I. Over view of the opportunities in the European High North

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3 I. Over view of the opportunities in the European High North Background The European High North is seen as the future center for economic growth in Europe due to gas, oil, mining, hydro and windpower development, up-grading of electrical networks, tourism, transport and logistics, fishing, fish farming, river transports to and from Siberia, and evolving Northern Sea and Trans Polar Routes and their needs for infra structure. Energy saving, energy efficiency, energy management, environmental safety and significant decreasing of pollution are the key sentences in this new home of global wealth. The facts and figures Norway, Sweden, Finland and Russia, their state level economical analysts, local financial institutions and Chambers of Commerce have put down the following facts. Barents Center Finland s role Is established and owned by the Northern Finnish Cities, Counties, Universities and Professional High Schools. It is a non profit match-making organization promoting Finnish competence in the Barents area. BCF has created a database of all open Public-Private, Public and Published Private Tenders in Northern Norway,Northern Sweden and North West of Russia. The database/tenders are up-dated monthly and updates/reports are provided to the shareholders. BCF informs and communicates directly with the local Finnish Embassies and Consulates in the Barents area in order to provide assistance, in applicable cases, for relevant Finnish authority support. BCF

4 GDP and GDP/capita Finland Billion US $ Sweden Billion US $ Russia Billion US $ Norway Billion US $ GDP Finland Sweden Russia Norway

5 GDP and GDP/capita Finland US $ Sweden US $ Russia US $ Norway US $ GDP/capita Finland Sweden Russia Norway

6 Salaries Finland Average 3040 Men s average 3352 Women s average 2735 Sweden average 3, Russia - average Norway Average Men s average NOK ( 5512) Women s average NOK ( 4701)

7 ll. The investment volume in High North until The total needed investment value in the European High North is estimated to roughly 100 B until year This volume is divided between Norway, Sweden, Finland and Russia. 3. The business areas are: Industry Mining Oil & Gas Nuclear power Hydro Energy Wind Energy Bio Energy Electricity transfer networks Trade Tourism Transport and logistics (TRPL) Public Investments BCF

8 lll. Detailed run down of the sectors by country Sector Total in B FIN S N RUS Industry 3,741 1,34 0,708-1,693 Mining 18,487 8,27 6,098 0,455 3,664 Oil&Gas 16, ,3 0,700 Nuclear Pwr 6,000 6,0 - - (6,000) Hydro Pwr 3,472 0,405 0,315 2,752 (8,173) Wind Pwr 23,735 1,515 14,3 7,6 0,320 Bio Pwr 0,733 0, ,176 Electricity trfr 3,640 0,540 0,500 2,6 (10,050) Trade 2,298 1,082 1, Tourism 3,426 1,235 1,571 0,500 0,120 TRPL 13,840 1,599 4,561 1,883 5,797 PI 2,091 0,091-1,2 0,800 TL/Country 97,463 22,297 29,606 32,290 13,270 (37,49) Parenthesis indicate a not yet secured investment/financing N.B. The figures presented above are by the courtesy of Lapland Chamber of Commerce, European High North Investment Catalogue Charting, compilation and summmary by Barents Center Finland Oy BCF

9 Norway lv. Short summary of the present and the opportunities by country 1. Norway lives of oil and gas. They have brought 500 B to Norwegian Oil Fund 2. The new findings in the old area in the North Sea, The elephants Aldous and Avaldsnes and Skrugard in the Barents Sea mean that Norway will have sufficient supply of oil and gas in the foreseeable future 3. Norway has more than ten closed down mines. They could be opened profitably with modern technology 4. Nussir AS is opening a new coppermine in Kvalsund, close to Hammerfest, in Norway will play a key role in the opening of the Northern Sea Route to and from Asia due to its year round open ports like Mo I Rana, Troms, Narvik, Alta, Hammerfest and Kirkenes 6. Hammerfest /Melköya LNG plant is selling all of its capacity already. There are concrete plans for either a gas pipe line hub or an additional LNG plant in Melköya. Investment decision in either case will be made within twelve months. The investment in both cases is 6-8 B. Run time 5-6 years. 7. Narvik is becoming the most important Swedish mining export port with an estimated cap 35 Mtons/PA 8. Kirkenes is already an iron ore export harbor and is now becoming a reloading/transfer harbor for raw oil coming from Yamal and Kara sea. The raw oil is sent to Rotterdam for refining. Investment 2 BNOK This oil could alternatively be transported to Finland, Sweden or Baltics for refining by rail 10. This railroad could be used for exporting Finnish (mining), Baltic products east and westwards 11. Troms-Skibotn railway could also be an alternative BCF

10 Sweden 1. Iron mining in Kiruna represents 95 per cent of the European iron supply. The reserves are still for foreseeable future. 2. Kiruna city is going to be moved a few kilometers away from its present location in order to make it possible to utilize the iron under the city. The process should be completed by Due to increased mining and new mines the railway and road transport infrastructure will be rebuilt in Northern Sweden. The railway investments and building will not be completed before The Swedish Government has decided to invest 200 MSEK(24 M ) in ming, mineral and steel research in the North. Total government investment in infrastructure rises to 3,5 BSEK. 5. The Swedish steel mills and mining require huge amounts of energy and therefore new energy sources and energy transfer networks are needed. 6. There will be a huge investment in wind energy and Sweden is aiming at exporting wind mill electrical energy. Approx wind mill stations are going to be built. One wind mill costs approximately 3 M a.k.a. 1MW=1M 7. The establishment of server halls for global players like Facebook, Google, LinkedIn and similar will drastically increase the need for energy. 8. Northland Resources has decided and signed to buy 400, 90 tons trailer truck combinations from Scania for transporting ore from Pajala to Kiruna. The annual transport volume is 5 Mtons/PA spanning over 9 years. From Kiruna the ore is transported to Narvik by train. The value of the deal is sapprox 1,5 B SEK. BCF

11 Finland 1. The metal mining and refining industry are on the high in Finland 2. The needs are in the infrastructure due to lack of rail, road and reliable/predictable sea transports 3. Finland does not have an ice free port (or direct access to one), which would be essential in order to secure the disturbance free export of the metal and mining industry s products also during winter. 4. The new IMO sulphur directive raises the price for sea transports on the Bothnian Gulf and Baltic Sea to a level, which effectively prohibits ship/sea transports of metals as bulk and refined products with present vessels. Outokumpu Plc has calculated the cost effect to 15 M PA for their own transports. This though does not affect the Russian vessels, which are not covered by the IMO sulphur treaty. 5. The railroad to Kirkenes, Murmansk, Narvik or Troms would change the situation dramatically 6. The Finnish metal and mining industries need more energy. The on-coming nuclear energy plant in Pyhäjoki is still far away in the future, if ever. Two of the Finnish nuclear plants are becoming obsolete so Olkiluoto and Pyhäjoki only retain the status quo. 7. Natural gas and LNG are valid environmentally acceptable alternatives to further construction of nuclear energy for the mining and metal refining industry. Norway or/and Russia could be a viable suppliers in this case for industry and communities. LNG can be transported by rail, truck and ship. 8. The lack of transport infrastructure in rail, roads, ships and the unpredictable tax practise for LNG could invalidate this opportinity. 9. Gas (pipe line) is a much more expensive and rigid alternative to LNG, which is already produced in Hammerfest and is soon to be produced in Yamal. BCF

12 Russia 1. The oil and gas reserves in NW-Russia are huge. 2. The development of Yamal peninsula is now gaining momentum with Novatek and their plans for LNG plant. 3. Rosneft and Statoil have created a strategic alliance for oil&gas prospecting/development 4. The Russian shale gas reserve mapping has just started, but will come on in years. 5. The existing railroad connections on the Russian would allow transport of LNG and mining products (both ways) with relatively modern investments. 6. The mining sector prospers in North West of Russia. The mining companies are cash rich. They need trp to markets like the corridor from Kostomuksha to Raahe and Oulu 7. The mining sector especially in North West of Russia is enjoying special positive attention from the regional authorities. This is an opportunity not to be missed. 8. This corridor could also be used for wood/forestry industry as well as for tourism in both directions. The potential of the route all the way from Troms through Finland to China and Far East should not be forgotten. 9. The energy supply/electrical networks have to be up-graded in order to facilitate the investments in mining, industry, oil and gas on-shore infrastructure. BCF

13 V. Summary of the opportunities for cooperation in the European High North 1. Energy supply in all forms: Nuclear RUS, FIN, SWE, Gas, LNG, N, RUS, Hydropower N, Wind power S, N, Mining N, S, FIN and RUS 2. Energy management, control and sensor technology, reconstruction/renewal of heating systems, water supply, waste management and forestry in NW Russia. The Russian federation has given an order to the regions to decrease the energy consumption with 13% per annum. Index year The EBRD, European Bank of Reconstruction and Development, controlled financing institutions in Russia, NDEP, Nordic Dimension Environmental Partnership, and NEFCO, Nordic Environment Financing Corporation work specifically with financing environmental projects in the Russian Federation. These named IFI:s look actively for prospects in RF. These institutions have sufficient experience all the way from integrity checks to project completion. 3. Norway has a labor shortage of 2000 engineers, in total workers. Metal and workshop competence is urgently needed. Now the capacity is bought in the Baltics. No domestic operators. Building and construction demand is two times higher than the available capacity. Hammerfest is becoming the Norwegian Arctic Hub and is expected be as strong as Stavanger until Kirkenes is booming and becomes an oil hub. 4. Sweden has the money inhouse for the investments and moves very quickly in mining, reconstruction, windpower, roads and railways. Everything happens in the North, where Finnish is the second language. 5. Finland needs to invest in infrastructure in order to secure the mining investments. This means roads and railways. There are plans like 8 different options of railroads in the North, but there are no decisions made for investments or applications sent to EU for the TEN (Trans European Network), TERFN (Trans European Railway Freight Network) or the NEW (North East West) meaning transports from EU through Russia to China and back. 6. N.B. NSR cuts transports from 30 to 14 days, the NEW rail from Troms to Beijing needs 7-8 days. BCF

14 Artic Sea Railroad Options

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