Global pulp and paper company Sappi has announced it has begun a consultation process to discuss the potential closure of its Lanaken integrated pulp and paper mill in Belgium.

The Lanaken plant has a production capacity of 165,000 tonnes (t) of pulp annually, which is used for manufacturing 530,000t of woodfree coated paper for the European market per annum. The factory currently has 644 employees.

Concurrently, the company has completed the consultation process at its Stockstadt integrated pulp and paper mill in Germany.

The process of discussing the potential closure of the Stockstadt plant began earlier this July.

Following the conclusion of these discussions, Sappi signed an agreement to sell its Stockstadt plant and decided to implement a social plan for its affected employees.

The closure of this mill is expected to be completed during the first quarter of 2024.

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Sappi claimed that after considering all potential impacts of this move, the result of the closure is projected to be cash-neutral.

The Stockstadt mill has a production capacity of 145,000t of pulp per annum and 220,000t of coated and uncoated woodfree paper, which is sold across the European print market, annually.

Sappi Europe CEO Marco Eikelenboom said: “As recent over-stocking by customers reduces it has become very clear that demand will not return to previous levels. Combined with input cost pressure, we do not see this situation, caused by factors beyond our control improving in the foreseeable future.

“We have therefore decided to inform both the mill management and Works Council that we are today starting the consultation process on the potential closure of the Lanaken Mill. In parallel we are reviewing how best to reduce overall fixed and other overhead costs.”

According to Sappi, the latest move can be attributed to the continuous global economic downturn, depressed markets, geopolitical instability, as well as weak economic growth, which is putting excess pressure on the company, especially in Europe.

Sappi CEO Steve Binnie added: “Sappi continues to position itself for growth and increased profitability in line with our group Thrive25 strategic focus.

“This includes reducing exposure to the graphic paper segment while expanding Sappi’s presence in packaging, speciality papers, pulp and biomaterials.”