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Economic development of the Republic of Karelia in 2005

  Results of 2005

  Economic Policy

  Productive Industry

    Timber Industry Complex

    Mining Complex


    The Agroindustrial Complex

    Transportation Industry

    Communication and



  Inter-Regional Cooperation

  Natural Resources
  and Ecology


Status of Productive Industry

Primary goals the Government of the Republic of Karelia faces in the field of industrial politics in 2002 - 2005 provided creation of conditions for steady growth of basic industries, interaction with the enterprises, increase of production efficiency due to introduction of the new technologies providing deep processing of raw materials and increase of competitiveness of production, growth of labour productivity. Work was carried out according to the republican program Basic Trands of the State Policy of Development of Industry of the Republic of Karelia.

Constantly carried out monitoring of social and economic situation of the republic allowed to define problems of both economics of the republic as a whole, and those branches, the situation in which is under the special control of republican authorities.

Within the period from 2002 to 2005 actions on maintenance of development of key economic branches of industry and economics of the republic as a whole on assistance to institutions of local government in development and implementation of actions on economic and social development of municipal formations were developed and caried out annually. As a result, process of industrial production in he republic was stabilized and has tends to growth. The basic target reference points of parameters of economic growth established according to electoral program of the Head of the Republic of Karelia and Basic directions of activity of the Government of the Republic of Karelia on social and economic development of the Republic of Karelia in 2002-2006 were executed.

It is confirmed by results of work of industries. Regarding extraction of minerals, manufacturing activit, generation and distribution of power, gas and water kinds of activity in 2005 cost of domestics shipped, works and services executed by own strength has made 61,5 billion rbl., that in current prices 1.4 times exceeds the level of 2004. Index of industrial production in 2005 has made 118% to the level of 2004 and 135.9% to the level of 2001.

Achieved in Karelia in 2005 (in relation to 2004) rates of growth of output of major kinds of products considerably exceeds average showing across the Russian Federation: 114.0% of iron ore pellets (97.4% in the RF), 108.6% of paper (101.7% in the RF), 128.9% of cardboard (104.5% in the RF), 123.0% of plywood (113.6 % in the RF). Within the past four years the highest rates were achieved in extraction of minerals (140.8% to the level of 2001); in processing manufactures: processing of wood and wood products (117.7%), pulp-and-paper production (131%), publishing and polygraphic activity (135%), metallurgical manufacture and production of finished metal articles (3.4 times).

The summary information on production indexes regarding kinds of economic activities in 2001-2005 is resulted in the appendix 2.

Compared to 2001, in 2005 it has been produced more iron ore pellets - by 34%, commodity cellulose - by 15%, paper - by 34%, chipboard - 4.2 times, paper sacks - by 60%, non-metallic building materials - by 48%.

With a view of maintenance of further growth of industrial production and growth of tax revenues in budgets of the republic General cooperation agreements between the Government of Karelia and the largest enterprises of the timber industry complex, metallurgical and machine-building enterprises are concluded. Monitoring and analysis of performance of conditions of these agreements is executed monthly.

Timber Industry Complex

Timber Industry Complex (TIC) is the leading branch in the industry of the republic, it includes enterprises of logging, woodworking and pulp and paper industry.

The share of commodity output of the timber industry complex in the general volume of production makes 40%. At the enterprises the timber industry complex there work more than half of all people occupated in the industry. Production of the timber industry complex of the republic takes a significant place in the Russian market. On the share of Karelia there falls 24% of the all-Russian manufacture of paper, 35% of newprint, 6% of business wood, 4% of saw-timbers, 3% of woodchip boards, 59% of paper sacks. The accepted in 2003 Program of actions of the Government of the Republic of Karelia on perfection of timber industry complex management and the program document "Policy and strategy of the Government of the Republic of Karelia in the field of forest exploitation and development of the timber industry complex of the Republic of Karelia till 2010" approved in 2004 defined principles of regional timber industry policy and strategy. The basic purpose is to increase efficiency of use of timber resources and work of branches of the timber industry complex.

The Government of Karelia sees its task in increase of economic feedback of the timber industry complex, in decision of problems of transferring raw streams from foreign to the internal market with the purpose of increase in volumes of processing of raw timber in the region, and also in necessity to coordinate economic, social and ecological purposes of forestry enterprisers, forest husbandmen and citizens of Karelia.

The accepted course for deep processing of raw timber in republic, on support of technical and technological modernization of enterprises of the timber industry complex, and also change of approaches to conditions of letting of timber fund sites under conditions of long-term rent contracts have allowed to found basis of interaction with business and to receive levers of management of use of wood resources in the long term.

In 2005 the basic work on letting of timber fund sites by results of wood competitions is completed: by the beginning of 2006 letting of timber fund sites to 71 tenants with total amount of annual use of 6,3 million cubic meters (74% of calculated wood-cutting area of the republic) was completed, of them competitive rent makes 93% (5,9 million cubic meters). Long-term timber fund rent (from 10 to 49 years) allows enterprises to plan their work for long prospect and makes them more attractive for potential investors. All tenants of timber fund sites have perspective business-plans.

The Federal law 199-FZ of December 29, 2004 consummated January 1, 2005 has brought changes to the Wood Code of the Russian Federation which have considerably reduced powers of the subject of the Russian Federation in the sphere of possession, using and disposal of timber fund. Under the changed conditions work is organised in cooperation with the Forestry Agency on the Republic of Karelia. The new structure of the commission carrying out timber competitions is approved. Representatives of the state authorities of Karelia participate in the timber fund distribution.

As a result policy pursued by the Government of Karelia for the period from 2002 to 2005 the certain positive results of work in development of the timber industry complex of the republic have been achieved.

Rates of growth of output of industrial products of branches of the timber industry complex in the republic higher, than in the next regions of the Northwest federal district: Republic of Komi, Vologda, Murmansk, Pskov and Novgorod areas. Percent of development of calculated wood-cutting area considerably exceed average showings across Russia.

Index of industrial production regrding all kinds of economic activities of the timber sector (timber cutting, timber processing and timber production, pulp-and-paper production and furniture production) have positive dynamics from 2002 to 2005.

As a result of letting of timber fund sites to long-term competitive rent, despite of some decrease in volumes of logging production to the level of 2004, in 2005 the volume of removal of logs has increased in comparison with 2001 by 7.7% and has made 6304,2 thousand cubic meters. Manufacture of merchantable wood has increased by 10,6% and has made 5829,3 thousand cubic meters. Transition to assortment preparation of wood is carried out actively: the share of timber prepared according to this technology by large timber users, has increased from 49.2% in 2004 to 56.1% in 2005. The percent of merchantable wood output has increased from 90.1% in 2001 to 92.5% in 2005.

Volumes of removal of logs in 2005 by Pyaozero Timber Industry Enterprise, Inc., Zapkarelles, Ltd., Olonetsles, Inc., Kostomuksha-Les, Ltd., Karelskaya Sosna, Ltd., North Inter House Joint-Stock Company increased considerably. As Lendery Timber Industry Enterprise, Ltd., Шуялес Joint-Stock Company, Ladenso, Inc., Porosozero, Inc., Lahdenpohja Timber Industry Enterprise, Inc., worked stably.

Indexes of industrial production regrding the "Timber Processing and Timber Production" form of economic activity in 2005 in relation to 2001 has made 117.7% that is caused by 4.2 times increase in production volumes of wood-shaving plates (their production in 2005 has made 126.3 thousand conventional cubic meters), production of glued plywood has grown by 14.1% (in 2005 it was made 23,5 thousand cubic meters).

These volumes have been reached as a result of commissioning Karelia Woodchip Board's , Inc., producing woodchip boards and it's achieving designed capacity, and also modernization of the process equipment for glued plywood production of Bumex, Ltd.

After significant (10%) decrease in production of saw-timbers in 2002 to the level of 2001, the tendency of annual growth of their manufacture began to show - within 20 thousand cubic meters. It was promoted by implementation of investment projects on construction and commissioning of Setles, Ltd., saw-mill in the settlement of Impilahti, modernization of saw-mills and more complete loading of equipment in Medvezhiegorsky Timber Industry Enterprise, Ltd., Kem Saw-Woodworking Mill, Ltd., Zapkarelles, Ltd., Pyaozero Timber Industry Enterprise, Inc., Ilyinsky Saw-Mill, Inc., Kondopogs Timber Exploitation Mill, Ltd. In 2005 converted timber production has made 771,2 thousand cubic meters, that exceeds the level of 2002 by 6.7%, however the level of 2001 will not reached yet.

Indexe of industrial production regrding the "Production of cellulose, wood pulp, paper and cardboard and products made of them" form of economic activity in 2005 in relation to 2001 has made 131.0%. As a result of modernization of the process equipment of Segezha Pulp and Paper Mill, Inc., that is one of the largest pulp-and-paper enterprises of the republic, commissioning new paper-making machine in Kondopoga, Inc., reconstruction of Pitkaranta Pulp Mill, Inc., in 2005 in relation to 2001 volumes of paper production increased by 34%, (in 2005 it was made 936,7 thousand tons), volumes of commodity cellulose production increased by 15% (84,2 thousand tons was made), volumes of production of paper bags increased by 60% (311,7 million pieces has been produced).

Kondopoga 's, Inc., acquisition of Suojarvsky cardboard factory and start up of the cardboard-making machine have allowed to stabilize cardboard production which production output in 2005 was made with 70,7 thousand tons, that exceeds the level of 2004 by 29%.

Manufacture of the major kinds of production of the timber industry complex in natural expression in dynamics from 2001 to 2005 is resulted in the appendix 2.

Technical support
Created: April 10, 2006. Last updated: May 7, 2006.
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