viru County, the high demand for bioproducts in global markets and the experience of Viru Keemia Grupp in establishing and operating large industrial enterprises are strong favourable preconditions for the emergence of a new economic sector. We find that the production of bioproducts and the development of wood chemistry is inevitably necessary for the Estonian economy and certainly also for the development of Ida-Viru County. The support of local residents and local governments obligates us to act promptly, thoroughly and with commitment.

In conclusion, we continue operating as a producer of ship fuels and as a responsible member of the business community. We are committed to development and constantly seek opportunities to apply the strengths of Ida-Viru County in the best possible way. We continue active work in the name of improving the business environment. The initiative started by Viru Keemia Grupp for creating Estonia’s own climate act has launched discussions and forced decision-makers to think along. Together, we can make Estonia better!

Ahti Asmann

Chairman of Management Board of Viru Keemia Grupp