ULK Group, the largest sawmill company in the Northwest of Russia, will stop all of its pellet production facilities due to lack of sales. The company has already completely stopped the pellet plant in Pestovo, Novgorod region, said the owner and CEO of ULK Group Vladimir Butorin. The company fired about 1.5 thousand out of 5.4 thousand employees.
“We were forced to completely stop the plant in Pestovo and cut 350 people there, because there was no logistics at the plant in Pestovo, we were not supplied with rolling stock,” Butorin explained. According to Butorin, the Russian export of wood pellets through Turkey, which began after the EU sanctions, was stopped due to the threat of secondary sanctions.
In 2023, ULK Group plans to reduce lumber production by 600,000 m3, while the company's logging volume will not exceed 2.5 million m3. The company expects that its revenue will be reduced by 2.5-3 times. In 2021, ULK Group's revenue reached 36 billion rubles ($495 million).
ULK Group also suspended construction of a new sawmill in the Arkhangelsk region with a design capacity of 1 million m3 of lumber per year, as European companies refused to supply equipment and return advance payments. The ULK Group lost 10 billion rubles ($138 million) on this project. The Pinezhsky sawmill was supposed to start work in 2023. The suppliers of equipment for the plant were the companies MiCROTEC (Italy), Nordautomation (Finland), Jartek (Finland) and Valutec (Sweden).
“I am sure that most of the Russian wood processing enterprises are in even worse conditions today, with the exception of the pulp and paper mill,” Butorin said.
A pellet plant with a capacity of 60 thousand tons of wood pellets per year in the city of Pestovo, Novgorod Region, was launched in May 2020 on the basis of the Pestovsky sawmill. ULK Group invested 1.4 billion rubles ($19 million). With the launch of this pellet plant, the company increased its annual production of wood pellets to 300,000 tons.
