Stora Enso to Build Pulp and Paperboard Mill in China
March 21, 2012 (Press Release) - Stora Enso plans to build plantation-based integrated board and pulp mills at
Beihai city in Guangxi, southern China. The mill site will initially include a
450,000 tonnes per year state-of-the-art paperboard machine and pulp capacity
of 900,000 tonnes per year, including necessary energy plant and auxiliary
facilities. In a unique set-up, the board and pulp mills will be
self-sufficiently integrated with wood supply from 120,000 hectares of
self-managed eucalyptus plantations.
The ultimate target is to expand the
paperboard capacity to 900,000 tonnes at a later stage.
The operations will be
managed by an equity joint-venture company established by Stora Enso (85%) and
the Guangxi Forestry Group (15%), a state-owned company under the Guangxi
provincial government. The joint venture will serve the fast-growing market for
liquid packaging board and other premium consumer board grades.
The project investment will be approximately EUR 1.6 billion.
the industrial site will commence when specific preconditions have been
fulfilled, which is expected to be in the second half of 2012. Production is
scheduled to start in the fourth quarter of 2014. The investment will
significantly support Stora Enso moving towards companyís 13% ROCE target.
The project will be financed through a combination of debt and equity on an
approximately 60/40 basis. The debt financing is expected to be a mix of export
credit agency, multilateral and commercial bank debt.
"Today we are taking another significant step in transforming Stora Enso into a
global renewable materials company. We already have a globally leading position
in renewable fibre-based packaging boards. We will now invest in a world-class
integrated mill based on locally grown renewable materials for the benefit of
local Chinese consumers in the fastest-growing market. Everything we do will be
based on best-in-class technologies, environmental standards and sustainability
practices — together with the local partners and communities," says Stora Enso
CEO Jouko Karvinen.
"Generating sustainable returns from any business requires a unique offering to
the customers, be it product or process benefits, in a cost-efficient way — or
something that is very difficult for the competitors to copy, like integrating
the operation from the plantations to the technically advanced product. This is
exactly why we have chosen to differentiate ourselves through a range of
specialised world-class board products and end-to-end integration — with the
most cost-efficient solution for the Chinese market and at a globally
competitive total cost," says Stora Enso EVP for Renewable Packaging Mats
The investment is subject to regulatory approvals, the signing of final
documentation and other customary conditions precedent.
Growth together with customers — strong growth forecast in fibre-based
packaging in China
The fibre-based liquid packaging board segment is one of Stora Ensoís strategic
focus areas and this investment is consistent with the Groupís announced
strategic guidelines. Through this investment, Stora Enso seeks to benefit from
the forecast future growth in demand for fibre-based packaging solutions for
food in China, which is forecast by several researchers to grow at a compound
annual rate of over 10% during the next ten years. This investment will also
enable Stora Enso to provide excellent service with cost-competitive, locally
produced high quality liquid packaging boards on a regional basis for its
global key customers that are already well established in China.
Impact study supports the project
The United Nations Development Programme (UNDP) conducted an Environmental and
Social Impact Assessment (ESIA) of the project for Stora Enso in 2006, and at
Stora Ensoís request made an additional, integrated ESIA summary report which
will be independently reviewed and published in 2012. The studies give a
supporting view for the board and pulp mill project. When the project began,
Stora Enso established a Community Development Fund to provide financial
support for development of education and infrastructure in local villages, and
in 2011 the Group revised its stakeholder engagement and community development
plans. Stora Enso will co-operate with local authorities, universities,
organisations and villagers to find long-term sustainable solutions for
Stora Ensoís present operations in China
Stora Enso has been establishing plantations in Guangxi since 2002. The Group
currently holds approximately 90,000 hectares, and is to establish sustainable
eucalyptus plantations with an effective fibre base of 120,000 hectares to
support the new pulp mill in Guangxi. The Groupís other operations in China
include a 245,000 tonnes per year coated fine paper mill in Suzhou, a 170,000
tonnes per year uncoated magazine paper mill at Dawang, two core factories,
five sales offices and the newly acquired majority shareholding in Inpac
International, a packaging company with production operations in China and
India, and service operations in Korea. The total number of employees in China
is currently about 4,500.
SOURCE: Stora Enso