Timber industry research & analytics Denis Kumirov, Deputy Director General for Raw Material Provision at JSC Volga: “If our contractors were thinking about further development before, these Key Rate and leasing rate make it virtually impossible to buy anything”
JSC Volga is one of the largest paper mills in Russia. This enterprise specializes in producing lightweight and ultra lightweight containerboard and printing paper. In 2024, the paper mill completed several investment projects that include: repurposing of Paper-Making Machine 6 to make testliner and fluting paper for markets of container paper types with the capacity of 140,000 tons of product per year; commissioning of a waste paper line with the capacity of 500 tons per day; and commissioning of a condensing turbine with the capacity of 27 MW. Upon reaching the machine’s full capacity and using additional raw material produced by the waste paper line, the paper mill will achieve the production level of about 450,000 tons of product per year. Repurposing of the previously mothballed paper-making machine, technical upgrading, and production expansion were implemented with a subsidized loan of 1.5 billion rubles from the federal Industrial Development Fund. The company has also started utilizing its newly leased forest areas. WhatWood Agency was thrilled to ask a few questions regarding the paper mill’s provision with wood raw material. We talked with Denis Kumirov, Deputy Director General for Raw Material Provision at JSC Volga.
Denis, please tell us about Volga’s performance in 2024.
Our key successes had to do with implementing a large investment project: we launched the upgraded Paper-Making Machine 6. The year 2024, particularly the end of the year, saw its final stage. Paper-Making Machine 6 can produce an additional 140,000 tons of container paper types. We launched a waste paper line to commission the repurposed Paper-Making Machine 6.
A 27 MW turbine was also commissioned in our power generation unit. The power unit generates a total of about 130 MW, which fully covers the mill’s need for energy.
And another investment project was about starting to work on the newly leased forest areas with the AAC of 232,000 m³ in the Nizhny Novgorod Region, which was assigned for relaunching Paper-Making Machine 6.
It is too early to share the company’s financial performance in 2024. But looking ahead, I would like to say that the year 2024 was not bad for us—even quite good, taking into account the challenging situation in the market.
How did relaunching Paper-Making Machine 6 affect the mill’s raw material consumption? Does Paper-Making Machine 6 consume only recycled raw material?
Paper-Making Machine 6 uses a very interesting mix of raw material unlike anything else in Russia or around the world. Roughly speaking, it is 50% of waste paper and 50% of thermomechanical pulp. The ratio of raw material may vary depending on the end product that we want to make: it can be 30% by 70% or 60% by 40%. We are now running various tests, but generally, the waste paper to thermomechanical pulp ratio is approximately 50:50. So the volume of raw material consumed by the mill in general did not grow significantly, and we are covering almost the entire increase with the newly leased forest.
What raw material is used to produce thermomechanical pulp?
We mostly use spruce and partially hardwood harvested in-house for thermomechanical pulp production.
Is in-house wood sufficient to produce the additional amount of thermomechanical pulp for Paper-Making Machine 6, or do you have to purchase extra?
We are almost completely satisfying our needs with in-house leased areas. We only purchase a small percentage of third-party raw material.
Please share how the mill’s provision with timber is generally organized: what is the harvesting volume, the key consumed sizes, and the shares of in-house and purchased raw material?
We are diversified as much as possible and well provided with raw material in terms of wood raw material supplies. We source about 10% of the consumed raw material from our leased areas and about 25–30% from so-called reciprocal supplies based on our own leased areas, that is, we swap sawlogs and veneer logs for spruce pulpwood and chips. We buy the rest of the raw material in the open market and get it delivered by trucks, by railway, and by water. As for the raw material breakdown, chips account for 25–30%, and roundwood, for the rest. Hardwood pulpwood accounts for approximately 5–7% of the total amount.
We are also trying to diversify by regions as much as possible. We purchase from the Arkhangelsk to the Perm Regions. We primarily focus on the central areas of Russia, however: mainly on the Kirov, Kostroma, and Yaroslavl Regions, as well as on our home areas, i.e., Nizhny Novgorod and Ivanovo Regions. About 5% of the raw material is delivered by water, approximately 35%, by trucks, and 60%, by railway. As of the end of 2024, we rent forest areas with the AAC of about 530,000 m³ per year. In 2025, we will have approximately 700,000 m³ per year due to the conducted forest management operations. This is more than twice as much as in 2023.
All of the above enables us to procure raw material at prices below the market and below those of our key competitors.
