1. 29.05. – 31.05.2013, Lotte-hotel, Seoul, Korea
Global Project Plaza 2013
– , Lotte-hotel, Seoul, Korea
ARCTIC CORRIDOR
Jorma Pietiläinen

2. AGENDA presentation of Finland and Lapland Business in Finland
Arctic Corridor
Drivers for the Arctic Railway
Logistics in Kirkenes
Arctic Railway

3. FINLAND EU´s northernmost country

4. FINLAND FACTS Finland is Member of Arctic Council
Total area: 338,000 km2
Neighbouring
countries:  Estonia, Sweden, Norway, Russia
Population:  5.4 million
Languages:  official languages Finnish (90.67%) Swedish (5.43%), English important business language.
Currency:  euro (€, EUR)
GDP per capita:   35,928 € (2012)
GDP growth:  -0.2% (2012)
Unemployment rate:  8.7% (January 2013)
Monthly wages:  average 3,040 €
Finland is Member of Arctic Council

5. BUSINESS IN FINLAND Main industrial products: Paper and board,
metal products,
electronics,
chemicals,
and software

6. WHY FINLAND ? Stable society politically and financially
Creative solutions economy is knowledge-based and strong on innovation
Gateway to Russia km border with Russia
Strong in Logistics, rd position in The World Bank´s Logistics Performance Index comparison
Competent professionals workforce is highly educated
Advanced infrastructure transport, communication, electricity

7. LAPLAND northernmost Finland

8. ARCTIC CORRIDOR
The Arctic Corridor is a new cross-border economic area as well as a transport and
development corridor. It links the Baltic region with the deep-water ports around
the Arctic Ocean, oil and gas fields and the Northern Sea Route.
Arctic Corridor offers businesses and investors an opputunity to get involved with major projects in Arctic Europa
Arctic Corridor is an initiative carried out municipalities of Rovaniemi, Sodankylä, Inari and Utsjoki .
In Finland local authorities have a monopoly on land use planning.

9. TOURISM IN THE ARCTIC CORRIDOR
winter tourism is very strong in Arctic Corridor
espically tourism from Russia and Asian countries is growing
main attractions are wintersporting, Santa Claus and northern lights
main tourism centers are:Saariselkä, Pyhä/Luosto
summer tourism attractions are hiking and fishing

10. MINING INDUSTRY IN ARCTIC CORRIDOR
Composite Policy and Mineral Potential Ranking
Frazer Institute Mining Company Survey 2013
Finland
Finland has been considered to be one of the best exploration targets in the world. According to the Frazer Institute Mining Company Survey Finland was considered as second best country in the world as defined by Policy Potential Index.

11. MINING INDUSTRY IN ARCTIC CORRIDOR
Estimated mining on metal ores in near future
Companies having activities in the Arctic Corridor region

12. BARENTS SEA OIL AND GAS
An estimated 20–30% of the world’s untapped gas reserves and 5–13% of oil reserves are located in Arctic regions.
Norway side of Barent sea 14 Production Licences 01/2013
Latest development projects:
SNÖVIT(snow white) 2001
GOLIAT 2009
HAVIS 2011
SCRUGARD 2012
An estimated 20–30% of the world’s untapped gas reserves and 5–13% of oil reserves are located in Arctic regions.

13. NORTHERN SEA ROUTE Trafic at NSR, according Rosatom: Year 2012:
vessels: 46
freight 1,26 million tons
Year 2013
vessels : 71
freight 1,36 million tons

14. NORTHERN SEA ROUTE Sea ice extent record low in Arctic last September:
3,4 million km2
the trend is clear

15. NORTHERN SEA ROUTE

16. LOGISTICS IN KIRKENES

17. LOGISTICS IN KIRKENES
NEW INVESTMENTS PLANS 1. KILA (Tschudi) 2. pulkneset (GTI, svi) 3. norterminal (stolt-nielsen)
3. NORTERMINAL
2. PULKNESET
1. KILA

18. LOGISTICS IN KIRKENES KILA investor Tschudi AS
KILA will be developed and made available for companies related to the oil and gas industry in the Barents sea and for maritime transport and logistics activities. Total area of da (250 acres), 600 meters of deep water quays (13 to 23 meters) with ISPS status. All approvals required prior to construction have been granted.
KILA
investor Tschudi AS
investment 100 million euros
all needed approvals granted

19. LOGISTICS IN KIRKENES PULKNESET harbor and industrial area
two private investment groups
GTI and SVI
contruction start 2014
Industrial park at Korsfjorden close to the Kirkenes Airport. The Pulkneset approach and port provides a large, deep and sheltered port, year round ice free by nature, with excellent manoeuvring conditions for ships and rigs of any size – operational at all times. Pulkneset is now in the impact assessment phase. The planned construction start is spring 2014.

20. LOGISTICS IN KIRKENES NORTERMINAL investor Norterminal AS
Oil terminal with oil storege capacity of
cbm and annual capacity 20
million tons
investment 400 million euros
starting 2014
Our mission is to build, operate and provide, a reliable land based tank storage terminal in Northern Norway, for oil and oil products exported from ice restricted ports, for reliable, low cost, onward shipments in large tankers.

21. ARCTIC RAILWAY
Railway created the basis for well-being in the U.S.

22. ARCTIC RAILWAY
The goal of the Arctic Railway is to develop alternative routes from Asia to the Baltic Sea Region for the goods flows of the future and to improve the competitiveness of
mining and other industry by creating new, cost-effective
transport possibilities.

23. ARCTIC RAILWAY Potential cargos for Arctic Railway:
ore concentrates from the mines in Lapland
iron pellets from Kostamus
paper from Kemi and Oulu
timber from Lapland forests
coal from USA to Raahe
oil products from Barents Sea to south
product transportation in containers to and from Asia

24. ARCTIC RAILWAY
THE ARCTIC RAILWAY – TWO
PHASES OF CONSTRUCTION
The first phase of the Arctic Railway, Rovaniemi–Sodankylä, is being constructed to meet the needs of the mining and forest industries in central
Lapland. Planning for the route will begin in The goal is for the track to be finished by The demand for transports in the direction of the Arctic Ocean is expected to grow to fulfil the financial preconditions to begin construction on the second phase, Sodankylä–Kirkenes, by 2030.
PHASE 1: Rovaniemi – Sodankylä
• The length of the Rovaniemi–Sodankylä track is around 145km.
• The track will reach the Sodankylä mining areas, around 40km to the north of the population centre.
• The estimated cost of construction is maximum 841 million EUR (2012)
• A minimum transport amount of around 3,0 million tons per year is needed to support the execution of the phase
PHASE 2 : Sodankylä – Kirkenes
• The length of the Sodankylä-Kirkenes track is around 362 km.
• The total cost of construction is maximum EUR 2,24 billion (2012)
• A minimun transport amount of around 5,7 million tons per year is needed to support the execution of the phase.
• The Sodankylä–Kirkenes track shall be included in the TEN-T transport network supported by the European Union.

25. ARCTIC RAILWAY
According to economic prerequisites, the implementation of the first phase of the Arctic railway Rovaniemi–Sodankylä is possible providing that mining industry in Central Lapland will grow according to expectations and railway transport will be a competitive alternative (large and frequent transport volumes).
With regard to economic feasibility, the required traffic volumes for railway implementation in the first phase are millions of tonnes/year. Transport needs of few potential mining projects together with wood transport can produce sufficient transport volumes in the short run.
Long-term potential for the implementation of the second phase of the Arctic railway Sodankylä-Kirkenes is based on versatile transport needs of the oil and gas deposits in the Barents area as well as on faster alternative transport route between Europe and Asia as a result of the opening of the Northern Sea Route. At the moment, sufficient potential for the construction of the second phase cannot yet be precisely identified.
Arguments for the implementation of the Sodankylä–Kirkkoniemi railway will be defined when critical factors regarding the utilization of oil and gas reserves as well as the transport economic feasibility of the Northern Sea Route will be specified.
Based on freight transport survey, the Arctic Corridor and especially the Northern Sea Route are significant and probably frequently used transport routes in the long run.
Companies and business life consider the Arctic railway as an important long-term project. The significance of the Arctic railway will probably increase over time.

26. ARCTIC RAILWAY

27. ARCTIC RAILWAY
Estimated break even traffic volume with different cost estimates, Rovaniemi-Kirkenes
Rail section Rovaniemi–Kirkenes
Low cost level
Average cost level
High cost level
Costs:
- investment (excl. interest)
- operation and maintenance (30 v)
1 589 million €
200 million €
2 397 million €
3 078 million €
Minimum traffic volume for implementation (break-even volume)
3 million tonnes/year
4,4 million tonnes/year
5,7 million tonnes/year
Minimum number of trains for implementation (*)
2-4 trains/day
4-5 trains/day
5–7 trains/day
Minimum number of trucks for implementation (**)
17-19 trucks/hour
( trucks/day)
25-27 trucks/hour
( trucks/day)
32-34 trucks/hour
( trucks/day)
(*) estimated for bulk cargo, real volumes can be larger (net weight of train 5 600 tons)
(**)estimated for bulk cargo, real volumes can be larger (total weight of vehicle 60 tons, load 40 tons)

28. Finance and implementation
ARCTIC RAILWAY
Finance and implementation
Implementation of the Arctic railway is suitable by PPP – Public Private Partnership or an Infrastructure Company
In PPP the State contracts a construction company to build and operate the track over a fixed period
The construction company is responsible for acquiring market financing for the project
Reimbursements to the construction company are agreed upon by the State and other beneficiaries (e.g. mining companies and other track users)
The Infrastructure Company is suitable for constructing and operating international transport connections
The Infrastructure Company engages committed shareholders to the project and it’s risks
The shareholders could consist of the State of Finland and e.g. mining companies, logistics companies and other States
The shareholders participate both in direct financing as well as in acquiring loans
The investment can be partly financed by collecting track charges
The Infrastructure Company would contract construction and operation of the tracks as in PPP.

29. email: jorma.pietilainen@arcticcorridor.fi
Mr Jorma Pietiläinen
tel:
Thank You !