Rockwell Capital Suspends Krasnoyarsk Pulp and Paper Mill Project Citing High Logistics Costs

Rockwell Capital and development partner VEB.RF have suspended plans to build a pulp and paper mill in Russia’s Krasnoyarsk Krai, citing high logistics costs and concerns about the project's long-term competitiveness.

According to the companies, the absence of nearby distribution infrastructure, including seaports, would significantly increase transportation expenses and could make the plant’s products uncompetitive compared with both international producers and Russian manufacturers located in regions with more favorable logistics conditions.

The investors also pointed to current challenges facing the forestry and pulp and paper sector, noting that industry conditions have increased the risks associated with implementing large-scale greenfield projects. As a result, government and investor attention is increasingly focused on supporting existing exporters of sawn timber, pellets, and pulp products.

Plans for a vertically integrated pulp and paper mill in the Boguchansky District date back to 2007 under the Integrated Development of the Lower Angara Region program. Vnesheconombank established Kraslesinvest JSC to develop the Boguchansky forestry complex and associated pulp production facilities.

The project experienced multiple setbacks over the years. In 2013, concerns emerged regarding the adequacy of the local raw material base for pulp production. Subsequent disputes between Kraslesinvest and contractor JV Arkaim further delayed progress. In 2022, the Austrian supplier of the project's production line withdrew, leading developers to engage Chinese engineering company CAMCE. However, the revised project later received a negative conclusion from Russia’s Main State Expertise Authority.

The project regained momentum after cooperation between VEB.RF and Rockwell Capital began after 2020. In 2022, the project received a positive assessment from Glavgosexpertiza, Russia’s state expertise authority. The facility had been expected to produce approximately one million tonnes of finished products annually, with start-up targeted for 2026.

Despite the suspension of the pulp and paper mill project, Rockwell Capital’s subsidiary Taiga Boguchany continues construction of a biotechnology complex for advanced wood processing in the same region. Supported by VEB.RF, the project has an estimated cost of 150.8 billion rubles and is scheduled for commissioning in 2027.