Hekotek to build pellet mill for RusForest in Arkhangelsk

AS Hekotek company will build a wood pellet production facility at RusForest’s LDK-3 sawmill in Arkhangelsk. The Swedish company has completed a review of its Arkhangelsk assets and has identified the region as a core focus. Following the recent divestment of the Shenkursk sawmill, the remaining assets in the region include LDK-3 sawmill with annual lumber capacity of 120,000 m3 and forestry leases with annual allowable cut of 958,800 m3. The Company has recently hired a new management team in Arkhangelsk led by Mikhail Papylyov, former CEO of Arkhangelsk pulp and paper mill.

As previously disclosed, the Arkhangelsk region is suffering from financial difficulties in the pulp sector, and the company’s sawmill residual revenues are at risk. In order to address this situation, RusForest has engaged Hekotek to build a wood pellet production facility with up to 100,000 t of annual capacity. The pellet facility will allow RusForest to monetize its sawmill by-products by exporting wood pellets to Europe.

Total investment volume is estimated at €10 million before VAT, with 70% expected to be financed by local bank facilities. The investment will benefit from the company’s previous €1.6 million deposit made to Hekotek in 2008.

Anton Bogdanov, the Company’s COO, commented, “We are fortunate to have Mikhail Papylyov and his team join RusForest, and I believe they will add significant value to the northwest assets. The pellet investment is crucial to make our Arkhangelsk sawmill profitable. The LDK-3 sawmill benefits from a unique port location with favourable logistics for shipping sawnwood and pellets to Europe. A pellet facility will help insulate our operations from the financial situation of the local pulp mills.”

AS Hekotek’s main operations include the design and production of woodworking technologies and facilities. The company was founded in 1992 by Finnish wood processing specialists and is now the largest Baltic manufacturer of sawmill and bioenergy sector equipment. Hekotek is a part of Lifco Group, an international concern based on Swedish capital assets.