Finnish pulp and paper company Stora Enso has announced its decision to invest approximately €350m (£308.5m) to convert the Oulu paper mill in Finland into packaging board mill.
The plan includes converting paper machine 7 into high-quality virgin-fibre-based kraftliner production, as well as closure of paper machine 6 and sheeting plant at the mill.
Current production capacity at the Oulu Mill is 1,080,000 tonnes of woodfree coated papers annually. Production is planned to be continued until the end of September 2020.
Stora Enso CEO Karl-Henrik Sundström said: “The conversion of Oulu Mill will enable Stora Enso to further improve its position in the growing packaging business and take a major step forward in its transformation.”
As part of the conversion project, Stora Enso will invest in a new line for virgin-fibre-based kraftliner with an annual capacity of 450,000 tonnes, as well as modify the pulp mill and drying machine for unbleached brown pulp.
The firm, which plans to commence ground work for the conversion project in summer 2019, will also invest to enhance the mill’s environmental performance. The project is expected to involve about 200 contractors.
Scheduled to commence production by the end of 2020, the converted machine will produce kraftliner, which is used in food, fruit and vegetables packaging as well as heavy duty packaging industries.
Stora Enso packaging solutions division executive vice-president Gilles van Nieuwenhuyzen said: “This conversion will allow us to provide customers with an innovative kraftliner product with high-performance qualities in terms of strength, printability and food safety.”
The firm expects the investment to meet the packaging solutions division’s profitability target, operational return on operating capital (ROOC) of 20%.
The converted Oulu Mill, which will directly employ approximately 180 people, will receive wood from private forest owners in Northern Finland.
As a result of the new investment project, the firm plans to axe 365 jobs, which is expected to mainly take place by the end of 2020.
The firm said in a statement: “Stora Enso will book a cost of EUR 31 million as an item affecting comparability (IAC) relating to layoffs, restructuring expenses, asset write-downs and impairment reversals, of which EUR 7 million will be recognised in the second quarter of 2019 and EUR 24 million in the following five quarters.”