The board of Mondi Group announced its decision to divest the group’s Russian assets. According to the group, as of 31 December 2021, the net asset value of the Russian operations was Euro 687 million.
“Mondi remains profoundly concerned about the war in Ukraine and is shocked by the humanitarian impact. We express our deepest sympathy to all those affected by the ongoing hostilities, reiterating our call for an urgent cessation and a peaceful resolution”, said the company in the first quarter report.
The divestment process for Russian assets is operationally and structurally complex and is being undertaken in an evolving political and regulatory environment. “Accordingly, there can be no certainty when a transaction will be completed or as to the structure of any possible transaction”, said the company in the report.
The Russian businesses have, to date, managed supply chain constraints. However, the situation remains fluid, with interruptions to pulp and paper production possible going forward. All significant capital expenditure projects in Russia have been suspended.
The company’s main asset in Russia is Mondi Syktyvkar pulp and paper mill in the Komi Republic. In the Top-50 ranking of the Russian “Lesnaya Industriya Journal”, Mondi Syktyvkar ranked third in terms of revenue among all forest based industry companies. Revenue Mondi Syktyvkar in 2020 amounted to 61 billion rubles, and net profit of 11.7 billion rubles. In 2021, Mondi Syktyvkar produced 893.8 thousand tons of pulp, 485.0 thousand tons of paper, 328.7 thousand tons of containerboard and 144.9 thousand tons of newsprint.
Over the past 15 years, the Mondi Group estimates that its investments in Russia amounted to Euro 1.6 billion. As a result of the investments, the volume of production of finished products increased by 46% compared to the level of 2008. In early 2022 Mondi announced its plan to invest Euro 300 million more in Russia in the next 3 years.
Mondi Syktyvkar is a fully integrated mill from timber harvesting to shipment of finished products to the buyer. The mill operates three thin uncoated paper machines, one containerboard machine and a pulp dryer. The company also has a sawmill, a pulp mill, a power plant and a wastewater treatment plant.