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Economic development of the Republic of Karelia in 2008

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  Results of 2008

Basic results of social and economic development of the Republic of Karelia in 2008

Under conditions of instability of the world financial market, economic policy pursued by the Government of republic in 2008 has been directed on non-admission of sharp decrease in volumes of industrial production, preservation of industrial potential and workplaces, maintenance of functioning of the social sphere.

On results of 2008 the production index in the republic has made 100.01% (102.1% in the RF).

Last year non-uniformity of rates of production volumes growth was observed in the industry, on separate kinds of economic activities rates of production growth considerably conceded to values of the last year. Thus, the index of industrial growth in processing activities in 2008 has developed at the level of 99.3% (119.3% in 2007).

As a whole regarding the Extraction of minerals, processing industry, power, gas and water generation and distribution form of activity cost of shipped goods of home manufacture, works performed, services rendered using own resources has made 89,2 billion rbl., that in established prices exceeds the level of the last year by 13.5%.

In 2008 there have increased volumes of extraction of other minerals (114.2%), manufactures of foodstuff (114%), leather goods and shoe making (113.3%), production of cellulose and wood pulp (106.9%), rubber and plastic products (131.1%), vehicles and equipment (122.9%), electric power (104.7%), metallurgy production (104.4%).

In comparison with the last year there have been produced more building nonmetallic materials, including road metal and gravel made of natural stone, chemical equipment and spare parts to it, cellulose (commodity), building bricks, animal oil, canned fish, confectionery products. Production of saw-timber, industrial wood, plywood and cardboard, paper sacks, woodchip boards, meat and sausage products, vodka and distillery products, and flour has decreased.

Volume of investments into the fixed capital of the Republic of Karelia in 2008 has made 22,75 billion roubles, or 106.7% to the level of 2007.

On results of 2008 the ballanced financial result of large and medium organizations of the Republic of Karelia has made 8,3 billion rbl. of profit, or 90.2% to the level of 2007. The greatest volume of ballanced profits - 13,2 billion rbl. - was received in extraction of minerals.

Relative density of unprofitable organizations in 2008 has made 44.2% of total number of enterprises.

Timber industry complex is the leader in industry of the republic, and its production is a dominating commodity group in Karelian export. The share of timber industry complex enterprises in total amount of shipped goods of home manufacture, works executed and services rendered in the republic makes more than 29% (32% in 2007). On the share of Karelia there fall about 64% of the all-Russian manufacture of paper sacks, 24.2% of paper sacks, including 37.1% of newprint, 1% of technological splinter; 4.4% of commodity cellulose, 3.2% of saw-timber, 2.2% of woodchip boards.

Total amount of investments in projects implemented in forest sector of the Republic of Karelia in 2008 is estimated to make 4 billion roubles. Thus, 2,2 billion roubles of investments into pulp-and-paper production having increased essentially and made 115.4% to the level of 2007, investments in the logging branch remained at a level of the last year, and in woodworking - have decreased by 36%.

In 2008 complex situation developed at timber enterprises of the republic. As well as in other wood regions of the Russian Federation it is caused by many factors, among which there are the falling of demand for wood production, both on external, and internal markets, decrease in availability of credit resources, influence of customs duties, etc.

Timber hauling in 2008 on the full circle of enterprises has made 5947 thousand cubic meters, or 89.6% to the level of 2007. The majority of logging organizations of the republic have lowered the volumes of hauling. At the same time, despite of difficulties, last year Zapkarelles Joint-Stock Company, Kondopoga Forest Industrial Company, Inc., Porosozero, Inc., Shuyales Joint-Stock Company have kept and increased volumes of hauling.

The share of logging on the assortment technologies has made 77.9% in total amount of timber logging (70.7% in 2007).

Analysis of strams of raw materials received from timber cuttings, and volumes of their deliveries to processing enterprises of the republic shows, that the most of the forest resources production (63.4%) is delivered by enterprises to the domestic market. In comparison with 2007 the share of deliveries to the domestic market in 2008 has increased by 6.1%. Outside of the republic processing enterprises buy about 10% of plank timber and 40% of coniferous paper wood (53% in 2007).

Decrease in consumer demand of woodworking and pulp-and-paper enterprises for raw timber cause heavy stocks of assortments accumulated by lumberers, and problems of realization of pine and birch paper wood.

Volume of export of forest products processed in 2008 was reduced by 18.8% to the level 2007, raw forest products by 22.9%.

Financial condition of enterprises of timber complex of the republic has worsened considerably in 2008. For the first time in recent years there has developed negative financial result in pulp and paper industry.

Deterioration of financial condition of the majority of enterprises was affected by growth of expenses for manufacture, decrease in the volume of sales and finished product prices, as well as absence of enterprises' circulating assets, complexities in reception of credits, absence of commodity market of deciduous assortments, coniferous paper wood.

Negative financial result developed regarding all kinds of activities, including balanced loss in pulp-and-paper industry has made 3187 million roubles, in woodworking - 1677 million roubles, in logging - 1381 million roubles. In 2007 woodworking and pulp-and-paper productions were profitable.

In 2008 cost of production made and shiped by woodworking enterprises of the republic has totaled 5116 million rbl., or 79.6% to the level of 2007.

Change of situation in foreign markets, inability of manufacturers to reorient operatively to other commodity markets have led to suspesion of production activity of such sawmills as Auer and Varlen Sawmill, Ltd., Pegas International, Ltd., Kem Saw-Woodworking Mill, Ltd., Ladoga Timber Mill Joint-Stock Company, Kondopoga Timber Exploitation Mill, Ltd., Byelomorsk Woodworking Company, Pälma Sawmill, Ltd. Production of saw-timbers in 2008 reduced to 660 thousand cubic meters, or 23.7% to the level of 2007. Besides, there have lowered production of plywood (by 30%), woodchip boards (by 7%).

At the same time in 2008 in comparison with 2007 Setles, Ltd., Solomensky Timber Mill Joint-Stock Company, Karlis Prom Joint-Stock Company, DOK, Inc., have increased rates of growth of production volumes of saw-timbers.

Pulp-and-paper enterprises of the republic worked astably. Due to slump in demand from the basic consumers production of cardboard has decreased in 2008 by 18.3%, production paper sacks decreased by 10.6%. Management of Investlesprom Joint-Stock Company and Segezha Pulp-and-Paper Plant, Inc., in the end of 2008 have developed a complex of measures on optimization of production which provides actions on reduction of production costs, volumes of production , disposal of not profile and unprofitable actives, transition to more effective technologies, reduction of the number of employees, the decision on withdrawing paper-making machine N11 from manufacture production has been made. At the same time the volume of commodity cellulose production by Pitkäaranta Pupl Mill, Inc., has increased by 6.9% (101.4 thousand tons). In 2008 Pitkäaranta Pupl Mill, Inc., has started the second phase of modernization that would allow to achieve the annual cellulose production of 120 thousand tons. Due to stable work of Kondopoga, Inc., production of paper has developed at the level of 2007, having totaled 964,5 thousand tons.

As a result, decrease in physical volumes of production of cellulose, wood pulp, paper, cardboard and products made of them has made 1.9% to the level of 2007.

In 2008 cost of shipment of goods on the extraction of minerals form of activity in actually established prices has grown by 23%, including 20% growth of extraction of metal ores. At that the index of physical production volume on extraction of minerals has made 96.7%, including 92.6% on extraction of metal ores.

Karelsky Okatysh (Iron-Ore Pellets), Inc., is a member of Severstal-Resurs Joint-Stock Companyand today provides production of 26.9% of all iron-ore pellets produced in the Russian federation. To the share of the enterprise there fall about 40% of the volume of iron-ore pellets exported by Russian enterprises far abroad.

The enterprise works according to the approved program of production and realization of finished product of iron-ore pellets for 2006-2016, developed together with the Operating company of Severstal-Resurs Joint-Stock Company.

In 2008 Karelsky Okatysh, Inc., produced 9305 thousand tons of iron-ore pellets, or 93% to the level of 2007. The developed situation in the market of steelmaking production, caused by negative influence of the world financial crisis, has affected reduction in demand and prices that has led to slowdown of production rates.

Overfulfilment of the road-metal production parameter has allowed to keep positive dynamics in extraction of other minerals at the level of 114.2%. It was promoted by commissioning of new modern road-metal-producing complexes in Sortavala and Byelomorsk regions, achievement of estimated capacity by a number of operating quarries.

In 2008 manufacture of nonmetallic building materials has grown by 8% to the level of 2007.

Growth of extraction of other minerals was affected by increase in road-metal production volumes by Prionezhsky Gabbro-Diabase, Ltd., - 407 thousand cubic meters (144.5%), Mosavtodor Quarry Administration, Inc., - 881,2 thousand cubic meters (121.7%), commissioning of the new grinding-sorting factory of Golodai Gora Quarry Joint-Stock Company - 604,5 thousand cubic meters (3.9 times growth).

In 2008 prouction of road-metal has begun in Onego Quarries, Ltd., (Prionezhsky municipal area), Prionezhsky Mining Company, Ltd., (Pryazha metropolitan region), KarelStroiNerud, Ltd., (Pitkäranta metropolitan region), Eurostoigroupp-Diabase, Ltd., (Kondopoga metropolitan region), Granitdomdorstroi, Ltd., (Suojärvi metropolitan region).

At the same time, the delay of payment for delivred production, absence of turnover assets, infringement of payment terms for finished product transportation have caused decrease in crushed stone production volumes in Sortavala Grinding-Sorting Factory, Inc., Karelinvest, Ltd., Karelprirodresurs, Ltd., Porfirit, Inc. Due to absence of demand for its production in November, 2008 Shokshinsky Quartzite Joint-Stock Company has suspended its industrial activity.

In 2008 the volume of crushed schungite production in Carbon-Schungite SPC, Ltd., has made 137 thousand cubic meters, or 106% to 2007.

Block stone for production of memorial products (monuments), mainly presented by gabbro-diabases of Drugoretsky deposit (Prionezhsky region) remains the most steadily called-for in the market. In 2008 the share of black stone in total amount of extracted block stone in the republic has exceeded 80%.

Production of block stone last year has made 26 thousand cubic meters (105%). Development of block stone deposits is carried out in Pitkäranta, Kem, Lahdenpohja, Pudozh regions and the most active is in Prionezhsky region.

The best results of extraction and production of block stone belong to Drugaya Reka Joint-Stock Company (25% of total amount on the republic) and Kara-Tau, Ltd., (18%).

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Created: April 14, 2009. Last updated: April 23, 2009.
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