Ukraine's Zhydachiv Mill Stops Production of Newsprint

May 15, 2012 (Interfax-Ukraine) - The Zhydachiv Pulp and Paper Plant (Zhydachiv, Lviv region), a monopoly producer of newsprint in Ukraine, has stopped producing this type of paper in connection with non-profitability of this product due to the constant growth of prices of wood and tariffs on cargo transportation.

The situation at the mill is very tough now, a source in the industry has told Interfax-Ukraine. The mill's personnel have been drastically reduced in connection with the closure of a woodpulp plant and a chemical and thermomechanical pulp plant, which are involved in the production of newsprint.

As was earlier reported, the central committee of trade unions of the Ukrainian forestry sector on February 24, 2012, sent a letter to Prime Minister Mykola Azarov, asking to address the issue of including newsprint in the state order, with the secured provision of wood, establish state supervision over regulation of the prices of wood, and achieve a reduction in round wood exports.

However, the executive director of the UkrPapir association Eduard Litvak told Interfax-Ukraine, there had been no response from the authorities to that request.

"At the same time, the government clams the need to facilitate the substitution of imported goods by domestic ones (and this is amid in a foreign trade deficit estimated at over $9 billion). However, in the case of newsprint, this 'zeal' looks mismatched: the import of cardboard and paper products will additionally increase by 40,000 tonnes of newsprint per year, which will be accompanied by the loss of jobs and a decline in Ukrainian budget receipts," he said.

According to him, the newsprint market last year was split in the following way: 35% belonged to locally made newsprint, while imports accounted for 65% (mainly Russian and Polish newsprint), while today it will be 100% imported newsprint with all negative expectations in the pricing policy. "How will Ukrainian mass media, who are now in a serious financial condition, respond?" he wondered.

"Therefore, we can say one thing today — the state has not shown interest in the preservation of the production and stabilization of the situation at the mill. And the price at stake is whether our state remains informationally independent," he added.

As reported, the decision to cease the production of newsprint was made by the mill's owners (the Privat Group) due to constant problems with the provision of the mill with softwood after the State Agency for Forest Resources had switched sales of this type of wood to auctions.

The mill is a major employee in the town of Zhydachiv and currently employs over 1,000 people (about 3,000 people worked at the mill in 2002).

SOURCE: Interfax