Mr. Zakhar Smushkin, Board Chairman of Ilim Group, spoke at a plenary session of the Baikal Economic Forum in Irkutsk. His presentation was dedicated to investments into the forest products industry and ways to improve efficiency in using forest resources.

According to Mr. Smushkin, Ilim Group has already invested more than USD 130 million in purchasing high-performance harvesting, wood hauling, road construction and auxiliary equipment in Siberia, as well as in the construction of forest roads. These investments resulted in doubled production per unit of equipment, a 20% reduction in wood costs, and an increased output of saw logs. Moreover, working conditions in the forest were brought in compliance with the modern-day requirements.

The Company is currently implementing an investment project to install a new fiber line in Bratsk with the total amount of investments being USD 670 million. Ilim Group’s aggregate investments in the Irkutsk Oblast will exceed USD 860 million.

The Chairman of the Board has also covered some of the major issues the Company encountered while implementing this project, including lack of sufficiently experienced construction and installation companies in the region, as well as the need to engage additional workforce, since the peak phase of the project will require up to 1,500 people.

In the area of forest management, apart from the poor road infrastructure, Mr. Smushkin has stressed the issue of low yield of wood from a unit of timberland as compared with the industrially developed countries. A possible solution to the issues mentioned above would be to provide major forest products companies with the right to organize special-purpose harvesting operations on the leased timberland plots. This would allow them to increase harvesting volumes without leasing additional timberland plots, reduce harvesting and hauling costs, and improve forest regeneration quality. In 2010, Ilim Group launched a pilot project to introduce this concept in one of the forestries of the Irkutsk Oblast.

About Ilim Group
Ilim Group was registered in St. Petersburg on September 27, 2006. In 2007, the Group was joined by Kotlas Pulp and Paper Mill, Bratsk Pulp and Containerboard Mill and Ust-Ilimsk Pulp and Paper Mill as the mills were converted to a single share. On July 2 Ilim Group started its activities as a unified company.
Production assets of the Group are structured on the production and geographical basis and include the following business units: “Ilim West” (North-Western Pulp and Paper Production), “Ilim East” (Siberian Pulp and Paper Production) and Corrugated Box business.
Business unit Ilim West includes Koryazhma Branch of Ilim Group (Arkhangelsk region), as well as timber suppliers and regional service companies in Arkhangelsk region.
Business unit Ilim East includes Bratsk and Ust-Ilimsk Branches of Ilim Group, as well as regional logging companies and service companies.
Corrugated Packaging business unit includes 2 corrugated plants in Leningrad Region.
The company also includes centralized service providers to the Group’s branches and subsidiaries.