Nordic Paper injects SEK850M into Swedish mill to boost kraft paper production

01 Sep 2023 --- Nordic Paper is investing approximately SEK850 million (US$77 million) at its Bäckhammar mill in Sweden. The investment is said to improve the plant’s environmental sustainability performance and strengthen its competitiveness.

The investment will provide a new wood room for strategic flexibility in raw material sourcing and production efficiency gains. A new electrostatic filter will also be installed at the mill, reducing dust emissions. 

“A new wood room will lead to efficiency gains in the production process. The installation of a new electrofilter will lead to substantially reduced emissions of dust to air from the Bäckhammar plant, a reduction of more than two thirds,” Henrik Essén, director for Sustainability and Communication at Nordic Paper, tells Packaging Insights. 

The investments are expected to add approximately SEK100 million (US$9 million) annually to Nordic Paper’s EBITDA. Further, the investments set the foundation for future growth in production output.

Aligning with global trends
At Bäckhammar, Nordic Paper manufactures unbleached kraft papers of different qualities primarily for packaging end-uses. The raw material is pulpwood from environmentally sustainably managed forests in mid-Sweden and sawmill chips. 

Essén says the company exports most of its kraft paper to the global market. Products made from paper from Bäckhammar include sacks for flour, carrier bags and bread pouches. The main market is in Europe but the papers are shipped globally.

“Nordic Paper exports most of its speciality papers to a global market. More than 65% of the turnover is for food related end-uses. All over the world, we see a growing interest for more sustainable packaging materials, primarily so where replacing plastics can be done. The market in Sweden is in line with this global trend,” explains Essén.

The investments were approved under the current existing production permit. A new production permit was granted for the Bäckhammar mill on January 31. A third party appealed the new production permit and has not yet gained legal force.

Strengthening climate efficiency
Nordic Paper says that Bäckhammar is a “highly competitive” production unit. It is also reportedly one of the most climate-efficient production plants in the global kraft paper industry. 

“With these investments, we further strengthen the competitiveness of the plant at the same time as we improve our environmental performance,” says Nordic Paper’s CEO Anita Sjölander.

“The investment decision has been made considering our strong balance sheet and opportunities for organic growth in Bäckhammar in the future.” 

The investments will be carried out from 2023-2025 and will be financed through existing credit facilities. The main cash flow effect from these investments will occur in 2024 and 2025 with more than SEK300 million (US$27 million) annually, says the company. 

There will also be a cash flow effect in 2023 most of which in Q4, and a minor effect in 2026. The additional EBITDA of about SEK100 million (US$9 million) from the investments is said to have full effect from 2026.

By Natalie Schwertheim