Russian Forestry and Wood Supply Operations Analysis

76 PRIORITY INVESTMENT PROJECTS PRIORITY INVESTMENT PROJECTS Volume of Investment, million Rubles. Investor / Name of Project / City Incl. Total Borrowed Funds Volume of the material, th m³ consumed raw Allowable cut size, thsd. m³ Types of Products and Annual Production Volumes Imployment impact (number of man) Period of Construction Payback Period, Number of Years Volume of Investor / Name of Project / City Investment, million Rubles. Incl. Volume of the Angara Paper • Lesosibirsk Building of the wood-chemical complex Angara Paper (Yeniseisky LHK) Yeniseu Plywood Plant Sosnovoborsk Business development in timber-processing 7,680 2,350 900 1,886.5 Plywood - 350 thsd m³ Veneer 100 thsd m³ 544 2008-2010 6 Was put into operation in 2011. Production was stopped in November 2014 by Rospotrebnadzor because of the high level of maximum allowable concentration of methanol and formaldehyde in the air. Credit funds from VTB of 5,329,761,700 rubles were loaned. The plant has been declared bankrupt. The media have noted the bad loan credited by VTB to its own enterprise, which might have been used for moving funds offshore. The main problem stated was the lack of quality raw materials in the rented forestry funds Sanitary paper - 60 thsd t Thermomechanical Pulp - 220 thsd t 30,747.5 21,523.2 5,000 6,869.3 White line box cardboard - 320 thsd t Cardboard from unbleached kraft pulping - 320 thsd t Total Borrowed Funds FAR EASTERN FEDERAL DISTRICT consumed raw material material, th m³ Allowable cut size, thsd. m³ Types of Products and Annual Production Volumes Imployment impact (number of man) Period of Construction Payback Period, Number of Years Les Export Dalnerechensk Three-ply parquette board production PRIMORSKY KRAI 2,447 1,395 91.2 128.5 Parquette - 1,757 thsd m² 150 2008-2012 4 No information 560 2008-2012 8.4 Primorsklesprom Only pre-project works have been fulfilled. Sodra Group (Sweden) withdrew from the project in the beginning of 2013. The management of Angara Paper announced that an updated concept of the project had been prepared, and an EPC-contractor had been found - the Japanese Marubeni Corporation. According to data of Forest Forum Greepeace, the main shareholder OAO Angara Paper, is the Cypriot company Brazzako Limited (74.9% shares) Wood-sawing plants in Terneysky and Olginsky districts, glued timber plant in Chuguevsky district 309.7 195.6 360 200 Sawn timber - 130 thsd m³ Glued timber - 50 thsd m³ No info 2008-2013 (started in 2014) 5.2 All the three wood-sawing plants are built, although within 2013-2014 they did not operate steadily because of prolems with raw materials and sales Terneyles • Terneyski district Sibles Project Yeniseisky district, Verkhnepashino 693 613 300 Sawn timber - 120 thsd m³ 200.5 Moulded strips - 18 thsd m³ 3,979.4 3,979.4 685 392.5 345 2008-2013 5.8 Creation of timber-processing infrastructure Sawn timber - 150 thsd m³ Veneer -267 thsd m³ 325 2008-2010 (started in 2009) 4.2 Modernization of timber-processing production Technological wood chips - 90 thsd m³ No information Production was put into operation in 2014, the second phase and pellet workshop are being built now SAKHALIN OBLAST KLM-Eco Krasnoyarsk 470 470 300 236.8 Moulded strips - 90 thsd m³ 167 2009-2011 5.5 Development of woodworking complex Production of glued beam and sets of houses started at the end of 2013 Aleksandrovsk-Sakhalinsky district Managing Company Mekran Krasnoyarsk BM Sakhalin (part of the holding Business-Marketing) Woodworking production Dry sawn timber - 80 thsd m³ Planed sawn timber - 100 thsd m³ 7,167 6,100 465 747 Technological wood chips- 370 thsd m³ Fuel pellets - 62 thsd t 686 2012-2023 9.2 5,636.4 4,600 118.6 1186 Furniture from solid wood - 5,660.4 million rubles 939 2009-2011 7 Creation of full cycle woodworking production In the stage of organization of logging sites, exporting round log to China. It is planned to build a plant in 2015 The first Mekran furniture plant was modernized in 2010, and the new furniture production was put into operation in 2013 Novoeniseysky LHK • Lesosibirsk KHABAROVSK KRAI 351.1 252.2 226 226 Pellets 80 thsd t 29 2009-2012 (started in 2013) 4.2 Amur Forest Solnechny district, Berezovy settlement Wood-sawing plant 856.8 856.8 300 114 Sawn timber - 150 thsd m³ 120 2008-2009 (started in 2009) 5 Growth of timber-processing production and organization of the forestry infrastructure A paper mill and new sawn timber production are in the plans of Novoeniseysky LHK Firma Master Krasnoyarsk Solid wood processing The latest coverage in the media was in 2011 Doeble-edged boards - 45 thsd m³ Floor board -6.72 thsd m³ 1,482.4 1,189.2 214.6 214.6 Lining - 6.72 thsd m³ 207 2010-2015 4.1 Furniture board- 6.72 thsd m³ Glued window timber - 6.72 thsd m³ The second stage was set in operation in 2014, it was announced at the end of the year about the plant stoppage because of a claim caused by fire at a waste tip SP Arkaim Vanino district 2,375.9 1,960.7 825 636 Chipboard 140 thsd m³ Sawn timber - 350 thsd m³ 560 2008-2010 (started in 2009) 7.2 Woodworking complex for chipboard and sawn timber production The second stage startup was planned for 2012. Non-payment of wages, strikes by workers, and criminal cases. $600 million credit from China Forest Products Corporation, plans for creation of the Russian-Chinese woodworking holding with the logging volume up to 3.7 million m³ and processing facilities up to 2 million m³ of timber per annum LPK Partner-Tomsk • Tomsk MDF production Priangarsky LPK (UK Lespromtekhnologii) • Kodinsk Organization of timber-processing 2,200 1,500 630 Sawn timber-300 thsd m³ 1,400 Fuel briquettes - 25.32 thsd t Wood charcoal - 2.56 thsd t 480 2011-2018 7 Sawn timber production was started in spring 2014, it is planned to reach estimated capacity in 2016. A pellet production is in the plans TOMSK OBLAST 6,308.9 5,083.1 570 575.6 MDF 264 thsd m³ Rimbunan Hijau • Lazo district, Khor settlement MDF and THDF plant 2,400 2,400 300 262 MDF/THDF boards - 150 thsd m³ 360 2008-2009 8.2 Was put into operation in 2011. The production was stopped in 2012, because of the high cost of raw materials and index of formaldehyde emission. In March 2015 the leadership of Rimbunan Hijau announced about plans of construction of a wood-sawing plant and production of their own glue, which would make it possible to resume MDF production An OSB plant is planned ALTAI KRAI Sodruzhestvo (LHK Altailes) Pavlovsky district Plant for production of sets of houses from glued timber 337 210 141 121 | Детали домов из клееного бруса 18 тыс. м³ 134 2006-2015 (started in 2010) 5.4 Dallesprom Amursk 700 2008-2010 (started in 2010) Far Eastern center of deep timber-processing 6.5 Sawn timber - 230 thsd m³ 12,054.9 12,008.1 2,133 2,133 Rotary-cut veneer - 300 thsd m³ MDF boards 300 thsd m³ Technological wood chips- 750 thsd m³ 1,000 2009-2019 Part of RFP Group. Creditor - Vnesheconombank. Veneer production was set in operation in 2013 Asia Les (UK Amurles, part of the holding Business-Marketing) Solnechny district, Berezovy settlement Production of profile and planed sawn timber 500 No info 500 No info 10 10 Round timber - 150 thsd m³ Dry sawn timber - 290 thsd M Planed sawn timber - 60 thsd m³, Pellets 100 thsd t No info 2012-2015 No info No information Kamensky LDK (LHK Altailes) • Kamen'-na-Obi Wood-sawing production 568 1,000 542 No info Sawn timber-240 thsd m³ thsd ha 120 2009-2011 (started in 2011) No info KEMEROVO OBLAST Anzhersky Plywood Plant Anzhero-Sudzhensk 2,405.3 2,105.3 333.7 333.7 Oversize plywood production Oversize plywood - 60 thsd m³ Sawn timber - 6 thsd m³ 745 2009-2018 9.6 Amur Forest Zeya Building of woodworking plant It was behind schedule, and consequently was mooted to close, but in 2014 it was announced that the project was to continue Wood-sawing and pellet equipment has been purchased. Production facilities are being increased AMUR OBLAST Sawn timber - 105 thsd m³ 352 345.6 175 34.2 Fuel granules - 3 thsd t Wood houses - 50 pieces 270 2007-2013 8.7 At the end 2009 building works were stopped (75% is at the stage of readiness) because of difficulties with financing and default on an obligations by subcontractor 000 Videmann Poland. In October 2010 a new subcontractor 000 PSP Redox was chosen, although in spring 2014 construction works were not resumed. In February 2015 the continuation of construction was announced Turanles Tyndinsky district Mariinsly Plywood Plant Mariinsk 3,734 No info No info No info OSB, OPB and chipboard production OSB, OPB 99,6 thsd m³ Chipboard - 20,4 thsd m³ Building of the woodworking plant Vostochny No info 2011-2015 No info Sawn timber - 8 thsd m³ Glued timber - 1.2 thsd m³ Square beam -14 thsd m³ 346.8 168 116.8 116.8 Moulded strips- 1.6 thsd m³ Floor board -1.5 thsd m³ Furniture board - 0.2 thsd m³ Set of low-rise house construction - 20 pieces 105 2006-2015 9 Vnesheconombank issued credit, the construction works are in process AVA Company • Omsk OMSK OBLAST Sawn timber - 61.4 thsd m³ Furniture board- 3.4 thsd m³ Parquette -8.7 thsd m³ 948.6 948.6 277.6 277.6 Moulded strips- 2.1 thsd m³ 1760 Fair furniture workpieces - 1.45 thsd m³ 2006-2012 (started in 2010) Ecoles Company • Birobidzhan 8.1 Creation and modernization of objects of forestry Wood briquettes - 20 thsd t and timber-processing infrastructure Construction of a pellet plant was started in 2013. There is no information about the woodworking plant JEWISH AUTONOMOUS OBLAST Sawn timber - 72 thsd m³ Wood charcoal - 10 thsd t 655.9 382.2 325 325 Activated wood charcoal - 0.9 thsd t 804 2010-2014 2.5 Fuel briquettes -3.24 thsd t Glued timber and furniture board - 20.75 thsd m³ Furniture 192 million rubles Realization of the project was stopped in 2012, because the Chinese investors refused to finance Timber-processing production AVA Company is planning to build a similar plant for birch processing in the Tyumen' Oblast #6 (2015) RUSSIAN FORESTRY RUSSIAN #6 (2015) FORESTAY 77