Stora Enso Forms Joint Venture in China

April 25, 2006 - Stora Enso today said that it has signed an agreement with Shandong Huatai Paper to form a publication paper company. The agreement to establish the joint venture, in which Stora Enso will hold 60% of the share capital, is subject to approval by the Chinese authorities.

"The key strategic aims for Stora Enso are to strengthen our market position in the core product segment of publication paper, to grow with our key customers and to continue expanding in new growth markets such as China. Our co-operation with Huatai Paper, the leading producer of newsprint in China, will open up new business segments for Stora Enso in China," said Jukka Härmälä, CEO of Stora Enso.

In October 2004, Stora Enso and Shandong Huatai Paper announced that the companies were conducting a feasibility study about publication paper production in China.

The joint venture's paper machine at Dongying in Shandong province in China is expected to have an annual production capacity up to 200,000 tonnes of super-calendered (SC) magazine paper and other publication paper grades based on recovered fiber, Stora Enso said.

Dongying city is located between Beijing and Shanghai.

The total investment of the joint venture is estimated to be about US$100 million (EUR 83 million) of which Stora Enso's share is 60%.

Assembly of the production line will start in mid-2007, depending on the permission process. Key components of the joint venture equipment are to be sourced from a machine formerly at Stora Enso's Maxau Mill in Germany, Stora Enso said.

The machine's production will focus on the offset printing papers market in China. Start-up is slated for late-2007

Shandong Huatai Paper Co. Ltd, is a company listed on the Shanghai Stock Exchange with sales of EUR 290 million in 2005. It is part of the Huatai Group, which is involved in paper manufacture, the chemicals industry, printing, energy, forestry, logistics and trading. The Huatai Group has over 10,000 employees, including about 4,470 at Huatai Paper. All of the company's paper and board manufacturing assets are located in Shandong province and its annual production capacity is 1.2 million tonnes of paper and board.

SOURCE: Stora Enso

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