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LDK-3
LDK-3 and Infa
In December 2010, RusForest's acquired 86 percent of LDK-3, a sawmilling operation located in the city of Arkhangelsk, in North West Russia, and 100 percent of Infa, a planing mill at the same site.
LDK-3 is one of the largest sawmills in Arkhangelsk, with a current monthly production of 8,000 m3 sawnwood and 1,800-2,000 m3 planed products at Infa. However, the drying capacity at the site is at the historical production level of 160,000 m3 per year. LDK-3 is located on an industrial site comprising about 86 hectares, which has an existing log sorting line, well functioning dryers and dry sorting lines and export storage areas comprising a capacity of approximately 20,000 m3 of finished products. LDK-3's own dock, with cranes for direct loading, enables efficient loading of larger vessels for shipments of sawnwood. Total port capacity is at least 400,000 m3 sawnwood per year.
LDK-3's geographical position entails that sawlogs can be delivered via railway, waterways (barges or rafting) or by truck. As there is sufficient storage space next to the industrial site's log sorting, an efficient supply of raw material to the sawmill can be ensured.
LDK-3 Port Facility, 253 meters long and 10 meters deep (left) and the unloading of a barge at the facility
LDK-3's logistics solution - with its own export port right next to the mill - makes a doubling of the production capacity within the next few years possible, and RusForest intends is to replace the older saw-lines at the site and install additional drying capacity. As a first step, this is expected to increase annual production to around 175,000-200,000 m3 of pine and spruce sawnwood. More information regarding the restructuring and expansion at LDK-3 is expected during Q1 or Q2 2011.
LDK-3 also holds a lease with an annual allowable cut amounting to 177,200 m3, which until today only has been used to a limited extent. In order to increase the internal supply of raw material, RusForest intends to double the annual allowable cut and develop its own harvesting organisation in the Arkhangelsk Region.
Infa is a small planing mill situated at the LDK-3 industrial site. The mill is relatively modern and manufactures planed products primarily aimed at the domestic market, with customers in southern Russia and in the areas around Moscow and St. Petersburg.
LDK-3 Dry Sorting Line (left) and the Infa Planing Mill
In addition to LDK 3's existing operations, RusForest believes that the Company's geographical position and logistical advantages - with a large industrial site in direct connection to its own port and access to international waters - entails potential to create synergies by co-operation with third parties. Therefore, in the long run, the Company sees potential in offering other players the possibility to establish themselves close to LDK-3, thereby using the site's entire potential. Such a spin-off would further increase the profitability of the LDK-3 project for RusForest.