The company of Abramovich and partners refused to build a pulp and paper mill in the Far East for $ 1 billion

Timber holding RFP Group decided to abandon plans to build a pulp and paper mill (PPM) in Amursk in the north of the Khabarovsk Territory, investments in the project were estimated at at least $ 1 billion, said the head of the company Konstantin Lashkevich. According to him, the study of the project showed that its rate of return will be close to zero. Mr. Lashkevich also proposed to allow the privatization of 2-3% of the forest territory of Russia in order to engage in intensive forest cultivation.

RFP Group is the largest timber industry enterprise in the Far East, one of the leaders in the export of Russian timber to Asian countries. Roman Abramovich and Alexander Abramov own 58% of the company, 42% belong to the Russian-Chinese Investment Fund, a joint venture between RDIF and China Investment Corporation.

“There used to be a pulp and paper mill in Amursk, but it closed after the collapse of the USSR. There was an idea to build a plant ourselves there. We hired foreign consultants who worked out this project in detail, but even on the condition that we provide the plant with raw materials, its IRR (internal rate of return – “B”) would be close to zero, ”Mr. Lashkevich told RBC. According to him, the pulp and paper mill in the Far East is a “meaningless story.” He believes that it is easier to create “more modest investment projects for the production of pellets with a profitability of 12-17% than to build a giant that will be unprofitable and will constantly ask for state support.”

The head of RFP Group said that in 2018 the company was in talks with China Paper on the construction of a plant. RFP Group was supposed to supply 400-600 thousand cubic meters. m of wood per year for the Chinese pulp and paper mill. According to him, China Paper appealed to the president’s plenipotentiary in the Far East, Yuri Trutnev, and asked for a forest with infrastructure in order to build a pulp and paper mill. “But it turned out that we no longer have such a forest, and 70% of the timber base is larch, and the pulp and paper mill is trying not to use it. We offered our low-grade timber and tried to pull up other loggers, but the Chinese did not like it, ”he added.

According to him, in the Far East there is less and less mature forest with high-quality, suitable for processing wood, and with the current felling of natural growth, it will have to wait 80-120 years. In this regard, Konstantin Lashkevich proposed to allocate forest land, on which it is possible to achieve a multiple increase in commercial timber. He clarified that this would be justified if investors were allowed to privatize the forest.

The head of RFP Group believes that this model can be implemented in favorable climatic zones, which occupy 2-3% of the entire forest area of ​​the country. He clarified that the model implies the ability to privatize such land, cheaply insure timber, mortgage it in a bank and increase its value on the balance sheet through growth.

Leave a Reply

Your email address will not be published. Required fields are marked *