Norske Skog to Convert Two Newsprint Machines to Containerboard

Norske Skog will take a major step in its continued transformation towards a growing and high margin business by converting two newsprint paper machines into renewable containerboard production. The conversions at Golbey and Bruck will introduce 765,000 metric tons of competitive containerboard capacity to meet the growing demand for renewable packaging.

Following the conversions, both mills will have access to green energy and have reduced their carbon footprints to become among the best performers in the industry. Norske Skog will continue to be a reliable supplier of all publication paper grades after the planned conversions.

Newsprint capacity will be reduced with 360,000 metric tons, balancing the market for the Norske Skog's remaining European publication paper capacity.

"This is a milestone in Norske Skog's strategy to become a leading European packaging producer through conversion of publication paper capacity," said Norske Skog's Chair of the Board John Chiang, who also represents the largest shareholder Oceanwood. "We will continue to optimize our broad asset base to diversify within high-growth fiber segments, and maximize cash flows from the publication paper business."

Norske Skog plans to invest approximately EUR 350 million in the conversion projects over an 18-month period commencing in H2 2021. The investments are expected to generate an annual EBITDA of approximately EUR 70-80 million at full utilization, based on historical prices for containerboard and recovered paper.

These investments represent the latest initiative in enhancing the circular and industrial ecosystems at the Golbey and Bruck mills. Containerboard production will be based on recycled fiber and will reduce the mills' electricity consumption. Boilers to be constructed at the sites will provide efficient and environmentally friendly off-take of residual materials, and in return generate green steam for sustainable containerboard and paper production and green electricity for the power grids.

At the Golbey mill in France, approximately EUR 250 million is planned to be invested to convert PM1 from its current 235,000 metric tons of newsprint capacity to 555,000 metric tons of leading recycled containerboard capacity. Following the conversion in 2023, Golbey will have 555,000 metric tons of recycled containerboard capacity and 330,000 metric tons of newsprint capacity.

At the Bruck mill in Austria, approximately EUR 90 million is planned to be invested to convert PM3 from its current 125,000 metric tons of newsprint capacity to 210,000 metric tons of recycled containerboard capacity. Following the conversion in 2023, Bruck will have 210,000 metric tons of recycled containerboard capacity and 265,000 metric tons of lightweight coated magazine capacity.

Final investment decisions are planned in the first half of 2021, and start of containerboard production in the first half of 2023. Production standstill at the machines that will be converted is limited to three months during the final stages of the conversions, and full utilization is expected by the end of 2025.

TAPPI
http://www.tappi.org/