Stora Enso Will Cease Newsprint, Directory Paper Production at Varkaus

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Stora Enso, Helsinki, Finland, reported yesterday that it will permanently close down newsprint and directory paper production at Varkaus mill in Finland by the end of the third quarter. Reasons for the planned capacity closure announced on April 22 have not changed, the company notes—the European newsprint and directory paper market is strongly and structurally oversupplied and sales prices have fallen significantly. As a result, newsprint production at Varkaus is expected to remain unprofitable in the long term.

"The overcapacity position in the European newsprint and directory paper market has persisted in 2010. Consequently, sales prices have fallen significantly. In the longer term, demand in Europe is expected to decline further, as has been happening in North America. In addition, the competitiveness of Varkaus is weakened because newsprint production at Varkaus relies on less-competitive virgin fiber, the availability of wood raw material in Finland is not stable, and Varkaus is far away from most of its customers and main markets," says Juha Vanhainen, executive VP, Publication Paper Business Area, and country manager, Finland.

The closure of the two newsprint machines PM 2 and PM 4 at Varkaus Mill will reduce newsprint and directory paper annual production by 290,000 metric tons. The co-determination negotiations at Varkaus were concluded at the end of June. As a result of the ending of newsprint production, 175 employees will be made redundant. There are currently 506 employees at Stora Enso's Varkaus Mill.

The Varkaus mill site will continue to produce pulp and fine paper after newsprint and directory paper production ends. The operations of the sawmill and the NSE Biofuels Oy biofuel joint venture with Neste Oil and its demonstration plant will also continue. The ending of newsprint production will not substantially affect the amount of renewable energy produced at Varkaus.

Stora Enso will support redeployment of those affected by the plans through efficiently offering jobs internally and eligibility for outplacement services. The Group works closely with local employment and economic development centers to find new job opportunities for people affected.Stora Enso will also support financially those who would like to start their own business.