Loiste 1/2024 - News from Port of HaminaKotka

LOISTE NEWS FROM PORT OF HAMINAKOTKA 1/2024

Photograph: Vesa Hovi

Varying year for Port of HaminaKotka Baltic Ports Organization working for Baltic Sea ports p. 4

Battery materials plant planned in Hamina obtained environmental permit p. 6

NEWS FROM PORT OF HAMINAKOTKA 1/2024

Photograph: Vesa Hovi

Varying year for Port of HaminaKotka For the Port of HaminaKotka, 2023 will remain in the history books as a year of great changes. There were considerable variations in the transport volumes during the year, the port investment of the D-area at Mussalo was completed, and there were successes in the international cruise traffic, which is undergoing fundamental changes.

The Port of HaminaKotka started at a record pace in 2023, and after the first five months the transport volumes were at peak figures.

At the turn of May and June, Finnish exports began to slow down, and the general economy both in Finland and in its key trading partner countries began to decline. The situation at the Port of HaminaKotka was also impaired by the sanctions imposed on Russia. In 2023, these affected oil and methanol transport in particular. The above factors and the irregular entry of people into Finland that started at the border between Finland and Russia at the end of the year further eroded the operating environment. As a result, the transport volumes at the Port of HaminaKotka fell short of the previous year by 13.2 per cent, amounting to 14.1 million tonnes.

Export transport was particularly affected by the demand difficulties in the Finnish wood-processing industry, and export transport decreased by a total of 1.9 million tonnes, or 16.6% from the previous year. Despite the slightly higher import volumes of raw wood, imports decreased by 0.3 million tonnes, in other words 5.5% from the previous year. Transit transport decreased by 0.7 million tonnes or 2

19.0%, and the number of calls by vessels also decreased by 12% from the previous year.

Significant investment

The biggest investment of the Port of HaminaKotka in recent years, the D-area at Mussalo, was completed at the end of 2023. The total cost of the project, which was co-financed by the European Union’s Connecting Europe Facility (CEF) and spanned over several years, for the port company was 72 million euros, of which 11.1 million euros was funded by the EU. Moreover, the port operator Steveco built two gigantic warehouses in the D-area for the needs of the wood-processing industry, and the area now in full use has attracted interest among many customers to transfer and concentrate their transport operations to the Port of HaminaKotka.

“The port company started to develop the D-area of Mussalo so that even larger ships and the goods flows they carry could be handled as efficiently as possible and so that containers and break bulk could be handled in the same location, also optimising rail transport. The D-area completed last year offers an excellent operating area for the international transport of

the wood-processing industry, and the completion of this area will make the Mussalo Harbour of Port of HaminaKotka the largest concentration of pulp transport on the Baltic Sea,” says Kimmo Naski, Port Counsellor (satamaneuvos) and CEO of Port of HaminaKotka Ltd.

Successful international cruise season

The international cruise season of the Port of HaminaKotka in the past summer was successful. A total of 13 ships called at the port, 2 of which anchored in the Eastern Gulf of Finland by the remote island of Ulko-Tammio. There were a total of some 20,000 passengers, who came mainly from the United States, Canada, Australia, New Zealand, British Isles and Germany.

Even though the main destination of Baltic Sea cruises, St. Petersburg, is no longer on the itinerary, the degree of occupancy rate on the vessels cruising on the Baltic Sea has grown. In 2022, the biggest cruise ships withdrew from the Baltic Sea to other markets, but they aim to return. This is also influenced by the political situation in other parts of the world. The active sales and marketing efforts by the port

NEWS FROM PORT OF HAMINAKOTKA 1/2024

company are yielding results, and cruise shipping companies have found the Port of HaminaKotka and the attractions in the region, but it takes time for the purchasing patterns of consumers to change. Expert estimates suggest that a better outlook in the cruise market can be expected from 2026 onwards, and the port company is already working with a time span of almost 10 years ahead.

Cargo transport at the Port of HaminaKotka 2023

• Domestic <1% • Transit 22%

•Exports 47%

Continued challenges

The outlook for 2024 is uncertain. The EU sanctions, the economic decline in Europe and Finland, significant sales difficulties and increased costs of the Finnish exporting industries, political strikes, restrictions caused by the irregular entry of people into Finland at the FinnishRussian border, and difficulties in international transport in the Red Sea and the Suez Canal all complicate the opportunities of the Port of HaminaKotka.

It is expected that growth in the Finnish and European economies as a whole will be very modest in 2024. Some relief appears to come from the more moderate inflation and the end of interest rate increases by the European Central Bank as well as a potential reduction in interest rates. This is expected to boost consumption and investments, which would also have a positive effect on transport at the Port of HaminaKotka.

Geopolitical turbulence, such as the war in Ukraine and unrest in the Red Sea, the Suez Canal and on the eastern border of Finland, creates extraordinary challenges in finding new traffic flows and industrial production based at the port. However, the development of the Kotka-Hamina region will have positive impetus from the various green investments, such as battery industry investment projects in Hamina and Kotka, as well as port-related projects in future fuels.

“The port company plays an active role in locating these and other similar projects in the region”, Kimmo Naski says.

• Imports 29%

Cargo volumes by types of cargo

• Other goods 18%

• Wood products 28%

• Fertilizers 18%

• Paper and pulp 26%

• Liquids 10%

Exports*

9,411,216 tn

-16.6%

Imports**

4,706,592 tn

-5.6%

Total

14,117,808 tn

-13.2%

*Also includes export transit **Also includes import transit

Photograph: Jarno Koivula Among other things, about 700 m of new quay has been built in the D-area.

3

NEWS FROM PORT OF HAMINAKOTKA 1/2024

Baltic Ports Organization working for Baltic Sea ports The Baltic Ports Organization (BPO) is a regional organization of seaports established on 10 October 1991 in Copenhagen, with an aim to facilitate co-operation between the ports and to monitor and improve the possibilities for shipping in the Baltic Sea region.

Mr. Bogdan Ołdakowski, BPO Secretary General, explains the history of the organization in more detail: “BPO was established after the collapse of the Soviet Union. The Baltic states gained independence, Poland broke off its old relations with the Soviet Union and Germany was reunited. The main aim of BPO was to build a bridge between well-developed ports from Scandinavia, West Germany, Finland and ports in the Baltic states and Poland. Over time and with a very fast economic development in Central and Eastern Europe, the difference between these two worlds became smaller.

BPO has been focusing on various challenges and facing them for over three decades. In the past, we used to have standing committees that dealt with more long-term challenges such as training and environment. Faced with a more dynamic business and political environment, we opted for working groups instead of standing committees. For example, we have

just established a working group dealing with offshore wind energy, in particular how ports should be prepared for such a massive development of OWE on the sea.”

A well-known and respected organization

BPO is the only business association in the Baltic Sea region having members from all countries (apart from Russia). According to Bogdan Ołdakowski, one of the main reasons is that BPO has adapted to dynamic changes in port environment. Secondly, BPO has been promoting port, maritime and transportation sectors in the Baltic Sea area at the EU level, explaining our special domains, differences from other EU regions and our special interest.

Now, the organization is very well recognized among EU bodies and the unique nature of the Baltic Sea area is taken into account in EU poli­ cies. Another accomplishment of BPO is that it

has established a collaborative and innovative culture among the members, and together with other parties the Baltic Sea can be considered as a model region for green ports and maritime transport.

“Among our many achievements, there is one close to my heart. Over recent years, we have built very close relations between ports and established a ‘Baltic ports family’. Port managers throughout the Baltic Sea know each other and can call or meet if they need advice or establish any initiatives, they can count on each other. The Baltic ports family meets on different occasions. The Baltic Ports Conference is the largest BPO annual event. The next one will be held in Klaipeda Lithuania on 4-6 September 2024,” Bogdan Ołdakowski says.

BPO tackling challenges

BPO constantly monitors the developments both in the Baltic Sea region and its surround-

The Baltic Ports Conference convenes the representatives of seaports in the Baltic Sea region annually. The photograph is from a conference in Trelleborg in 2017. Photograph: BPO. 4

NEWS FROM PORT OF HAMINAKOTKA 1/2024

ings. The Russian aggression on Ukraine on 24 February 2022 has been the most tragic and impactful event in the past decades. The war in Ukraine has a lot of consequences, mainly for the Ukrainian people. However, it also has a major impact on Baltic ports. Everywhere ports depend on handling goods and providing mobility for people. We have experienced a series of sanctions imposed on Russia and Belarus, which naturally significantly limited the trade exchange with those countries. Moreover, the Russian military attack on Ukraine and the full-scale war have affected various sectors and economic development as a whole. On one hand, we could see that ports were considered a very important player for energy security (e.g. construction of LNG terminals), but on the other hand, the cruise market in the eastern part of the Baltic Sea has decreased dramatically.

There are also other challenges or factors that BPO is tracking and trying to assess their consequences for the Baltic ports. At the EU level, BPO monitors the regulations within the Fit for 55 package, especially the obligation to invest in onshore power supply for passenger and container vessels. Climate change is, naturally, also a challenge for ports, which means that ports should include climate targets in their strategies, invest in energy efficiency and collaborate with port stakeholders in order to reduce greenhouse gas emissions from the entire port environment. This will cost a lot of money and will be a challenge especially for smaller ports. The newly revised TEN-T policy and the introduction of a new TEN-T corridor on the EU’s eastern border connecting Ukraine with the EU transport network will also have a rather big impact on some Baltic ports. At the global level, changing the production pattern (reshoring or nearshoring) is a new trend, and very fast technology developments also affect ports.

“BPO’s role is to try to impact such developments wherever possible, for example at the EU level, or assess the consequences and support members by providing forums for discussions, research, reports, etc.,” says Bogdan Ołdakowski.

Dr. Kimmo Naski, CEO of Port of HaminaKotka Ltd, Port Counsellor (satamaneuvos), has been involved in BPO’s operations since the late 1990s. He served as a member of the Board of Directors from 2006 to 2011 and as Deputy Chairman of the Board from 2011 to 2018. Kimmo Naski has served as the Chairman since 2018.

“BPO is a significant contributor to the maritime transport and port industry in the Baltic Sea region. It represents the interests of the Baltic Sea ports towards EU institutions and other relevant organizations. BPO also contributes to the clean environment of the Baltic Sea and plays an active role in international dialogues dealing with environmental issues. It has been a pleasure and an honour to be involved in this work,” Kimmo Naski says.

Kimmo Naski, Bogdan Ołdakowski and Ville Haapasaari at the Baltic Ports Conference in Szczecin in 2018. Photograph: BPO.

Kimmo Naski has been Chairman of BPO since 2018. Photograph: BPO.

BPO Board: Dr. Kimmo Naski, HaminaKotka Chairman Dr. Gernot Tesch, Rostock - Deputy Chairman Martynas Armonaitis, Klaipeda Deputy Chairman

Ville Haapasaari, Helsinki Margus Vihman, Tallinn Ansis Zeltins, Riga Maciej Krzesiński, Gdynia Magdalena Bosson, Stockholm

Ulrika Prytz Rugfelt, Copenhagen Malmö

5

NEWS FROM PORT OF HAMINAKOTKA 1/2024

Battery materials plant planned in Hamina obtained environmental permit The Regional State Administrative Agency for Southern Finland has granted an environmental permit and a permit to start operations for the battery materials plant planned by CNGR Finland Oy. The permit issued on 12 February 2024 covers an annual production of approximately 60,000 tonnes of battery chemicals.

The product of the battery materials plant is a precursor cathode active material (pCAM), which is used in the production of cathode active material (CAM) as the main raw material for electric vehicle batteries.

The permit decision has raised concerns about the environmental impact of the plant.

According to the Regional State Administrative Agency, permit regulations have been imposed on the company based on issues such as the requirements of best available technology, and these permit regulations contributed to the fulfilment of the conditions for granting the permit.

The environmental permit specifies limit values for waste water and discharged gases. These limit values are based on the chemical indus-

try BAT conclusions accepted by the European Commission, and on pollution prevention. Emission limit values have been set for items such as emissions of metals into water and air, and nitrogen and particulates. The decision does not require the removal of sulphate from waste water, since according to preliminary estimates, sulphate discharges will not cause significant pollution or its risk when the project complies with the permit. Monitoring of emissions and their effects is mandatory, and an annual fisheries fee has been imposed on the operator.

CNGR Finland Oy has examined the environmental impacts of the project as part of the permit process and provided information to support public discussion. Public discussion has raised concerns about the plant’s waste water treatment process and the assumed environmental impact on the Baltic Sea, among other things. The waste water generated in the process is the most significant environmental impact of the projected battery materials plant.

CNGR Finland Oy will purify the waste water

from the battery material plant at its own treatment plant, and the planned method of discharging process waste water also ensures that no harmful consequences, such as sulphate deposition on the seabed, can occur in the monitored area. According to CNGR Finland Oy, potential environmental impacts are measured and reported continuously by a third party.

The appeal period for the environmental permit ended on 20 March 2024, and 12 appeals against the permit decision were filed by the deadline. The next phase is the consideration of the matter at the Administrative Court of Vaasa, which has started with the hearing of the authorities.

Sources: https://avi.fi/tiedote/-/tiedote/70091869 https://cngr.fi/ajankohtaista/keskusteluaher%C3%A4tt%C3%A4neetymp%C3%A4rist%C3%B6vaikutuksethuomioitu

CNGR Finland Oy’s battery materials plant is planned to be located near the gate area of the Hamina Harbour. Photograph: Port of HaminaKotka Ltd. 6

NEWS FROM PORT OF HAMINAKOTKA 1/2024

International cruise ship season to begin in June The international cruise ship season for the Port of HaminaKotka will commence in June when the vessel Deutschland of Phoenix Reisen will arrive at Kantasatama in Kotka.

The new cruise ship season will not be quite as busy as in the past couple of years, because after St. Petersburg is no longer included in the itinerary of cruise line companies, the biggest cruise ships have withdrawn from the eastern Baltic Sea to other markets for the time being.

During the cruise ship season of 2024, all ships will call at Kantasatama in Kotka. Some of the cruise ships have been to the Port of HaminaKotka before and some are making their inaugural call.

“Our long-term sales efforts have paid off, as we have succeeded in attracting not only so-called regular visitors, but also ships that visit HaminaKotka for the first time,” says Petra Cranston, Project Manager, Cruise Business, of Port of HaminaKotka Ltd. Despite the transition of the cruise market in the Baltic Sea region, the Port of HaminaKotka, together with other cruise ports on the Gulf of Finland, has succeeded in enhancing the attractiveness of the region among cruise line companies. Decisions in the international cruise business are made with a perspective of two to three years ahead, which is why the market is expected to pick up more distinctly from 2026 onwards.

Cruise ships calling at the Port of HaminaKotka in 2024: 10 June

Deutschland

9 July

Seven Seas Navigator

9 August

Hebridean Sky

18 August

Azamara Onward

11 September Sirena 28 September Sirena The information is subject to change.

The Seven Seas Navigator called at Kantasatama in Kotka most recently in 2022. Photograph: Jarno Koivula 7

NEWS FROM PORT OF HAMINAKOTKA 1/2024

Port of HaminaKotka signed memorandum of understanding with X-Press Feeders for green shipping corridors X-Press Feeders, the world’s largest independent common carrier, has signed of a memorandum of understanding with six European ports: Antwerp Bruges, Tallinn, Helsinki, HaminaKotka, Riga and Klaipeda.

The memorandum of understanding signifies a joint commitment of the parties to accelerate the establishment of green shipping corridors and the broader decarbonisation of the marine sector in Scandinavia and the Baltic Sea. Through the memorandum, X-Press Feeders and the participating ports will pool resources and expertise to develop and implement sustainable practices for maritime operations.

The collaboration between the parties will begin with the establishment of these two shipping routes: Green Baltic X-PRESS (GBX): Rotterdam > Antwerp Bruges > Klaipeda > Riga > Rotterdam Green Finland X-PRESS (GFX): Rotterdam > Antwerp Bruges > Helsinki > Tallinn > HaminaKotka > Rotterdam These services are scheduled to commence in the third quarter in 2024, marking a significant step towards more environmentally sustainable shipping services in Europe. This development is significant as these will be the

Port of HaminaKotka at Breakbulk Europe in Rotterdam

very first scheduled feeder routes in Europe powered by green methanol, an alternative fuel that produces at least 60% less greenhouse gas emissions than conventional marine fuel.

“Port of HaminaKotka Ltd commits itself to promoting environmentally friendly practices in maritime transport by signing the memorandum of understanding aimed at creating green shipping corridors in Europe. This initiative is a step towards a more sustainable future and more environmentally responsible shipping.

We are confident that the joint efforts play a key role in reducing the environmental impact of shipping,” says Timo Rosendahl, Director, Traffic Operations of Port of HaminaKotka Ltd.

Appointment

Port of HaminaKotka will again participate in the international Breakbulk Europe fair this year. The event will take place in Rotterdam Ahoy from 21 to 23 May 2024.

Welcome to meet us at stand 1G25-H24 in hall 1!

Further information: europe.breakbulk.com

Esa Paronen, Bachelor of Engineering in Construction, was appointed Technical Director of Port of HaminaKotka Ltd on 1 March 2024. He served earlier as the Technical Manager of Port of HaminaKotka Ltd. Esa Paronen will report to CEO Kimmo Naski.

Port of HaminaKotka Ltd Merituulentie 424, FI-48310 Kotka, Finland • office@haminakotka.fi haminakotka.com • tel. +358 20 790 8800

Port of HaminaKotka

Cruise Port HaminaKotka