British sustainable packaging and paper company Mondi has signed an agreement to acquire West Fraser Timber’s unbleached softwood kraft pulp mill in Hinton, Alberta, Canada.

Mondi said that it has agreed to acquire the Hinton plant for a total price of $5m.

The completion of this deal is now subject to certain customary regulatory reviews and the fulfilment of customary conditions. It is scheduled to be completed by the end of this year.

The latest transaction is expected to support the growth of Mondi’s Americas paper bags business and further establish a long-term partnership between both companies in the region.

The long-term agreement between Mondi and West Fraser will allow Mondi to access high-quality fibre from a ‘well-established wood basket’ in Canada.

As per the terms of this agreement, West Fraser will continue to supply fibre to its Hinton plant, via residuals from its Alberta sawmills.

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Mondi CEO Andrew King said: “Strategically, we are focused on investing to support the growing market demand for our sustainable packaging products, while delivering attractive mid-teen returns through cycle.

“The acquisition of Hinton is an excellent opportunity for us to secure locally produced kraft paper for our bags customers, helping to meet the current and anticipated future growth in demand for industrial and mailer bags in the Americas.”

Mondi is now planning to invest up to €400m ($438.2m) to support the expansion of the Hinton mill.

This investment, which is subject to pre-engineering and permitting, will primarily focus on the installation of a new kraft paper machine, with an expected annual production capacity of 200,000 tonnes. The machine is expected to become operational in the second half of 2027.

West Fraser president and CEO Ray Ferris said: “This transaction creates a sustainable long-term future for the pulp mill, while maintaining the integrated fibre supply chain in place with West Fraser’s operations in the region.”