Norske Skog to Enter Tissue Market via Joint Venture

"We are entering the tissue market through a joint venture structure with an experienced partner, which limits the market risk and the capital spend for Norske Skog." – Sven Ombudstvedt, President and CEO, Norske Skog.

Aug. 13, 2015 - Norske Skog's President and CEO in the company's second quarter earnings report announced plans to convert a newsprint machine (PM 3) at the company's Bruck paper mill in Austria to tissue production through a joint venture deal with Italian tissue converter Roto-cart.

The total investment for the machine conversion project is around EUR 80 million, with project financing of 75% debt and 25% equity.

“We are entering the tissue market through a joint venture structure with an experienced partner, which limits the market risk and the capital spend for Norske Skog,” Sven Ombudstvedt said. “The joint venture will replace newsprint production at Bruck with tissue. Thus, supporting the market balance for newsprint and exposing Norske Skog towards the growing market for tissue.”

The Bruck mill is located in in Styria, Austria, and currently produces newsprint (128,000 tpy) on PM 3 and lightweight coated (275,000 tpy) grades on PM 4.

Biogas Facilities Also Planned
Norske Skog also announced that it will build biogas facilities at its mills, with the first biogas facility planned for the company's Saugbrugs paper mill in Norway. This project calls for an investment of about NOK 150 million.

“We are planning to commercialize bio-waste from raw material into gas at our mills,” Ombudstvedt said. “Despite challenging markets, we believe that our mill sites are sustainable, and will strengthen their competitiveness by constructing biogas facilities.

“Our new growth area will be a new main business leg named Nature's Flame,” Ombudstvedt added.

The biogas facility will contribute to gross operating earnings in 2016 and be at full run-rate contribution in 2017. Norske Skog is currently considering replicating the project at its other mills.

“An onsite biogas facility brings twofold economic benefits; a new biogas revenue stream and reduced paper production costs,” Ombudstvedt noted. “Biogas is further a renewable alternative to fossil fuels, which forms part of the carbon solution. Moreover, biogas has large potentials in improving urban air-quality.”

With headquarters in Oslo, Norway, Norske Skog is one of the world's largest producer of publication paper. The company has an annual production capacity of 2.8 million tonnes — 2.1 million in Europe and 0.7 million in Australasia. To learn more, please visit: www.norskeskog.com

SOURCE: Norske Skog