Segezha CEO talks industry trends, competitive advantages, investment pipeline

18/12/2018

Mikhail Shamolin, President of Sistema’s pulp and paper asset Segezha Group, gave an interview to @Kommersant, the leading Russian business daily, where he addressed the outlook for the industry, Segezha’s competitive advantages and the company’s investment plans.

Segezha is a leading player in the Russian forestry, timber, pulp and paper industry, and is the country’s top producer of sawn timber, pre-fab laminated beam homes, paper sacks and unbleached sack paper. Shamolin explained that what sets Segezha apart from its competitors is the company’s diversified and full-cycle business model. Segezha harvests much of its own timber and produces everything from boards to plywood to paper bags for cement mix to consumer packaging.

In the interview, Shamolin talks about why world prices for cellulose-based products, including paper, packaging, cardboard, tissue and hygienic paper products, have continued to rise over the last five years. One reason is the rise of e-commerce, which has driven increased demand for packaging. Another reason is increased hygienic paper products usage in India and China, the world’s two most populous nations, where Segezha exports some of its products, including sawn timber, sack paper.

The consumer packaging segment is positioned to continue to expand at an impressive rate. Another product where Segezha is seeing rapid growth is glued beams, which are used primarily in housing construction.  “Our [glued beams] are made from dense northern pine; it’s in demand all over the world and we can’t produce enough to meet demand,” Shamolin says.

Construction is underway on a new plant that will produce cross-laminated timber (CLT), wood panels that can be used in the construction of multi-story structures. The product is a substitute for concrete panels, and is gaining popularity in Europe thanks to shorter construction times, the environmental sustainability of wood and costs in line or below masonry alternatives.

Key Segezha investment projects in 2018 included the new plywood plant in Kirov launched in July that is now operating at full capacity of 100,000 cubic metres of plywood annually. In Karelia, a new multi-fuel boiler is expected to come online shortly, which will substantially decrease energy costs at the Segezha mill.

Looking ahead, the company plans a major overhaul of the Segezha Pulp & Paper Mill, increasing output from 360,000 tonnes to 600-700 tonnes, and launching a new power-generating facility that will make the plant energy self-sufficient. “Today we buy about 40 MWt of power from the grid, but looking ahead we will be able to produce this amount [or more] on our own,” Shamolin said.

Read Shamolin’s full interview, in Russian, here: https://www.kommersant.ru/doc/3834120?tw