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Economic development of the Republic of Karelia in 2007

  Economic Policy

  Industrial Policy

    Industrial Policy

    Timber Industry

    Subsurface Use


    Agroindustrial Complex


  Natural Resources
  and Ecology


   Results of 2007

Timber Industry Complex

Timber industry complex (TIC) which activity in 2007 was carried out under conditions of changed forest legislation due to coming into force of the new Forestry Code the Russian Federation since January 1, 2007 still reserves leading positions in industry of the republic .

According to new requirements, there occured transformation of timber enterprises with division of forest management functions and performance of forestry operations. For management in the field of use, protection, reproduction of forest in territory of the republic, by the order of Federal Forestry Agency there have been defined borders of 11 forest areas. For performance of economic functions there has been founded the Forest of Karelia state unitary enterprise of the Republic of Karelia.

Forest Council of the Republic of Karelia has been formed. The basic purposes of the Council are development of recommendations for solution of problems of timber sector in Karelia, effective utilization of woods and forest management, organization of timber industry production, protection of forest resources.

Since January 1, 2008 all functions on coordination of work on use of forest resources and development of timber complex of the republic are carried out by new uniform enforcement authority of the Republic of Karelia - Ministry of Forestry of the Republic of Karelia. Functions, implemented in the Republic of Karelia earlier by the State committee on Forestry and Ministry of Industry and Natural Resources of Republic the Republic of Karelia are delegated to it.

Policy of the Government of the republic in the field of TIC was formed according to the program document Policy and strategy of the Government of the Republic of Karelia in the field of forest exploitation and development of timber industry complex for 2004-2010 where increase of overall performance of timber industry complex on the basis of inexhaustible forest exploitation is defined as strategic target in this sector of economy.

In 2007 executive power had to solve the following problems faced by enterprises:

  • presence of deficiency of raw timber at processing and pulp-and-paper enterprises;
  • increase of requirements of buyers to exported forest products, including by criterion of presence of international certificates;
  • toughening of requirements of customs bodies on sorting of exported round timber, introduction of obligatory payments for fytosanitory survey of exported timber, introduction of quarantine mode for some territories of the republic;
  • detection of infringements of actual volumes of annual forest exploitation in comparison with volumes specified in leasing contracts;
  • personnel problem, related to shortage of experts in forestry and difficulties in selection of personnel for work in the forest from among local population;
  • strengthening of influence of activity of public nature protection organizations in so-called 'green blocks' on carrying out of logging works on rented sites of forest resources;
  • frequent cases of change of proprietors of enterprises, entailing failures in organization of production.

Due to measures taken, in timber industry complex in 2007 it was possible to increase volume of production both in cost expression, and on the majority of kinds of production in natural parameters.

Provision of wood-working and pulp-and-paper enterprises of the republic with raw material in many respects depends on results of work of the logging branch.

Considering the tendency of reduction of areas of high-bonitat plantings with extended exploitation stocks, possible for operation, the primary goal of the Government of the Republic of Karelia in the intermediate term prospect is creation of conditions for increasing development of calculated felling rate on basic using and involving of resources from improvement felling (intermediate using) in the turnover.

Within the past few years the main deterrent of increasing volumes of logging was lack of necessary network of roads to use for removal of timber all-the-year-round. Average density of road system of Karelia makes about 0,25-0,26 km per 100 hectares of forest area, that is 4 times less than the normative requires.

With a view of increasing volumes of construction of wood tracks the governmental order of the Republic of Karelia N75-P of May 15, 2007 On the order of extraction of widespread minerals, construction of underground facilities, arrangement and use of household wells by proprietors, owners of ground areas in territory of the Republic of Karelia was accepted. This document gives an opportunity to tenants of woodland to receive sanctions to development sand and gravel mix pits for their own needs according to a simplified scheme.

Alongside with changes in logging technology changes in work organization in TIC are observed. Lumberers use shift work widely. More often tenants turn to services rendered by contract organizations - mobile brigades. Today they harvest about 55% of total amount of wood.

In 2007 TIC enterprises continued working on voluntary certification of forest resources management. FSC forest management certificates were received by: Segezha Pulp and Paper Mill, Inc., and Lendery timber industry enterprise, Inc.

Analysis shows, that most of forest resources production (61.9%) is delivered by lumberers on the home market. In comparison with 2006 volume of delivery in the home market in 2007 has grown by 10%. In export deliveries significant share is made by hardwood (51.5%). Reorientation of raw material streams to the home market is observed.

Implementation of some projects is aimed at solution of the task of development of profound processing of timber logged in territory of tne republic.

Construction of wood-working enterprise Swedwood Karelia, Inc. Official opening of the factory producing furniture components took place on November 27, 2007. The company management decided to start implementation of the 3rd phase of the project, which is construction of furniture factory.

Reconstruction of Segezha Pulp and Paper Mill, Inc., (modernization of existing equipment) with increasing its capacity up to 600 thousand tons of cellulose a year.

Creation of sawing and processing factory working under the new technological scheme of saw-timber supply, sawing up, drying, and packing (project of Medvezhiegorsky Timber Industry Enterprise, Ltd.). In 2007 the enterprise was bought by Investlespom JSC.

Implementation of the second phase of Setles, Ltd., project (creation modern woodworking complex on the basis of timber mill).

Reconstruction of Kondopoga, Inc.

Commissioning of new timber works (project of Solomensky Timber Mill JSC). Official ceremony of start-up of the timber mill upon complete reconstruction was held on November 16, 2007.

In August, 2007 a foundation stone was laid in construction of factory producing oriented standard boards ОSB that will allow to process deciduous and low-grade timber in the volume of up to 700 thousand cubic meters a year starting from 2009.

At the same time woodworking and pulp-and-paper enterprises have to purchase some raw timber outside of the republic. Of total volume of deliveries it makes 10% for plank timber and 53% for paper wood.

In view of the fact that in the next regions (Arkhangelsk, Vologda areas) work on increase in volumes of wood processing is conducted as well, opportunities of wood raw material deliveries will be limited gradually.

Therefore, the task to form optimum structure of balance of production and processing of wood remains actual for the Government of the Republic of Karelia.

Government of the republic promotes proceeding process of consolidation of enterprises, creation of holdings. Association of the enterprises increases opportunities on organization of their effective work, provision with raw material, involvement of additional financial resources for modernization of production facilities.

Investlespom JSC Holding works in territory of the republic. It comprises Segezha Pulp and Paper Mill, Inc., Karelia Chipboard, Inc., Medvezhiegorsky Timber Industry Enterprise, Ltd., Ilyinsky Timber Mill, Inc., etc.

To specify actions on intermediate term prospect program of the Government of the Republic of Karelia for perfection of timber complex management control system is developed for the period through to 2010.

In 2008, with a view of solution of problems faced by timber industry complex, work in following major directions will be organized and continued:

  • maintenance of steady work of TIC enterprises due to reorientation of wood raw material streams to the home market;
  • support and assistance in implementation of investment projects in the branch, creation of new industrial processing capacities;
  • monitoring of results of activity of TIC enterprises with the purpose of definition of mechanisms of solving tasks on the further development of the branch;
  • rendering assistance to timber industry complex enterprises carrying out voluntary certification of forest resource management;
  • rendering assistance to enterprises regarding complex job training and peopleware of timber complex.
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Created: March 24, 2008. Last updated: April 15, 2008.
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