RFP Group, one of Russia’s largest timber holdings, has suspended its project for the building of a large-scale pulp and paper mill in the city of Amursk in the north of the Khabarovsk Territory.
The volume of investments in the project were estimated at least US$1 billion, said the head of the company Konstantin Lashkevich. According to him, the study of the project showed that its rate of return will be close to zero.
RFP Group, which is the largest timber industry enterprise in the Far East and one of the leaders in the export of Russian timber to Asian countries is owned by Russian millionaires Roman Abramovich and Alexander Abramov (58% of the company). The remaining 42% stake is owned by the Russian-Chinese Investment Fund, a joint venture between RDIF and China Investment Corporation.
As Lashkevich told in an interview with the Russian RBC paper «there used to be a pulp and paper mill in Amursk, which, however, was closed after the collapse of the USSR.
«There was an idea to build the plant in this site. We hired foreign consultants who worked out this project in detail, but even if we provided the plant with raw materials, its IRR (internal rate of return - Kommersant) would be close to zero.
According to him, the pulp and paper mill in the Far East is a "meaningless story." He believes that it is easier to create "more modest investment projects for the production of pellets with a profitability of 12-17% than to build a giant facility that will be unprofitable and will constantly ask for state support."
By: Eugen Gerden