UPM-Kymmene to build a sawmill in Russia

UPM-Kymmene will build a sawmill in Russia in co-operation with the Russian timber company ZAO Novgorodlesprom. UPM-Kymmene will have a majority holding in the new sawmill, which is due to start operations at the end of 2003. The estimated costs of the project are EUR 30 million.

The sawmill that will initially produce 200,000 cubic metres of sawn whitewood a year will be built in the Novgorod oblast, in the city of Pestovo. Pestovo is centrally located between two major cities, St. Petersburg and Moscow, and the railway between these crosses through it. The city has also good connections to the various raw material sources.

"UPM-Kymmene considers it strategically important to be active in Russia, which now offers good opportunities for the wood processing industry. We have had positive experiences of operating in the Novgorod region for more than ten years. At the same time, it has become increasingly difficult in Finland to operate a profitable wood products industry," says Kari Makkonen, President of UPM-Kymmene Wood Products Industry.

UPM-Kymmene will carry out the investment despite the delay in the agreement on investment protection between Finland and Russia. The good experiences earlier and the magnitude of this investment made it possible to start without delay.

The new sawmill will be a single-line circular sawmill producing profiled whitewood timber according to UPM-Kymmene's quality standards. Most of the production will be exported, and further processing is also planned. The sawn timber produced will be 100% kiln dried. The bark and sawdust will be combusted at a thermal power plant to be built adjoining the sawmill, and the chips will be delivered to UPM-Kymmene's Finnish mills. The new sawmill will provide jobs for some 100 people.

Raw material for the sawmill will be supplied by its own wood procurement organisation. A new timber depot will also be established to support the wood supply to this mill and UPM-Kymmene's Finnish mills.

The partner in the sawmill project, ZAO Novgorodlesprom, is a Russian company concentrating on wood processing and procurement. UPM-Kymmene already has one joint facility with ZAO Novgorodlesprom in Chudovo, in the Novgorod oblast, with an annual production of 60,000 cubic metres of birch plywood. UPM-Kymmene has a majority holding in this plant as well. Positive experience from co-operation and profitable plywood manufacture recently led to the decision to build a new joint factory for producing high-quality birch veneer on the Chudovo site next to the plywood mill. This mill, which will produce over 10 million square metres of birch veneer a year, will start up at the beginning of 2003.

For further information, please contact:
Kari Anttilainen, Managing Director, United Sawmills Ltd./UPM-Kymmene Wood Products Industry, tel. +358 (0) 400 322 301

UPM-Kymmene Wood Products Industry
Communications
28 May 2002