Deputy Ellis has given me notice of his intention to raise the matter of the establishment of a wool-pulp mill within the State and the progress in relation to same. Deputy Ellis has five minutes to present his case and the Minister — or the Minister of State — has five minutes to reply.
Adjournment Debate. - Establishment of Wood-Pulp Mill.
First, I wish to express my sincere thanks to you for allowing me to raise this very important matter on the Adjournment of the House. Everybody in the country has been well aware of the proposals of the Government, Coillte Teoranta and the IDA with regard to the establishment within the country of a wood-pulp mill. It is an aim which has been thwarted for a number of years due to lack of supplies. However, it is now evident that sufficient supplies will become available in this country within the next two to three years to sustain a viable wood-pulp mill.
The need for its provision is unquestionable but, in recent times, very serious questions arose with regard to the possibility of this being a viable operation. I refer especially to the recent announcement by a company in Northern Ireland that they propose to set up a wood-pulp mill in Derry. This would make a mill within this country available. We are told that there are only sufficient supplies to maintain one pulp-mill within the country.
It is important that we should know the exact position in this regard. I assume that Coillte Teoranta have not entered into any commitment to supply the Northern Ireland plant with timber at any level, whether by means of waste from sawmills, wood thinnings or other sources. I also have grave concerns about the fact that a member of the European Parliament recently made a statement that the wood-pulp plant proposed for Derry had been cleared for EC Structural Funds.
I should like to ask the Minister for Energy two questions. Have commitments been given — I assume that they have not — in regard to supplies being made available to the Derry plant? What efforts have been made with regard to getting EC Structural Funds and EC funding for the proposed mill which has been talked about for quite a number of years here? I hope that the Minister will be able to give us the up-to-date position, that he will assure the House that the Government are continuing their efforts and that his Department, Coillte Teoranta and the IDA are making the necessary progress for the establishment of a mill in this country. Regrettably, when I talk about "within this country" I must talk about the 26 Counties.
I also hope that the Department and Coillte Teoranta are as committed as ever to the establishment of such a project in the north west, and to Leitrim, which has been earmarked for quite a number of years due to the supplies which will become available there.
Once again, I thank you for giving me the opportunity of raising this very important matter because we all know that, without supplies from Southern Ireland, the Derry mill is unviable. Therefore, I presume the Minister can assure me that it will not be supplied from State forests or from private forests which have been grant-aided by the EC.
In view of recent developments I am happy to take this opportunity to outline to the House the present position as regards the establishment of a pulp mill in Ireland.
A third pulpwood industry is regarded as a strategic cog in the development of the Irish forest products industry. Since its establishment in January 1989, Coillte Teoranta have made tremendous strides and considerable progress in putting commercially orientated structures and systems in place. They have ambitious targets for planting which will see the achievement of Government planting targets of 30,000 hectares per annum shared by Coillte Teoranta and the private sector. They are affording particular attention to marketing to ensure that Irish timber is competitively exported; and that value added is created in the Irish economy.
There is a large and developing market for timber products which offers exciting prospects. The EC meets only about half of its timber requirements. Its import bill for timber and timber products is some £15 billion, second only to that for oil. Britain, our nearest market, is only 10 per cent sufficient in its timber need. The timber produced in Ireland can help reduce the £400 million import bill we have each year for imports of timber and timber products, thus helping to improve our balance of payments and provide much needed jobs at home and the EC estimates that demand for timber will continue to outstrip supply.
Part and parcel of developing a coherent and long term export marketing programme for Irish timber is the need for the establishment of a third pulp mill. The need for such a mill will be evident from the fact that timber supplies here will double between 1989 and the year 2000 from 1.5 million cubic metres to three million cubic metres. The pulp mill will be necessary to absorb the increasing roundwood and residue supplies coming in line with this doubling of output.
In order to ensure that the full benefits of this increasesd output is derived here at home, Coillte Teoranta and the IDA have been in negotiation with a number of potential investors for over two years. They have agreed that the preferred process is CTMP — chemi-thermo mechanical pulp — for the following reasons: it provides an opportunity to develop a new high added value industry sector; chemi-thermo mechanical pulp is an advanced technology with expanding market and new uses are being developed all the time; there is the potential to develop a paper manufacturing industry downstream; chemi-thermo mechanical pulp is environmentally benign vis-à-vis other pulp processes; the economies of scale involved closely match the availability of raw material; and chemi-thermo mechanical pulp has the best potential to pay sustained good prices for pulpwood and timber chips.
In September 1990, Coillte Teoranta and Stora Kopparsberg AB of Sweden announced their decision to participate in two joint ventures: a joint forestry company establishing 2,000 ha. each year in Ireland over the next 15 years; and a joint chemi-thermo mechanical pulp mill to be established in the mid-nineties.
In December 1990 Stora announced that due primarily to market reasons they would delay the commencement of the final feasibility-engineering study necessary to progress the project at this stage.
In January of this year, Coillte Teoranta indicated to Stora that, in view of the importance of having a pulp mill in operation for the second half of the nineties, they would actively seek out other potential partners. This process is ongoing, in conjunction with the IDA. In the meantime plans for the joint Stora-Coillte Teoranta forestry project which was established for the pulp mill are not affected by the postponement of the feasibility-engineering study.
I am aware of the announcement by the Lees Group and Rauma Repola that plans for a chemi-thermo mechanical pulp mill in Derry have been formally submitted to the Industrial Development Board in Northern Ireland and that financing for the project, which is dependent on IDB and EC grant-aid, has yet to be finalised. However, I see no reason why that announcement should affect plans for a pulp mill in Ireland. I am confident that the work now underway between Coillte Teoranta and the IDA, in close consultation with my Department, will bear fruit and that the planned pulp mill will be in place by the mid-nineties. I can assure Deputy Ellis that Coillte Teoranta have not entered into any arrangement to supply raw materials to the Derry plant.