Significant activity in the Russian forestry and pulp sector – what are the implications?
Russia is having one of the world’s most important untapped wide boreal forest resources and we can see a change in their investment environment. How will the resources be utilized?
As the Chinese paper industry continues to rely on imported pulp to meet their growing fiber demand, Russia seems to be a logical alternative with its competitive wood costs and strategically favorable geographical location. The global demand for bleached softwood kraft pulp (BSKP) continues to grow led by China. The demand is further accelerated by the ongoing Chinese industry restructuring.
For the Chinese pulp and paper industry the changes driven by environmental regulations have a domino effect resulting in changes in the supplier base, the grade structure and the fiber furnishes as well.
By 2030 the estimate is that China will need over 4 million tonnes more softwood kraft pulp yearly. This equals the production of about 4 new modern 1.2 million t/a pulp mills.
New pulp mill investments take place in regions with competitive and available long fiber wood
A major share of the decided projects for BSKP are taking place in the Nordics, but there is also significant activity in the Russian forestry and pulp sector.
Investment plans for 18 pulp mill investments have been announced in Russia both from current forest industry players and from new entrants as well. The total announced capacity additions exceed 9 million tons and the estimated value of the investments is almost 20 billion USD.
The changes in the Russian pulp investment environment and rationale will also have an impact on the global BSKP market. Investing in modern biorefineries vs traditional pulp mills would also offer more end product options and innovative business possibilities. Developing the pulp industry cluster in Russia requires a stable platform and identifying the optimal investment concepts.
Interested in discussing this topic further? Please contact Teija Konttori +358 40 533 5312 | teija.konttori@visionhunters.com
Vision Hunters provides strategic advisory services for the Forest Industry and Energy sectors. We assist leadership teams in making the smartest strategic choices to improve the outcome of their company in the future. We are highly experienced and result-oriented and have advised many of the leading companies in our industry.