Stora Enso to shutter two paper mills due to continued declines in European demand
Stora Enso will start co-determination negotiations with employees at its Kvarnsveden Mill in Sweden and Veitsiluoto Mill in Finland regarding a plan to permanently cease pulp and paper production at both mills. The planned closures would take place during Q3 2021, and affect directly 670 people in Finland and 440 people in Sweden.
Paper demand in Europe has declined for over a decade. This trend has further accelerated due to the COVID-19 pandemic, which has led to changes in consumer behavior. As a consequence, there is a significant overcapacity in the European paper market, which has resulted in historically low price levels and challenged the cost-competitiveness of many paper mills. Both Kvarnsveden and Veitsiluoto mills are loss-making, and their profitability is expected to remain unsatisfactory.
“This is heavy news for our company and our colleagues at Veitsiluoto and Kvarnsveden mills. Our people at the sites are very competent and have done their utmost during very difficult circumstances. Unfortunately, in the rapidly declining paper market, we need to adjust our production capacity to improve the competitiveness of our total paper business. This sadly means the closure of unprofitable assets. As communicated last year, we have reviewed our strategy and are shaping our business for accelerated growth and value. We are focusing on packaging, building solutions and biomaterials innovations, where we see strong growth potential,” says Stora Enso President/CEOAnnica Bresky.
“We have examined several options to improve the financial situation for Veitsiluoto and Kvarnsveden mills. However, none of these options have proved feasible in ensuring a cost-competitive future for the mills. If there was a decision to close down the mills, we would work closely together with other Stora Enso locations, the cities of Kemi and Borlänge, and other stakeholders to support in re-employment and training of the affected employees. We would also actively engage in discussions to find alternative future uses for the mill sites. Throughout this process, we will serve our customers in the best possible way,” says Katiter Horst, exec vp-Paper Division.
The planned mill closures would reduce Stora Enso’s paper production capacity by 35% to 2.6 million tonnes/yr. Stora Enso’s annual paper sales would decrease by approximately EUR 600 million, and the operational EBITDA is expected to improve by approximately EUR 35 million annually. The share of Paper Division of the Group sales would be reduced to slightly above 10% after these planned closures.
Stora Enso would continue to source wood in northern Finland and central Sweden, as the regions continue to be important sources for the company’s operations.
Stora Enso continues to produce woodfree uncoated (WFU) office papers at its Nymölla Mill in Sweden, supercalendered (SC) papers at Langerbrugge Mill in Belgium and Maxau Mill in Germany, machine finished coated (MFC) papers and coated and uncoated book papers at Anjala Mill in Finland, standard newsprint at Langerbrugge Mill in Belgium and Hylte Mill in Sweden, and improved newsprint and other newsprint specialities at Anjala Mill in Finland and Sachsen Mill in Germany.