UPM Proceeding with Russian Joint Venture
April 25, 2008 - UPM said that it has agreed to form a joint venture with Sveza Group (Russia) to build a facility that would include a pulp mill, a sawmill and an OSB mill in the Vologda region of Northwest Russia.
A letter of intent on the project was signed on December 19, 2007, UPM said.
The JV, OOO Borea, is a 50:50 deal. Total investment is expected to exceed EUR one billion, UPM said.
Andrey Kashubski, managing director of Sveza Group, will act as the first Chairman of the Board of the new company. The chairmanship will rotate between the companies, UPM added.
The planned capacity of the pulp mill would be 800,000 metric tons, the sawmill 300,000 cubic meters and the OSB mill 450,000 cubic meters.
According to UPM, the joint venture will continue with its feasibility study and permitting process for the project. Critical issues remaining are logging rights and fees, and the Russian Federation's confirmation of financing of infrastructure projects in the region.
UPM said the first investment phase (sawmill/OSB mill) could take place at the earliest in the fall of 2008, and, providing the project proceeds as planned, decisions on the pulp mill investment will be considered earliest in 2009. The estimated start up of the mill would be in 2012.