Segezha PPM Modernization Investment Project Listed as Top Priority Project by the Ministry of Industry and Trade

By order of Denis Manturov, Minister of Industry and Trade of the Russian Federation, an investment project of Segezha Group (part of Sistema JSFC) “Modernization of Segezha PPM JSC, and Capacity Increase in Sack Paper Production” has been included in the list of top priority investment projects in forest management.

Order No. 114 signed by the Minister on January 22, 2019 allows Segezha Group to rent forest areas in Karelia with the calculated production volume of 219,500 cubic meters. The increase of the calculated production volume is an issue of resource safety of the project and one of effective tools of managing product costs. Segezha Group is the largest forest user in the European part of Russia. The total area of its leased forests now equals 7.4 mln ha, 86% of which is certified according to international standards.

The priority status in the area of forest development was assigned to the modernization project of the Segezha Pulp and Paper Mill following implementation of a large-scale investment program in 2016-2018. In 2016, the plant replaced the fiber line of the pulp mill and upgraded digester unit No. 4, which allowed to increase the output of pulp, save energy and chemicals and process wood raw materials more efficiently. In 2017 the SPPM launched unique BDM-11 paper-making machine produced by Voith Global Concern, with the output capacity of 110,000 tons of sack paper a year. A modern boiler system that uses bark and wood waste products as fuel was delivered by Valmet in 2018. The system generates steam for technological processes of the mill.

Further modernization of the Segezha PPM will result in increased production, and on the other hand, help improve efficiency at every stage of production,” President of the forest industry holding Mikhail Shamolin said. “We have already invested more than RUB 14 billion in the development of the mill over the past several years. The modernization program is continuing, we are expecting to improve the SPPM further so that it could be favorably compared to best state-of-the-art pulp-and-paper mills abroad.”

After the capacities of the Segezha PPM are upgraded, the enterprise will be expected to produce up to 600-700 thousand tons of paper a year. According to initial assessments, this reconstruction will cost around RUB 45-50 billion.

The planned modernization process will allow not only to increase the volume of paper produced at the Segezha PPM, but also to diversify the Group’s product portfolio, and use deciduous trees in production. Deciduous trees provide up to one-fourth of all harvested timber raw materials in Karelia. After the investment project is implemented, the combine will be able to produce marketable bleached deciduous and coniferous pulp and bleached paper, and this will open new markets for the Group, since at present the Segezha PPM produces only non-bleached kraft paper made of coniferous pulp.

Mikhail Shamolin, president of Segezha Group, noted that last year the Segezha PPM reached the record production volume - 355,000 tons of premium-class sack paper. To compare, in 2014-2015 the production did not exceed 260,000 tons.

“We have practically no doubts that the investment project being implemented in the region is beneficial to all,” said Nikolay Ivanov, Head of Segezha Group’s GR Relations, commenting on the priority status of the modernization program. “The business we are building in Karelia has not only good capitalization, but enjoys a good public reputation as well. Working in the interests of the state, the corporation and local residents is the foundation of our strategy.”