News

BNS − AS Silmet Grupp has repurchased from the Swiss company Zimal S.A. 50 percent of the shares plus one share in AS Silmet and now owns 90 percent of the Sillamae, northeast Estonia based rare earth metals producer, Silmet Grupp said.

Silmet Grupp sold the majority holding in Silmet in late 2005 for 12 million US dollars.

A tenth of the shares still belong to the Austrian company Treibacher Industrie AG.

A few months ago shareholders of Zimal S.A. sold their holdings in the Silvinit potassium fertilizer plant, in the Solikamsk magnesium plant and in the Lovozero loparite mine, all situated in Russia. By this the owners of Zimal ended their activity in the production of fertilizers and metals. Because of this Silmet Grupp made to Zimal a proposal for share repurchase concerning Silmet, which Zimal accepted.

Cooperation with and supply of raw materials of rare earth metals from the Solikamsk magnesium plant to Silmet will continue on the basis of the agreements concluded, Silmet Grupp told BNS.

Silmet posted a profit of 36 million kroons (EUR 2.3 mln) for the first nine months of this year.

Silmet Grupp is controlled by Tiit Vahi, former prime minister of Estonia.

(EUR 1 = EEK 15.65)

ERR - The Economist magazine's blog, Eastern Approaches, has chosen Estonia for its 2010 country-of-the-year award."For a country that emerged battered and blinking from Soviet occupation not quite 20 years ago, being the only country to meet the main rules of the continent’s main clubs is a triumph. Häid jõule ja head uut aastat!" congratulates a blog post from December 16.

The writers explain their criteria in recognizing Estonia. "From January 1st, when it joins the euro, it will be one of only two countries in the single currency area that actually meet its debt and deficit rules. The other is Luxembourg. But if you add another filter, the willingness to meet NATO’s target for defence spending of 2 percent of GDP, Estonia (at 1.9 percent next year) beats Luxembourg (0.7 percent) easily.

Read more: http://news.err.ee/politics/bdd3c049-efaf-4ee7-8eb2-8c81a243bc3f

ERR - The Estonian Genome Center at the University of Tartu has been completed, after reaching its goal of gathering genetic data from 50,000 Estonians.Now, the next step is to develop within five years a personalized medical industry, specialized to fit the unique characteristics of each individual. Soon, doctors will be able to base their diagnoses on a specific individual's genetic data, reported ETV.

"By that time, genetic analysis will be of equal value to other analyses used in hospitals today for diagnosis,“ said the Genome Center's director, Andres Metspalu. The biotechnology professor said his institution is unique in Europe, thus creating a lot of interest abroad.

Read more: http://news.err.ee/sci-tech/11b5db28-9645-4386-a8ee-356debdf4707

ERR - A study by Raideberg Ltd. finds great untapped potential to expand the timber industry in southeastern Estonia and along the Latvian border.A few kilometers from the Latvian border, a family-run furniture producer named Vipmööbel Ltd. employs a family and a few more workers. Ten years ago, the owner sold his remaining livestock, which wasn't paying the bills, and used the funds to buy machinery for utilizing a plentiful local resource – forests. These days the company, which has carved out a niche market with few regional competitors, is prospering and creating new jobs, reported ETV.

The study, ordered by a cooperative Estonian-Latvian effort to stimulate business activity in the border region, believes that the model used by firms like Vipmööbel Ltd. can fix the problem of low economic activity and dwindling populations in the countryside.

Read more: http://news.err.ee/economy/8eb68b4b-1255-4559-9ee4-10a7b399065b

ERR - On December 13, Eesti Energia signed a partnership agreement with Near East Investment and leading Asian energy company YTL Power International Berhad for the development of an oil shale plant in Jordan. The Estonian energy giant will be the primary developer of the planned Enefit-280 plant, which will have the capacity to produce about 38,000 barrels of shale oil a day as well as generate 900 megawatts of electrical power, a statement from the company said.

Under the deal, Eesti Energia owns 65 percent of the project, YTLPI 30 percent, and NEI 5 percent.

Read more: http://news.err.ee/economy/0bb4d390-9957-48ad-be0c-045716996162

ERR - After applications were accepted on December 8, the Ministry of Economic Affairs and Communications will decide in coming days which companies will be given the three licenses to launch 4G networks in Estonia.The fourth generation cellular wireless standard, or 4G technology as it is called, will make it easier to work from home and will allow live feeds with high-definition video cameras.

In December 2009, Telia Sonera, a telecommunications provider in the Nordic and Baltic countries, launched the world's first commercial 4G networks in Sweden and Norway. Ten countries currently have 4G network systems. Companies tested the technology in Estonia earlier this year.

Read more: http://news.err.ee/economy/21896393-6d73-49ea-81fb-f5bc603e600b

BNS − The head of the mission of the International Monetary Fund (IMF) to Estonia, Alexander Hoffmaister, said at a news conference summing up the mission's one-and-a-half week visit to Estonia on Monday that the Estonian economy has been doing better than expected of late and the IMF has raised the economic growth forecast for the country for 2011 to 3.5-4 percent.

In the press conference at the Bank of Estonia, the head of the IMF Article IV mission to Estonia stressed on repeated occasions the need to keep the state's spending under control and to stick to the state budget adopted for next year, warning Estonia against upward revisions of the budget.

Hoffmaister observed that even though Estonia's outlooks are good, risk factors nevertheless exist. These include developments on the financial and bond markets and a possible second period of worldwide economic decline. He said that in the event if these risks should materialize Estonia will be supported by its low fiscal deficit and low level of government debt.

While spending pressures will continue, under current policies a balanced budget can be broadly achieved, the IMF delegation said in its conclusions. This will require holding expenditures unchanged after discounting inflation. Demands to boost spending are bound to emerge nevertheless, given the large expenditure cuts in 2009, limited social benefits, and an improving economy. If necessary, offseting measures should focus largely on the revenues side. Consideration should be given to increasing VAT and environment and property taxes. Hoffmaister said that potential tax changes should be as broad-based as possible.

The head of the IMF mission said that neither the topic of graduated rate income tax nor of corporate income tax were discussed during the mission.

The IMF recommends Estonia to set out a full-fledged medium term fiscal framework, including binding multi-year expenditure ceilings, and pursue a counter-cyclical fiscal policy.

Speaking about the situation of banking, Hoffmaister said that while banks have coped relatively well, one needs to keep an eye on it that banks remain as well capitalized as they are now also in the future. He also stressed the importance of continued cross-border cooperation in financial sector supervision.

Another key point made by the IMF mission is the need to fully deploy potential resources and restore competitiveness. It said that from a cyclical perspective, the previous boom-induced gap between real wages and productivity seems to be narrowing, with Estonia's active labor market policies, geared to ensure that workers acquire the skills required by the economy, seen as key to address the skill mismatch legacy of the construction boom.

Estonia's Finance Minister Jurgen Ligi named as keywords the quality of the state's expenditures, the need to achieve a fiscal surplus and the importance of restoring and accumulating reserves. He emphasized that one needs to address structural problems in the budget, which won't be solved by the resumption of economic growth.

According to Ligi, a ban has to be put on the drawing up of supplementary budgets with the aim of spending potential surplus revenue.

The need to continue pursuing a conservative fiscal policy was stressed also by Bank of Estonia governor Andres Lipstok, who underscored that next year's state budget must be fulfilled in the adopted form.

International cooperation in financial sector supervision needs to continue. Lipstok said that while cooperation to this effect works well now, one mustn't become lazy or leave untapped the big opportunities there are to develop this cooperation further.

Lipstok, just like Hoffmaister and Ligi, pointed at inflation, which at this point is significantly driven by food and fuel, or prices that Estonia cannot control. Price increase is set to remain high on the agenda in the future too, the central bank governor said.

ERR - The Irish airline, Ryanair, which on December 13 launches its first routes from Tallinn, will soon offer flights to eight destinations. This week, the airline will begin flights to Düsseldorf, Oslo, Stockholm, Dublin and Milano. On January 10, Ryanair will expand its Tallinn flights to London and Edinburgh. Another UK flight to East-Midland will begin operating in the summer.

Ryanair has said that its expansion to Tallinn was motivated by the Estonian government's decision to allocate extra money to Tallinn Airport as well as the capital's position next year as the European Culture Capital.

Read more: http://news.err.ee/economy/8c1f6b72-9e0a-4a3b-ae85-4b9d456faaeb

ERR - Estonian schoolchildren continue to hold a strong position in PISA's global education assessment, particularly in reading and science.In the 2009 Program for International Student Assessment (PISA) study published by the OECD on December 7, the nation ranked 13 in the world in the field of comprehensive reading. Among European countries, Estonia's position rose from eighth to fifth.

On the other hand, Estonia's results for mathematics and science have declined. Since 2006, the country's ranking for mathematics declined from 14th to 17th in the world and from sixth to seventh in Europe.

Read more: http://news.err.ee/education/08dcdf00-91f5-40fc-915c-4183be03fac7

BNS - The Hungarian packaging maker Tiszatextil has bought the bankrupt Estonian peer OU Uritus, a maker of flexible intermediate bulk containers, European Plastics News reported.

Austrian-owned Tiszatextil will operate the acquired company as an independent unit under the name Tiszatextil Eesti.

The Kohtla-Jarve, northeast Estonia based company is a manufacturer of flexible intermediate bulk containers (FIBCs), or "big bags," with a load capacity of 500-1,500 kilograms.

Tiszatextil, which has capacity to produce 1.2 million big bags a year, said it aims to strengthen its position on the big bag market with the acquisition. The company employs 250 people at its base in the Hungarian town of Tiszaujvaros and exports about two-thirds of its products.

OU Uritus started the manufacture of  FIBC rolls in 1993 and is said to have built up a capacity to produce one million bags annually. It petitioned for its own bankruptcy in May this year. According to the latest annual report available via Krediidiinfo the company made a loss of 5.3 million kroons (EUR 0.34 mln) on revenues of 29.5 million kroons in 2008.

The last time the bankrupt's assets were up for sale by trustee Hillar Villers was on Nov. 17 and the starting price tag then was 14 million kroons.

(EUR 1 = EEK 15.65)