According to State Forest Management Center (RMK) CEO Mikk Marran, the aim of the agreement is to advance the development of Estonia's largest wood biorefinery, planned for Lüganuse Municipality in Ida-Viru County.

The purchase and sale agreement is for 10 years.

VKG's planned production will consume 700,000 cubic meters of pulpwood annually sourced from state forests.

The contract with the RMK guarantees VKG approximately a third of the raw materials it needs, the RMK has said.

RMK board chair Mikk Marran said: "When the factory is built, VKG will become RMK's largest customer. The factory, planned for Lüganuse municipality, would valorize approximately one-fifth of the total volume of wood procured from state forests. The chemical processing of wood is significant from the perspective of the entire forestry and timber sector, as today the lion's share of pulpwood is moving out of Estonia without any added value. Now a solid foundation stone has been laid so that more jobs and more income can stay in Estonia."

The ultimate sales volume would be seven million cubic meters of pulpwood in ten years, he explained.

The agreement stipulates that VKG submits a detailed schedule for the construction of the production unit within two months, which can be supplemented within one year after the conclusion of the agreement.

The completion of the new production unit, as specified in the revised schedule, may differ from the schedule originally presented in the business plan.

The contract provides for the eventuality of postponing completion by two years, and in the event of an additional postponement of more than two years, the volume of wood supplied will be reduced by up to 10 percent for each year.

VKG Fiber won the tender at the end of March for both hardwood and softwood pulpwood quantities, of 340,000 and 360,000 cubic meters respectively.

The contract follows a pricing model in which the base price is the Scandinavian regional price, adjusted to the price difference between Estonia and Scandinavia. That price gets reviewed before each delivery period.

The RMK and VKG have also agreed to establish a superficies right on a 170-hectare property in Lüganuse rural municipality, near Kiviõli, Ida-Viru County. The municipality approved the special detailed plan last week.

Enhancing biochemically low-value wood involves using various techniques to improve its properties and extend its usability. These methods can include chemical modification, thermal modification, and the use of biochar to create high-value products like biofuels, adhesives, and structural materials.

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