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Economic development of the Republic of Karelia in 2007

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   Results of 2007

The basic results of social and economic development of the Republic of Karelia in 2007

In 2007 economic policy followed by the Government of the republic contributed to acceleration of rates of economic growth in Karelia that has allowed to provide steady social and economic development of the republic. By estimations, rate of growth of gross regional product has made 105% in comparable prices to the level of 2006. Index of industrial production has reached 116.8% against 101.8% in 2006. This parameter in the republic exceeds average performance for Russia (106.3%), and regarding production index among regions of the Northwest federal district Karelia is on the 2nd place. Positive processes occur in other spheres and economic activities.

Turnover of organizations regarding the basic kinds of economic activities has increased essentially, volumes of transportation of cargoes, construction, including housing construction, foreign trade turnover and internal consumer demand have increased, tendencies of escalating of volumes of consumer crediting for physical persons remained unchanged. Outstripping growth rate in the republic is observed in extraction of minerals - 109.3% (101.9% in the Russian Federation), production of foodstuff -137.1% (106.1% in the RF), metallurgical production - 109.3% (102% in the RF), production of machinery and equipment - 171.4% (119.3% in the RF), production of electric equipment - 124.6% (112.8% in the RF).

Advancing of growth of volumes in processing industry in comparison with growth of volumes of extraction of minerals is a distinctive feature of the last year - by 10.1 percentage items.

As a whole regarding the Extraction of minerals, processing industry, power, gas and water generation and distribution form of activity cost of shipped goods produced by the enterprise, works performed, services rendered using own resources has made 77,2 billion rbl., that in established prices exceeds the level of the last year by 21%.

Last year volumes of extraction of metal ores and other minerals, manufacture of foodstuff including drinks, pulp-and-paper production, publishing and polygraphic activity, metallurgical production and production of ready metal products, production of machinery and equipment, electronic and optical equipment have increased.

In comparison with 2006 there has been produced more electric power, merchantable wood, saw-timber, woodchip board, iron-ore pellets, nonmetallic building materials including rubble and gravel, paper-mking equipment and spare parts for it, cellulose (commodity), paper sacks, modular ferro-concrete designs and details, building bricks, knitted products, animal oil, flour, vodka and distillery products. Production of plywood and cardboard, canned fish, meat and sausage products, bread, bakery and confectionery products lags behind.

Volume of investments into a fixed capital in 2007 in established prices has made 18,6 billion rbl.

Financial condition of organizations of the republic. In 2007 on the average for large and medium enterprises considered by the Commitee for Statistics in the Republic of Karelia, financial parameters of activity as a whole have exceeded the value of the last year. Consolidated profit for 2007 has exceeded the level of 2006 by 23% and has made 9,8 billion rbl. However, financial results regarding the extraction of minerals form of activity have rendered essential influence on developed positive dynamics. Consolidated profit for this form of activity has exceeded 7,4 billion roubles that makes 76% in total amount of consolidated profits.

Consolidated прибыль в производстве, распределении электроэнергии, газа и воды, в два раза - в обрабатывающих производствах сократилась Почти на 40% .

As well as in 2006, organizations, engaged timber cutting remain unprofitable, although, consolidated losses of logging enterprises have decreased by 24%.

At the same time consolidated profit in construction has grown 3.1-fold, and 1.5-fold - in wholesale and retail trade.

According to the Commitee for Statistics in the Republic of Karelia, the profitable enterprises in 2007 received 11,9 billion roubles of profit, that exceeds the level of 2006 1.22-fold. At the same time profit counted for the purposes of taxation, in 2007 is estimated to make 17 billion rbl., or 15 more, than in 2006, which is an evidence of decrease in profit of organizations omitted by the Commitee for Statistics in the Republic of Karelia in the survey sample and, accordingly, not considered in financial parameters, and also located outside of the republic and having territorial divisions in the Republic of Karelia.

Relative density of unprofitable organizations in 2007 has made 36.5% of general number of enterprises and was reduced by 5.1 percentage items.

Timber industry complex is leading in industry of the republic, and its production has a significant place in the Russian market and is a dominating commodity group in Karelian export.

Results of work of timber industry complex in 2007 as a whole can be estimated as satisfactory. Last year growth of production volumes in timber industry complex, both in cost expression, and regarding the basic nomenclature of major kinds of production has been obtained.

Share of timber industry complex enterprises in total amount of shipped goods produced by enterprises, the works performed, services rendered using own resources in the republic makes more than 30 %. On the share of Karelia there fall 66.9% of the all-Russian production of paper sacks, 36.2% of newprint, 3.4% of saw-timber, 6.1% of merchantable wood.

Allowable cut in the Republic of Karelia in 2007 has made 8,8 million cubic meters, development has made 64% (62% in 2006).

Raw material reserves of woodworking and pulp-and-paper enterprises of the republic in many respects depends on work of the logging sector.

In 2007 removal of wood (according to the Commitee for Statistics in the Republic of Karelia) on the average for enterprises has made 6488,8 thousand cubic meters and in comparison with 2006 has increased by 5.7%.

Among enterprises that increased volumes of removal of wood there are Karellesprom Forest Industrial Company, Inc., Lendersky Forest Industrial Company, Inc., Kondopoga Forest Industrial Company , Inc., Segezha Pulp and Paper Mill, Inc., Zapkarelles Joint-Stock Company, Swedwood Karelia, Ltd., Vuokatti Karelia, Ltd., Areal, Ltd., etc.

At the same time, a number of tenants made essential decrease in volumes of removal of wood to the level of 2006, among them there are Muezersky Forest Industrial Company, Inc., Päozersky Forest Industrial Company, Inc., Shuyales Joint-Stock Company, PorosozeroMedvezhiegorsky Forest Industrial Company, Inc., KLDZ-cutting, Ltd.

Within the past few years the basic parameters of work of logging enterprises have been depending essentially on weather conditions. The principal cause of decrease in efficiency of timber cutting is that most of the logging enterprises lack necessary road network which may be used for removal of wood all-the-year-round.

Most of logging enterprises yet have no sufficient own financial assets for construction wood-road in necessary volumes. At the same time, during the last year decrease of consolidated losses in timber cuttings was noted. So, in 2007 consolidared losses in timber cutting in comparison with 2006 have decreased by more than 100 million roubles, or by 23.9%.

Volumes of investments in the logging branch grow, as evidenced by dynamics of volumes of harvesting of wood accoding to the cut-to length technology which share in total amount of harvested wood on results 2007 has made 70.7% (66.2% in 2006).

Analysis of the source of raw materials received from timber cutting and volumes of their deliveries to processing enterprises of the republic shows, that most of the wood resource production (61.9%) is delivered to the home market enterprises. In comparison with 2006 the volume of deliveries to the home market in 2007 has grown by 10%.

In export deliveries hardwood forms a significant share (51.5%), including: hardwood balance (45.4%), hardwood plank timber (6.1%).

Missing volumes of wood raw material is purchased by enterprise outside of the republic. From total amount of deliveries it makes 10% for plank timber and 53% for balance.

In 2007 cost of production produced and shipped by woodworking enterprises of the republic has made 5500,5 million rbl., that exceeds the level of 2006 by 17.5%. Production index regarding the woodworking and production of woodwork form of activity has made 99.5%.

Woodworking enterprises produced 837,4 thousand cubic meters of saw-timber (106.3% to 2006), 135,4 thousand conditional cubic meters of chipboards (101.1%), 13,2 thousand cubic meters of plywood (62%).

Realization of investment projects promotes increase in volumes in woodworking enterprises. As a result of construction of industrial complex of Swedwood Karelia, Ltd. volumes of lumbering in comparison with 2006 have grown 3-fold. The company's management has made a decision to start realization of 3-rd phase of the project - construction of furniture factory. Solomensky Saw-Mill Joint-Stock Company to which raw timber streams of PorosozeroShuyales Joint-Stock Company are reoriented has put additional capacities into operation.

Volumes of lumbering have also been increased at Pämsky Saw-Mill, Ltd., (167.5%), Karelia-profil, Ltd., (165.3%), Agrovodsnab, Ltd., (142.6%), Kondopozhsky Forestry (129.7%), Segezha LDK (107.6%).

In August of 2007 "the first stone" was laid in construction of a Oriented Strand Boards (OSB) factory that will allow to process hardwood and low-grade wood.

Index of production regarding the Production of cellulose, wood pulp, paper, cardboard and their products form of activity in 2007 has made 102.3%. Total amount of production shipped by pulp-and-paper enterprises has made 18,2 billion rbl., or 115% to the level 2006

It has been produced 964,4 thousand tons of paper (100.4% to 2006), 82,6 thousand tons of cardboard (98%), 94,9 thousand tons of commodity cellulose (104.9%), 399,8 million paper sacks (115.9%).

Within the past few years pulp-and-paper enterprises work have been working stably, developing and modernizing production capacities.

In 2007 reorganization was held at Segezha Pulp and Paper Plant, Inc., due to which there have been alloted Meshki (Sacks) Production Line (Segezha Packing, Inc.) and Timber Management (SLZK, Ltd.).

Because Segezha Pulp and Paper Mill, Inc., entered a large vertically-integrated structure headed by Investlesprom Joint-Stock Company, strategy of the enterprise's development for the near-term outlook is being elaborated.

Volume of investments of Kondopoga, Inc., in 2007 has made 1609 million rbl., including 264 million rbl. in production of paper and cardboard. The enterprise went through the folowing improvements: replacement of the out-of-date cooking boilers N1,8 and 9 at the cellulose factory; modernization of electrosubstation N16, central pump station, 6 kilovolt switching centre for the entire enterprise; construction of thermal power plant-3 consisting of two 160 tons of steam per hour boilers on natural gas and two 25-30 megawatt turbines completed with equipment; installation of technological line producing cardboard with a productivity rate of 70 thousand tons a year; installation of a new technological line producing supercalendered paper with the weight of 45-70 g/sq.m., with a productivity rate of 320 thousand tons a year.

In the mining complex of the republic growth of volumes of extraction of metal ores and other minerals proceeded. In 2007 rate of growth of extraction of minerals has made 109.3% (2006 - 107.3%).

Share of the mining complex enterprises in total cost volume of industrial production of the republic in recent years increased considerably. If in 2000 it made 15%, on results of 2007 it made more than 30%. Creation of stone-working shops at operating quarries of block stone became a positive tendency. Thus, the enterprises pass from simple extraction and sale of blocks-preparations to a stage of deeper repartition.

At the Karelsky Okatysh, Inc., there has been extracted 10417,8 thousand tons of commodity ore, or 104.6% by 2006, produced 10044,6 thousand tons of iron-ore pellets (106.4%)which is a maximum level from the beginning of work of the enterprise.

Positive results of work were caused by favorable conjuncture developed in the market of iron-ore raw material, and, accordingly, raised demand for production of the enterprise.

The enterprise works according to the approved program of production and realization of iron-ore pellets for 2006-2016, developed together with Severstal-resurs Operating company.

To maintain capacity of the quarry and restore the mineral resources base Karelsky Okatysh, Inc., realizes the investment project of development of Korpangsky deposit of iron ores which is located twenty kilometers from the operating infrastructure of the enterprise and which stocks are estimated to make 320 million tons of iron ore. The first ton of iron ore has been extracted on Korpangsky deposit in March of 2007.

In 2007 enterprises of the republic produced 10,5 million cubic meters of rubble, or 141% to the level of 2006 that is a record for the entire postreorganization period. The best results on production of rubble in the republic were achieved by Karelprirodresurs, Ltd., and SPTK-SDSU, Ltd. (Sortavalsky Grinding-Sorting Factory, Inc.).

In August of 2007 in Suojärvi region Karelprirodresurs, Ltd., enterprise put into operation a modern ballast stone producing complex on on the second quarry Leppäsyrja. On results of the year two quarries produced 2028,7 thousand cubic meters, that is 2.6 times more, than in 2006. On the basis of Sortavalsky Grinding-Sorting Factory, Inc., on December 4, 2007 there has been produced the milionth cubic metre of ballast stone from the beginning of 2007.

In area Kondopoga region Diabase Industrial Group, Ltd., has started construction of a grinding-sorting complex producing ballast stone at Keppäselgskoye deposit.

Ballast stone production will increase further on from an one and a half to two million cubic metres a year.

Volume of block stone extraction in the republic in 2007 has made 24,9 thousand cubic meters, or 122% to the level of 2006. Development of block stone deposits is carried out in Pitkäranta, Louhi, Pudozh and in the most active way in Prionezhsky region.

Positive dynamics of increasing volumes of block stone extraction at the level of 15-20% will remain within the next years.

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Created: March 25, 2008. Last updated: March 28, 2008.
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