Ahlstrom enters papermaking joint venture in Brazil

Feb. 23, 2007 - Ahlstrom today said that it has signed a Memorandum of Understanding with Brazilian Votorantim Celulose e Papel (VCP) to form a joint venture for specialty paper production in Brazil.

The assets in the joint venture, currently owned by VCP, include a paper machine, an offline coater and extensive finishing equipment at the Jacarei mill, close to São Paulo, Ahlstrom said. The capacity of production line is about 110,000 tons per year.

The deal states that Ahlstrom will hold a majority of the joint venture.

The joint venture will be part of Ahlstrom's Specialty Papers segment and serve mainly the labeling and flexible packaging markets. In addition, it will continue to produce coated and uncoated paper grades for other end-uses. Currently, most of the paper production is supplied on the local markets, but Ahlstrom said it plans to expand the customer base and serve the markets by utilizing its global specialty materials sales network.

The Jacarei facility is an integrated pulp and paper mill and one of the most modern and competitive eucalyptus pulp producers in the world with a pulp production capacity of one million tons per year.

VCP has been supplying eucalyptus pulp for Ahlstrom on a global basis for more than seven years, the company said.

"The deal is in line with Ahlstrom's strategy to expand its operations in the fast-growing markets outside Europe. Moreover, the joint venture offers us an excellent opportunity to strengthen our position as the global leader in the specialty papers markets. The integrated mill also gives us an exceptional access to competitively priced eucalyptus pulp and energy," said Jukka Moisio, president and CEO of Ahlstrom.

Ahlstrom expects to close the deal on or before June 30, 2007. According to Ahlstrom, the global market for label and packaging papers is estimated to grow 3-4% annually with double-digit growth rates seen in Latin America and Asia. The company's current operations in Brazil consist of a plant manufacturing filtration materials in Louveira

In 2006, Ahlstrom announced an investment in a wiping fabrics production line utilizing spunlace technology, also located in Louveira. The new line is estimated to be operational in early 2008.

SOURCE: Ahlstrom

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