| Evrazholding is acquiring woodworking assets Evrazholding, controlled by Alexander Abramov, announced its intention to build a plant in the Krasnoyarsk Territory to produce medium- and high-density fiberboards (MDF). As Andrei Mirsky, adviser to the president of Evrazholding on investment policy, told Interfax yesterday, the cost of the project, which involves organizing a capacity to produce 200-250 thousand tons of slabs per year, is $100 million. Previously, it was believed that Evraz was buying up non-core assets in forestry sector for the purpose of more profitable resale. Now, experts believe, the intentions of the group’s owners to create their own holding company specializing in woodworking are obvious.
Mr. Abramov’s interest in the forestry business first appeared last year, when Evraz structures bought 50% of the Krasnoyarsk company Maltat, which specializes in logging (700 thousand cubic meters per year). At the end of the year, it became known that Evraz acquired the MS United Ltd holding, which owns three woodworking enterprises: Kunerminskoye and Mikura in the Irkutsk region, as well as Kanskwood in the Krasnoyarsk Territory (the total volume of woodworking is 170 thousand. cubic meters). Now Evraz intends to build an enterprise for deeper wood processing within two years, which will become the next link in the production chain.
There is no final decision on the location and timing of construction of the plant, and Khabarovsk Territory is being considered as an alternative site. But, according to Mr. Mirsky, Evrazholding “really wanted the plant to be located in the Krasnoyarsk Territory, in Lesosibirsk, since this area is close to the raw material base and the consumer.” As you know, almost a fifth of Russia’s forest reserves and almost all of the Angara pine, which is in great demand abroad, are concentrated in the Krasnoyarsk Territory. The new Evraza plant will be focused mainly on China, “where a shortage of MDF boards is expected from 2005 to 2010, therefore, the plant must be commissioned during this period,” explains Mr. Mirsky. According to him, the Chinese have already documented their willingness to buy up to 90% of the produced slabs, as well as to participate in financing the project.
However, according to Mr. Mirsky, it will not be possible to start construction in 2004: “Lesosibirsk is provided with electricity at the maximum capacity, we need to resolve the issue of eliminating the electricity shortage as soon as possible, together with the regional administration.” To speed up the project implementation period, the holding is ready to invest in the construction of an additional power transmission line or thermal power plant.
The Krasnoyarsk authorities, who consider the forestry industry to be the most promising and expect the main influx of investment from it, have already made it clear to Evrazholding that they are glad of its arrival. According to the administration’s concept for the development of the forestry industry until 2015, it is planned to create vertically integrated structures on the basis of regional forest assets. In the spring, at the regional investment forum, First Vice-Governor Lev Kuznetsov noted that so far only Continental Management (the main asset is the Krasnoyarsk Pulp and Paper Mill) is building such structures, and added that Evrazholding will soon compete with it. As Mr. Kuznetsov explained then, the regional administration is negotiating with Evraz about investments in the creation of a new pulp and paper production.
According to the vice-president of the Aton investment company, Alexander Agibalov, strengthening the position of Evraz in the region will not lead to a conflict of interests with Continental Management, which, as is known, has already begun construction of the Novo-Yenisei LHC in Lesosibirsk. According to him, Continental's assets provide the group's commercial pulp production enterprises with raw materials, while Evrazholding is interested in exports. “Evraz is focusing on the rapidly developing Chinese furniture industry, which has already supplanted the American one,” explains the expert. According to him, Russia is also experiencing a shortage of MDF, importing 50% of its needs. Yana VIKTOROVA |
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