Cathay Forest Products has acquired majority ownership of a major Russian forest concession.
The company has taken a 51% share in Russian company DalEuroles, which owns 270,000ha of standing timber in Khabarovsk, for a combination of US$2.7m cash, shares and a loan.
“This agreement is a major milestone that vaults Cathay into a new peer group of leading, international forestry companies,” said Anthony Ng, president and CEO of Cathay.
“Russia contains vast tracts of dense forests which the government is motivated to commercialise with large-scale sustainable operators.”
The remaining 49% of DalEuroles is conrolled by Finmasheri Co Ltd, which has been Cathay’s joint venture partner harvesting roundwood in the Khabarovsk region for nine years and which has supplied one of Cathay’s subsidiaries for seven years.
Finmasheri has been named on a list of Russian-based forestry companies qualifying for an exemption to the government’s new export tariff on roundwood.
Finmasheri is currently constructing a 150,000m3 capacity sawmill, a project approved by the Russian government’s priority investment programme. The approval means 600,000m3 of roundwood can continue to be exported annually without incurring a tariff.
