ukrainian news - 25.05.2007
Ruukki Group to invest Euro 1.1 billion in Russian woodworking sector
In
February 2007, Ruukki Group Plc announced that it had registered
investment agreements concerning a sawmill and a chemi-mechanical
market pulp factory (BCTMP, bleached chemi thermo mechanical pulp) mill
in the investment project register of the Kostroma region. Ruukki Group
has reached an agreement with the administration of the Kostroma region
concerning the expansion of the BCTMP mill investment agreement with a
new agreement which must still be registered in the Kostroma region's
administration. Pursuant
to the earlier investment agreement that was registered in February
2007, Ruukki Group has the opportunity to invest in a BCTMP mill with
an annual production capacity of 300 000-500 000 tonnes. Pursuant to
the expanded investment agreement now concluded, Ruukki Group can
either invest in a chemical pulp mill (BKP, bleached kraft pulp) with
an annual production capacity of 800 000 tonnes, or alternatively in
the BCTMP mill agreed earlier. The
joint use of wood of the 800 000 tonne BKP mill that Ruukki Group is
now planning and the conifer sawmill, which will have an annual
production capacity of 300 000 cubic meters, will, if realized, reach
over four million cubic meters of wood for industrial use per year. In
order to make this possible, it has been agreed that the annual
harvesting rights included in the investment agreements can be raised
from the previous 2.5-3.1 million cubic meters to a total of 6.0
million cubic meters per year. This increase in total harvesting rights
also gives an opportunity to expand the sawmill capacity clearly in
excess of the planned 300 000 cubic meters. About
half of the output of the BKP mill is planned to be long-fiber bleached
conifer pulp (BSKP, bleached softwood kraft pulp), and half short-fiber
bleached deciduous pulp (BHKP, bleached hardwood kraft pulp). Ruukki
Group has had Pöyry Forest Industry Consulting Ltd conduct a
feasibility study on both alternatives. The preliminary estimates of
this study show that the production costs of a BKP mill would be on a
competitive level when compared with, e.g., new chemical pulp mills
operating with low production costs in South America. Based
on current information and calculations, Ruukki Group estimates the
total investments for the BKP mill and sawmill, and for the necessary
harvesting and transport machinery, to be approximately Euro 1.1
billion, as opposed to the estimated total investments of Euro 0.5
billion for the BCTMP mill investment previously announced. Therefore,
the total investment is to a significant extent dependant upon the
technical setup and the annual production capacity of the pulp mill. If
the pulp mill is decided to be established as a BKP mill, then the mill
investment will be significantly affected, e.g., by the price
development of special steels during the implementation period of the
investment. The
extension of the investment agreement is not expected to change the
schedule of the investment projects considerably. The sawmill is
expected to start production at the end of 2008, and the pulp mill at
the end of 2010. The planned location for the pulp mill and sawmill is
about 500 km north-east of Moscow in the city of Manturovo, on the
Unzha River, in the Kostroma region. In
addition, the final implementation of the investments is dependent,
e.g., on obtaining environmental and other official permits in Russia
and on other factors. At this time, no assurance can be given that such
permits will be obtained or that favorable decisions will be made by
the relevant authorities. Ruukki
Group has set a target that equity financing would constitute 20-40% of
the total financing for the Kostroma project. In order to finance the
planned investments in Russia, Ruukki Group intends to arrange a share
issue in the nearfuture with a value of Euro 200-250 million. A
considerable portion of the issue will be directed to international
institutional investors that do not have previous holdings in Ruukki
Group; however, the existing shareholders of the company will also have
the opportunity to participate in the issue. Ruukki
Group is an entrepreneurial development company that operates through
the companies it owns all over Finland in various field including house
building, sawmill and furniture business and care services. Ruukki
Group Plc's share (RUG1V) is listed on the Helsinki Exchange in the OMX
Nordic Exchange's small cap category.
See also:
- — Good prospects for timber trade in Finland
- — EU adopted Commission’s proposal to repeal the so called “knots in the wood” directive
- — Successful Selling at Ligna+ 2007
- — Microwave Drying of Timber Could Revolutionise Industry
- — Germany: Production of stationary woodworking machines rose 18.8 per cent in 2006
