Pulp and paper manufacturer Stora Enso has announced plans to invest approximately €110m to convert the fine paper machine in its Varkaus Mill in Finland to produce virgin-fibre-based containerboard.
With the work scheduled to begin in the autumn, the containerboard machine will begin operations in the fourth quarter of 2015. The existing production of 280,000t a year of uncoated fine paper from the current machine will be ceased by the end of August 2015.
Once the Varkaus mill is converted into a linerboard machine, it will have a capacity to produce around 390,000t annually of kraftliner and 310,000t of brown unbleached kraft pulp.
The conversion will decrease printing and reading annual sales by €140m from 2016 onward when the machine runs on full capacity and increase renewable packaging sales by €280m.
The company intends to take advantage of the combination of two market forces with the machine conversion, the decreasing global market for paper and increasing for renewable packaging board. The targeted earnings before interest, taxes, depreciation, and amortisation (EBITDA) to the machine conversion will be above 15%, provided that the current market conditions prevail.
Stora Enso CEO Jouko Karvinen said that using existing assets within the company and modifying them to a new product line is part of its transformation to a renewable materials company focusing on growth markets.
"Varkaus is an ideal mill for this kind of conversion. It has an integrated pulp mill, a power plant and a suitable paper machine," Karvinen added.
"In addition, the mill is well located from a raw material supply point of view and it has the necessary infrastructure and competence to run the project successfully."
Image: Stora Enso will convert its paper machine to produce containerboard. Photo: courtesy of Richard Wheeler (Zephyris).