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Mitsui to participate in timber processing with forest concessions in Russia

Aug. 5, 2013


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Mitsui & Co., Ltd. ("Mitsui" Head Office: Tokyo, President and CEO: Masami Iijima) 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.

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.

Company Profile

(1) BLK

Name of Company ZAO Baikalskaya Lesnaya Kompaniya
Representative Evgeny Pruidze CEO
Head Office The Republic Buryatia Russian Federation
Establishment 1999
Capital (before acquisition) 2 hundred million Ruble (about 6 hundred million yen)
Employees About 350
Shareholders (after acquisition) BAIL (60%), Mitsui (40%)
Business Activities Timber felling, processing wooden products, and selling the lumber

(2) BAIL

Name of Company OOO Bail
Representative Gennadiy Pruidze CEO
Head Office The Republic Buryatia Russian Federation
Establishment 1999
Business Activities Investing in wood business and real-estate business in the Republic Buryatia

MAP

MAP

*About the FSC (Forest Stewardship Council)
The FSC was jointly established in 1993 by environmental groups and companies handling wood materials as a not-for-profit organization with an international membership to operate an internationally unified forest certification system. The FSC set up a forest certification system with the aim of promoting forest management that is appropriate from an environmental protection perspective as well as socially beneficial and economically sustainable. Independent third parties assess whether or not forest management and logging is being carried out in consideration of the environment or local community, verified against a trustworthy system. Globally sustainable forest preservation and use is promoted through a system whereby the FSC logo is attached to widely distributed wood materials and wood products produced through these forests. By purchasing these environmentally-friendly products, consumers contribute indirectly to forest preservation, bringing together a variety of participants, from people managing the forests to the consumers of wood and wood products. (Translation of text quoted from the FSC Japan website)

Notice:
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.
This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Corporate Communications Division
Noriko Okamoto
Telephone: +81-3-3285-6645
Facsimile: +81-3-3285-9819