The European Investment Bank (EIB) has signed a Skr1.3bn ($124.6m) loan agreement with Billerud, a Sweden-based paper and packaging materials supplier.

The agreement will allow Billerud to facilitate the modernisation and environmental upgrade of its integrated pulp and paper mill located in Frövi, Sweden.

The company will utilise the funds to replace the recovery boiler at the site, which was originally built in 1969.

Billerud’s Frövi mill specialises in the production of fibre-based materials that can be used for a variety of packaging applications, primarily related to the food and beverage packaging sector.

According to the Swedish company, its fibre-based packaging is fossil-free and biodegradable and can be recycled multiple times to convert into recycled board, before the end of its life cycle to be finally used for energy production.

Once implemented, the latest upgrades will allow Billerud to further minimise emissions while also enhancing its existing energy and resource efficiency at the plant.

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Currently, the Frövi mill’s byproducts include valuable tall oil and turpentine, as well as renewable energy, which is sold to local communities and neighbouring businesses.

EIB vice-president Thomas Östros said: “The renewal and modernisation of production processes and industrial facilities are key to achieving EU climate targets and securing the sustainability and competitiveness of EU manufacturing.

“This project improves the energy and resource efficiency of the mill and contributes to the shift from fossil-based packaging material, such as plastic, to packaging made of renewable resources.”

Billerud acting president and CEO Ivar Vatne added: “The new recovery boiler will allow Billerud to implement energy improvement measures to meet future environmental requirements and ensure stable availability of pulp production.

“This is a long-term investment in efficient, sustainable, and safe production, which increases our competitiveness and benefits our customers. We are pleased to see the EIB’s support for this project.”

The modernisation work is in compliance with the EIB’s Climate Bank Roadmap, which supports low-carbon technology and products, as well as energy and resource efficiency.