When the Russian Timber Group (RTG) completed a merger with Hupex Management Forestry Assets Ltd in March, it created one of the largest forest products companies in Russia with access to 2.7 million ha of forest and sustainable cutting rights to more than 3.5 million m3 of timber.
The additional purchase of a Chinese flooring plant gave the enlarged group increased capacity to produce solid and engineered timber flooring products and opened the door for expansion into the high-volume Asian markets.
Now, RTG managing director Leo Hambro has his eyes set firmly on growth into Europe and the UK, with semi-finished and finished products set to be pushed onto the market.
“The integration of the [Hupex] management teams and the legal integration is complete and puts the group in a good position,” said Mr Hambro. “The group has started discussions with several UK and mainland European based distribution and broking companies.
“We are working on several marketing plan possibilities at present, which include the UK as a very attractive market for some of the group’s products.”
This is part of an overall aim to establish RTG, formerly known as Tynda Forest Holdings Ltd, as a “leading vertically integrated timber group within the global forest products industry” and to take advantage of the “high quality, plentiful and mostly unexploited timber reserves of Russia”, where RTG and Hupex harvested 2 million m3 of timber and produced 200,000m3 of sawn timber in 2006.
Established in 2004 by Peter Hambro and Dr Pavel Maslovsky, RTG has predominantly focused on roundwood sales into China, Japan and the Koreas, which are close to its Irkutsk and Amur-based operations where angara pine, Siberian and Dahurian larch and birch are the main species harvested.
Value-added ambition
Leo Hambro said that the company is now set to change tack and move to engineered, end-value products that are suited to the Asian and western markets.
“The quality of the timber within our leases and our capacity to process it to European quality standards should make it very attractive to the UK market, especially when one considers the high density and water-resistant nature that species like Siberian and Dahurian larch offer,” he added.
He is actually fitting out his own home in Norfolk in Siberian larch, with glulam beams, planed square edge timber, decking and cladding all sourced from Russian plantations.
For the future Mr Hambro expects to see the company move still more strongly into value added and further processed product, with MDF and OSB on the drawing board as well as glulam. It also has ambitions in biofuels. And as it broadens its portfolio he predicts further export growth in Europe and North America.
RTG already has three sawmills and a host of associated production facilities and is planning to expand through organic growth and further mergers and acquisitions, akin to those of Hupex and Amur-based forestry companies OAO LPK TyndaLes and OOO LPKH Taezhny, which were bought in 2005 and 2006.
Certification is currently a potential stumbling block for RTG’s plans for growth in the UK and the rest of Europe where buyers are increasingly demanding it. But Mr Hambro said that the company aims to gain FSC certification by the end of 2007.
Clearly the company is looking ahead with some confidence, underpinned by the wealth of timber at its disposal and its steadily increasing processing capacity.
“Our aim is to provide our current investors, and potentially others in the future, with greater access to the vast potential of the largely undeveloped forest reserves of Russia,” said Mr Hambro.
