Strategies

Ilim Group comments on a potential IP spin-off

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International Paper has announced that it may sell its 50% stake in the Ilim Group which is Russia’s largest producer of pulp and packaging materials. IP has made it clear, however, that it has no intention of suspending operations or initiating liquidation or bankruptcy proceedings against the group.

The announcement comes in the aftermath of the decision by hundreds of companies to leave Russia following the outbreak of the Russian-Ukrainian conflict and massive Western sanctions against Russia.

Since 2007, International Paper has operated a 50-50 joint venture with Ilim Group, led by billionaire Zakhar Smushkin and his colleagues. Together, International Paper and Ilim Group work to harvest Russian trees, process them into pulp and export the products, mainly to China. The Russian company informed the public that it currently continued its normal business activities. It also states that it has all the necessary operational and financial resources to continue implementing its planned investment programme in Ust-Ilimsk, where a new paper mill with a capacity of 600 thousand tons per year is being built for 1.3 billion EUR. The start-up of the new kraftliner machine is scheduled for the end of this year.

According to the latest figures, the Ilim Group generated an operating EBITDA of 1.1 billion EUR in the last financial year. The group produced 3.6 million tons of pulp and paper, including 2.2 million tons of pulp and 815 thousand tons of packaging paper.

The group points out that with an export volume of 1.4 million tons, China was its main sales market and Ilim plans to further expand its presence in all regions of China in the future. Thus, Ilim intends to increase the total export volume to the People’s Republic of China to 2.4 million tons by 2025, the company announced.