The Norwegian paper group Norske Skog announced today that the world's leading producer of newsprint and magazine paper is entering the market for recycled packaging paper and board, "a growing, high-margin market ".
350 million euros of investment, including 250 million euros in France
For this "important step in its transformation" Two newsprint production machines will be converted, one at the Golbey site in France and the other at Bruck in Austria. Norske Skog plans to invest EUR 350 million over 18 months in its conversion projects.
At the French Norske Skog Golbey site near Epinal in the Vosges, 250 million euros will be invested in this conversion of the PM1 built in 1992. The paper machine will increase its production capacity from 235,000 tonnes of newsprint to 555,000 tonnes of recycled paper for packaging board in 2023.
The Golbey paper mill will also be able to produce 330,000 tonnes of newsprint on the second machine, the PM2, which is one of the most competitive machines in Europe.
The site is already benefiting from an investment of 160 million euros for the Biomass CRE5 boiler project, and 70 million euros for the construction of a new boiler (read New boiler at Norske Skog Golbey paper mill ).
In Austria, about EUR 90 million is planned to be invested to convert PM3. The machine will then be able to produce 210,000 tonnes of recycled paper for packaging (compared to the current 125,000 tonnes of newsprint). It will also be able to produce 265,000 tonnes of thin coated paper (LWC).
Work in 2021 for a start in 2023
Work will begin in the first half of 2021, with production starting in the first half of 2023 and the machines running at full capacity by the end of 2025. The production stoppages, which will be the last stage in the conversion of the machines, will not last more than three months.
"Following the conversion, both plants will use sustainable energy and reduce their carbon footprint, making them among the most efficient sites in the industry" indicates the group.
E-commerce and sustainable packaging at the origin of this project
Norske Skog expects earnings before interest, taxes, depreciation and amortization (EBITDA) of 70 to 80 million Euros generated by these investments in full production. "These estimates are based on historical market prices for containerboard and recovered paper."
"The conversions at Golbey and Bruck are profitable investments (...) explains Sven Ombudstvedt, CEO of Norske Skog. The two driving forces in the sector are, on the one hand, the rise of the concept of sustainability in packaging and, on the other hand, the growth of e-commerce. Thanks to the investments we will be making in Golbey and Bruck, we will be able to offer an adapted and competitive response to these trends. Both sites are ideally located in the heart of the cardboard market in continental Europe. They have been building supply networks for recycled fibres for years. In this, they represent one of the best industrial conversion opportunities on the market."
The Norske Skog Group, listed on the Oslo Stock Exchange, has two other sites based in Europe and two in Australia producing publication papers and one producing pellets. It employs approximately 2,300 people.
