Projects financed by the EDB
Construction of an MDF board factory in Tomsk Region
Many of us have furniture made from MDF. Kitchen furniture, wardrobes, beds and chests of drawers were very common in the apartments in the former Soviet Union. But what does this abbreviation mean?
Medium-density fibre (MDF) board is a modern construction and finishing material. MDF boards are used not only in furniture production, but also in construction (flooring, wall panels, doors, etc.), mainly in low-rise buildings.
An important feature of MDF board is that it is made from low-grade wood and woodchips. However, the boards have high operating characteristics that are close in terms of quality and environmental safety to natural wood.
Russia’s consumption of MDF board exceeds 1.2 million cu m per year. About
In April 2008 the EDB joined a multilateral project to increase the production of MDF board in Russia. The Bank signed financial agreements on a syndicated loan for the construction of a high-tech timber processing plant to manufacture medium-density fibre (MDF) boards in Tomsk region. The project was implemented by LPK Partner-Tomsk, a company which had been set up specifically for this purpose.
The syndicated loan was arranged by the EDB with the participation of Nomos-Bank (Russia) and using leasing and direct debt financing schemes and the services of the Hermes export credit agency (Germany). The EDB structured the project with the latest financing methods and engaged the most reputable consultants, including Jaakko Poyry Group (Finland).
Investments in the project totalled approximately US $ 270 m, including US $ 95 m provided by the EDB as a ten-year loan. The Bank opened credit facilities to finance the construction and purchase of main process equipment.
This project is unprecedented in the CIS. The plant has become the most advanced manufacturer of MDF board in the world. It uses the latest, innovative technology by Dieffenbacher, the global leader in wood-processing equipment.
A lack of safe and high-quality analogues in the market gives the plant a significant competitive advantage and ensures its profitability. The company sells primarily in Siberia, the Ural region, Central Russia and Kazakhstan and exports limited quantities to Uzbekistan and Iran.
Up-to-date equipment, in particular its cutting-edge production line, allows the plant to manufacture high-quality products in line with international standards.
The project also complies fully with the EDB’s mission and strategy due to its significant development and integration potential: there are plans to export up to 30% of its finished goods, worth up to US $ 50 m a year, to Kazakhstan and other Central Asian countries.
The project supplies house building and furniture production in Russia and meets the country’s growing demand for MDF boards. The project is deemed important for economic diversification and compatible with the objectives of Russia’s National Affordable Housing Project. The plant has created 850 jobs. Its tax payments are expected to reach almost US $ 200 m by 2021.
"We did it! But this is only the first step", - Viktor Kress, Tomsk Oblast governor, on the first MDF board manufactured by the new company.
The plant was opened officially in December 2010. When it reaches its design capacity, the company will account for up to 25% of the Russian MDF market and will become one of the top three manufacturers in this sector in Russia. The plant was due to reach its design capacity of 264,000 cu m of MDF board per year (using a three-shift working day) in the second half of 2011.
“The project coincided with the most acute phase of the global financial crisis,” says Gennady Zhuzhlev, Deputy Chairman of the EDB Management Board. “However, thanks to the financial resources received and investors’ support, the borrower has managed to complete construction and launch production on time. The company has been given lengthy grace periods for repaying the principal capital and interest on all the project’s credit facilities. Repayment will begin after the plant achieves its design capacity.”