In a situation update issued this afternoon (10 March), Mondi explained that its Syktyvkar Mill operates an integrated power plant, which is the primary source of heat and warm water for a local population of around 60,000 people.
Mondi is legally required by the Russian authorities to provide the energy supply.
In addition, the mill also provides other local community services such as waste water treatment.
However, Mondi noted that Syktyvkar Mill was also “starting to see a number of operational constraints, including in the importing of process chemicals, spare parts and other critical supplies”.
“While difficult to assess the ramifications in what remains a fast-moving situation, this may significantly impact the operation of the mill.”
Mondi Group employs around 5,300 people in Russia, and it has been under increasing pressure over its stance to continue operating there. Syktyvkar does not receive any direct funding from Mondi.
In its update, Mondi said it was “assessing all options” for its Russian interests, including “any form of legal separation”.
“Recognising its corporate values and broader stakeholder responsibilities, the board is assessing all options for the Group’s interests in Russia, including any form of legal separation.
“This does not mean, or imply, that Mondi is planning, or initiating, any liquidation or bankruptcy proceedings in relation to any of its Russian subsidiaries or assets,” the group stated.
Production at Mondi’s 100-employee paper plant bag in Ukraine was suspended at the beginning of the month.
“Mondi is profoundly concerned about the crisis unfolding in Ukraine and is shocked by the humanitarian impact. We express our deepest sympathy to all those impacted by the ongoing hostilities, adding our voice to those calling for an urgent cessation,” the group said.
“In addition to the direct support the Group is providing to colleagues in Ukraine, Mondi has recently pledged €1 million to support the United Nations World Food Programme’s emergency operation to provide food assistance for people impacted by the conflict.”
Mondi’s operations in Russia represented circa 12% of the group’s revenue by location of production in 2021 and, over the last three years, generated around 20% of the group’s underlying EBITDA.
Mondi has operated in Russia for over 22 years.
Also today, former Russia president Dmitry Medvedev warned that the Russian state could nationalise the property of foreign organisations that have pulled out of Russia.
The impact of Russia's war in Ukraine has sent the group’s share price tumbling to a 52-week low.
