Mitsui & Co., Ltd. agreed with ZAO Baikalskaya Lesnaya Kompaniya ("BLK") to participate in running BLK, a company engaged in timber felling and processing wooden products in Republic of Buryatia, and we finalized the contract on August 5, 2013. Mitsui will acquire a part of BLK's stock held by OOO Bail ("BAIL"), which is the parent company of BLK, and take a third-party allocation of new shares by BLK, finally acquiring a 40% ownership stake in BLK, said in the company's press release.
BLK has forest concessions in 5 forest areas in the Republic of Buryatia (1,000,000 ha in total) until 2059 maximum. BLK began to operate a factory with the latest wood products processing machine in 2012 and has a value chain from forest concessions to processing to sales of wooden products. In addition, BLK engages in sustainable forest management, has a license from FSC*, which is an international forest certification system covering all forest areas. (License Code: FSC-C115188, FSC-C115189)
The Republic of Buryatia is located in the center of Eurasia. Spanning Europe and Asia, it has the geographical advantage of easy access to consuming regions in Europe, the Middle East and Asia. Furthermore, Mitsui plans to focus on selling products to the Chinese market, taking advantage of the Republic of Buryatia's location near the border of China.
In 1991 Mitsui acquired 14% ownership stake in Russian lumber company T.M. Baikal Co., Ltd. ("TMB") and has been importing and selling red pine products to the Japanese market for 20 years. While wood demand in developing countries such as China is growing, Mitsui hopes to stably supply BLK's high-quality wooden products to Japan, China, Europe and the Middle East based on the experience and know-how that we have gained through TMB business. Moreover, Mitsui will contribute to the development of the regional economy with the lumber project in Russia by industrial progress and sales promotion in global market.
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