Fire hazard investments. Why should next catastrophic fires be expected not in Siberia, but in Far East?
In Siberia, more than 2 million hectares of forest continues to burn. Unprecedented fires have already officially been recognized as an attempt to hide illegal logging. The fire passed through the territories that had previously been allocated for the implementation of investment projects. Today, the investment territory is the Far East. Investors by hook or by crook try to get forest plots. What schemes are used for this? And is not one thing hidden behind loud statements – the desire to make money on deforestation, and then hide the traces in the fire?
The CrimeRussia recently reported in detail about why the main reason for the unprecedented fires in Siberia is an attempt to hide illegal logging. One of the profitable schemes of the shadow economy is to declare a high-profile investment project, get a lease for it, cut down trees, and then set fire to massive cuttings and cover all traces.
The Prosecutor General’s Office has already found confirmation that illegal logging is being covered by fires. Arson facts were revealed in all regions where the taiga burns. So, in the Krasnoyarsk region 15 criminal cases are already being investigated related to illegal logging and official crimes of officials in relation to forests. But the Siberians are no better off from this: more than 2 million hectares are still engulfed in fire. “People are suffocating from smoke,” “a real catastrophe is occurring,” the speaker of the Irkutsk Legislative Assembly Sergey Sokol summed up on Facebook. “It's time to stop mocking the residents of the region, putting their health and lives at risk,” the experienced politician urged.
Whether Sokol remembers how, in the status of Deputy Governor of the Krasnoyarsk region Alexander Khloponin, he oversaw the activities of the forest complex? Back then, he zealously advocated for the implementation of investment projects in the Angara region, which is now engulfed in fire. “The projects were to build processing plants, factories for the production of materials from the forest. And under one condition – forest for logging was allocated immediately. There were 14 such projects in the Krasnoyarsk region – 3 of them ended, there are no enterprises, and the forest has been cut down,” said Tatyana Davydenko, head of the Krasnoyarsk Accounts Chamber, who lost her job for her courage..
Today it’s no longer accepted to talk about the development of the Angara area. Now the vector of attention is directed to the Far East. Investors are taking advantage of the opportunity to lease forest land for 49 years for the implementation of investment projects. And, it seems, as once in the Angara region, they are most interested in the forest itself, which one can cut down and earn on it, and then hide the traces of clearings by arranging arson.
The President of Russia first set the task of accelerating the development of the Far East in 2013. In 2015, in the macro-region, zones began to be created with favorable conditions for doing business – ADT (advanced development territories). And in the spring of 2016, the first scandal broke out with the distribution of the Far Eastern forests under the guise of implementing an investment project. A certain “Far Eastern Woodworking Company” (DDK) announced its intention to launch a project for the production of chipboards for house building. To this end, the company asked to give it leases on concessional areas with an area of about 750 thousand hectares – 6.5% of all forests of Primorye and 4.5% of the territory of the whole region. The DDK requested 825.1 thousand cubic meters of annual cut-off limit – the same amount was cut at that time in all of Primorye. Moreover, the company intended to receive forest fund lands for timber harvesting with a 50% discount on rent payments and without an auction.
In the Far East, then any investor was welcomed with open arms: the growth of statistics on investment projects had to be achieved at any cost. And, perhaps, the DDK would have received everything that it had demanded if environmentalists had not sounded the alarm. They stated that industrial cuttings should not be carried out at all on the part of the land claimed by the company, since they belong to protective and water-protecting forests, reserves, etc. Ecologists could have been ignored if one more circumstance had not been clarified: the staff of the company, which is going to cut down almost the entire free forest fund of Primorye, consists of only one person, and its authorized capital is 20,000 rubles. That is, the imaginary “investor" has neither people nor resources.
If DDK could get the forest for rent on favorable terms, the head of the company, of course, would immediately hire people who would cut down the trees. But experts doubted whether he would spend money on reforestation, fire fighting, and so on. And most importantly, will the profits received from the sale of wood be directed to the construction of a chipboard factory, as promised? The arguments were considered weighty in the relevant ministry, the application of DDK was not approved, and in the fall of 2016 the company announced the liquidation.
The lesson was learned, and the distribution of forest land in the Far East began to be monitored more closely.
“We are ready to support projects, but these should be high-quality projects that will give an incentive to the development of the Far East, rather than cutting down and selling timber,” said Leonid Petukhov, Director General of the Far East Investment Promotion and Export Support Agency, decisively.
Obtaining forest land for the construction of wood processing industries has become much more difficult. And since July of this year, restrictions have been enshrined in law: now only the projects of the largest investors can count on priority status. “If we are talking about new projects to create a forest infrastructure and production, then the minimum investment is from 3 billion rubles ($45 mln),” Petukhov explained.
Projects supported by foreign investors are now pretending to receive the Far Eastern forest for deforestation. So, in the city of Amursk, Khabarovsk Region, the construction of a new pulp and paper mill is planned. According to the governor of the region Sergey Fural, "the selection of forest sites for future production has already been carried out." The main stakeholder on the Chinese side is China Paper, which is already looking for suitable land and forest plots. Singapore company Sudima, which has teamed up with its Indian partner KGK is already choosing the sites for the construction of a timber processing complex in Primorye and Transbaikalia. Investors announced their intention to produce parquet, furniture panels, lumber and pellets from Far Eastern wood. Companies from Indonesia, Japan and South Africa also intend to build woodworking industries in the Far East.
Russian companies that can’t offer the right amount of investment had to come up with creative schemes for how to get right for deforestation. An example of how to act was shown by OOO Eco Toys. She launched a small production of toys made of natural wood under the brand name Kubi Dubi. The company employs 50 people in the small Far Eastern village of Chuguevka, who produce 4,500 game sets per month. Despite the small volume of production, Chuguev’s cubes and pyramids for babies are presented at the largest federal online platforms, in the Detsky Mir, Bubble Gum, and Schastlivoye Detstvo retailers. And the company's management announces ambitious plans to start deliveries abroad and conquer the world market.
OOO Eco Toys emphasizes that wooden toys have a lot of advantages. They are environmentally friendly, durable and easy to care for, developed taking into account the teaching methods used in kindergartens, produced “in the spirit and traditions of the cultural and moral values of the Russian Federation.” And most importantly, unlike imported toys, the quality of which regularly raises questions, are absolutely safe for the health of babies. The child will not be pleased with harmful plastic when he decides to taste the toy. In order to guarantee complete safety for the kids, in the production of Kubi Dubi only valuable wood species are used – linden, oak, and birch. But the company must be completely sure that nothing threatens the health of children, so it wants to build its own woodworking plant. For some reason, the company's specialists doubt the quality of the purchased raw materials, which is why they need forest land for rent where they can independently harvest timber.
For 10 years, the company Eco Toys plans to process more than 150 thousand m³ of wood of various species. But only valuable woods are suitable for the production of toys. What to do with the rest of the cut down wood? The company says it will make additional investments in processing. Equipment is already being purchased to produce lumber. As true patriots, Eco Toys employees would prefer to supply boards and timber to domestic customers. But there are no potential consumers in the Far East, and it is very expensive to deliver goods to the European part of the country. So, there is nothing to be done, you have to sell boards and timber to China and South Korea. But at least production waste will go to local residents. The company emphasizes that the launch of pellet production will help provide fuel to socially vulnerable segments of the population. “The creation of a modern complex for deep processing of wood will make it possible to produce about 50 thousand cubic meters of dry planed lumber, and the complex for processing wood waste through the production of pellets will produce products in the amount of 30 thousand cubic meters,” said Yevgeny Korzh, the head of OOO Eco Toys.
Is it possible not to support a company that is so worried about the health of Russian children and the well-being of poor residents of the Far East? Of course not. Eco Toys investment project has already found support at all levels. It was the first project in the field of forest development, which received the status of priority. On June 14, 2018, the government of the Russian Federation by decree No. 1181-r included the project in the state program "Socio-economic development of the Far East and the Baikal region." On July 18, 2019, in accordance with Order No. 2102 of the Ministry of Industry and Trade of the Russian Federation, the project was included in the list of priority investment projects in the field of forest development. The company received various tax benefits and preferences, including the right to conclude a lease agreement for a forest plot without an auction and a reduced rent, and most importantly, a legal opportunity to cut down Far Eastern forests and sell timber abroad.
An example of Eco Toys gave many an idea of how to act. So, in 2019, in the Nadezhdinskaya ADT in Primorye, Stickwood LLC will launch the production of disposable wooden chopsticks, which are needed not only in Asian markets, but also for Russians. The need of the residents of the Far East "in Chinese sticks is estimated at about 1.2 million pieces per month." In the Kangalassi Industrial Park ADT, the Wood Park company will produce prefabricated wooden houses that are "suitable for living in the Far North, can be built in uluses and remote areas of Yakutia" and will be built for orphans and IDPs from emergency housing. In Primorye, OOO Biotopwood will begin to produce furniture panels, veneers and wood-based biofuels, which "will reduce tension with a shortage of firewood in rural areas."
The circuit turned out to be quite functional. To get forest areas for cutting, it is enough to declare the high social significance of their products. So, the application of OOO Biotopwood has already been approved, "the forest areas for rent will be handed over to the investor to provide raw materials for production facilities." An enterprise without auction and at a reduced price will receive 225.393 thousand ha of forest, on which it will be able to harvest 103.936 thousand cubic meters of wood annually.
All investors receive land for 49 years. Obviously, it will be extremely difficult to control how they manage the allotted forest for this entire period. Indeed, illegal logging in the Far East is an urgent problem, and it is not possible to cope with it. Thus, according to the Ministry of Environment of the Zabaykalsky region, the damage from illegal logging in the region from 2016 to 2019 has more than doubled. This means that it is possible that in a few years the fires will no longer cover, but the Far East. And the arsons will be recorded precisely in those areas that are currently allocated for investment projects.
September 10 is the day when State Duma deputies return from summer vacation to the building on Okhotny Ryad. Among them is the hero of our previous investigation, the ‘Steel King of the South of Russia,’ Ivan Ivanovich Demchenko. The owner of the Abinsky Electrometallurgical Plant, which withdraws the profits of companies under its control to the accounts of foreign offshore companies, will once again start working as part of the Duma committee on regulations – it is an unchallenging job, necessary for parliamentary immunity of the deputy and his vast business, which brings billions of rubles annually.