Quo Vadis

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Experience of low-scale milling in Central
Europe and North America relative to the Far
Eastern region VLADO BUTORA President Salix
Company (Switzerland)
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Quo Vadis
Future of Forest Lumber Industry
Dr. Forst Ing. ETH Vlado A. Butora Salix
Inc. Switzerland / Canada
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• The Russian Forest and Lumber Industry
• is facing similar problems like in the other
  countries,
• but the impacts to the Russian Industry is more
  serious.

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World present situation

• The last two decades of global free trade
  politics, the world political
• changes and the world economical development as
  well, is putting the
• Forest and Lumber Industry under enormous
  pressure
• Securing the timber areas (ownership, timber
  licences etc)
• Over cutting the timber areas, low reforestation
• Increasing the energy costs
• Increasing the transport distances (timber areas
  manufacturing facilities)
• Environmental protection of forest areas
  (National parks etc)
• Over supply of lumber in industrial countries

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Present Situation of Forest and Lumber Industry
in Far East Russia(Summary of the statements of
several organisation)

• Poor log export policy / loosing major profits to
  the import countries
• Large dependence from export
• Forest companies have problem to secure the raw
  material
• Increasing the transport distances of raw
  material to the mill and markets
• Increasing the energy costs
• Decreasing of working capital
• Low interest to invest into Forest Industry
  (high capital costs, small margins and low RI
• Fast changes in woodworking and building
  technology
• Dullness to sales low grade timber, lumber

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Present Situation, cont.

• Low infrastructure technical, human resources,
  
• Not efficient government regulation of timber
  resources
• Forest Policies not up to day
• To many government organisations
• No or very low support from government and
  financial institutions for development of small
  Industry program in Forest, Lumber Industry
• Past, poor management and bad privatisation
  concept of forest and lumber companies
• Dependence from Moscow
• No fair businesses practices

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What to do?

• There is a way for the future?

Yes Russian Forest Industry has the great
opportunity
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• Implementation of new Forest Policy (Canadian
  Licence System)
• Like in Russia close 100 of Forest Land is
  owned by Government
• Advantage
• Government has steady revenue (Stumpage fees)
• Industry has steady timber supply
• Forest companies (licence holder) have
  responsibility to manage forest areas
• Easier government control of Forest policy /
  licence holder could loose the timber licence
• Forest company have security for new long term
  investments
• Equal business opportunities for all companies
• Development of new work places
• Healthy cooperation between Government and
  Forest, Lumber and Building Industry

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• Development of small business Industry
• British Columbia , Canada Woodland Tree
  Farmer Licence
• Licence holder are holding up to 2 - 5000 ha of
  forest land
• 100 sustainable Forest Management System
• 100 selective logging only
• Back to the timber sources
• Secure the local working places
• Low investment costs of operating equipment
• Better usage of wood fibres
• Support an development of the local lumber und
  building Industry
• Secure the social infrastructures of small
  cities and villages (no ghost cities)
• Lower transport cost to the market (finish
  products only)

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• 3. Large Facilities ?
• There is, will be and must be a place for large
  facilities (like Plastum, Igirma Tairiku) .
• But this mill, similar to the Canadians mills
  will always facing following
• problems
• Log supply
• High investment of logging equipment
• New sawmill technology
• Shareholders dependence
• Increasing transport costs for raw material
• Large distance to local, domestic and
  international markets
• Large dependence from export and lumber brokers
• Labour problems
• Low infrastructures for high technology equipment
• Low or no interest of foreign investors to
  develop the social and economical infrastructure
  of the regions!

!
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Small business the spine of the Industry

• To the opponents of this concept - example from
  Switzerland
• Switzerland annual log production - 6 Mill m3 /
  year
• Public sector owns 70 of forest are and
  private sector 30
• 450 saw mills
• 250l saw mills with capacity of 2 8000 m3 /
  year
• 80 of the owners are also home builder and
  diff. woodworking manufacturers
• Only two mills cutting more that 100,000 m3 /
  year
• High integration of local sawmill industry and
  building industry
• Log supply 100 from selective logging
• Intensive Forest Management System
• 50 of logging take place in the mountains
  (Cable logging)
• Forestry, Agriculture and Tourism are building
  a common utilization system

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Small Business Program and Far East Region of
Russia

• Ten years ago, with forest experts from
  Khabarovsk and Vladivostok we started to develop
• this program.
• Due to several circumstances this project was
  put on hold.
• Today, the need to continue and to develop
  further this program is probably more important
• than 10 years ago.

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• To support this program we developed two small
  mills
• Canada 2000
• Canada 2005
• This mill are very suitable for the Russian
  conditions and could excellent support the
• development of Small Forest Business
  Program in the Far East of Russia
• The major characteristic of this mill
• Low investment costs
• Good productivity
• Energy efficient
• Easy technology and low maintenance equipment
• Prove operating records in Russia.

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Operating Facilities in Russian Far East

• Canada 2000 Marinskoje / 1996
• Closed due to disagreement between Owner and
  Government organisation,
• Sold to Primorskij kraj and still profitable
  operating in Dalnoriechensk
• Canada 2000 Komsomolsk na Amure (1999)
• still operating with profit
• New Canada 2005
• Sold and will be delivered end of September to
  Kukan, Khabarovsk kraj

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Canada 2000

• Production up to 20,000 m3
• Including
• Scragg Mill (max . 40 cm)
• Board Edger
• Horizontal Band - Saw
• Transfer tables
• Computer Control
• Sorting table
• 3. Price from 575 US

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Canada 2005

• Production up to 8000 m3
• Including
• Band Saw Mill
• Board Edger
• Power Generator
• Sharpening equipment
• Laser lines
• Log loader
• 3. Price from 91,000 US

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Conclusion

• The past good cooperation and connection between
  the Governments of Khabarovsk, Primorskij kraj
  and Britisch Columbia
• should be re-open and
• the positive results should be put in the
  reality.
• It is not only my opinion, but the the Canadian
  Forest Policy System, Licence System and Woodland
  Licence could be the best suitable systems to
  apply for the Russian Far East Region, since also
  the climate and forest are similar as well.
• New re-organisation of the Forest Sector will
  results, that the Far East Russian Forest and
  Lumber Industry will be again the world leading
  timber and lumber producer.
• Thank you for attention