Apr 09, 2004. /Lesprom Network/. The Lithuanian Ministry of Economy is carrying out an environmental impact assessment (EIA) into a proposed 500,000 tonne/yr pulp mill. The government is also looking for potential backers for the project. The EIA was launched at the end of last year and is due for completion at the end of 2004. An earlier pre-feasibility study carried out in cooperation with the Japanese government came up with four potential locations for the plant -- two near Alytus, one close to Jonava and another near Vievis. The facility would have a capacity of 250,000 tonnes/yr of bleached softwood kraft pulp and 250,000 tonnes/yr of bleached hardwood kraft pulp. Furnish would comprise pine, spruce and birch from Lithuanian forests, although waste from local sawmills may be used and some fiber could be imported from neighboring countries. The total project cost is estimated at $856 million, of which $765 million would come from foreign investors. The government is offering support for the scheme in the form of exemption from duties on imports of equipment and materials. The authorities will also grant a tax holiday for the first five years and a 50% reduction for the next five years, amongst other benefits. The government has held talks with an unnamed major pulp producer but the firm said the project is too big for one company. As a result, the authorities are looking for more backers. These investors would carry out a feasibility study on the scheme and a final decision on whether to proceed would then be taken. The Lithuanian parliament designated the project as a scheme of national importance in early 2002. One of the government's main economic policies is to foster the forestry industry by taking advantage of the country's abundant natural resources. Around two-thirds of Lithuania is covered by forest and the government is keen to use the fiber harvested domestically, rather than see it go for export.