IP Russia wood supply

Saint-Petersburg 08th of July, 2013

IP Russia wood supply

Presentation for

EFI summer school

Grabar Fedor

Deputy forest director

IP Russia

IP at a glance

2

08th of July, 2013

source: http://www.ipaper.com/US/EN/Company/Investors/RoadshowHandout.html

Founded in 1898

One of the world's largest producers of paper and packaging

2 Key Platform Businesses: Uncoated Paper and Packaging, complemented by Xpedx (distribution)

Manufacturing operations across the globe:

North America Latin America, Europe, Russia, Asia North Africa.

60,000 employees in over 20 countries

IP EMEA

Revenues in 2010 - $3.7 billion

Manufacturing operations

in 8 countries

3 uncoated paper mills

2 recycled board mills

25 box plants

Production capacity of

> 3.8 MM metric tons

of paper and board products

9,000 employees

(over 30,000 including Ilim)

3 ILIM Group JV mills:

Forest management and wood supply

Integrated Paper mill Offices

Foodservice Europe Ilim Group Shorewood Packaging Europe

Canary Islands,

Atlantic

Guadeloupe,

Caribbean Sea

Box plant Recycled containerboard mill

Ilim Group JV in Russia

3 source: IP

:

IP Russia and Svetogorsk mill: major milestones in our corporate history

Finnish Enso village. Paper &

board mill

1887 1929 1936 1961 1972 –

1990 1995

Декабрь

1998 1999

2001-

2002 2004 2007 2008 2010 2011

Chlorine mill

Reconstruction

Soviet government

implements

large-scale modernization

of the mill

The mill joins Swedish

company Тetra Laval

IP purchases OAO

Svetogorsk

Launch of sheeting facility

PM4 and PM1

rebuilt

Launch of A4

facility. Speed up

of PM4

Launch of BCTMP plant

Group ILIM is set up

Groundbreaking

ceremony for CHP with

Governor Serdykov

ZAO International Paper

Liquid glass mill

4 source: IP

:

Trees Pulp Finished products

Hardwood

Softwood

Packaging

Print & Writing

-Rolls

-Cut size

Tissue

BCTMP/Mechanical (chemical + mechanical)

Kraft pulp (chemical process)

Bleached pulp (white)

Un-bleached pulp (brown)

Finished products

5 source: IP

:

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Sustainability Goals

source: IP

:

Wood supply

7 source: IP and state forest inventory data

:

Annual consumption: > 2 MMm3.

Specie: softwood, birch, aspen.

Delivery: truck, railroad.

Suppliers: > 60.

Purchasing: at gate, at railway landings,

at roadside storage or remote wood

yards.

FSC COC: 100%.

Measurement - by stick scaling, results in

solid m3 under bark.

Target inventory - 30–45 days of

consumption.

Snow storage of aspen to guarantee

supply of fresh aspen in Q4.

Forests

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Forests are state owned.

IP leases forests for long term.

Square: 360 th. Ha.

FSC FM: 100%.

Employees: 160.

Harvesting method: CTL (harvester +

forwarder).

Operations: logging - partly by own capacity,

trucking, loading, road construction – by

contractors.

Two shifts truck delivery due to road and

weather conditions.

Reforestation: 85% seed-tree or sprouting

methods; 15% planting with seedlings.

source: IP and state forest inventory data

:

Wood supply key issues

Country

Factor Russia

(Northwest)

USA

(Northeast)

Finland

(South/central)

Forest land ownership 100%

government

72% private

28%

government

65% private

35%

government

Modern forest management Low High High

Saw log yield (%) 30 50-70 53

Volume from thinnings (%) 3 30 27

Forest road density, km/1000

ha 1 10 12

SW Growth rate, m3/ha/yr 2.1 4.4 4.4

SW Rotation cycle, years 85+ 55 70-90

SW yield, m3/ha/year 0.1-0.2 2.3 2.1

Source: Government publications, technical articles, professional estimates.

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Driving toward sustainable forest management practices is good opportunity to strengthen

a competitiveness Russian forest industry in terms of wood supply.

Wood supply are influenced by:

Consumption conditions (specie,

specs etc)

Logging and trucking capacity

Condition of forests

(tended/untended, road density etc)

Forestry regulation

Monetary policy

Thank for your attention!

www.ipaper.com

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