Further equity funding has been secured by Forscot, the Scottish-based company established to develop and operate a large integrated forest products processing complex at Invergordon.
This brings total phase-one funding to £700,000, which will finance detailed research and the initial stages of the planning and environmental approvals process.
Forscot chairman Ed Gillespie said: ‘This completes the first phase of our funding and keeps us on track with our time table. Our aim is to start construction of this competitive, world scale, state-of-the-art plant in 2006 and to begin operations in 2008.
‘It is good to see these pieces of the plan falling into place. We have an expert and dedicated management team working hard on this ambitious project and, importantly, we have an active and continuing dialogue with the local community and its representatives. We must be sensitive to their concerns as we go through the planning process.’
Forscot’s financial strategy involves fund raising in three stages, with the £1 billion estimated capital cost funded through a combination of debt, equity and grants.
The first phase, which included a £200,000 grant from Ross and Cromarty Enterprise, has enabled the commissioning of pre-feasibility studies to confirm the business case and the project’s viability, together with preparation for initial trading and for later-stage funding.
The additional funding announced today completes the first phase and will finance more detailed research and the initial stages of the planning and environmental approvals process.
The second phase will raise some £5m-£10m of equity funding. This will be to secure the site, broaden the management team, complete the detailed project definition, and secure planning and environmental approvals and construction quotes.
Phase three funding, to finance construction, is expected to total of the order of £1 billion through a combination of equity, debt and grants.
NOTES TO EDITORS
The proposed facility will be an integrated pulp mill, paper mill, saw mill and renewable energy generation plant. The raw material is Sitka spruce grown in Scotland and northern England, which produces a white, high-strength pulp ideal for making magazine papers and for adding strength to tissue products that use a high proportion of weaker recycled fibre.
The pulp mill will produce 550,000 tonnes a year of A+ grade NBSK (northern bleached softwood kraft) pulp. The market for this Sitka spruce product is secure and it commands a premium. At present it is only made in Canada.
The paper mill will produce 420,000 tonnes a year of publishing paper for use in advertising material and magazines. The main market is Europe. Demand is growing at 3 per cent to 5 per cent a year.
Sawn goods operations, planned to be contracted out, would produce some 250,000 cubic metres a year of strong, low-cost construction timber. It has good development potential with the increasing demand for timber-frame houses. The target UK market is at present largely served by imports.
All the biofuel residues from the saw mill and pulp mill will fuel a boiler to power the site. Additional power will be provided by a recovery boiler, which will burn the non-cellulose materials dissolved during the pulping process. The boilers are expected to produce surplus electricity, likely to be classed as green power, and which could be exported to the grid.
The project will provide a profitable outlet for Scottish and northern English Sitka spruce. Because pulp and paper manufacture gives the most added value to timber, Forscot will be able to offer competitive prices and longer term stability than growers are currently getting.
The UK is one of the largest European markets for pulp, but the paper industry currently imports around 80 per cent of its virgin fibre. Forest industry products represent the UK’s third largest import bill. Forscot’s paper products will be particularly attractive to the operators of the new gravure printing capacity currently being established in England. There is currently no production of this grade of paper in the UK.
Around 3,000 jobs will be created during construction of the plant. Once in full production, Forscot will employ some 500 people and create an estimated additional 5,000 indirect jobs in the forestry sector and in the supply of goods and services.
The site at Invergordon was chosen by Forscot mainly because of its good transport links by sea, rail and road. Most of the raw materials and finished goods will be transported by sea, using the deep water harbour at the Saltburn Pier and an enclosed conveyor system between the pier and the site.
Date: 4 August 2005
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