PaperAge Magazine

SCA to Invest SEK 7.5 Billion in New Kraftliner Machine at Obbola Mill in Sweden

SCA's Obbola Paper Mill A new kraftliner machine to be installed at SCA's Obbola mill in Sweden will boost the mill's annual production of kraftliner from its current 450,000 tonnes to 725,000 tonnes.

Sept. 3, 2019 - SCA announced that it will install a new paper machine for the production of kraftliner at its Obbola paper mill in Umea, Sweden. The new machine will boost the mill's annual production of kraftliner from its current 450,000 tonnes to 725,000 tonnes.

The total investment amounts to SEK 7.5 billion over a five-year period and includes investments in environmental improvements of approximately SEK 1 billion, including a reduction in the need for oil by 8,000 cubic meters per year and improvements in the water treatment capacity. Following the investment, SCA's own industrial processes will be 97 percent fossil-free.

SCA said the investment replaces necessary reinvestments in Obbola of approximately SEK 2.5 billion. The investment will be mainly financed by operating cash flow, complemented by regular group financing activities.

SCA expects start-up of the new machine in the first quarter of 2023.

In addition to the Obbola paper mill, SCA also produces kraftliner at Munksund paper mill in Piteĺ. Over the past twelve months SCA's kraftliner operations had an EBITDA margin of 35%. With a kraftliner trend price of EUR 600 per tonne, the investment is expected to generate an annual EBITDA improvement of approximately SEK 800-1,000 million after full ramp-up.

SCA explained that demand for paper based packaging is growing. This trend is being driven by a number of factors — increased e-commerce, a growing population and the ambition to reduce the use of plastic.

“This is a profitable investment in a growing segment,” said CEO Ulf Larsson. “We expect the investment to be profitable already during the first year of operation and to contribute positively to the return on capital from our industrial operations.”

Mats Nordlander, President, Paper for SCA, said, “With the investment in Obbola we can meet the increased demand for sustainable packaging. We have access to high quality wood fiber from Norrland. We have efficient and reliable supply of wood and logistic operations.”

The new paper machine is being constructed in a new building in line with the current paper machine. As a result, the plant will be in full production during the entire construction period before switching over from the old machine to the new one ahead of the start-up in 2023. The new plant's ramp-up to full capacity is expected to take three years.

Based in Sweden, SCA produces solid-wood products, pulp, kraftliner, publication papers and renewable energy. To learn more, please visit: www.sca.com.

SOURCE: SCA