Ilim Group Mulls Investment in New Pulp and Paper Mill in Russia’s Far East

The Russian pulp and paper giant Ilim Group might become one of the investors in a new pulp and paper mill in the country’s Far East via a project which is being considered by the Russian state-owned Vnesheconombank (VEB) bank. Ilim told RISI that it is "studying such a possibility."

Russian media sources recently quoted Ilim’s chairman Zakhar Smushkin as saying that the group was in negotiations with the ministry of trade Minpromtorg on investment incentives for the project. Smushkin said that the project would be interesting for his firm if there were clear prospects for selling the pulp to the Chinese market, or if Ilim comes up with "a special type" of pulp that could be made there.

"[Ilim] sees itself growing only in export markets because of our [strong] position in the domestic market, where any further step would lead to a monopolistic status," Smushkin said in an interview with the RNS news service.

Last year, VEB announced that it intended to revive plans to invest in a greenfield pulp and paper mill in Siberia, a scheme which dates back to 2008 but was scrapped in 2013. The mill would have a capacity of 800,000 tonnes/yr of softwood pulp, with production earmarked mainly for the Chinese market. VEB said that it plans to act as the main investor for the $1.5 billion project, but also intends to attract financing from "strategic partners" in Russia and China.