The project of building new pulp and paper mill in Nizhny Novgorod Russia has postponed for 2 years.

Despite the best efforts of Nizhny Novgorod authorities, the Finnish-Swedish company Stora Enso postponed for two years a final decision about the construction of Pulp and Paper Mill, valued at about 1.5 billion euros. According to the Governor of Nizhny Novgorod region, Valery Shantsev, even though the project has already received the status of prior project in the region, the company management totally refused not only to postpone the proposal but also to continue the preparatory work. According to experts, the decision of Stora Enso seems to be a justifiable act in terms of falling pulp and paper market.

Stora Enso was founded in 1998 while the merger of Swedish Mining and Forestry company Stora and Finnish forestry company Enso-Gutzeit Oy. It has 85 production assets in 35 countries with capacity of about 12.7 million tons of paper and cardboard per year. In Russia, it owns paper packaging factories in Arzamas Nizhny Novgorod Region, Balabanova Kaluga region and Luhovicy Moscow region, as well as sawmills in the Novgorod region. The main shareholders are the Government of Finland 12% stake, Finnish and Swedish institutional investors 24%, and 12.8% of the ADR owners. In 2008 revenues amounted to 11 billion euros and net profit – 388.4 million euro.

Valery Shantsev said that the decision to postpone the project for two years due to the financial crisis has been adopted by Shareholders of Stora Enso. “We have explained that they can take a decision on the construction, but to postpone the start of the project, – quotes the Governor. – But they do not want to do this”. In Stora Enso the intention to postpone the construction is confirmed referring to the earlier statement that the work on the project will continue.

The construction of Pulp and Paper Mill capacity of 500 thousand tons of coated paper in the year declared by Stora Enso and the leadership of the Nizhniy Novgorod region in 2007: it was signed an agreement of intent, and the Russian Federation Ministry of Industry received papers on attribution of the priority of the project. By July 2009, Stora Enso was to determine the site for the plant, which area would be about 300 hectares.

Market participants still hampered to predict the fate of the Pulp and Paper Mill project. According to the director Alexander Utevsky, Syassky PPM, the Stora Enso has been fully justified. “Build the plant for two years, to run it and work at the deaf market had no sense, he said. On the other hand, the pulp market is quite mobile, and it is possible the project will be relevant again in some time”.

via Stora Enso Will Leave Without Plant.

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