Mondi expands Russian business

South African-based paper producer Mondi is expanding its international presence following its listing on the JSE at the beginning of the month, announcing a €525-million (about R5.1-billion) project to modernise and expand the pulp and paper mill in Syktyvkar, Russia.

All main equipment contracts have been agreed and construction is to commence in April 2008, with completion scheduled by the end of 2010,” the company said in a statement issued last week. “The project will enhance Syktyvkar’s low cost position, with the additional volume of uncoated fine paper and containerboard being supplied to the high growth domestic Russian market.”

Engineering News reported last month that the project involved the construction of new wood-handling facilities, a recovery boiler and turbine, a lime kiln and pulp dryer, as well as upgrades to two chemical pulp lines and improvements to machinery.

Mondi chief executive David Hathorn told the publication that it should slash operating costs and improve efficiencies, while also slightly increasing production by 190 000 tonnes per year, 60 000 tonnes of which will be sold into the pulp market, which is being driven by Chinese demand.

He added that the modernisation of the plant was probably only the start of the group’s activities in the territory, which is arguably the only major unexploited softwood resource left in the world.

“In fact, forests cover more than 70% of the territory, while swamps cover about 15%, making forestry activity attractive but difficult, given swarming mosquitoes and mud in the warmer periods,” Engineering News says. “This means that felling is generally confined to the icy winter months.”

The company was spun-off from former parent Anglo American plc in July this year, and has looked at expansion to secure its position as an independent integrated paper and packaging group.

Its main interests are in emerging markets, such as South Africa and in various locations in Eastern Europe.

According to Mondi, Mondi Business Paper Syktyvkar, with an annual capacity of 580 000 tonnes of paper per year, is one of the largest producers in the Russian pulp and paper industry. In addition, the Syktyvkar mill controls 11 logging companies in the Komi Republic that supply the mill with wood.

Mondi Packaging Paper, which operates within the same complex, has an annual capacity of more than 200 000 tonnes of packaging paper, delivering around 60% of the total white top paper market in Russia and the Commonwealth of Independent States.