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14 Feb 2020

Lukashenko to inspect Svetlogorsk Pulp and Board Mill

Lukashenko to inspect Svetlogorsk Pulp and Board Mill
Photo svetlogorsk.by

SVETLOGORSK, 14 February (BelTA) – Belarus President Aleksandr Lukashenko has left for Svetlogorsk for a working visit, BelTA has learned.

The head of state will inspect Svetlogorsk Pulp and Board Mill and its bleached sulfate pulp plant. The plant has not officially gone online yet and is operating in a test mode. It is possible that the president’s visit will help come to grips with the issues facing the plant.

Issues

The history of the bleached sulfate pulp plant goes back to 2010 when a decision was made to establish a unique import-substituting facility to manufacture products with a high profit margin in the city. Beijing-based company CAMCE was chosen as a general contractor. Contracts worth more than $800 million were signed with the company. The money was provided by Chinese banks.

Issues emerged virtually as soon as the construction began. According to the Belarusian timber, woodworking, pulp and paper industry concern Bellesbumprom, the Chinese contractor played fast and loose with its obligations: it missed deadlines on paperwork, did not involve enough qualified workforce, suspended work for some unexpected reasons. After pilot production was launched in November 2017, issues with the general contractor emerged again.

As a result, Svetlogorsk Pulp and Board Mill had to finish the project on its own involving Belarusian contractors. In early 2020 Bellesbumprom passed the acceptance document that allowed commissioning the plant.

However, relationships with the Chinese contractor and the bank were not broken off. Now the parties are negotiating the amount and terms of payments, payment guarantees and warranty commitments.

How the president can help

In 2019 during pilot production launched by Svetlogorsk Pulp and Board Mill on its own, the plant rolled out nearly 147,000 tonnes of pulp (the designed capacity stands at 400,000 tonnes). Now the plant is building its production capacity. About 85% of products are exported to China, 10% is sold domestically and 5% goes to the CIS member states. In 2019 Svetlogorsk Pulp and Board Mill exported a total of $64.2 million worth of products, including $52 million worth of pulp, which was up 3.7 times over 2018.

The plant was put on the list of troubled investment projects. In the case of the cardboard production in Dobrush and paper substrate production in Shklov, money was needed to complete the construction of production facilities. However, as far as  Svetlogorsk Pulp and Board Mill is concerned, the company wants to ask the head of state to extend the loan payment deadline. In order to complete all the necessary procedures and commission the plant, the government developed a draft decree that is now under scrutiny of the president. Aleksandr Lukashenko did not sign the document right away in December 2019. Instead he decided to look into the draft decree carefully and to make sure that it will really help the company to start operating in the black.

“At present the plant is managed by Svetlogorsk Pulp and Board Mill and is operating steadily. Now we are working to increase its workload as part of a stable technological process,” Prime Minister Sergei Rumas said at the meeting back then.

According to Bellesbumprom, bleached sulfate pulp is in high demand on the international market and is an important part of the country’s import-substituting effort. Bleached sulfate pulp is used to make wallpaper, packaging materials, writing paper, cardboard and other products. “There are no companies like that in the entire post-Soviet space. As of today, Svetlogorsk Pulp and Board Mill is the CIS only new pulp plant,”  Bellesbumprom informed.

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