Myllykoski to build paper-making line in Czech Republic

Stora Enso and UPM also to invest in similar magazine paper undertakings

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Myllykoski Corporation, owned by the Finnish Björnberg family, is to build a new paper production line in the city of Opatovice in the Czech Republic. The paper mill is the first large-scale forest industry undertaking by a Finnish company in Eastern Europe.
      The aggregate investment cost is said to be around EUR 450 million, and the line, which will be supplied by the Finnish engineering group Metso in a EUR 200 million deal, is scheduled for start-up in early 2007.
      The main product of the new factory will be uncoated SC paper for printing of magazines. SC paper is already produced at Myllykoski's facilities in the USA, Germany, and Finland.
      SC paper contains spruce ground pulp, chemical pulp, and fillers. The raw paper is dried by the paper machine, after which it is driven through a large mangle which smoothes and polishes its surface.
     
According to Sverre Norrgård, president and CEO of Myllykoski Corporation, setting up a production facility in the Czech Republic is a direct response to customers' requests.
      "Publishers and printers are moving to the new EU countries. Growth here is rapid, even if the volumes at present are still modest", Norrgård explains.
      Though binding contracts of purchase have not yet been signed, Norrgård says Myllykoski has received quite a few valuable letters of intent.
     
SC paper is the Finnish forestry industry's favourite product. In addition to Myllykoski, it is also produced by Stora Enso and UPM. To limit the risk of overproduction, the mill in the Czech Republic will produce improved newsprint as well, which is slightly lighter than normal newsprint.
      Once the facility in the Czech Republic comes on stream, Myllykoski may rationalise and restructure its operations. In practice, this means that smaller paper mills may be shut down.
      According to Norrgård, this streamlining will also include Myllykoski's original production facilities in Anjalankoski, Finland, which have been less profitable than the corporation's other factories.
      In previous decision-making, Anjalankoski has been in a special position because of the owners' and directors' strong ties to the site.
      A third of the Anjalankoski factories is owned by Metsäliitto, who are responsible for the wood-handling.
      A dramatic production cut in Anjalankoski would not serve Metsäliitto's interests.
     
According to Jyrki Ovaska, president of UPM Magazine Production Division, Myllykoski's undertaking does not affect UPM's own projects.
      UPM will carry on according to the previously published investment plans.
      "The competition is fierce, and Myllykoski is taking a brave step by dramatically increasing the net production in the market. I'm interested to find out what their restructuring programme will entail", Ovaska says.


Links:
  Myllykoski Paper
  Metso
  UPM

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