Europe’s largest tall oil plant will be built in Finland

Dagens Industri, Mosse Wallén

Newly founded Finnish company, Forchem Oy, is starting to compete with world-leading Arizona Chemical in the tall oil market. In a year, the company inaugurates Europe’s largest and most modern tall oil distillery in Rauma on the Finnish west coast.

Behind Forchem Oy is the Finnish venture capital funds Biofund Management, Merita Capital and OKO-Venture Capital and the state investment company Suomen Teollisuussijoitus. The share capital is just over SEK 170 million. The investment in the distillery is estimated at SEK 680 million.

“We are aiming for strong growth through further refinement. In the long term the company may be listed on the stock exchange,” says Martti Fredrikson, CEO of Forchem Oy.

Martti Fredrikson was previously Arizona Chemicals’ marketing manager in Europe and was also responsible for the company’s two tall oil distilleries in Finland. The commitment to Forchem means that he is now taking up the competition with his former employer.

Arizona Chemical is owned by the international giant Forest Paper, currently has 85 percent of the European market and 56 percent of the world market.

“Starting such a project right now is natural. Pulp production has increased significantly in recent years while the distilling capacity for tall oil has remained the same. In addition, Arizona Chemical’s dominance means that there is a craving for a competitor,” says Martti Fredrikson.

Forchem’s raw material is crude tall oil, a by-product of pulp production of pine wood. By distilling the crude tall oil, resin and tall fatty acid are separated. The resin is sold partly to the adhesive industry and partly to manufacturers of printing inks and paper chemicals. The tall fatty acid, or tall oil, is sold to the paint industry but can also be used as a cleaning or lubricant.

The rest will be pine oil, which is used as biofuel and will mainly be exported to Sweden.

The foundation stone for Forchem’s distillery was laid last week and production will roll out in a year. The distillation capacity is 150,000 tonnes of crude tall oil per year, making the plant the largest one in Europe. The second largest is Arizona Chemical’s Swedish plant, located in Söderhamn, opposite Rauma on the other side of the Gulf of Bothnia.

“Our factory will produce about 30 percent of the tall oil in Europe. The plant is also by far the most modern and we can manage the whole production process with about 40 employees,” says Martti Fredrikson.

The location in the small town of Rauma on the west coast of Finland is no an accident. The neighbor to the new distillery is one of Europe’s largest and most modern pulp mills, Metsä Botnia, owned by the forest company UPM-Kymmene and M-Real. Metsä Botnia’s mill, built in 1995, has a capacity of 600,000 tonnes of pulp per year.

“In addition, Rauma has a good port. We can easily take in deliveries of crude tall oil and just as easily ship out our products,” says Martti Fredrikson.