Ilim, Orgkhim Biochemical Join Forces for Biochemical Production Project

Ksenia Sosnina, CEO of Ilim Group, Russia, and Nikolay Khodov, CEO of Orgkhim Biochemical Holding, Russia, have signed an agreement to set up Amber Stream LLC, a joint venture with 50/50 participation. The new JV will produce a wide range of pine-chemical products with a high added value, including unique products completely new to Russian pine chemical industry.

Amber Stream will set up its first line in Koryazhma (Arkhangelsk Region) at Ilim’s Mill, the group’s flagship manufacturing facility in terms of capacity and product mix. The project involves an upgrade of the pine chemicals plant to allow for value-added raw materials processing  to manufacture new environmentally friendly biochemical products.

JV’s main product-line will include upgraded rosin esters, tall oil fatty acids, and their derivatives. In addition, the JV will be the first in Russia to introduce manufacturing of sterols, completely new to Russia’s array of products in high demand from pharmaceuticals and nutraceutical industries. According to JV management, licensing and startup is scheduled for Q4, 2017.

Alexander Emdin, VP of finance at Ilim Group, has been elected chairman of the board of JV Amber Stream LLC, and Aleksey Krylov, former technical director at Orgkhim, has been appointed CEO of the new JV.

"Our company’s development strategy through 2030 involves a higher level of diversification and exploration of new opportunities. In addition to our traditional and still growing segments such as pulp and packaging materials, we are resolute to develop other promising opportunities, including biochemical. To pursue this goal, we have joined our efforts with the industry leader – Orgkhim Biochemical Holding. The synergy effect produced by the combined capacities of the largest forest industry company and a national-level expert in value-added innovative manufacturing of safe and environmentally friendly pine chemicals will make an important contribution towards boosting Russia’s bioeconomy, and help Ilim make another strategic step forward," said Sosnina on the decision to set up a new JV.

"The Amber Stream business seeks to capitalize on strengths of vertical integration, which will have a favorable impact on the product quality, delivery time precision, and customer service level. The JV will operate both on domestic and global markets. The consolidation of pine-chemicals assets and products from two partners will allow the JV to build up a tangible presence and force on the global pine-derived chemicals market," said Khodov.

JSC Ilim Group is Russia’s pulp and paper industry leader, with the biggest recorded market share, production volumes, and size of investments, and one of the largest industry players on the global scale. International Paper, the world’s largest pulp and paper manufacturer, is Ilim Group’s strategic partner.

Ilim Group has its production sites in Arkhangelsk, Irkutsk, Leningrad, and Moscow areas, which together make up the key manufacturing force in Russia’s forest industry, accounting for 75% of all domestically produced market pulp, 20% of board, and 10% of paper. The company's total annual pulp and paper output exceeds 3.2 million metric tons.

In the next five years, Ilim Group intends to invest in the development of its facilities in Bratsk, Ust-Ilimsk, and Koryazhma, with a total estimated increase in output of 500,000 metric tpy. The upgrade efforts will enhance operating efficiency, improve product quality, and reduce the environmental footprint. Some of the projects are already under way.

Orgkhim Biochemical Holding (Russia) is an innovative company, specializing in development and manufacture of "green chemistry" products, which are safe for people and friendly to the environment. The company’s annual turnover exceeds RUB 6 billion (~$100 million), with approximately 60% of that amount coming from export sales.

The company has its production facilities close to Nizhny Novgorod, Voronezh, and Krasnoyarsk (Russia). The company’s business falls into two main segments—petrochemicals and pine-chemicals. The main pine-chemical products are emulsifiers for synthetic rubber, rosin resins for the tire industry, rosin esters for road marking and for adhesive and coatings production, and pine oil used in perfumes, cleaning products, and in mining. The company’s world class products are made from raw materials that are 90% domestically sourced.

Orgkhim is a proven expert and a leading research center in carcinogenic safety. The results of the research carried out by the company’s R&D gave rise to a number of European legislative norms, in particular those restricting the carcinogenic content in certain products (REACH). In May 2016, Orgkhim received the Safety and Health Facility Excellence Award from the Pine Chemicals Association Inc.