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Stora Enso is investing big in China for Sustainable competitive differentiation in the world’s fastest-growing packaging market

Tuesday, 20 March 2012
Stora Enso plans to build a plantation-based integrated paperboard and paper mill in the city of Beihai in Guangxi in southern China. The company will service the rapidly growing market for liquid packaging and other high-quality consumer board types.

According to a press release from the company, the facility includes a modern paper machine with capacity of 450,000 tons per year and a pulp capacity of 900,000 tons per year and the necessary energy plants and other facilities.

In a unique set-up, the board and pulp mills will be self-sufficiently integrated with wood supply from 120 000 hectares of self-managed eucalyptus plantations. The ultimate target is to expand the paperboard capacity to 900 000 tonnes at a later stage. The operations will be managed by an equity joint-venture company established by Stora Enso (85%) and the Guangxi Forestry Group (15%), a state-owned company under the Guangxi provincial government. The joint venture will serve the fast-growing market for liquid packaging board and other premium consumer board grades.

The project investment will be approximately EUR 1.6 billion. Construction at the industrial site will commence when specific preconditions have been fulfilled, which is expected to be in the second half of 2012. Production is scheduled to start in the fourth quarter of 2014. The investment will significantly support Stora Enso moving towards company’s 13% ROCE target.

The project will be financed through a combination of debt and equity on an approximately 60/40 basis. The debt financing is expected to be a mix of export credit agency, multilateral and commercial bank debt.

“Today we are taking another significant step in transforming Stora Enso into a global renewable materials company. We already have a globally leading position in renewable fibre-based packaging boards. We will now invest in a world-class integrated mill based on locally grown renewable materials for the benefit of local Chinese consumers in the fastest-growing market. Everything we do will be based on best-in-class technologies, environmental standards and sustainability practices – together with the local partners and communities” says Stora Enso CEO Jouko Karvinen.
By Team

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