Ilim pulp and paper to resume Bratsk plant

Ilim Group will resume the construction of a new pulp and paper mill in Bratsk, Irkutsk region.

An Ilim board meeting on April 1 agreed on putting $700 million into the plant which had been planned prior to 2007 but shelved during the financial crisis and economic downturn. When completed in 2012 the plant will have more than triple the capacity of the nearby Baikal pulp and paper mill, with a planned capacity of 720 thousand tons of bleached coniferous cellulose a year. It is expected that 80% of the output will be exported to China.

Ilim told Vedomosti that they will finance 20-30% of the investment with the rest coming from banks, with a return on investment over 4-6 years, capitalising on strongly growing Chinese demand. However, Dmitry Baranov at Finam Management, is more conservative in his estimates, talking about 5-7 years, and emphasising that the pay back period will depend on the prices, which are quite volatile at the moment.