Wood Products Investment in Belarus for IKEA Furniture

MINSK, 25 October (BelTA) - Foreign investors are implementing two woodworking projects in Belarus: one in the free economic zone Mogilev by the VMG Industry who is IKEA’s partner, the other one in Smorgon District by the Kronospan Corporation, BelTA learnt from the public relations department of the Economic Ministry.

 In compliance with the plan of action to the investment project in the FEZ Mogilev, work on design and budget documentation continues. Works on the construction of the main production building have already been launched. In January-September this year, almost $27 million of foreign investment was transferred for the investment project, including $18.5 million of foreign direct investment on a net basis.

 As previously reported, the investment project features a complex consisting of three production facilities: chipboard panels, furniture components made of peeled veneer and cabinet furniture. Local resources will be used as raw materials: low-quality wood and wood waste of the complex itself. It is planned that at least 70% of manufactured products will be exported. The core consumer will be the world-renowned IKEA company, on the orders of which the plant is being built. The project will create more than 870 jobs.

 The investor is planning to create a forest cluster in Mogilev Oblast to bring together a number of facilities servicing the woodworking industry. One of the companies will be a timber growing and harvesting enterprise using the most modern technologies. This company will be set up jointly with the Mogilev Production Forestry Association. The joint venture is slated to come on stream in 2012.

 Kronospan has already acquired a production site in the town of Smorgon. Construction and assembly works are underway. In September this year the Economy Ministry agreed on the list of technological equipment to be imported by the investor duty-frees in accordance with the investment contract.

The facility in Smorgon District is set to manufacture MDF, wood-fiber boards, pulp. Local timber enterprises will supply raw materials for this project too. In addition, Kronospan is thinking of opening a regional office in Belarus (including for management of its assets in the Russian Federation and Ukraine). The company has already acquired real estate in Minsk to the time of $6 million.

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