Plantations, poverty and power - Critical Information Collective

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“implementation plan” to meet this projected demand. Ian Luyt, IFC Senior Operations Manager for
Europe and Central Asia, is clearly excited about handing over IFC loans to the pulp and paper sector in
Ukraine. “This is an exciting period of growth and development for Ukraine’s pulp and paper industry,”
Luyt announced in a May 2007 press release. “We believe the industry has the skills and commitment to
achieve its full potential, but there are still significant improvements needed in the regulatory
environment to aid this development. The strategic development plan is an important basis for planning
and implementing the investment to meet future needs.”
Currently, the pulp industry in Ukraine is largely based on recycled paper. Pöyry recommends using
Ukraine’s forests to produce pulp.
None of this is inevitable. First the demand has to be created. “We have a long and challenging road
ahead to develop a robust and profitable domestic market for pulp and paper in Ukraine,” said Evgeny
Lobanov, chairman of UkrPapir, one of the companies in Ukraine hoping to cash in on IFC’s loans.
Finland’s industry is also hoping to benefit. Lauri Pullola, First Secretary at the Embassy of Finland in
Ukraine, noted that
“The forest industry is a key pillar of Ukraine’s economy. It also represents over 20 percent of Finland’s
exports, and our government is happy to promote and support this important study. This will lead to new
opportunities for cooperation between the Finnish and Ukrainian governments and the private sector.”534
In China, IFC is playing an important role in financing the expansion of the industrial forestry sector:
•In September 2001, IFC loaned a total of US$25 million to two subsidiaries of Sino-Forest Corporation
for the construction of wood-related manufacturing plants and the purchase of plantations in China.535
Sino-Forest, a Canadian company, has a plantation area of about 240,000 hectares in southern China. The
company is currently expanding its plantation area by 200,000 hectares in Guangdong Province.
•In December 2004, IFC announced a financing package to Jiangxi Chenming Paper Company for a
350,000 tons a year paper mill and an associated pulp mill. Jiangxi Chenming is a joint venture between
Sappi (South Africa), Shinmoorim (South Korea), Chenming Group (China) and Jiangxi Paper Industry
Company Limited (China). IFC will provide US$72.9 million in equity and loans and will arrange a
further US$205 million project financing.536
•In June 2005, Stora Enso signed a loan agreement with IFC for US$75 million to finance Stora Enso’s
activities in China. A year later, Stora Enso asked for a further US$225 million. The money is to go
towards Stora Enso’s eucalyptus plantations in Guangxi province in southern China and a planned
expansion of the company’s Suzhou Mill.537
Companies which receive IFC loans often claim that the loan is some sort of independent approval of the
534 “IFC helps identify opportunities for growth in Ukraine’s pulp and paper industry”, IFC press eelease, 29 May 2007.
http://www.ifc.org/ifcext/eca.nsf/Content/SelectedPROpenDocument&UNID=4DF89FDCFEE069FB852572EA0055575
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535 “Sino-Forest signs $25 million financing agreement to expand in China”, Paperloop, 9 February 2001.
http://www.paperloop.com/db_area/archive/pponews/2001/wk02_05_2001/92.shtml
536 “IFC confirms financing package for Shandong Chenming expansion”, Paperloop, 7 December 2004.
http://www.paperloop.com/db_area/archive/pponews/2004/wk12_13_2004/08.html
537 “Stora China-II”, IFC Summary of Proposed Investment.
http://www.ifc.org/ifcext/spiwebsite1.nsf/1ca07340e47a35cd85256efb00700cee/912B04166E2036D285257178006439EF