China's Sunshine Kaidi New Energy Group said on Wednesday it is planning to invest about EUR 1 billion  ($1.13 billion) in a new wood-based biodiesel plant in Finland, offering a potential boost to the recession-hit Nordic country.

Finland's forest industry is a traditional backbone for the country's economy, but it has lost thousands of jobs in the past decade as paper mills have been closed due to increased use of digital devices.

Kaidi said the plant would use wood-based biomass as its main raw material and it is scheduled to start operations in the northern city of Kemi by the end of 2019.

The company said it was attracted by Finland's vast forests and government subsidies.

"Finland is the most interesting investment target in the northern hemisphere, when it comes to biofuels," Kaidi Chairman Chen Yilong said in a statement.

Kaidi operates about 30 biomass plants in China and Vietnam, and the Kemi plant would be its first in Europe.

The plant is due to employ about 4,000 people during its construction, offering a boost for an economy that has seen flatlining output for four years.

"This is very positive news for Lapland and for Finland. Wood processing and new wood-based products are a major thing for Finland," Employment Minister Jari Lindstrom said.