Overview and business in Russia
A British organization Mondi ranks among the global leaders in packaging and paper. This organization is established in the UK and furthermore has an office in Austria.
In Russia, Mondi Group owns a coordinated plant for manufacturing pulp, packaging paper, and uncoated paper (JSC Mondi SLPK) and three processing plants (LLC Mondi Aramil, LLC Mondi Pereslavl, and LLC Mondi Lebedyan). The main asset of Mondi Group is the plant for manufacturing pulp, packaging paper, and uncoated thin paper, which is situated in Syktyvkar. These organizations essentially work for the homegrown market and employ 5,300 individuals in Russia.
Response to aggression in Ukraine
On March 10, Mondi put out an announcement with respect to its work in Russia. Mondi affirmed that its top-level business, Mondi Syktyvkarsky LP, keeps working.
On May 4, the organization stated in the wake of assessing all aspects, the Board of Directors chose to get rid of its assets in Russia. Nonetheless, “there is no sureness about the timing of the arrangement, as well as how it is structured,” the organization commented.
On May 6, TASS reported that JSC Mondi Syktyvkarsky LPK, one of the biggest paper makers in Russia, keeps working consistently. Suspension of its work is not arranged after the post of Mondi Group about the sale of its resources in Russia, which is confirmed by First Deputy Chairman of the Government of the Komi Republic Elmira Akhmeeva.
On June 3, General Director of Mondi SYK LPK Klaus Peller held a meeting where he expressed the following in short:
- All machines work as usual in the manufacturing process.
- Our income has stayed at the same level, while the exchange rate changes all the time.
- As to the office and offset paper, the situation is all different: it is predominantly sold in Russia and the CIS states.
- Mondi is currently the main pulp and paper factory in Russia whose product line has not changed in terms of quality.
On June 11, 2022, Mondi SLPK upheld a bike event “We are Russia! We are together!” by giving resources to arrange a bike rally.
On June 15, Pavel Buslaev, Financial Director of Mondi Syktyvkar LPK JSC, reported that the Mondi Syktyvkar plant is currently exploring different options regarding the manufacturing of packaging that has to replace Tetra Pak. A similar data was proved by the Vice-Prime Minister of Russia Victoria Abramchenko who stated that against the background of Tetra Pak’s departure from Russia, the country will face no problems with any packaging — the organization’s products would have the option to be replaced thanks to existing advancements, raw materials, and assets.
On August 4, during a quarterly public interview, Mondi declared that as of June 30, 2022, while a discussion with certain potential buyers was ongoing, their Russian organizations proceeded to work and were productive. Consequently, the management team needed to assess the fair value of the plants. The organization’s management team pointed to the complex and bureaucratic sale process and did not provide explicit terms for providing its Russian assets to the new owners. Accordingly, the Ukrainian people began an online campaign using the hashtag #MondiBloodyPackaging, calling Mondi and its clients to quit helping Russia.
On August 12, the organization stated that it was selling its key Russian asset — Joint Stock Company Mondi Syktyvkar — for RUB 95 billion (around EUR 1.5 billion at that exchange rate), payable in cash after sale. It must be noted that the contract value is over two times the worth of all Mondi’s assets, which it had last year (EUR 687 million).
Notwithstanding the potential sale of Syktyvkarsk LPK, Mondi actually possesses three plants in Russia that keep working.
Likewise, the new proprietor of the plant is appealing. Viktor Kharitonin is the key maker of the Sputnik V vaccine, an oligarch close to Deputy Prime Minister Tatyana Holikova, whose protégé is the head of Komi, Vladimir Uyba (Mondi SLPK is situated in the Komi Republic). In 2022, Forbes estimated Kharitonin’s fortune at USD 1.4 billion — this is the 66th place on the list of the most affluent Russians.
In any case, the value of Mondi SLPK marginally surpasses Kharitonin’s fortune, which — taking into account his closeness to Russian authorities — drives the idea of governmental financial aid in buying an important asset like that to meet the packaging demand of the internal market. Viktor Kharitonin is on the list of candidates for Ukrainian sanctions imposed by the Ukrainian NACP.
Conclusion
The organization responded to the conflict in Ukraine and reported the sale of its plants in Russia and exit from the market.
Notwithstanding, its plants keep working to the surprise of no one. The suspension of activities did not happen. The managers prove that Mondi keeps operating. The Russian government upholds their operation.
The sale of Mondi SLPK to an oligarch close to the Russian government, given his probable wealth and scope of activities, is likely to be partly subsidized by Russia to preserve a crucial manufacturing capacity. Even despite the possible suspicious sale of Syktyvkarsk LPK, Mondi still runs three plants in Russia that keep operating. Photo by Janay Symonette, Wikimedia commons.