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UPM Begins Construction of Third Production Unit at Changshu Mill in China

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UPM, Finland, has begun construction of the third production unit on its Changshu mill in China. With the investment, the company is strengthening its global position in labeling materials. The Changshu investment was originally announced Aug. 7, 2012.

The investment scope has been moderately revised by specifying more focused infrastructure investments compared with the original scope. Instead of constructing a new power plant, UPM will upgrade existing boilers, providing opportunity to consider more environmentally effective fuels or solutions for the mill’s energy supply in the future. The mill also aims at utilizing existing facilities more effectively rather than building new infrastructure. With the revised plan, the investment cost is EUR 277 million instead of the original EUR 390 million.

"We have set ourselves clear targets for focused growth initiatives over the next three years in biofuels, specialty papers in Asia, label materials, and pulp production. With these initiatives, we are targeting an additional EUR 200 million EBITDA when in full operation. The return on the Changshu investment is attractive and is expected to bring a significant contribution to our EBITDA growth target," says Jussi Pesonen, UPM’s CEO and president.

"The Changshu investment is targeted to serve growing end uses in Asian markets with a wide range of release liner materials and specialty products. This investment is implemented in our existing platform in Changshu, and will give us competitive production cost base through local synergies. The business fundamentals for the investment continue to be positive as both release liner materials and uncoated woodfree office and specialty papers enjoy a healthy demand outlook in Asia," says Kim Poulsen, EVP, UPM Paper Asia.

The annual growth of labelling materials is expected to be globally around 4%. More than half of the global growth takes place in Asia with annual growth more than 8%. The most attractive growth markets are China, Southeast Asia, and India.

The new machine is capable of producing up to 360,000 metric tpy of specialty papers and labeling materials. The machine will start up at the end of 2015.


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