Russian Forestry and Wood Supply Operations Analysis

SIBERIAN FEDERAL DISTRICT NOVOSIBIRSK OBLAST Novosibirsk Oblast: In the Heart of Siberia According to various rating agencies, Novosibirsk Oblast is among the top thirty constituent members of the Russian Federation in terms of investment potential. In 2013, investments in fixed assets totaled 174 billion rubles; thus, the region occupies the relatively high 23rd place in Russia and 3rd place in the Siberian Federal District, after Krasnoyarsk Territory and Kemerovo Oblast. Novosibirsk Oblast was established in 1937 when the Altai Territory was split from the West Siberian Territory. Later, Kemerovo Oblast and Tomsk Oblast, previously parts of Novosibirsk Oblast, also became separate oblasts. This splitting of regions resulted in the quite moderate linear dimensions of Novosibirsk Oblast. The region extends 642 km from west-to-east, and 444 km from north-to-south. The area of Novosibirsk Oblast is 177,800 km². Large-scale forest enterprises of the Novosibirsk Oblast Its capital, Novosibirsk is also the capital of the Siberian Federal District. The region comprises five urban districts, 30 municipal districts, and 455 settlements (26 of which are urban and 429 rural). According to Novosibirskstat, 2,709,836 people were resident in Novosibirsk Oblast as of January 1, 2013, of which 2,110,240 were city dwellers. TOMSK OBLAST OMSK OBLAST Kedrovyy Muromovo Vengerovo Leskhoz, OAO Dauria, GK Ecodom, 000 Tatarsk Chany Kamea, TD, OO0 Megano, MK, OOO Raumebel, 000 Siberian Forest, PG, OOO Barabínsk Vengerovo Kuybyshev P-254 Kargat OZdvinsk Kupino Chany Lake Bakchar Chulym Kolyvan' Molchanovo P-255 TOMSK Bolotnoye OB Yurga Toguchin M-53 NOVOSIBIRSK Ordynskoye Berdsk Iskitim Novosibirsk Reservoir Cherepanovo Suzun Maslyanino Sibirmebel, GK Siblesprom NSK, OOO Krasnozersk SKMD, ZAO Strojbit-M, ZAO Karasuk O Kamen'sen-Ob' Karasukskaya PMK, OOO Slavgorod KAZAKHSTAN ALTAI KRAI BARNAUL Pavlodar 118 #6 (2015) RUSSIAN FORESTRY Aleysk M-52 Zarinsk GEOGRAPHY AND CLIMATE Novosibirsk Oblast is located in the south-eastern part of the West Siberian Plain, mainly in the Ob-Irtysh interfluve. There are approximately 350 rivers in the oblast, the main one being the Ob. Close to the region's capital is the Novosibirsk Reservoir, the ("Sea of Ob"); the oblast has over 3,000 lakes. The climate is continental. The temperature in January varies from -16 in the south to -20 °C in the northern districts. The temperature in July ranges between 18-20 °C. RESOURCES Over 500 deposits of various minerals have been identified in Novosibirsk Oblast, of which not more than 100 are currently being developed. Apart from coal, high-melting clay, and peat deposits, the oblast has minor reserves of gold and four types of marble, including high-class marble, which is in great demand. There are considerable reserves of ground water, thermal and mineral waters. Oil fields and natural gas fields have been discovered in the north-west of the oblast. Nearly 6.5 million hectares of forest cover the region. TRANSPORT The transport routes across Novosibirsk Oblast connect Siberia, the Far East, and Central Asia to Russia's European regions. Several federal highways and a portion of the Trans-Siberial Railway extend across the oblast. Novosibirsk is a river port; navigation on the Ob serves long distance cargo transit, local passenger traffic and sand production. There are 12 airports in the oblast, of which two are of the federal level: Tolmachevo and Novosibirsk. Novosibirsk is the first Siberian city to construct a subway. ECONOMY The gross domestic product of the Novosibirsk Oblast grew by 1.3% against 2013 in 2014, to reach 776 billion rubles. The industrial production growth rate was 100.2 in 2014. The trends are positive in agriculture, wholesale and retail, in the service domain and in cargo turnover for all kinds of transport. The military industrial complex has a special role in the region's economy. 39 companies and institutes of the oblast work to defense orders. A growth of 14% was recorded in this sector in 2014, with a product output worth 57 billion rubles. Currently, the defense order size for the region's enterprises remains at last year's level, with an overall decrease of federal allocations for other federal target programs. The pride of Novosibirsk Oblast is science and the agro-industrial complex. The region grows grain, potatoes and vegetables; meat and dairy farming, poultry farming and beekeeping are well-developed; flax production is of great importance. The oblast is among the top ten largest agricultural producers in Russia. Novosibirsk Oblast has been taking the lead in science and technology for more than 50 years. The Siberian Branch of the Russian Academy of Sciences, the Siberian Branch of the Russian Academy of Agricultural Sciences, the Siberian Branch of the Russian Academy of Medical Sciences, the Vektor State Virology and Biotechnology Research Center, 55 academical institutes and over 60 industrial research, engineering and design institutes, and 100 large and 1700 smaller companies related to technological innovation activity are located there. The educational complex of Novosibirsk Oblast is the largest in Russia's Asian territory. The level of business activity in the region is relatively high. The proportion of turnover of small and medium companies in 2014 was 40% of the overall turnover of the region's business. FOREST RESOURCES Forest coverage in Novosibirsk Oblast is a mere 26.7%, that is to say the oblast is sparsely forested. Furthermore, the oblast belongs to Siberia's forest-deficient regions in terms of softwood, and to forest-abundant regions, in terms of hardwood. Typical for most forest lands is the predominance of hardwood stand nearly 80 percent of forested land; in particular, 66.3% of which is birch wood, just one-fifth being occupied softwood stand, with pine predominant. For this reason, the governmental policy on forest management and reclamation is primarily aimed at changing the existing situation and curbing the softwood timber resource deficit. According to the state forest register, a positive trend may be seen in the quality and quantity indicators of forest lands in recent years. The forested areas have increased by 3,500 hectares, the overall reserve of basic dominant species has grown by 3.8 million m³, the area of homogeneous stands brought to forested lands has increased by 100 hectares, and the total average increment has increased by 40,000 m³. According to the Forest Plan of Novosibirsk Oblast, the total forest land area is about 6.4 million ha of which the area covered with forest vegetation is 4.6 million ha. The total timber reserve is estimated at 517 million m³, of which 124 million m³ (24%) for softwood and 393 million m³ (76%) for hardwood. As reported by the forest management department of Novosibirsk Oblast, the allowable cut in the region is 4,810,800 m³, 25-30% of which is currently exploited. The main cause of such a low indicator of development, as in most Russian regions, is the lack of transport infrastructure in the northern regions where the main forests of the oblast are located, and the quality structure of the stand. THE FORESTRY AND TIMBER SECTOR The forestry and timber industry is a mere 2.2% of the output of all the industries of Novosibirsk Oblast. The annual timber harvest in Novosibirsk Oblast has remained at about the same level since 2010, varying within 1.2-1.7 million m³, with nearly 600,000 m³ harvested for the needs of the region's population. However, according to the Forest Plan of Novosibirsk Oblast, it is planned to increase the proportion of the forestry/timber sector in the industrial production of Novosibirsk Oblast to 2.7 million m3 by 2020. There are no large timber processing facilities in Novosibirsk Oblast. According to experts, the region's FTS is mainly an array of small and scattered harvesting facilities, nearly all of which operate absolutely obsolete equipment. This determines the high costs of such facilities, and thus a low, and even, due to the crisis, negative rate of return of such production. These timber companies are not rich, and therefore cannot afford to modernize their production, due to deficient current assets. The region's FTS is aimed at satisfying the needs of local residents for firewood, and of the megalopolis for construction materials. Most of the timber products are imported to Novosibirsk Oblast from neighbouring regions (Altai Territory, Tomsk Oblast and so on). In the future, a large hardwood processing facility could be set up, but as of this day, there are no such FTS-related investment projects in Novosibirsk Oblast. Attracting new investors to build their mills there from scratch might turn the tide. Today, the authorities see low-rise house building and biofuel production as the most promising lines of development for the region's FTS. As for added-value timber processing, a whole number of problems are faced here. The main problems still are the species composition of the region's forest resources and economic accessibility of attractive forest lots; infrastructural support to FTS; skilled personnel for FTS enterprises, and the need to modernize most of the processing facilities. Experts see the development of the bioenergy segment as a considerable prospect for the development of the regional FTS. A program to improve the energy efficiency and energy saving in the oblast using renewable energy sources, primarily timber has been developed with contributions from regional authorities. There is news already about several successfully implemented projects for the construction of new boiler plants burning biofuel, or of the switchover of existing municipal boiler plants from burning coal or black oil to the use of wood fuel. One of the first such projects was the launch of an experimental boiler plant for 6 MW of thermal energy in Vengerovo village in Novosibirsk Oblast. About 5,500 cubic meters of wood chips are needed for the proper operation of the boiler plant for the whole heating season. Mariya ALEKSEYEVA, Oleg PRUDNIKOV RUSSIAN #6 (2015) 119 FORESTRY