BRUSSELS, June 25, 2009 (RISI) – UPM and Sveza’s plans to build a greenfield pulp mill and sawmill in the Vologda region of northwest Russia, have been pushed back due to the current economic climate.

“We are still continuing the work on the project together with Sveza, but given the economic situation in Russia and the pulp business in general right now, it is not possible to make any investment under current conditions. At least not before the economic situation in Russia as well as the general economic situation improves,” Tapio Korpeinen, president of UPM’s energy and pulp business group, commented.

In 2007, UPM teamed up with the Russian Sveza Group to form a joint venture, with each party holding 50% of the share capital.

The Finnish and Russian companies intended to start up a 800,000 tonne/yr pulp mill, a 300,000 tonne/yr sawmill and a 450,000 m³/yr oriented strand board building panels facility by 2012. However, the scheme, which is worth around Euro 1.2 billion ($1.67 billion) is still at the feasibility stage.

Korpeinen was not able to say when the project will advance. “We need to have a better visibility on both the economy and the possibility of getting financing for the investments as well as on the pulp cycle,” he said.

Andrey Kashubsky, managing director of Sveza, commented, “The project is ongoing. We are currently selecting a site for the complex in the north-western region of Russia.” He added, “Following the recent drop in demand for paper and pulp coupled with temporary investment limitations at Sveza and UPM, the final decision regarding the investment has been pushed back until further notice.”

via RISI.

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