By Rex Merrifield LONDON, March 6 (Reuters) - Resources giant Anglo American Plc (quote from Yahoo! UK & Ireland: AAL.L) said on Wednesday it was expanding its forest products interests in Russia, paying $252 million for control of a leading forestry business in the far north. Anglo said in a statement its forest products division, Mondi, was buying 68.5 percent of Syktyvkar Forest Enterprise, taking its stake in the Russian business to 87.9 percent. Anglo said the assets include Syktyvkar, its logging and transportation, construction and engineering firms and sales organisation. Syktyvkar is in the republic of Komi, in northern Russia. Anglo has set growing its forestry products interests as a priority and the division contributed $148 million to half-year profits -- as much as its coal assets and more than 18 percent of core headline profits -- despite pulp prices weakened by the global economic slowdown. In western Europe, Mondi has bid about 400 million euros ($350 million) for French paper and packaging group La Rochette , competing with a recommended offer from family-owned Spanish cardboard firm Saica. The Syktyvkar stake will form part of Mondi Europe's wholly owned Austrian subsidiary, Neusiedler, which is a leading producer of copy and office paper. Neusiedler, which focuses on the production of environmentally friendly unbleached paper, has six plants in Austria, Slovakia, Hungary and Israel, with a total capacity of more than one million tonnes a year. Timber is one of the main sources of income for the republic of Komi, which has been trying to raise cash from Russian and foreign investors. Anglo said the plant had production capacity of about 700,000 tonnes annually -- 400,000 tonnes of uncoated woodfree paper, 150,000 tonnes of corrugated paper and 150,000 tonnes of newsprint. NORDIC CAUTION Industry experts say the Russian paper market is one of the largest and fastest growing in the world. The cost of paper manufacturing there has fallen by as much as a third in recent years, helped by a weak rouble and more efficient production. So far most of the big Western paper players have kept out of Russia, fearing political and economic instability. U.S.-based International Paper (NYSE:IP - news) has been the most active, buying a Russian pulp & paper mill in 1998. The heads of Europe's leading papermakers Stora Enso and UPM-Kymmene and fine paper maker M-real went to Moscow recently to tell Russia not to expect major Nordic investment until it can grant Western standard investor protection rules. Nonetheless, analysts say the big Nordic firms are closely watching developments in Russia, and if Anglo's move is successful it could encourage the big players to follow. Shares in Anglo, which has major interests in platinum, gold and diamonds, were down 1.0 percent in London at 12.12 pounds by 1445 GMT. The shares have gained about 25 percent in the last six months on hopes that the company will benefit when the global economy recovers. They have outperformed those of their London-listed rivals in the FTSE mining index (^FTEI - news) by about four percent over the same period. Anglo reports its results for 2001 on March 13. (Additional reporting by John Acher in Helsinki)