The Russian forest sector is an important player in the global timberland space and continues to offer opportunities for further development. Russia has the biggest forest area in the world and is one of the top roundwood producing countries. However, the overall standing stock includes large areas that are not economically available; thus, most of the forest remains under-utilised due to limited infrastructure. Sources: Indufor, Timberbiz
Mr Jarno Seppälä, Head of Forest Industry Consulting at Indufor, presented the Russian forest sector and its importance and dependencies in the global context at the “Who Will Own the Forest? Timberland Investment” conference in Portland, Oregon held in September.
Russian forest resources fall under federal ownership and currently there are no options for the privatisation of forests. The government has leased about 20% of forest lands. The leasing time is up to 49 years, while the average rotation period for coniferous forests is 80 years.
Interestingly, the largest Russian forest leaseholders (Segezha, Ilim Group and RFP) are among the world’s largest forest owners/leasers. There are also significant foreign lease holders in Russia of which most are from western Europe.
However, there are also numerous Chinese leaseholders, especially in the Russian Far East.
Exports account for under 10% of the total harvest, and China is by far the largest export destination for roundwood. The volume of Chinese imports has amounted to about 13 million during the last years.
However, there has been a major decline in volumes in 2019. This is partly due to the export limitations on birch logs during the first six months of the year. Further export limitations on softwood logs from the Russian Far East will be due this month. The continuation and expansion of export ban(s) and quota(s) to China are expected to be the most likely near-term disruption related to Russia’s role in the global roundwood trade. The impact will be seen the most in China.
Another major phenomenon that can influence the balance between domestic roundwood processing and trade is the Forest Sector Strategy 2030 which calls for opportunities to develop value-added forest products and wood processing industries.
The strategy also aims to redirect roundwood to be utilised in local consumption rather than for exports. In the baseline scenario, the domestic roundwood use would increase by over hundred million.
The strategy foresees declined roundwood export volumes. Over half of the ongoing and planned forest sector investments focus on the sawnwood and wood panels product segments. Consequently, Russia is looking to encourage more significant investment in the forest sector as a whole.
