Russian Forestry and Wood Supply Operations Analysis
FAR EASTERN FEDERAL DISTRICT
KHABAROVSK KRAI
By intended purpose, all known groups of forests are represented in the
Khabarovsk Krai: commercial forests (34.5 million ha), reserved forests (2.98
million ha), protective forests (9.3 million ha), high-value forests (8.9 million
ha) as well as green belts, nut harvesting areas, forest areas sheltering fish
spawning grounds, and restricted forest belts along water bodies. In coniferous
forests, timber resources are estimated approximately at 2.3 million m3; in
soft-wooded broadleaved forests, this figure is estimated at 276.6 thousand
m³, and in hard-wooded broadleaved forests, at 148.2 million m³.
Each year, reforestation works cover an area of 67 000 hectares. Around 14
million coniferous seedlings are grown, of which more than 4 million are
containerized. Over the last three years, planned targets were exceeded.
Seed breeding is conducted to meet the region's demand. Another upcoming
reforestation trend is plantation planting, which is still in the early stage of
its development and requires significant research and investment.
In the last decade, almost no significant efforts were made in forest
management. The supervision of forestry law compliance remains inefficient.
This is mainly due to the fact that the forest service was downsized threefold
as a result of Russian forestry reform, as well as to systematic underfunding
of forestry activities reassigned to the Krai.
FORESTRY AND TIMBER SECTOR
The main type of forest use is timber harvesting. By harvesting volumes,
the Krai ranks first in the Far Eastern region.
More than 130 businesses are engaged in timber harvesting. By their combined
output, the Khabarovsk Krai ranks third in Russia and first in the Far Eastern
region. However, the forestry share of tax proceeds to the Krai's budget only
amounts to 1.5% and, at existing forest usage level, the Krai's government
considers overall forestry returns to be extremely low.
Currently, 4610 km of main logging roads are used to haul timber. The region
has a severe shortage of logging roads; at the same time, 85% of all spur and
branch roads constructed in recent years were built with major violations,
and many of them became unusable after as little as a year of operation.
Also, the practice of priority harvesting of high quality sites located close
to logging roads near landings caused many sections to be broken and often
join different roads and landings.
Currently, the Khabarovsk Krai is receiving significant government support.
In the Far Eastern Federal District, the region is leading by the number
Planned Projects
By OAO Dallesprom: Construction of a pulp mill in Amursk, with an
annual capacity of 700,000 tons of bleached softwood sulfate pulp. Upon
reaching design capacity, the mill's annual tax payments to the Krai's
consolidated budget will amount to 370 million rubles. The target market
is the countries of North Eastern Asia. Estimated payback period is 11
years. The number of new jobs to be created is 2,000.
By 000 Ros-DV: Construction of a facility to produce sawn timber and
components for timber housing construction in the Sukpay settlement,
Imeni Lazo district. The company leases forest areas with an estimated
annual cut of 306,000 m³. The objective is to process the timber into 125,000
m³ of high quality sawn goods. The target markets are the countries of
North Eastern Asia and Russia's domestic market. As part of the project,
facilities have been built to produce 75,000 m³ of dried sawn timber and
30,000 m³ of shaped sawn products. Estimated payback period is three
years. The number of new jobs to be created is 100.
Investment proposal: An OSB (oriented strand board) mill with an
annual capacity of 150,000 m3.
The project has been initiated by the Ministry of Natural Resources in
the Khabarovsk Krai. The facility's location will be determined by the
investor during preliminary design. The target markets are the countries
of North Eastern Asia (90%) and the domestic market (10%).
130 #6 (2015) RUSSIAN +
FORESTRY
of investment projects included in the forest exploitation priority list.
According to the Krai administration, three major investment projects
currently operate in the Krai: a sawmill in the Berezovy settlement, in
the Solnechny municipal district, with an annual capacity of 150,000 m³
of sawn timber (000 Amur Forest); a woodworking mill in the Oktyabrsky
settlement, in the Vanino municipal district, with an annual capacity of
140,000 m³ of wood particle board and 350,000 m³ of sawn timber (000
SP Arkaim); and an MDF/HDF plant in the Khor settlement, in the Imeni
Lazo municipal district, with an annual capacity of 150,000 m³ (000
Rimbunan Hijau MDF). In reality, however, all these businesses are now
experiencing financial hardship, though there are no quality complaints
for their products. In the experts' opinion, the low competitive capacity
of these businesses is due to high transportation and utility connection
costs, and possibly to internal factors such as inefficient management etc.,
along with the effects caused by the global financial crisis of 2008-2009,
when the universal fall in purchasing power was such that even price
reductions could not help sales.
At the same time, the forestry and timber sector of the region has
certain distinct prospects, related mainly to the ramp-up of exports. The
interest shown by neighboring countries, first of all by China, proves that
foreign investors are willing to invest in production capacities in the
Khabarovsk Krai. For example, in late 2013, the Russia-China Investment
Fund (RCIF) completed acquisition of 42% shares in Russian Forest Products
Group (RFP Group), the biggest Russian forestry sector holding in the
Russian Far East. According to the Fund's data, RFP Group ranks second
in Russia both by the area of forests managed (5.1 million ha) and by
harvesting volumes (2.3 million m³ in 2012). The holding includes OAO
Dallesprom and ZAO Flora (the biggest forestry and timber companies
in the Khabarovsk Krai), 000 Torgoviy Dom RFP (the biggest exporter of
timber to Asia-Pacific) and OAO Amurskoye Parokhodstvo (the biggest
river transportation company in the region) and thus accounts for about
10% of total Russian timber exports to China and 15% of exports to
Japan. In total, the companies comprising the holding employ more than
6,000 people. RCIF's investment will be used to construct the Added-Value
Wood Conversion Center. Based in the Vanino settlement, the project is
being implemented by OAO Dallesprom and will produce 300,000 m³ of
rotary-cut veneer, 230,000 m³ of sawn timber and 50,000 m³ of wood
particle board. Investments into a waste-free chain of wood processing
facilities with a total throughput of 6 million m³ of raw materials per
year amount to approximately $400 million.
In 2010-2013, according to the Khabarovsk Krai administration, more than
22 billion rubles was invested in the industry, resulting in 1,500 new jobs.
At the same time, the problem of timber processing waste and low-grade
wood utilization remains. Starting as far back as in the middle of the
century's first decade, the Krai's administration was planning to address
this by building a pulp production facility. According to the Krai's Forestry
Plan for 2009-2018, pulp production was expected to be restored by 2012,
and in 2014 the mill was to reach its design capacity of 500,000 tons of
pulp per year. However, the project has not been implemented because no
investors were found.
In order to alter the situation, the region works to build and enhance its
regulatory framework. As approved by decree of the Krai's government, the
main strategic objectives for the forest industry are improving the efficiency
of forest resource usage, and creating capacities to manufacture more forest
products with high added value. These challenges will primarily be addressed
in the advanced economic growth zones currently being established in the Far
East. The region's authorities expect that investor incentives offered in such
zones, including tax holidays, simplified building and utility connection permit
procedures, and streamlined customs clearance etc., will be able to turn the tide.
According to Vyacheslav Shport, the Krai's governor, despite the overall
positive trend, the forestry and timber sector's contribution to the gross
regional product (GRP) has recently been decreasing. For example, the sector
accounted for 4.1% of the GRP in 2010; this figure went down to 2.9% in
2012 i.e. 23% lower than in 2010. The reduction is caused mainly by falling
prices and demand on the international market. In forestry products, rough
timber prevails (70%). For this reason, to stimulate forestry and timber sector
growth, it is essential to increase the share of added-value wood processing
and to strengthen domestic demand for timber. An example of such an effort
to influence demand is promoting timber housing construction, assisted by
a number of state-run programs such as the special-purpose program "The
Development of Housing Construction in the Khabarovsk Krai" and the
Krai's targeted program that aims to relocate citizens from unfit housing
facilities while also supporting low-rise construction. In addition, there is
work going on to rehabilitate and build new housing in flood-impacted areas.
Maria ALEKSEYEVA
Khabarovsk Krai government authorities responsible
for timber industry regulation
Governor of the Khabarovsk Krai
Shport Vyacheslav Ivanovich
Russian Federation, 680000, Khabarovsk
Ul. Karla Marksa, 56
Tel. +7 (4212) 32-51-21
fax +7 (4212) 32-87-56
www.khabkrai.ru
Ministry of Natural Resources of the Khabarovsk Krai
Minister Shikhalev Vasiliy Mikhailovich
Russian Federation, 680000, Khabarovsk
Ul. Karla Marksa, 56
Tel. +7 (4212) 32-50-80
fax +7 (4212) 37-87-74
[email protected], www.mpr.khabkrai.ru
Ministry of Economic Development of the Khabarovsk Krai
Minister Kalashnikov Viktor Dmitrievich
Russian Federation, 680002, Khabarovsk
Ul. Muravjova-Amurskogo, 19
Tel +7 (4212) 32-97-39
fax +7 (4212) 32-41-53
[email protected], www.minec.khabkrai.ru
Ministry of Investment and Land-Property Policy
of the Khabarovsk Krai
Minister Chaika Yuri Afanasievich
Russian Federation, 680000, Khabarovsk
Ul. Zaparina, 76
Tel. +7 +7 (4212)32-40-85
[email protected], www.khabkrai.ru
Enterprises of the forestry industry of the Khabarovsk Krai
Name
101 Dom, 000
Al'ternoStroj, 000
Amur-Trans-Les, 000
AntreLDV, 000
Arkaim, SP, 000
Artstroj, 000
Asia Export, 000
Activity
Wooden house construction: frame-board
houses
Wooden house construction: frame-board
houses, houses from round log and timber
Wood-sawing: sawn timber
Address
680000, Khabarovsk, ul. Karla Marksa,
1445, korpus 2, office 225
680042, Khabarovsk, ul. P. Morozova,
84, office 28
680000, Khabarovsk, ul. Lenina, 18A,
office 6
Contacts
Tel.: +7 (4212) 78-41-24, 24-15-99
[email protected], ww.101domdv.ru
Tel.: +7 (4212) 63-00-44, 63-85-16
[email protected], www.dv-karkas.ru
Tel.: +7 (4212) 42-09-16, 31-62-48, fax +7
(4212) 42-10-59
[email protected]
Furniture production: casegoods furniture 680007, Khabarovsk, Sportivniy per., 4, Tel.: +7 (4212) 41-58-00, 48-66-74
Logging. Wood-sawing: sawn timber,
surfaced units. Bioenergy: wood pellets.
Woodworking: laminated board and
chipboard
Wooden house construction: frame-board
houses. Woodworking: doors
Wood-sawing: sawn timber
office 204
682860, Khabarovsk Krai,
Vaninsky rayon, pos. Vanino, ul.
Molodiozhnaya,14
[email protected], www.antreldv.ru
Tel.: +7 (42137) 6-01-01, 6-01-03, fax +7
(42137) 6-00-66
[email protected]
680007, Khabarovsk, ul. Shevchuka, 18 Tel./fax +7 (4212) 41-77-11
[email protected]
680030, Khabarovsk, Oblachny per., 78A Tel.: +7 (4212) 23-33-24, 23-28-66
[email protected]
RUSSIAN #6 (2015) 131
FORESTRYView entire presentation