RDIF and partners agree on a project to construct a pellet mill in the Khabarovsk Region

Press release, 10.09.2018

Vladivostok, September 10, 2018 – The Russian Direct Investment Fund (RDIF), the sovereign wealth fund of Russia, the Russia-Japan Investment Fund (RJIF, launched by RDIF and the Japan Bank for International Cooperation (JBIC)), RFP Group and Japan’s Prospect Co., Ltd. have agreed to advance negotiations on a joint project to construct a pellet mill in Amursk (Khabarovsk Region). A corresponding agreement was signed today on the sidelines of the meeting of the Russian President, Vladimir Putin and the Japanese Prime Minister, Shinzo Abe at the Eastern Economic Forum.

The investment for the project totals $35 million at the first stage with a potential further increase to up to $200 million. The project involves the construction of a fuel pellet production mill (wood pellets) with a total capacity of 135 thousand tons per year. Construction of the first facility has started from the summer of 2018, with pellet production beginning in 2019. The parties are considering to expand production capacity and construct additional plants to reach a capacity of circa 500,000 tons per year. A significant volume of the product will be exported to Japan and several agreements have already been signed with potential pellet customers. Negotiations to attract project financing from leading Japanese banks are also underway.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), said:
"In Russia, a large quantity of timber is harvested and processed, this leads to a significant amount of waste from the Russian timber industry. The joint project of RDIF and partners uses this timber waste to produce pellets. It not only generates attractive returns but also holds significant export potential. The project also has an important environmental component, as wood pellets have several advantages compared to traditional fuels."

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Russia-Japan Investment Fund was established to pursue and implement attractive investment projects to promote economic, trade and investment cooperation between Japan and Russia. Priority sectors identified for cooperation include healthcare, development of smart cities and sustainable technologies, energy, cutting-edge technologies and developing industries and export in the Russian Far Eastern District, as well as other initiatives that will strengthen the trade and economic relations between the two countries. www.rjif.org

Prospect Co., Ltd (TSE: 3528) is a Tokyo Stock Exchange listed investment and development firm with over 200 employees and over 20 years of development experience in Japan, totaling over 2 billion USD. The company operates in five main business segments, (1) the development and sale of condominiums in the Tokyo metropolitan area; (2) the sale of built to order residential properties; (3) asset management through its SEC registered U.S. Investment Advisory subsidiary, investing in Japanese equity, (4) general civil engineering and construction, specialized in prestressed concrete (PC) works, micro-tunneling and (5) renewable energy power generation and electricity sale. The Company currently has 150 million USD in renewable energy projects under development. www.prospectjapan.co.jp

Russia Forest Products (RFP Group) is the largest forestry company in the Russian Far East with 5 million m3 of annual allowable felling rights and annual felling volumes of over 2 million m3. RFP operates one of the largest wood-processing clusters with an input capacity over 1.5 million m3 of round wood with plants producing veneer, sawn wood and wood pellets. RFP is set up to become a leading producer of biofuel in the Russian Far East. http://www.rfpgroup.ru/

For additional information contact:
Arseniy Palagin
Russian Direct Investment Fund
Press Secretary
Tel: +7 495 644 34 14, ext. 2395
Mobile: +7 916 110 31 41
E-mail: arseniy.palagin@rdif.ru

Andrew Hayes / Andrew Leach
Hudson Sandler
Tel: +44 (0) 20 7796 4133