Investment Director of Pulp Mill Holding Vladimir Krupchak: “For us it is important to create a favourable socio-economic environment both for employees and people in the regions of our companies’ presence”

29 july 2021

On July 23, Arkhangelsk PPM received an Integrated Environmental Permit (IEP) for 7 years. Investment Director of Pulp Mill Holding Vladimir Krupchak told Interfax about how the IEP will help to the implementation of the planned activities, as well as the investment plans and priority projects, the Environmental Efficiency Enhancement Program and social projects of Pulp Mill Holding.

  1. How much will be invested during next three years? What about the medium-term horizon?

Pulp Mill Holding intends to invest more than 160 billion rubles in the modernization of its Russian production facilities.

  1. What are the priority directions and project for which investment will be spent?

We will invest about 1.6 billion rubles for the consumer packaging (Arkhbum JSC) and more than 20 billion rubles will be invested in two additional lines of tissue (Arkhbum Tissue Group LLC). The modernization of the pulp production shop worth 26,8 billion rubles is planned at Arkhangelsk Pulp and Paper Mill. The annual capacity of the third line of the mill will increase by 70-80 thousand tons of pulp.

Our main project is "Breakthrough of 2027". It is the construction of a new sulfate board plant with the third board machine (BM-3) with the capacity of 700 thousand tons per year at APPM. More than one billion euros will be invested in this project. The new production facilities will be located on the site of the sulfite production closed in the 1990s. Infrastructure of APPM with the appropriate reconstruction and capital investments allows to provide the new board production with everything necessary. Within the plant construction, several workshops and auxiliary process facilities will be erected.  

Today, Arkhangelsk PPM is the leader in the production of high-quality containerboard with stable buyers and a wide market. The existing capacity of the two board machines is more than 600 thousand tons per year. The new BM-3 will focus on growing foreign markets, especially Asian markets: the demand for board is expected to double by 2050 in the world.

Our major project is already studied. Its implementation period is five years.

  1. What indicators do you intend to achieve after 2027?

As for APPM, the completion of the project "Breakthrough of 2027" will allow us to increase EBITDA, ensure growth of the company's capitalization and certainly improve the environmental situation in the north of the region through the further implementation of the best available technologies.

We will increase our annual pulp cooking up to 1,700,000 tons and containerboard production up to 1,300,000 tons.

The growth of our capacities means the increase of wood logging, i.e. creation of new jobs, new timber logging companies, taxes, development of the region's infrastructure, etc.

The logic of our vertically integrated structure, where Arkhangelsk Pulp and Paper Mill is the anchor enterprise, is the maximum use of all components of the wood, including its energy resources.

Estimated logging area of Arkhangelsk PPM will increase by 6 million m3 up to 11 million m3 with the commissioning of the new board plant. Our general supplier, Titan Group of Companies, will supply the mill with 2.6 million m3 of logs and Sawmill-25 will supply the mill with 3.3 million m3 of sawn timber. Therefore, Titan Holding will build a new sawmill and pellet plant with an annual capacity of 2 million m3 on the site of Sawmill-25 CJSC. Thus, in 2027, the volume of sawn wood production will increase up to 1,700 thousand m3, pellet - up to 400 thousand m3, wood chips - up to 1,200 thousand m3.

With the increase in the volume of harvesting, the area of forest restoration will increase at least twice from the existing volume (from 19 to 38 thousand hectares). This will require more planting material, including with closed root system. At present time Arkhangelsk Pulp and Paper Mill is designing a forest nursery garden in Novodvinsk for growing seedlings with closed root system with capacity of 3,7 mln. pieces with further increase up to 9 mln. pieces. This forest nursery garden will provide the planting material for forest regeneration works in the northern part of Arkhangelsk region.

  1. What about consumer packaging and tissue?

We are going to be leaders in these market segments. The potential annual capacity of Arkhbum JSC, taking into account the existing facilities and Ulyanovsk site under construction, will be one billion m3.

The strategic goal of Arkhbum Tissue Group is to become a leader on the Russian market in selling sanitary tissue products under the brand Soffione.

  1. Has the Environmental Efficiency Enhancement Program (EEPP), which has been submitted to the Russian Ministry of Industry and Trade, been approved? What exactly is written in the program?

Yes, it was done at the end of February. The implementation of all the measures of the EEEP will lead to a new ecological transformation of Arkhangelsk PPM by 2030. As a result of the planned upgrade, the mill plans to reduce the specific discharge of pollutants into the Northern Dvina River, measured in characteristic integral indices, by 45% - 55%.

The program includes more than 20 measures of environmental protection purposes. The preliminary costs for its financing amount to 18.2 billion rubles.

The work aimed to reduce air emissions of sulfur-containing compounds causing the most trouble for the inhabitants of the nearest settlements of the Arkhangelsk region will be continued and is planned to be finished by 2023.

  1. Has the Arkhangelsk Pulp and Paper Mill received an Integrated Environmental Permit (IEP)?

On July 23, Rosprirodnadzor (the Federal Oversight Service for Natural Resource Use) issued an Integrated Environmental Permit (IEP) for 7 years to APPM. The receipt of the IER will help to the planned implementation of the organizational and technical measures aimed at the integrated reduction of the load to the environment and optimization of control. The presence of the IEP will require from APPM a more responsible attitude towards environmental issues. I also would like to note that receiving IER right now is a positive result as the procedure of IER applications consideration is new and there is not much experience among Russian enterprises that could be acquainted with it. The legislation reforming has not yet been completed in this area.

  1. What social projects are you planning to implement in the near future?

For us, it is important to create a favourable socio-economic environment for both employees and people in the regions of our companies’ presence. Today, APPM annually spends about 350 million rubles for social programs and benefits. The mill annually provides charitable assistance to almost all categories of the population, state-financed, social and other organizations, as well as the Russian Orthodox Church. Its contribution to the patronage of the Arkhangelsk region - support both young talents of the region and recognized people of science and culture - is inestimable. The mill founded an educational project. Many years it publishes and reprint books, art albums, etc. We do all this things and we will continue to do so.

  1. How has the pandemic affected the company's plans?

All companies of Pulp Mill Holding Group are continuous cycle enterprises. They not only worked as usual, but also continued to implement all investment programs adopted by the board of directors. But, of course, with strict adherence to all security measures.

In 2020, APPM opened a new Valmet evaporation plant, completing the priority investment project “Reconstruction of the Cardboard Production” worth 18.8 billion rubles.

Our corrugated packaging division Arkhbum JSC also realized its investment package of 6.8 billion rubles.

We made a qualitative step in business development — we moved to the B&C sector: launched the first production line of the sanitary tissue plant “Arkhbum Tissue Group LLC” in the Kaluga region. This is the largest investment project of APPM for the development of deep processing of its own products — high-quality pulp — worth 11.5 billion rubles. And we have already signed a contract for the construction of the second and third lines. The capacity of Arkhbum Tissue Group will increase to 210 thousand tons/year. The total cost of the project for the construction of the second and third lines is estimated at more than 20 billion rubles.

In spite of obvious difficulties connected with pandemic, in 2020 APPM and its subsidiaries retain the markets, increased capacity of facilities and their growth.

  1. What is the situation with vaccination of employees? Are there any motivating programs?

There is an active agitation of vaccination campaign at APPM. Managers are vaccinated in the same groups as workers. The vaccination is carried out on the territory of the mill in the first-aid station. The workers are given an opportunity to be vaccinated during working hours with pay. Now, more than 700 workers have been vaccinated. There are 210 employees registered for vaccination and waiting for their turn.

The vaccine is being delivered from the Novodvinsk Central City Hospital (NCCH). Due to the lack of vaccines, the cooperation with Zaostrovskiy day hospital of Primorskiy district was arranged. The mill has been working fruitfully with this hospital for a long time. By the efforts of APPM, a primary health worker of Zaostrovskiy day hospital with vaccines is delivered to the first-aid station of the mill. The personnel of Novodvinsk Medical Center and the first-aid station of the mill assist in vaccination of the APPM’s staff.

  1. Do you intend to increase the salaries of your employees this year?

We have already increased salaries in all departments of APPM by 10% since June 1. Earlier we increased salaries by 5% only eight months ago - from October 1, 2020.

At Arkhangelsk PPM there is one of the best social programs for workers in timber industry, including, among other things, rehabilitation treatment, voluntary health insurance, financing of expenses for recreation and rehabilitation for children of company’s workers during summer holidays, purchasing of the New year presents for worker’s children, package tours to pensioners – former workers of the mill, financial assistance for funerals, assistance to multi-child families, for a child’s birth, for anniversaries of retirees, help for surgeries and examinations, for reimbursement of expenses related to movement to a new place of living etc.

APPM makes significant investments to education of employees, preventive health care, improvement of labor conditions and protection, reduction of professional risks.

In 2020 we invested almost 140 million rubles in measures to improve working conditions and occupational safety.

Every year the company annually invests in social programs and projects in the territory of its presence over 350 million rubles.

The mill contributes to the development of the economy of the Arctic region is investments aimed at maintaining social infrastructure facilities in Novodvinsk that provide services for the entire population of the city. We finance the “Arkhangelsk PPM for Children Sports Development” programs (support of children sports clubs). Charitable assistance to social institutions and public organizations of Novodvinsk and the region amounted to about 70 million rubles at the end of 2020. For five years we have been supporting the project “4D: Social Dimension — Let’s Do Good Things”.

Since 2016, APPM has been involved in co-financing the program “Provision of housing for young families”, within the framework of which financial assistance was provided for 100 families of employees.

In March 2020, Pulp Mill Holding adopted a program of assistance to regional medical and social institutions in all territories of its presence. It is being implemented to this day. Only APPM has created a whole system of assistance to healthcare and social sphere. More than 60 million rubles have already been allocated for the re-equipment of medical institutions, the purchase of medical equipment and means of protection against coronavirus, 20 million rubles of which for the protection of workers (a wide range of preventive measures ).