15 January 2024
Pulp and paper industry of Russia has received a major boost over the past few years due to the growth of the packaging paper market and the development of new export destinations. We spoke to Sergey Pondar, the General Director of JSC Volga, a major paper producer in the Nizhny Novgorod region, about how the industry is feeling under sanctions.
- Sergey Iosifovich, how do you see the current state of the pulp and paper industry in Russia?
- The domestic paper industry has undergone serious changes over the last 20-25 years. Large-scale modernization of production facilities has taken place, and the industry today produces competitive products, a large percentage of which are exported. The pulp and paper industry is capital-intensive and requires serious investments both for maintenance and development. In Russia, not only the owners of the companies themselves, but also the government, which has provided investment and credit facilities, have made a significant contribution to expanding its opportunities.
Since the early 2000s there has been diversification of production facilities, new and modern types of products, which are in demand both in Russia and abroad, are being actively developed. The market is gradually growing along with the purchasing power, which allows the industry to actively develop. The result of this development is that today imports of paper products have been practically replaced in Russia, and our own enterprises are coping with the demand in the country.
- What products does JSC Volga produce?
- Our Mill was built to produce newsprint, but 4 years ago, against the background of the "shrinking" of this market, we were concerned about diversification of our product portfolio and started producing packaging and corrugated paper.
Our paper machines are caught up in the trend of reducing the weight of packaging paper. Paper for corrugated packaging production is becoming thinner and lighter. Next year, JSC Volga launches a re-purposed 6th Paper Machine, which will produce high quality testliners and flutings. This machine will enable us to cover the current market needs.
- Sergey Iosifovich, JSC Volga celebrated its 95th anniversary this year. Please tell us more about it.
- The first Paper Machine of our Mill was launched in 1928 and produced about 700 tons of products every month. It is noteworthy that almost from its very foundation in 1933, our Mill became the country's largest paper exporter.
- The year 2023 is coming to an end. Tell us about the pace of strengthening the production and material and technical base, important events in the life of the Mill.
- In 2023, we invested heavily in expanding production, building new Mill infrastructure, improving the Mill's energy efficiency and increasing paper output.
This year we started producing large-format packaging paper, the 2.5-metre wide reels that are in demand in the market.
We are also continuing our strategic project to restore one of our Paper Machines, which was shut down in 2015 due to a lack of newsprint demand. We intend to retrofit it and start producing paper for corrugated packaging. Of course, this requires global investment. Soon we plan to launch a waste paper line and start manufacturing products from recycled paper. In addition, we are building a condensing turbine with a 27 MW generator in our energy complex. Together all of these projects will provide the Company with an increase in productivity of approximately 50 per cent.
- Your company is a prominent player in the Nizhny Novgorod region. What is your relationship with the regional government?
- JSC Volga receives great support from the authorities of Nizhny Novgorod region: the regional authorities support our investment projects, which allows the Company to actively grow and develop.
In 2021, we reported on the results achieved under the priority investment project in forest development at the level of the Nizhny Novgorod regional government and the Ministry of Industry and Trade of the Russian Federation. As part of this project, new capacities were commissioned to increase raw material output and boost production of finished products. Over two years, we have increased our productivity by about 30%. The Nizhny Novgorod region allocated forest areas for the Company to lease and harvest timber. As a result, we have increased our turnover by almost 50%, increased exports and thereby revenues to the federal and regional budgets. The project also created about 200 new workplaces at the Mill.
To date we are set for even greater expansion. For a year with the structural support of representatives of the Nizhny Novgorod Region authorities, we have been working on an investment project to modernize our production facilities, which will create another 350 workplaces for the region's population.
In 2022, JSC Volga signed an Agreement on cooperation in the implementation of investment projects with the Government of Nizhny Novgorod Region, and in 2023, it signed a special investment contract. This has largely contributed to the Сompany's inclusion in various prestigious ratings, such as the Information Transparency Rating of Timber Processing Companies, support for priority investment projects in forest development, and other state support measures.
- Sergey Iosifovich, please say a few words about the team, education and training of new personnel, and the Company's social policy. What could you be proud of today?
- Today, we do a lot to train, motivate, recognize and support the Volga’s employees. We revise wages, increase salaries and annually increase the real variable part of labour remuneration.
At the end of the year, we reward the best employees, the best workshop teams and labour dynasties. Every year, JSC Volga JSC organizes more than 50 entertainment, sports and health promotion events for employees and their families.
In personnel training and development, in addition to functional professional development programmes, the priority today is the development of the talent pool and one of the areas of the programme for reservists is training at the expense of the employer on higher education programmes.
- Are you thinking about expanding your markets? What are the priority areas?
- Our traditional markets are Russia and India. Russia certainly remains our anchor market for both newsprint and tare types of paper. We are also working on expanding our co-operation with China.
China is our key partner today, both in terms of sales of finished products and supplies of production equipment. It has been a big market for us in the past, but now it has become even more important. The size of the united Chinese market is now several times larger than the united European markets. Therefore, we are actively working on establishing new supply channels to China.
In addition, we are opening up markets in the Middle East, Africa, Turkey and CIS countries.
