Finnish paper company Stora Enso is all set to construct a €1.6bn plantation-based integrated board and pulp mill in Guangxi, China.
The mill site in Beihai city, which will be part of a plantation complex with an energy plant and auxiliary facilities, will have an estimated annual output of 450,000t of paperboard and 900,000t of pulp.
Construction at the site will begin during the second half of this year, with the plant expected to be operational by the end of 2014.
According to the company, the mill will be integrated with wood supply from 120,000ha eucalyptus plantations to expand the paperboard capacity to 900,000t at a later stage.
An equity joint-venture (JV) company established by Stora Enso will manage 85% of the operations and Guangxi Forestry Group, a state-owned company under the Guangxi provincial government will manage 15% of the operations.
Stora Enso said, the JV will serve the growing market for liquid packaging board and other consumer board grades.
The project will be financed through 60% debt and 40% equity, is consistent with the group's announced strategic guidelines, and is expected to support the company moving towards its 13% return on capital employed (ROCE) target.
The company seeks to benefit from the forecast future growth in fibre-based packaging solutions demand for food in China, which is expected to grow at a compound annual rate of over 10% during the next ten years, as forecast by several researchers.
Image: Stora Enso's new mill in Guangxi, China, will have an integrated wood supply from 120,000ha eucalyptus plantations. Photo: Stora Enso