Yugra-Plit, one of Russia’s largest producers of particleboard, based in Khanty-Mansiysk Autonomous Okrug (Yugra) – a federal region of Russia, which is a centre of oil production – plans to become a leading producer and exporter of particleboard in the Russian Western Siberia and Ural regions. This will take place through the doubling of capacities at its existing production facilities, according to the company.

Yuriy Kraev, director of Yugra-Plit, says the company currently produces 240,000m3 of particleboard per year, of which 229,000 tonnes are laminated. However, it is planned that these figures will significantly increase in the coming years.

“Our existing plant was commissioned at the end of 2010 with the capacity to produce 150,000m3 of particleboard annually, at that time,” said Yuriy Kraev.

“Reconstruction, which was completed in 2013, resulted in the raising of this capacity to 265,000m3. In the first half of 2018, the plant produced about 108,000m3 of products and, according to our plans, the capacities will shortly be significantly expanded.

"Our current reserves provide us with an opportunity to implement this project. For example, we have our own rich raw materials base, with an area estimated at about one million hectares.”

As part of the announced expansion plans, Yugra-Plit is going to build a second line at the plant, which will have the capacity to produce 300,000m3 of particleboard per year – and it will create more than 100 new jobs.

To date, the project has already received support from the authorities of the Khanty- Mansiysk Autonomous Okrug, particularly the governor of the region, Natalia Komarova, who has already promised to provide all the necessary assistance during implementation of the project, along with tax, customs and other benefits.

The planned investment in the second production line is estimated at RUB5bn (US$80m).

At the same time, another RUB1bn will be invested in the production of resins and the impregnation of paper for laminating.

According to the expectations of Yuri Kraev, the expansion of the enterprise will allow it to occupy 10% of the Russian market for particleboard.

It is planned that the majority of future production at the plant will be supplied to the domestic market (particularly the Urals region), with about 20% to be exported to the CIS region and other foreign markets. Part of the production will also be exported to the EU and other western markets.

Mr Kraev also added that the current capacity of the plant is equivalent to 2.5 billion marketable products per year.

In the meantime, in addition to new particleboard capacity, Yugra-Plit has not ruled out the possibility of resuming another large-scale project, which involves the building of a new OSB plant. The implementation of this project was suspended due to the beginning of the financial crisis in Russia.

A couple of years ago, the company declared its plans to invest RUB3.5bn (USD$100m) in a new OSB facility, which should have been located within the territory of the Soviet area of the Khanty-Mansiysk Autonomous Okrug.

Design documentation for the project was completed by local company Kostromalesproekt, while the equipment for the plant was to be supplied by Siempelkamp Maschinen und Anlagenbau GmbH & Co KG.

The commissioning of the plant was initially scheduled for the first half of 2016, however, due to deterioration of the economic situation in Russia, it was postponed until 2019-20.

In the meantime, thanks to the stabilisation of the Russian economy, and the ever-increasing demand for OSB in Russia, there is a possibility that implementation of the project will be resumed shortly.

During the first stage, the plant will have the capacity to produce about 200,000m3 of OSB per year. These capacities could be doubled during the second stage.

In the meantime, there is also the possibility that Yugra-Plit will not be the only large-scale producer of boards in Khanty-Mansiysk, as similar plans are being considered by other market players.

According to recent statements by representatives of the Khanty-Mansiysk government, several other potential investors – both domestic and foreign – are considering building another large-scale facility within the boundaries of the region, which will focus on the production of panels. According to the preliminary plans of the investors, the new facility will be located in the Kondinsky area of the Khanty-Mansiysk Autonomous Okrug.

Technical details of the project have not been disclosed, however, according to some sources within the Khanty-Mansiysk authorities, the new plant will have practically the same production capacity as Yugra-Plit’s existing facilities , while its establishment will allow the creation of a large-scale cluster for the production of boards in the Russian Urals region.

In the meantime, according to analysts at the Russian Ministry of Industry and Trade, there is a possibility that implementation of this, and other industry projects, may be suspended due to ongoing sanctions wars between Russia and the West.

Due to the existing ban on the supplies of production of dual-use to Russia, as well as the supply of some high technologies, the Russian government is considering imposing a ban on the supply of Western technologies for domestic wood and wood processing industries, including the wood based panels sector.

Recently Dmitry Medvedev, Russia’s Prime Minister, said that Russia is “potentially ready to introduce protective measures” in the national wood processing industry. He said that “it should be done sensibly,” because the government “understands the importance of cooperation in this area and adequately evaluates its own capabilities”.

The range of possible measures is very wide, from an increase in tariffs on the import of industrial equipment, to the imposition of an entire ban on the supply of equipment for Russian production facilities specialising in the production of wood based panels.

According to some top officials in the Russian Ministry of Industry and Trade, the government may well ban imports of the industry's equipment in response to recent sanctions. Such plans, however, have already been criticised by producers, according to whom the imposition of any additional bans will have serious, mostly negative, consequences on the further development of the Russian panel industry, as Russia currently experiences a lack of equipment and machinery for the production of such products within the country.

At the same time, in addition to equipment, the ban may also apply to finished products, which may result in a significant increase in prices for wood based panels in Russia.