One of the largest European paper producers, the Austrian group Mondi, announced in May 2022 the sale of its factory in Komi due to the war between Russia and Ukraine. The project was also stopped by the American Sylvamo, the Swedish Ikea and the Finnish Metsa.. We say how company employees react to the departure of timber companies from Russia and what happens in the forest industry after February 24.
On May 4, 2022, the Austrian group Mondi announced the sale of assets to Russia as part of the so-called special military operation of the Russian authorities in Ukraine. In addition to the paper mill in Syktyvkar, it has packaging plants in the Yaroslavl, Lipetsk and Sverdlovsk regions.
“Mondi is deeply concerned about the war in Ukraine and shocked by its humanitarian consequences. We extend our deepest condolences to all those who have suffered as a result of the hostilities, urge you to urgently end the war and reach a settlement agreement. “The group’s interests in Russia, our corporate values and obligations to the counterparties, the board decided to sell Russian assets,” the company said in a press release.
Mondi’s largest Russian asset is the timber industry complex (TIC) in Syktyvkar. It produces every third package of office paper in Russia, or about 1 million tons of products per year. The rest of the market belongs to American International Paper and Sylvamo’s “daughter” – it also announced the sale of its paper mill in Svetogorsk, Leningrad Oblast.
Nine winter months
Built in Soviet times in Ezhva, a suburb of Syktyvkar, the paper mill was purchased in 2003 by the Austrian group Mondi. In 2015, it entered the government list of “backbone” companies. The company has 4,500 employees; in total, just over 55,000 people live in Ezhva.
– The factory allows a much larger number of people to work. You have to understand that there are many contracting organizations around it: construction, services, logistics, lumber companies. Today it works the same way, production does not stop, but the Vienna-based farm has management problems. There is no job to resell to someone, there is a duty to keep it running efficiently. Obviously, there are some risks. “Everyone is running now, and so are I, as far as I can tell,” Sever told Realii, one of the leaders of the Syktyvkar forest complex, who spoke on condition of anonymity.
Office paper “Snegurochka” is the leading product of the Syktyvkar factory. The name was not chosen by chance: the winter in Komi lasts nine months a year and even at the end of May the roads can be covered with snow, say the locals. For working in difficult climatic conditions, employees receive the so-called “northern” benefits and students can skip classes on “activated” days when the temperature drops below 30 degrees.
In March, office paper in Russia increased in price by 5-10 times. Later, prices flattened, but some stores sold pre-ordered A4 sheets, brown “eco-paper” appeared on the shelves and sometimes retail chains sold one package per person. While market experts explained the rise in prices from the interrupted supplies of Finnish bleach paper to Russia, in Syktyvkar they talk about ordinary speculation.
– We conclude contracts for a quarter, half a year, so the price does not change for a long time. We sell wholesale at the lowest price, and then 3 or 4 links that increase their price. Pledge their risks, just greed. Nowhere in the West is there such a thing as prices dancing from time to time. Such legislation in Russia allows this to be done. In Germany, if someone gets up, the tax office immediately gives you a hat. And we can. We are still publishing a white paper, as I understand it, we have found the Russian version (bleach). How many of these materials are imported in total? Our main material is wood. The forest is located here in the Republic of Komi. “Everything else is a trifle,” said Sever.Realii’s interlocutor.
The village of Ezhva, translated from the Komi language, means “meadow water”. The river of the same name flows along the plant, so questions often arose about the quality of its water to the locals. He protested against the “white foam” emissions from the company’s pipes.
– There are many businesses in the city, there are many shows. In Syktyvkar itself, the drainage is generally poor. The emission incidents were 5-7 years ago. In those years decisions were made for the reconstruction of the therapeutic facilities of the whole city. The company has invested a lot of money. We carried out a strong modernization, to the point that at the same time we started burning waste from the Syktyvkar sewer cleaning system, not only the factory. The renovation was completed three years ago. And in principle, since then I have not heard of such problems, – continues the company employee.
The reconstruction of wastewater treatment plants is not the only Syktyvkar modernization project organized by Mondi. In 2020, the company completed a € 135 million renovation of the CHP plant to supply electricity to the plant, as well as reducing carbon dioxide (CO2) emissions. The group’s total investment in new equipment and urban infrastructure over the years is estimated at 1 billion euros.
The locals find many advantages in the “arrival of the Austrians”, one of which is order. Security appeared at the checkpoint, for intoxication – dismissal, a fence surrounded the vast area of the factory.
– I do not think that the changes in Ezhva are directly related to Mondi. In my opinion, many things have changed for the better, because people here make money, pay taxes. And in general the village looks good in relation to others: it has been renovated and is being renovated. The “Monti” has kept to the maximum the social obligations that existed in the forest department: polyclinic, doctor’s office, children’s camp, several sports facilities. “Everything was restrained,” recalls the factory employee.
“Mondi” is one of the most famous places to work in Syktyvkar, says a local Ekaterina Pimenova. He works as a system administrator at TP Wallet. This is a business that organizes meals for Mondi employees. The canteen is “under contract”, like dozens of other companies growing around the carpentry complex. Ekaterina found work here in her final year at the “sawmill” – as the locals call the Syktyvkar Forest Institute, where industry experts are trained.
– I have been working here since 2009, almost 13 years. I think nothing will change for us after the sale of Mondi. We have a one year contract. In addition, we provide services to other companies, he says.
Easy to “special operation”
The timber industry in Russia has always been very attractive to foreign investors, as it was oriented towards foreign markets. The situation changed when in March 2022 the government of the Russian Federation announced a ban on the export of round timber to the countries of the European Union, the United States, Canada and a number of other “unfriendly” countries for officials. Since April 8, the European Union has banned the import of Russian timber.
In the spring of 2022, the work of their wood processing companies was stopped by European agents, which aggravated the situation. The largest of these are the Swedish IKEA and the Danish JYSK.
– Now our procurement activity has been substantially reduced by 2-3 times. 200 people at idle. We no longer supply Russian Ikea, we transferred many of them in round form and semi-finished products. There were 5 or 6 companies like us that supplied them in their production near Novgorod. We still transport semi-finished products to them, but abroad. And in a round form they closed everything. They brought a lot, on an annual basis, 100 thousand cubic meters, – said Sever.Realii Alexander Oshkaevhead of the wood processing company Runko Group from the Leningrad region.
In March, the Finnish company Metsä Group announced the suspension of the Metsä Svir sawmill in the Leningrad region. The timber factory in Svir was established from the beginning in 2006. The investments in its construction amounted to 60 million euros. More than 100 people worked on it.
In “Metsya Svir” they did not answer the call of the correspondent of Sever.Realii. General Manager of Metsä Forest Podporozhye, who supplied round timber to the plant, Alexander Zaleski did not comment on the parent company’s departure, noting that their company continues to operate, but on a smaller scale.
– Yes, now all companies are going through difficult times. They are mainly related to a difficult market situation, difficulties in conducting financial transactions under foreign trade agreements, restrictions on logistical support as a result of supply chain disruptions and a ban on timber exports to Europe. This is what our company is facing, but nevertheless we did not stop our activities, but we limited them according to the market opportunities. Although our parent company is Finnish, we are also a Russian company. “We work according to Russian law,” he told Sever.Realii.
The American company International Paper, which owns the Svyatogorsk Pulp and Paper Mill (PPM) in the Leningrad region, also announced the sale of assets to Russia in May. The company declined to comment to Sever.Realities on the situation with the sale of the business.
According to the General Manager of Russian Export LLC Yuri Sindorov, timber collected for such large enterprises as the Svyatogorsk pulp and paper mill turned out to have no owner due to sanctions. According to Sidorov, today, in general, about 70 percent of the forest is not in demand.