Kondopoga CEO: spruce pulpwood in Karelia is almost twice as expensive as in Komi

Debts of Kondopoga pulp and paper mill to the loggers (first of all, those located in Vologda region) were put into the registry debts list, and the mill is not able to settle it now, because it is legally forbidden: this will meet the interests of certain creditors to the detriment of others, said the General Manager of Kondopoga PPM Dmitry Turkevich in an interview to the editor of “Forest portal of Karelia” Valery Potashov for the newspaper “Russian forestry news”.

“Unlike last year, the wood we buy is prepaid or bought under the guarantee of “Saint Petersburg” bank, so the new debt is not likely to arise,” Turkevich said.

Director lamented the absence of own logging base at the mill: stable work of the pulpmill requires raw material base which would cover about 50-60% of its needs.

According to Turkevich, the price of spruce pulpwood at the forest plot in the Republic of Komi now amounts to 400-500 roubles. At the same time, the mill now buys the same pulpwood with same terms in Karelia for 800-850 roubles, and this is not because of higher costs, but rather because of the fact that the loggers find it more profitable to sell the logs to Finland. Own raw material base would allow the company to reduce raw material costs dramatically.

“Our task is to assure that the transition of the mill to bankruptcy administration does not lead to production stoppage. We must go into the new legal entity without stopping the mill,” added Turkevich. “According to different estimates, newsprint will live in the world for five to fifteen years. We think that we have at least five years. Our goal in these five years is to re-equip the mill. We have 2014 for development of this marketing model. The remaining four years are enough to run the project.”

According to the Chief Executive, the mill will convert existing paper machines and consider construction of sawing facilities and a plant for the production of sulphate pulp. Complex processing of the whole raw material base will allow to make the company competitive. In Karelia, 60% of forest are pine, 30% are spruce, and 10% are birch, and since spruce can be utilised only in paper production, pine should be used for pulp and sawn timber, Turkevich concluded.