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Rottneros to Close Utansjö Pulp Mill in 2nd Quarter

Jan. 9, 2008 - Swedish pulp and paper maker Rottneros said that it will shutter its Utansjö pulp mill in northern Sweden in the second quarter of 2008—some six months earlier than planned.

About 140 employees will be affected by the closure.

Rottneros said that the decision to discontinue operations at the mill was made back in August 2006, when it entered negotiations with union representatives. At that time, the company had hoped to keep the mill running until the end of 2008.

But, dramatic increases in the price for electricity and the high cost of pulpwood have made it impossible to achieve profitability at the mill, the company said, and under these circumstances it would be unfeasible to keep the mill running until the end of the year.

“The fundamental reason for Utansjö's problems is the long-range, high Swedish electricity prices that are affecting all of our electricity-intensive basic industries. Combined with high wood costs, they have made it impossible for us to continue our operation in Utansjö,” said Lars Blecko, president and CEO of Rottneros.

“Naturally, it is extremely difficult to have to take a decision that directly affects 140 of our employees and indirectly impacts an entire area. We have an efficient mill in which we have invested heavily which has skilled employees, a sound customer structure, a good market, a strong order book and a good industrial location with an own port. It is just regrettable that the cost structure is such that it is impossible to continue to operate the mill,” Blecko added.

The company, however, does have plans for the CTMP (chemithermomechanical pulp) production line at the mill, which came on-stream in 2005. Back in March 2007, Rottneros and the South African forest products company NCT signed a letter of intent to explore the possibility of jointly building a CTMP mill in South Africa, where lower energy prices exist and raw materials are more abundant.

If the plan is carried out, the CTMP line at the Utansjö mill will be sold to a jointly owned company in South Africa and a new mill could be operational in 2009, Rottneros said.

A definite decision about the South African venture will be made in the first quarter of 2008, Rottneros added.

The Utansjö Mill is located north of Härnösand in Sweden and produces groundwood pulp and CTMP. Both grades of pulp are used primarily for coated and uncoated printing and writing paper. Most of the pulp is bleached. The mill's total capacity is 159,000 tonnes per year.

SOURCE: Rottneros

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