ISSN 1995-7343 ISSN Russian Forestry Review № 4 www.LesPromInform.com Russian Forestry Review #5 (2013) Specialized information-analytical magazine contents ISSN 1995-7343 («Российское лесное обозрение») специализированный информационно-аналитический журнал на английском языке Периодичность: 1 раз в 2 года Издатель: ООО «ЭКОЛАЙФ» A Complex View Адрес редакции: Россия, 196084, Санкт-Петербург, Лиговский пр., 270 Б, офис 10 The Russian Forest Industry: Five and 15 years after crisis ............................... 6 EDITORIAL TEAM: General Director Svetlana YarovaYa [email protected] Ilim Group: Editor-in-Chief, multimillion Investments in Action .................. 12 Business Development Director oleg Prudnikov [email protected] International Marketing Director Elena Shumeyko wood-SAwing [email protected] Art-Director Russian Sawmills Lose andrei ZabElin [email protected] Their Traditional competitive Advantages .... 16 PR and Distribution Elena Shumeyko [email protected] lumbering A Partnership Tested by Time: CONTACTS russia St.Petersburg, 196084 the Guarantee of common Success! .................. 20 ligovsky ave., 270, office 10 Tel./fax: +7 (812) 640-98-68 E-mail: [email protected] wood-Based Panel And plywood produCtion www.RussianForestryReview.com The Wood-based Panel Business – Circulation: 5,000 samples Russia is Growing ........................................................ 22 Published since 2006 The edition is printed in ‘PremiumPress’ typography (St. Petersburg) Отпечатано в типографии «ПремиумПресс», wooden bioenergy Санкт-Петербург denotes paid advertisement articles Russia Goes to Asia The founder is Svetlana Yarovaya. The license is PI № FC 77-26386, dated by 8 december, 2006. and overload Europe with Pellets ..................... 30 It is registered by the North-Western circuit inter- regional territorial administration of the ministry of printing of the rF, broadcasting and mass media. The editorial board is not responsible for the subject matter of advertising materials. any reprinting of informational materials may be carried out only with pulp And Paper induStry the written consent of the editorial board. © russian Forestry review, 2013 Russian PPI: current state and outlook ........ 34 contents SiberiAn federAl diStriCt: Kemerovo oblast The coal Lider ........................................................................................106 A point of View Irkutsk oblast operational Excellence Projects in Russia ..... 38 Taiga All Around ....................... ........................................................... 112 World Trade organization (WTo) Rules urAl federAl diStriCt: and Russian Forestry Policy .................................. 42 Sverdlovsk oblast In the center of the Urals . ........................................................... northweStern federAl diStriCt 118 Arkhangelsk oblast urAl federAl diStriCt: North coast Forests .................................................... 46 chelyabinsk oblast Vologda oblast on the Border of Europe and Asia ....................... ....................124 A Vologda Fairy Tale ................................................. 56 Republic of Karelia list of trade fairs in 2013 .................................. ....................130 on the coast of the White Sea .......................... 64 Komi Republic The Treasury of North .............................................. 70 St. Petersburg and Leningrad oblast The Gateway to Europe ............................................ 78 CentrAl federAl diStriCt: Tver oblast The Tver oblast: Between Two capitals .......... 92 Southern federAl diStriCt: Krasnodar Krai From the Wild Kuban Steppe to the caucasus Ridge .............................................. 98 A Complex View A Complex VIew Paper and paperboard supply and demand in Russia: The Russian Forest Industry: remains below Soviet-era level, with moderate growth ahead 1000 t Demand Growth, %/a Five and 15 years after crisis 10,000 12 9,000 e 8,000 10 ssu Ti 7,000 8 6,000 ainerboards 5,000 6 Cont Coated woodfree Coated 4,000 papers hanical 4 Mec 3,000 int onboards her grades her rt 2,000 wspr Ot 2 Ca ncoated woodfree ncoated Ne k paper k 1,000 U Sac 0 0 90 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 0 20 40 60 80 100 9 In the last 15 years, the russian forest industry went through two major crises, ruthless corporate wars, 19 19 19 19 19 1 20 20 20 20 20 20 20 20 20 20 20 20 20 Share in total consumption, 2010, % several waves of legislative reform and, in spite of all this, growing demand and rising production volumes. Growth of paper and paperboard production (blue bars) Long-term paper demand growth in Russia, 2010–2015: { Who are the leaders and who are the underachievers in russia today and why? Let’s have a closer look. and consumption (red line) in Russia 1995-2012: moderate growth ahead remains below soviet-era level pulp-And-pAper SeCtor: having picked up this opportunity for growth, major industry players have Demand for paper and paperboard in Russia has been increasing and is expected to continue to grow by an average of 3 % a year to reach an completed, or are in the process of rebuilding their key assets. The most estimated 10-11 million tons by the year 2015. In volume terms, this translates into 200,000-250,000 tons of incremental demand per year. The brownfield evolving, greenfield stymied year of 2009 saw a significant decline in consumption due to global financial turmoil. However, by 2010 the market had already nearly reached its impressive of these are reconstruction projects by mondi in Syktyvkar and back in 2003, the russian pulp-and-paper sector was at the end of the painful pre-crisis level. In 2011, year-on-year growth was about 10 %; coated paper grades and tissue show the fastest consumption growth. the Ilim Group in bratsk and kotlas. Investlesprom, the third biggest player, period of hostile takeovers and corporate wars and at the beginning of the had similarly ambitious plans until they were put on hold due to internal period of modernization, driven by a bustling consumer market in the country. company restructuring. means that a mill would have to be constructed in a very remote area, motivated and developed. The former can be achieved through various however, all these high profile projects in russia are concerned with renewing probably adding another billion Euros of infra-structure costs to the measures of state support ranging from small steps like the assignment Pulp production in Russia: existing facilities which have received chronic under-investment over the billion Euro ticket for the pulp mill. of priority investment status and tax preferences to larger ones, such years. Some of such projects were advanced even during the recession. on as direct state participation in funding infra-structure, machinery and aiming to reach pre-crisis level, the other hand, no greenfield pulp project has come on line in russia for construction as well as in pilot adaptation of international standards/ It is undeniable that russia possesses enough forests to be proud of. but in line with Soviet-era volume more than 30 years. over the last 10 years, there were quite a number of norms in health, safety and environmental issues. Establishment of modern it is also true that russian forests have been poorly managed. lots of greenfield pulp mill projects, all of them having been either abandoned or forest management practices can be achieved, for example through 1,000 t unwanted pulpwood are left in forests to simply rot or at best are used by 10,000 stymied at the feasibility stage. Why is this? implementation of related pilot projects in the wood supply zones of logging companies to repair forest roads. responsible cooperation between pulp mills. 9,000 There are some fundamental requirements for a pulp mill to be economically other wood products industries and the pulping sector would be a start, 8,000 and environmentally successful. but the government would have to make this economically advantageous to Ten years ago the need for such measures was not as urgent and obvious both parties and it is not clear whether this is among its highest priorities. as today. Now we see these steps as almost an absolute prerequisite for 7,000 • Firstly, pulp-and-paper is an expensive game, with a greenfield pulp new mills not only coming on stream (which can be achieved if there is mill requiring an investment of more than a billion Euros. relative to 6,000 It is tempting to refer to current global greenfield pulp mill experience when someone ready to pay), but for them to be sustainable in the long-term. returns, this makes some other extractive industries such as energy or considering greenfield pulp mill projects in russia but this would be a mistake. 5,000 metal production look cheap. Since costs are high and payback period New large-scale pulp mills have come on line in brazil, uruguay, Chile and China. 4,000 is long, it is a risky game as well. Solid wood SeCtor: however, as can be seen from the diagram, these countries all clearly differ • The second biggest requirement is that a greenfield site is located log availability becomes a major issue 3,000 from russia in terms of climatic conditions, which generally allow for a much near to a big river or lake, and that there are substantial forestry shorter forest rotation cycle. They are typically focused on developing the 2,000 resources available. The combination of these two factors, in spite With stagnant markets in Europe and uncertain