Stora Enso to Convert Fine Paper Machine at Varkaus Mill to Lightweight Containerboard

A fine paper machine at the Varkaus Mill in Finland will be converted to produce 390,000 tpy of kraftliner.

April 25, 2014 - Stora Enso announced that it will invest approximately EUR 110 million to convert a fine paper machine at the Varkaus Mill in Finland to produce virgin-fibre-based containerboard.

According to Stora Enso, the majority of the cost is due to the conversion work required on the paper machine and in the pulp mill.

“Utilising existing assets within Stora Enso and modifying them to a new product line is part of Stora Enso’s transformation to a value-creating renewable materials company focusing on growth markets,” said Stora Enso CEO Jouko Karvinen.

“Varkaus is an ideal mill for this kind of conversion. It has an integrated pulp mill, a power plant and a suitable paper machine," Karvinen said.

"In addition, the mill is well located from a raw material supply point of view and it has the necessary infrastructure and competence to run the project successfully,” he added.

Stora Enso noted that renewable-fibre-based packaging has good growth potential in Europe and globally, and the company sees an opportunity to benefit from that growth by investing in competitive kraftliner capacity at Varkaus. Through the machine conversion, Stora Enso is taking advantage of the combination of two market forces: the decreasing global market for paper but increasing global market for renewable packaging board.

The conversion will decrease Printing and Reading annual sales by EUR 140 million from 2016 onward and increase Renewable Packaging sales by EUR 280 million when the machine is running on full capacity.

The targeted EBITDA margin to the machine conversion in full run is above 15% provided that the current market conditions prevail.

Stora Enso said the conversion work is expected to be undertaken mainly during autumn 2015 and the containerboard machine is scheduled to start up during the fourth quarter of 2015.

The fine paper machine has a production capacity of 280,000 tonnes per year of uncoated fine paper and is scheduled to cease production by the end of August 2015.

Following the conversion, Varkaus Mill’s capacity will be about 390,000 tonnes per year of kraftliner and 310,000 tonnes of brown unbleached kraft pulp.

Most of the mill's board production is planned to be sold externally, Stora Enso added.

Varkaus Mill will produce office paper grades until the end of August 2015.

Stora Enso will continue serving its office paper customers from the two other uncoated fine paper units, Veitsiluoto Mill in Finland and Nymölla Mill in Sweden.

Stora Enso's annual production capacity is 5.4 million tonnes of chemical pulp, 11.7 million tonnes of paper and board, 1.3 billion square metres of corrugated packaging, and 5.6 million cubic metres of sawn wood products, including 2.9 million cubic metres of value-added products. For additional information please visit the company's website: www.storaenso.com

SOURCE: Stora Enso