Stora Enso invests €1B to convert Oulu site for board and unbleached kraft production
24 Oct 2022 --- Stora Enso is investing approximately €1 billion (US$98.4 million) to convert its remaining idle paper machine at the group’s Oulu site in Finland into a high-volume consumer board production line.
Production on the converted machine is estimated to start in early 2025 and is intended to support the company’s capacity for packaging production.
Following the first machine conversion at the Oulu site in 2021 from paper to kraft liner, the remaining idle paper line will be converted into a state-of-the-art, flexible consumer board line for folding box board (FBB) and coated unbleached kraft.
The total annual capacity will be 750,000 tons of consumer board. The target end-use segments are F&B packaging, especially frozen and chilled, and dry and fast food – mainly in Europe and North America.
“Renewable packaging continues to be our largest strategic growth area. It’s also a market that is now, for the first time, growing faster than plastics-based alternatives,” says Stora Enso’s president and CEO, Annica Bresky.
The investment will help maintain sustainability standards and create new jobs, says Stora Enso.“Through this conversion, we can build on existing assets for quick and cost-effective time-to-market compared to other investment alternatives. This puts us in a strong position to drive revenue growth and build market share.”
Investment returns
The total investment of roughly €1 billion will be implemented from 2022–2025. At full capacity, the company says its Packaging Materials division can meet its profitability target: operational return on operating capital of 20%. Annual sales are expected to be approximately €800 million (US$787 million).
“This investment represents a step change in the European market and will develop our Oulu unit into a mega site, improving profitability and competitiveness for both our consumer board and containerboard offerings,” says Hannu Kasurinen, executive vice president and head of the Packaging Materials division.
“The converted line will be the most cost-competitive FBB machine in Europe, also enabling us to optimize production at other sites to unlock further growth.”
Cutting emissions, boosting employment
Stora Enso says its billion euro injection will raise recycling rates and maintain the success it made last year. The Oulu site’s total scope 1 and 2 greenhouse gas emissions were reduced by 80% during the first conversion in 2021.
The investment will also create approximately 300 new jobs at the Oulu site and support functions and an additional 1,500 indirect employment opportunities overall. The wood consumption of the new line will be approximately one million cubic meters of pulp wood. After the investment, the group’s market pulp position will be reduced by about 250,000 tons annually.
Timber troubles
The investment comes following turmoil in the wood and paper business as major companies like Stora Enso abandoned their operations in Russia – one of the world’s largest wood producers – following the country’s invasion of Ukraine.
Stora Enso divested its Lukhovitsy, Arzamas and Balabanovo packaging plants in Russia to local management in May.
Last month, the company acquired Netherlands-based De Jong Packaging Group for €1.02 billion (US$1.02 billion). De Jong Packaging Group is one of the largest corrugated packaging producers in the Benelux countries. Stora Enso says the acquisition will “complement and enhance” its fresh produce, e-commerce and industrial packaging offerings.
Edited by Louis Gore-Langton
