PULP MILLS UPDATE 

 

May 2011

 

McIlvaine Company

 

 

TABLE OF CONTENTS

 

AFRICA

Sappi to Expand Ngodwana Mill, Adding 210,000 tpy of Chemical Cellulose Production

Sappi Plans to Close Adamas Mill in Port Elizabeth

 

AMERICAS

AbitibiBowater Announces First Quarter Profit

Neenah Paper Reports 2011 First Quarter Results

Boise Inc. Reports Financial Results for First Quarter 2011

IP to Produce Fluff Pulp at Shuttered Franklin, Va. Mill

Cosmo Specialty Fibers Officially Opens Cosmopolis Pulp Mill

Kruger and Industries Perron Partner to Restart Two Lumber Mills in Mauricie, Quebec

Cascades Invests $3.5 million in its Forma-Pak Plant in Quebec

Paper Excellence to Acquire Northern Pulp in Nova Scotia

EACOM Timber Acquires Remaining Stake of Elk Lake Sawmill

Domtar Windsor Spends Green Transformation Funds on Biomass Boiler

Metso to Supply Complete Woodyard and Defibrator Systems to Duratex, Brazil

 

EUROPE

Sappi to End Production of Coated Graphic Paper at Biberist Paper Mill

Sodra to Begin Commercial Production of DuraPulp

Finnish Forest Industry Growing, Urges Government Backing

Stora Enso Makes Groundbreaking Investment in Nanotechnology at Imatra, Finland

Powerflute Sells Papierfabrik Scheufelen to Paper Excellence

 

AFRICA

 

Sappi to Expand Ngodwana Mill, Adding 210,000 tpy of Chemical Cellulose Production

Sappi Southern Africa has entered into an exciting new phase of growth and development with the decision to go ahead with the expansion and modernisation of the Sappi Ngodwana mill, including the introduction of 210,000 tons per year of chemical cellulose production at the mill. Sappi’s total production of chemical cellulose will increase to over a million tons per year, entrenching our position as the global leader in chemical cellulose production, a fast growing, high margin business serving the textiles, consumer goods, foodstuffs and pharmaceutical industries.

 

Commenting on the decision, the CEO of Sappi Southern Africa, Alex Thiel, said: “This is a significant development for Sappi Southern Africa and confirms the confidence that the company has in this region. The project will see various enhancements and changes to the mill, all aimed at further improving the mill’s prospects as well as improving the mill’s environmental footprint. Of significance will be the replacement of the current bleach plant with a new process which will be chemically more efficient and will generate less effluent. The current bleached hardwood paper pulp capacity will be converted to produce chemical cellulose. The project demonstrates the commitment of Sappi to invest in South Africa to grow its business globally.”

 

SW Engelbrecht, the General Manager of Ngodwana mill, commented: “We are all very excited by the faith shown in the mill and its people to help grow Sappi’s business and of course the project, for which planning and consultation originally started in 2003, is a major boost for the local Lowveld economy.”

 

He concluded: “As regards the environmental footprint of the mill, the project will further reduce mill odour and improved efficiencies from new equipment will mean burning 61,000 tons less coal per year which equates to 120,000 tons fewer CO2 emissions. In addition, total mill effluent will significantly reduce and the revised project will require 200,000 tons less timber per year and 18,400 fewer trucks on the road compared to what was anticipated in the original project P1050.”

 

Sappi Plans to Close Adamas Mill in Port Elizabeth

Sappi Southern Africa said that it plans to cease operations at Adamas Mill in Port Elizabeth, South Africa in response to difficult market conditions and the continuing rise of input costs.

 

The Adams Mill has an annual capacity to produce 40,000 tons of uncoated woodfree paper.

 

Currently the company is in talks with staff and relevant union representatives.

 

Sappi Southern Africa acquired the Adamas Mill in 1964. It originally produced board for the motor industry and subsequently uncoated writing and printing papers with a significant percentage of recycled fiber.

 

Sappi said its proposed plan to close the Adamas Mill is an effort to match production capacity to market demand.

 

"We fully recognize and commend the enormous past and ongoing efforts that employees and mill management have undertaken to reduce costs and improve profitability," said Alex Thiel, CEO of Sappi Southern Africa. "However, the mill's size, technical age and high costs of energy and fiber have made it necessary to initiate a review.

 

"A final decision will only be made once the consultation process is completed towards the end of July," he added.

 

Sappi said the potential closure of Adamas Mill would have no impact on customers as production will be moved to Sappi's Enstra and Tugela Mills.

 

Sappi will maintain its presence in the Eastern Cape as regards marketing and sales as well as the collection and purchase of collected fiber (used for recycled paper) through Sappi ReFibre.

 

Adamas Mill is a small, non-integrated speciality paper mill. The mill purchases wastepaper and fully bleached hard- and softwood fibers from other pulp producing mills in the Sappi group. The mill operates two paper machines which produce uncoated woodfree recycled board grades from 100% waste furnish (PM3), as well as uncoated woodfree paper (PM4).

 

 

AMERICAS

 

AbitibiBowater Announces First Quarter Profit

AbitibiBowater Inc. recently reported net income for the first quarter of 2011 of $30 million, or $0.31 per diluted share, on sales of $1.2 billion. These results compare with a net loss of $500 million, or $8.68 per diluted share, on sales of $1.1 billion for the first quarter of 2010.

 

"Our first quarter since emergence resulted in net income and positive cash flow from operations, despite some ongoing post-emergence costs," said Richard Garneau, President and Chief Executive Officer. "Our operating results for the quarter were negatively impacted by the strong Canadian dollar, higher energy and recycled fiber costs, and market-related production curtailments in a seasonally weak quarter. Looking to the balance of the year, we expect improvement as a result of the implementation of previously announced price increases for our products, efficiency gains in our manufacturing costs and seasonally stronger demand."

 

Neenah Paper Reports 2011 First Quarter Results

Neenah Paper, Inc. (NYSE:NP) recently  reported net sales of $173 million in the first quarter of 2011 increased three percent from a year ago. Adjusted earnings were up 13%, with double-digit growth in both segments.

 

Technical Products net sales of $105.4 million in the first quarter of 2011 increased eight percent compared to $97.7 million in the first quarter of 2010. Increased sales in 2011 resulted from both a more favorable mix and higher selling prices. Volumes were essentially unchanged from the prior year as strong growth in higher-value products including transportation filtration, label, and abrasive backing were offset by a reduction in shipments of lower value tape products. Benefits from the improved mix and higher average prices were partly offset by a $1 million decrease in sales resulting from currency translation due to a weaker Euro in 2011.

 

Operating income for Technical Products of $10.5 million in the first quarter of 2011 increased 13 percent compared to $9.3 million in the first quarter of 2010. The higher operating income in 2011 resulted from the more favorable product mix, with growth in premium filtration, abrasive backing and labels, as well as improved cost efficiencies and higher selling prices. These factors more than offset $7 million of higher input costs resulting from increased prices of pulp, latex and energy.

 

Fine Paper net sales of $67.3 million in the first quarter of 2011 decreased three percent compared to $69.6 million in the first quarter of 2010, as benefits from an improved mix and higher selling prices were not able to fully offset the impact of ten percent lower volumes. The volume decline in 2011 was due to a reduction in shipments of lower value non-branded business as well as reduced market demand. These factors were only partly offset by increased sales to targeted new markets such as label and packaging. The favorable mix and selling prices reflected an increased proportion of higher value products, such as premium branded products and envelopes.

 

Operating income for Fine Paper of $10.5 million in the first quarter of 2011 increased 11 percent compared to $9.5 million in the first quarter of 2010. The higher income in 2011 was a result of the more profitable product mix, increased selling prices and manufacturing cost efficiencies that were able to offset the impact of lower volume and more than $2 million of higher input costs.

 

Boise Inc. Reports Financial Results for First Quarter 2011

Boise Inc. (NYSE: BZ) recently reported net income of $18.7 million for first quarter 2011 compared with a net loss of $12.7 million for first quarter 2010. Net income excluding special items was $20.0 million for first quarter 2011 compared with $3.0 million for first quarter 2010.

EBITDA excluding special items was $84.4 million for first quarter 2011 compared with $54.9 million for first quarter 2010.

 

"We performed well in first quarter 2011, delivering strong earnings and cash flow despite sequential increases in input and maintenance costs," said Alexander Toeldte, president and chief executive officer of Boise Inc. "With our acquisition of Tharco Packaging, we expanded and diversified our presence in packaging markets and increased our vertical integration opportunities. We also continued to grow sales volumes of our packaging demand-driven and premium office papers and corrugated packaging products.”

 

Total sales for first quarter 2011 were $568.8 million, up $74.7 million, or 15%, from $494.1 million for first quarter 2010 and up $44.7 million from fourth quarter 2010 sales of $524.1 million.

 

Paper segment sales increased $21.7 million during first quarter 2011 compared with first quarter 2010, due primarily to increased sales prices. Packaging segment sales increased $55.2 million during first quarter 2011 compared with first quarter 2010, driven by higher sales prices for linerboard, newsprint, and corrugated products and the acquisition of Tharco Packaging, Inc.

 

IP to Produce Fluff Pulp at Shuttered Franklin, Va. Mill

International Paper recently announced plans to repurpose a portion of its closed Franklin, Virginia, [USA] Mill as a fluff pulp mill capable of annually producing up to 270,000 metric tons of high quality fluff pulp for the global market.

 

With an investment of $83 million, repurposing the Franklin Mill for the production of fluff pulp will create approximately 200 jobs.

 

"IP is currently the third largest global supplier of fluff pulp and this investment gives us greater participation in a growing market," said Mark Sutton, International Paper Senior Vice-President Printing and Communications Papers the Americas.

 

"IP is a leader in the use of renewable energy. The Franklin fluff pulp facility will be 89% energy self-sufficient, utilizing power generated from carbon-neutral biomass on-site. The capability of producing energy from renewable biomass resources makes the remaining portions of the Franklin Mill site an ideal location for other partners looking for on-site green energy options."

 

IP continues to actively evaluate additional repurposing options for the Franklin site with third party partners. International Paper's decision to permanently shut down the Franklin Mill for uncoated freesheet (UFS) production remains unchanged.

 

A number of factors influenced IP's decision to locate a fluff pulp mill in Franklin, including: a skilled local workforce; the condition of the mill's current assets; a wide range of transportation options; and the availability of US southern pine in the region. The unique fiber length and absorption properties of this species makes it ideal for producing high quality fluff pulp.

 

"With roughly ninety percent of the world's fluff pulp made from US southern pine, this is a great opportunity to use a distinctively American material to produce a globally competitive product," Sutton commented.

 

Fluff pulp is used in a variety of absorbent products (baby diapers, adult incontinence products, feminine hygiene products, etc.) and in airlaid products such as cleaning and baby wipes.

 

Repurposing of the Franklin Mill for the production of fluff pulp will begin immediately, with start-up targeted for mid-year 2012.

 

Prior to its closure in 2010, the Franklin mill employed 1,100 people and had the capacity to produce 600,000 tpy of uncoated freesheet on three machines, and 140,000 tpy of coated paperboard on one machine.

 

Cosmo Specialty Fibers Officially Opens Cosmopolis Pulp Mill

Cosmo Specialty Fibers held the official opening of its mill in Cosmopolis, Washington on Saturday, May 21. The mill, formerly owned by Weyerhaeuser, was purchased in September of 2010 by the Beverly Hills-based private equity firm The Gores Group.

 

Pulp production began on May 1, 2011. The company anticipates a yearly production of 140,000 tons of high-purity cellulose for acetate tow, viscose filament and viscose staple fiber.

 

“We are incredibly proud of what our team has been able to accomplish at this mill in just nine months. We have moved from construction to operation and are currently producing a premium pulp product that will be shipped internationally,” said Mike Entz, CEO of Cosmo Specialty Fibers.

 

The Cosmopolis mill was built in 1957. Weyerhaeuser shut down the mill in September 2006.

 

Kruger and Industries Perron Partner to Restart Two Lumber Mills in Mauricie, Quebec

Kruger Publication Papers Inc. (KPPI) and Industries Perron recently announced the formation of a partnership to create a new commercial entity that will manufacture value-added lumber products.

 

The announcement was made in the presence of Julie Boulet, Minister of Employment and Social Solidarity and Minister Responsible for the Mauricie Region.

 

Under the agreement, the assets of Kruger’s sawmill in Parent and those of Perron’s finger-joint mill in Trois-Rivières will be merged, and $21 million will be invested to upgrade equipment and start up operations at both mills, which had been closed for more than a year and a half. The investment includes a $12.75-million loan from Investissement Québec and a $5.5-million loan from the Business Development Bank of Canada. This partnership will see about 300 employees return to work: 90 at the Parent Sawmill, 40 at the Trois-Rivières mill, and some 170 loggers and forest planning employees.

 

“Given the challenging environment in which the Québec forest industry is operating, we are very pleased to enter into this partnership which constitutes a new business model and will optimize production at both mills. Since our operations complement each other and are spread optimally over both sites, production will resume at both lumber mills and 300 employees will be called back to work,” said Daniel Archambault, Executive Vice President and Chief Operating Officer, Industrial Products Division of Kruger Inc.

 

In preparation for restarting the Parent sawmill at the end of July 2011 and the Trois-Rivières Mill in August 2011, logging operations will resume in June, in order to build up enough inventory to supply the production line. Both mills will then share primary and secondary processing activities up to and including finished products. The logs will be sawn and dried at the Parent Mill, after which they will be transported to the Trois-Rivières Mill to be planed and turned into lumber of varying lengths and finger-jointed lumber. The products will then be shipped to markets across North America.

 

The new company has also secured an asset-based loan of $8.5 million from the Royal Bank of Canada for the operating working capital.

 

The new commercial entity will be headed up by Claude Perron, who will act as Chairman and Chief Executive Officer, while all forest management, certification and logging activities will be coordinated by Kruger Inc.

 

“In short, performance of the Parent sawmill will be optimized, production will be geared to demand, fibre use will be maximized with finger-jointing, and product lines will be expanded to break into new markets in Canada and the United States. Our unique business model capitalizes on the complementarity of our activities and targeted markets in order to protect against fluctuations in the Canadian dollar,” Claude Perron concluded.

 

Cascades Invests $3.5 million in its Forma-Pak Plant in Quebec

Cascades recently announced the inauguration of a new machine that will be used in the manufacturing of moulded pulp products at its Cascades Forma-Pak plant in central Quebec.

 

Since 2010, Cascades has been automating other equipment in the mill. The company also implemented a project to secure the machines to improve employee safety.

 

These mill improvements required an investment of $3.5 million.

 

These changes will increase the plant’s production capacity by 40%. Significant gains in product quality have also been achieved, particularly with respect to finishing and packaging. As such, automation will allow for increased packaging rigidity and, as a result, will maximize delivery including up to 20% more products on trucks.

 

Cascades Forma-Pak manufactures 100% recycled moulded pulp products using old newspapers and telephone directories as raw material. The plant specializes in egg filler flats as well as cup carriers used for the transport of beverages for quick service restaurants. “It was time to modernize this plant which manufactures environmentally-friendly food packaging solutions. Since moulded pulp material is fully recycled and recyclable, we believe that it is a product with a future, especially with a packaging industry that increasingly demands more responsible solutions,” said Mr. Mario Plourde, Chief Operating Officer.

 

Paper Excellence to Acquire Northern Pulp in Nova Scotia

Paper Excellence Canada Holdings Corp of Vancouver, B.C. has reached an agreement to acquire Northern Resources, the parent company of Northern Pulp Nova Scotia and Northern Timber, Abercrombie Point, Nova Scotia.

 

“The agreement is good news for the company’s 230 employees, 400 timberlands contract employees, suppliers and community and business partners as it strengthens the mill’s economic position over the long-term,” says Wayne Gosse, President and Chief Financial Officer, Northern Resources. “A strong demand for the mill’s product globally presents a great opportunity for the mill to be part of a large international network of pulp mills and to diversify and expand its markets.”

 

The traceability of Northern Pulp’s products to sustainable forest resources is certified by the Sustainable Forestry Initiative (SFI) and the Programme for the Endorsement of Forest Certification (PEFC), exceeding provincial and Canadian national forestry laws and regulations. In January, Natural Resources Canada and the Green Transformation Program Fund recognized the operation’s commitment to environmental improvement by investing $28 million in three clean-tech programs to benefit Northern Pulp mill operations and the surrounding community.

 

Gosse says Paper Excellence Group has an excellent track record in Canada in terms of business leadership, labour and First Nations partnerships, and environmental stewardship. Paper Excellence operates three mills in Canada: Meadow Lake in Saskatchewan and Howe Sound and Mackenzie in British Columbia, and is in the process of acquiring the long closed Prince Albert mill in Saskatchewan. The Group currently employs over 800 Canadians.

 

“We have been impressed by Northern Pulp’s operations, employees, and the quality of stakeholder relationships and partnerships,” says Ed Roste, Vice President Operations, Paper Excellence Canada. “We welcome Northern Resources into the Paper Excellence family. The Northern Resources team will continue to operate the mill and land holdings under the Northern Pulp name, and there are no job impacts as a result of the transaction. We’re committed to continuing to build productive relationships with labour, First Nations, NGOs, and community partners to achieve balance of social, environmental and economic priorities in industry and forest management.”

 

Northern Pulp was sold by Neenah Paper three years ago amidst uncertainty about the mill’s future as a result of very difficult business conditions in the forestry sector worldwide. Since then, Northern Pulp’s workforce has improved efficiency and productivity and local management has worked closely with stakeholders to stabilize the business. A $1 million investment in R&D, the acquisition of 422,000 acres of forest land for active management and a commitment to work with Pictou Landing First Nation on economic development have been instrumental in the mill’s resurgence.

 

EACOM Timber Acquires Remaining Stake of Elk Lake Sawmill

EACOM Timber Corporation has announced that it has entered into an asset purchase agreement with Liskeard Lumber Limited to acquire the remaining one-third of the Elk Lake sawmill, near Elk Lake, Ontario, for a cash consideration of approximately $15 million.  EACOM currently owns two-thirds of the mill.

 

The transaction is subject to a number of customary closing conditions, and closing is expected on July 31, 2011. Part of the proceeds from the recent financing will be used to pay the purchase price.

 

”We are pleased to add the full Elk Lake sawmill facility to our operations. It allows us to combine our assets to reduce costs and achieve better productivity. The addition also provides an opportunity to expand our random length lumber business in Ontario,” said Rick Doman, President and CEO of EACOM. “We have had a good partner in John Wilson at Liskeard Lumber and wish him the best”.

 

Domtar Windsor Spends Green Transformation Funds on Biomass Boiler

Domtar will upgrade its biomass boiler and reduce steam demand for two paper machines with the $24.8 million in federal funding being provided for its Windsor Pulp Mill under the Pulp and Ppaer Green Transformation Program (PPGTP).

 

The boiler upgrade includes improving the lower furnace combustion to enable the boiler to operate at increased steam flow by replacing the lower furnace arches; upgrading the wood residue grinder and adding two new hog grinders.

 

Lowering the steam demand for two paper machines will be accomplished by installing new steam boxes to better control moisture content of the papers, produce a more uniform product, and save on steam to dry sheets; installing a stock screening system; and dedicating an existing pulp storage tank for recycled pulp storage.

 

These upgrades will result in a higher volume of alternative fuels being used at the mill to generate renewable energy and a reduction of 8,400 tonnes per year in greenhouse gas (GHG) emissions. In addition, the projects will lead to the elimination of approximately 25,000 tonnes of solid waste a year through the use of wood waste and other alternative fuels. As well, the mill will use less steam to produce more paper with recycled content.

 

The Windsor mill has been in operation since 1865 and was acquired by Domtar in 1961. The mill produces uncoated freesheet paper, digital paper, copy paper, laser forms bond, envelopes and recycled paper. It also produces bleached hardwood wet-lap market pulp.

 

Metso to Supply Complete Woodyard and Defibrator Systems to Duratex, Brazil

Metso will supply complete woodyard equipment and defibrator systems with chipwashers for the two new MDF (Medium Density Fiberboard) projects of Duratex S.A. in Brazil. The equipment for the first project placed in Itapetininga, São Paulo, will be delivered in December 2011 and for the second project at a later date. The order value is less than EUR 25 million.

 

The woodyard in both cases comprises log receiving, drum debarker and chipper, chip screens and reclaimers for chips and bark storage. The refining system for each project comprises Metso’s advanced large capacity defibrator as well as chipwasher.

 

The two new MDF plants will have an effective capacity of 1.2 million m³ per year when completed.

 

Duratex is the leader in the panels business in Southern Hemisphere, and the new investments will lift its annual MDF nominal capacity to 3.2 million cubic meters, which should generate expected additional annual net revenue of about EUR 430 million (Brazilian Real 1.0 billion). The market for woodpanels in Brazil increased by 21% in 2010 and that for MDF even more, by 26%.

 

Metso is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries.

 

 

EUROPE

 

Sappi to End Production of Coated Graphic Paper at Biberist Paper Mill

Sappi Fine Paper Europe announced that it will cease production of coated graphic paper at its Biberist paper mill in Switzerland.

 

In a written statement Sappi said, "After due and thorough consideration during the consultation process with local employees ending on 16 May 2011 the definitive decision to discontinue the coated graphic paper production was taken. It is anticipated that production will cease by the end of July. The consultation was conducted with good co-operation between all parties involved, complying with the applicable Swiss legal framework."

 

The Biberist Mill employs around 550 employees in total.

 

Sappi said that it will continue to investigate possibilities for the sale and alternative industrial use of the site.

 

"To give potential acquirers interested to convert the mill to alternative products the opportunity to complete a transaction, a decision regarding the future of paper machine No 6 (PM6) and paper machine No 9 (PM9) as well as associated support departments has been postponed.

 

"However, those employees working on paper machine No 8 (PM8) and associated people in finishing and supporting departments will be served notice of redundancy by the end of May. A social plan will specify redundancy terms, including provisions for outplacement and training support for all affected employees. The social plan will ensure that the affected employees are provided the best possible opportunities to secure new jobs," the company said.

 

Berry Wiersum, CEO of Sappi Fine Paper Europe, said, "We recognize this is a very difficult and unfortunate outcome for those employees concerned, their families and the communities surrounding the mill. Unfortunately this action was unavoidable and essential given the continued overcapacity and sustained increases in input costs."

 

Sappi said volumes produced at the mill will be transferred to other Sappi sites. Production of the uncoated Cento brand will continue unless a suitable new owner for the mill is not found by the end of July.

 

There will be no supply interruption of coated paper to customers during the transfer of production, Sappi added.

 

With the cessation of coated graphic paper production at Biberist mill, Sappi will reduce its coated graphic paper capacity by 500,000 tons per year.

 

Sodra to Begin Commercial Production of DuraPulp

Sodra Cell said that it will begin producing and selling DuraPulp — a biodegradable composite material made of 100 percent renewable fibers — at its Varo pulp mill in Sweden. Production is scheduled to start after the summer.

 

"DuraPulp is a material that is making a very timely appearance. It can replace plastics in many applications but it has the distinct advantage of being biodegradable. The time is right to begin producing and selling this material," said Henrik Wettergren, Business Area Manager for Printing Paper and Specialities.

 

Initially, sales of DuraPulp will focus on the business areas of speciality paper, design and board, Sodra said.

 

"We believe that our customers will come from these three business areas. We will begin with small-scale production but we're prepared to increase production to match demand," Wettergren added.

 

According to Sodra, DuraPulp is the result of many years of research and was produced by Södra together with the research and development company Innventia. The starting point for the research included the idea of creating a new fibre-based material that would be renewable and biodegradable.

 

DuraPulp is a composite material made of specially selected pulp from Sodra Cell combined with a renewable biopolymer. Following additional processing, these two components take on special properties such as humidity resistance, tensile strength and rigidity.

 

The use of DuraPulp was first demonstrated at the Milan Furniture Fair in 2009 through the children's chair, Parupu, which was developed by the Stockholm design firm, Claesson Koivisto Rune. The firm has also created the lamp w101 made of DuraPulp that is now being sold by the lighting company, Wästberg.

 

Sodra Cell's Varo Mill produces 400,000 tons per year of high quality totally chlorine-free softwood pulp.

 

Finnish Forest Industry Growing, Urges Government Backing

 Forest industry production continues to grow in Finland, but cost developments are eroding competitiveness, says the Finnish Forest Industries Federation (FFIF).

 

According to FFIF, some 1.7 million tonnes of pulp and 3.0 million tonnes of paper and paperboard were produced in Finland in January-March 2011. Paper and paperboard production was up more than 7% in comparison to Q1/2010. The export prices of pulp and different paper grades have also continued to increase during the first quarter.

 

"The forest industry's production has recovered both from the recession and the structural changes," said Timo Jaatinen, Director General of the FFIF.

 

However, Jaatinen warns that rising costs could all but squash the upturn if the Finnish government doesn't stand behind the industry.

 

"The industrial policy decisions included in the coming Programme for Government will largely decide how profitable Finnish mills can be in international competition," Jaatinen said.

 

“Amending the energy tax refund mechanism, improving the availability of wood, considering the combined effects of taxes and subsidies that promote the energy utilisation of wood as well as paying attention to the state of the transport network will have a substantial impact on the future success of the forest industry. All of these issues are influenced through domestic decisions,” Jaatinen pointed out.

 

“It is also important that a negotiated solution is reached quickly in the labor dispute with salaried paper industry employees. We should hold on to all of our industrial jobs, and not drive them out of the countries through our own actions — even if a labor market dispute is involved. The employer side remains prepared to offer salaried employees a pay solution that in amount and form matches those agreed to with other paper industry personnel groups,” Jaatinen said.

 

The value of Finland's forest industry production in January-March is estimated to have been almost EUR 5 billion, which is about 5% more than in the corresponding period of 2010. Finnish sawn timber production came to about 2.4 million cubic meters in January-March, up 1% from the corresponding period of 2010. Plywood production increased by 20% during the first quarter of the year.

 

FFIF said that the industry did not manage to procure sufficient quantities of wood in January-March to satisfy quarterly needs, and had to utilize reserves stockpiled earlier.

 

"Demand is strengthening and more wood will be needed to fuel capacity in the remaining part of the year. Sawlogs, pulpwood and energy wood are all in demand. Livelier timber sales will be boosted by stumpage prices, which have been buoyant during the first quarter," FFIF added.

 

Stora Enso Makes Groundbreaking Investment in Nanotechnology at Imatra, Finland

Stora Enso is taking a significant step forward in renewable materials innovation by building a re-commercial plant at Imatra in Finland for the production of microfibrillated cellulose. The new type of renewable material will be used in existing and new unique fibre-based paper and board products, barrier materials, and other potential future applications.

 

“The MFC pre-commercial plant is another proof point of rethinking within Stora Enso. It is not only an example of pathfinding innovation together with institutions and universities for the benefit of consumers and even the planet; it is also a proof point of Stora Enso's commitment to accelerating the development of the next generation of renewable materials. With MFC we will be able to develop lighter, stronger renewable packaging materials, a lot more with a lot less. The pre-commercial plant will put us into a unique position to accelerate customer-driven innovation and product concepts from this technology. In the longer term, as we continue to renew and challenge ourselves, the applications of this renewable material may well extend to replacing today's fossil-based materials such as plastics and some speciality chemicals, and aluminium - revolution instead of evolution,” says Stora Enso CEO Jouko Karvinen.

 

The microfibrillated cellulose technology project, including the Imatra pre-commercial plant, is estimated to total approximately EUR 10 million. The plant is scheduled to start production by the end of 2011.

 

Powerflute Sells Papierfabrik Scheufelen to Paper Excellence

Finnish packaging producer Powerflute recently said that it has agreed to sell Papierfabrik Scheufelen GmbH & Co. to Paper Excellence BV for a total consideration of EUR 38.5 million.

 

The deal calls for Paper Excellence to make two cash installments — EUR 25 million upon completion of the deal and EUR 7.5 million on October 31, 2011. Paper Excellence will also assume EUR 6 million of debt.

 

Powerflute said it will use about EUR 9 million of the proceeds from the sale to reduce debt.

 

Papierfabrik Scheufelen, which was acquired by Powerflute on January 1, 2009, operates a paper mill in Lenningen, Germany with a production capacity of 300,000 tonnes per year of coated woodfree papers from mixed hardwood and softwood pulps, sourced principally from South America and Northern Europe.

 

In a written statement, Powerflute said the divestment of Scheufelen was based the rising cost of pulp. "The business was heavily impacted by developments in worldwide pulp markets during 2009 and 2010 and we currently expect these challenging conditions to prevail for the foreseeable future.

 

"Shortly after the completion of the rights issue and placing in November 2010 an approach was received and although the Group would normally expect to own a business for a longer period, we concluded that Scheufelen would be better placed to withstand the challenges it faces as part of an integrated pulp and paper group."

 

After the divestment of Scheufelen, Powerflute’s only mill will be the Savon Sellu mill in Finland, which produces up to 300,000 tpy of Nordic semi-chemical fluting.

 

"Powerflute has achieved a significant return on its investment in a little over two years — a strong validation of our business strategy," said Dermot Smurfit, Powerflute's chairman.

 

"On completion of the disposal, Powerflute will be debt-free on a net basis and will have the capital structure and resources to continue to pursue its strategy of seeking opportunities to acquire underperforming businesses in the paper and packaging sectors,” Smurfit added.

 

 

McIlvaine Company

Northfield, IL 60093-2743

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