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Arkady Dvorkovich, Russia’s deputy prime minister said the Mill will be closed gradually, and its output transferred to other enterprises.
The mill operates on the world’s biggest and deepest freshwater lake.
Environmental activists in Russia have been up in arms against its operations which they say are seriously damaging the environment — contaminating the waters of the lake, its flora and fauna.
The Baikal mill, opened in 1966, and has been producing over 200,000 tons of cellulose annually.
The mill has also been the largest employer in the nearby town of Baikalsk.
“This is a complex process, but it can be completed in several years,” Dvorkovich said.
It might take up to two years to stop the mill’s operation, and another six to liquidate the waste products.
Public campaign to close the Baikal mill dates back to the 1980s, when under then-President Mikhail Gorbachev’s “openness” the nation’s leading statesmen and literary figures forced the Soviet government to halt production by 1993.
Over the past years the mill has faced severe financial problems, it has debts of 1.9 billion roubles.
December 2012 saw a Russian court ruling out bankruptcy procedures.
Baikal is a UNESCO World Heritage Site which holds 20 per cent of the planet’s unfrozen fresh surface water.