VKG seeking to increase mining operation despite saying new taxes will lead to bankruptcy

Oil Shale mine (Postimees/Scanpix)
11/10/2014 1:23 PM
Category: Economy

Fresh from running an ad campaign against the government's decision to increase the environment tax, the nation's second largest oil-shale rock miner has asked to increase its annual mining quotas from 2.7 million tons to 4.3 million.

Viru Keemi Grupp (VKG) said its new plant which turns the resource into shale oil needs more oil shale rock, with Eesti Päevaleht calculating the worth of the additional 1.6 million tons to roughly 40 to 50 million euros.

New Environment Minister Mati Raidma is now faced with a difficult decision - he can either reject the request and face even more criticism after the campaign, which was heavily funded and which said the new tax rates will drive the industry into bankruptcy, destroying 24,000 jobs and costing the state 250 million in tax revenue per year. He can increase the 20-million-ton annual mining limit in Estonia or take the 1.6 million tons from Eesti Energia's share.

VKG has already taken the state to court to change regulations which hand Eesti Energia the right to 75 percent of annual oil shale mining quotas. Increasing the limits is a political minefield, especially with elections on the horizon.

Eesti Energia said although it only mined 12 million tons of its 15-million-ton limit last year, it is not willing to decrease its quota as the company has to increase electricity production to lower prices when they get too high. The state-owned giant said it is a matter of energy security for the Baltic states.

VKG recently said it could bring plans to produce diesel from shale oil back from the dead. Its new Petroter 2 shale oil plant, opened at the beginning of October, is already producing shale oil from oil shale rock, a product which can be turned into diesel fuel, at full capacity.


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