NEW SOLUTION. Edžus Cābulis, the Chairman of the Board of SIA “Balticfloc”, reveals that the objective of the company is to develop alternative wastepaper and hemp fibre recycling, producing innovative thermal insulation materials with enhanced thermal conductivity.


SIA “Balticfloc” is recognised as the highest rated new project within the framework of the European Commission (EC) “LIFE” programme in Latvia.


The Ministry of Environmental Protection and Regional Development has highly appreciated the aim of the company based in Cēsis – to develop alternative wastepaper and hemp fibre recycling, producing innovative thermal insulation materials with enhanced thermal conductivity, as well as more efficient wastepaper sorting and recycling in the region.


“We wrote a project of a new prototype factory for production of new materials from hemp fibre and wastepaper. We want to produce thermal insulation plates from hemp fibre and wastepaper,” states Edžus Cābulis, the Chairman of the Board of the company. The project was drafted, and it was approved this year. Only two projects of entrepreneurs were approved in Latvia, and in European Union (EU) Member States in total – 50 projects. SIA “Balticfloc” received the highest rating in Latvia and the 10th best rating in the whole EU.


“Entrepreneurs also relate the ideas of their business projects with climate and environmental areas. This shows the increasing environmental awareness among entrepreneurs and also a necessity dictated by the entrepreneurship environment and life to look for more environment-friendly solutions that provide economic benefits at the same time,” indicated Kaspars Gerhards, the Minister of Environmental Protection and Regional Development.


The projected was commenced in September, and now the required licences are arranged. A patent approved in Latvia, Europe and worldwide is required. And it is not a fast process. A procurement procedure will be organised, and next year acquisition of equipment and manufacturing of test products will be started. The total costs of the project constitute 2.9 million euros, 60% of which is comprised of EU co-funding, the national funding is half a million euros, and the rest – own funds.


“When the project was approved, I was glad that something is accomplished, but there is still a long way to go.

Pilot equipment, technology recipe has to be developed and certified to be available for use also by other manufacturers. Similar products are already manufactured worldwide, but not using hemp fibre and paper in one product. This product is invented by ourselves, it is our formula, no scientists have been involved. Now we have to invest our own money, it is a loan we have to take into consideration. When doing something new, there is no satisfaction yet, because we know that it won’t be easy in the coming years,” E. Cābulis shares his thoughts and admits that it is not easy at all to raise funding for manufacturing.


So far, the entrepreneur has had to devote a lot of time and efforts to fulfil requirements of funding providers. In order to receive the first payment from the EC, a bank guarantee for half a million euros is necessary. For nine months the entrepreneur addressed one bank after another in Latvia, and negotiated with EU funding providers. “At one meeting, where applicants of all 50 project met, it turned out that only the Latvian project cannot obtain a bank guarantee. And I told without beating around the bush that nobody believes anybody in Latvia. Some bank has issued one such guarantee in 20 years of operation.


EU agreed that we implement the first stage of the project at our own expense, and only then receive EU funding. However, there is no feeling of stability that the project will not be stopped at some moment,” admits the entrepreneur. E. Cābulis reveals that each bank in Latvia had its own reasons for rejection. “This EC programme is aimed at small and medium entrepreneurs. This is perceived differently in Europe and Latvia. Our turnover requires a bank guarantee. The the EC reduced it by a half for us, but one bank declared immediately that it does not believe that we are capable of implementing such a project. We have engineers in Germany, who have already done it, but this aspect did not help either. Another bank admitted that it could issue the guarantee, but they would not have control over the project and procurements, so they would like to involve their own person in the project. We tried to offer the equipment as security, the bank assessed it as being good, but impossible to sell, because the equipment is too specific,” the entrepreneur tells about the long way to receiving EU funding. E. Cābulis has multiple times addressed the Ministry about the problem of receiving a bank guarantee. They are aware of this problem and understand it. Some years ago, a draft law was developed that such a guarantee may be issued by municipalities. E. Cābulis states that it is illogical, because why municipalities should take such a risk.


“Some specific things have to be done by the end of March, and it is clear that the procurement deadlines will move further away,” claims the entrepreneur and adds that there is constant cooperation with the project management, which always helps with advice. The use of the national funding is subject to reporting to the Ministry of Environmental Protection and Regional Development.


SIA “Balticfloc” uses wastepaper in the production process. In Cēsis, ecowool is produced – a natural, breathable and efficient thermal insulation material, acquired from natural cellulose fibre through the wastepaper recycling process. An export product is ecological cellulose mulch and mulch pellets suitable for hydroseeding. A highly demanded absorption product, which is used for pollution prevention also on the soil and in water, because it has high absorption capacity, which ensures collection of substances harmful to the environment. This year, the asphalt additive had high demand. We managed to break into the Lithuanian market.


Last year, SIA “Balticfloc” received an award for an innovative product – ecopellets for pets, which replace cat sand, for example. These pellets are not marketed in Latvia yet, we have to accelerate packaging in small quantities, but positive feedback has been received from consumers in Scandinavia.


“Our products are made of wastepaper. Preservation of environment and nature is important for each of us. One can only wonder that mineral wool and glass wool is still produced and used. It is known that the production process of these products generates high level of carbon dioxide emissions. If we think about the future, circular economy must not be just words,” indicates the entrepreneur E. Cābulis.


SIA “Balticfloc” cooperates with the company “Zaļā josta” for obtaining wastepaper, as a result of which the secondary raw material collected in the entire Vidzeme region comes to Cēsīs. The company recycles approximately 150 tonnes of wastepaper each month. “Concerns that we will run out of paper exist already for several years, but it still does not affect us; however, these concerns was the reason for us to focus on hemp,” reveals the entrepreneur and shows us piles of wastepaper in the wastepaper storage. There are also large boxes full of books. In order to process books, covers have to be removed from each book. SIA “Balticfloc” does not buy or accept wastepaper on site.


According to Kaspars Gerhards, the Minister of Environmental Protection and Regional Development, the impact of climate change and consequences of degradation of soil and biological diversity has become increasingly more notable. “Therefore, we – Latvia and other European countries and countries around the world – have to reorient to the model of circular economy. In this model, value of products, materials and resources is retained in economy as long as possible, creating as little waste as possible. Environment-friendly living – it is not a matter of choice anymore, but the only chance on a long-term basis,” points out the Minister. SIA “Balticfloc” follows this environment-friendly path.