The ongoing attempts of Finnish firm Metsaliitto to build a pulp and paper complex in the Volgograd region have taken a dent, after little-known Russian firm Crono said it was negotiating with the region's officials to build its plant on the very site the Finns chose.
Although experts estimate that Crono's chances of obtaining the site reserved by Metsaliitto are very low, Crono has promised to invest around 2 billion dollars in the project in the project, more than $500m more than Metsaliitto had planned.
One of many investors attracted to the Vologda region by its flourishing timber sector, Metsaliitto first planned to build the pulp and paper complex in in 2003. The firm even signed an agreement with the Vologda administration about beginning construction of the plant in the regional village of Suda.
Crono, not to be confused with Swiss timber group Krono, expects annual production volume at the plant to exceed 1 million tons of a wide range of goods, from cardboard to enamel paper.
The Vologda authorities believe the emergence of a new investor is good for competition among investment projects. They say tax and other financial incentives are on offer to companies undertaking such projects in the region.
Metsaliitto has reacted with surprise by the challenge from Crono. They say the existing agreement between themselves and the Vologda administration means the project will go ahead as scheduled