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M-real to invest €26m at Simpele mill

Finland-based M-real Corporation, part of Metsäliitto Group, is planning to increase the annual folding boxboard capacity of Simpele mill by about 80,000 tonnes and expand the sheeting capacity. The total value of the potential investments in Simpele, is approximately €26m.

Following the investment, the total folding boxboard capacity of Simpele would be approximately 300,000 tonnes per annum. The production would mainly be sold to food packaging purposes.

To improve profitability, M-real is considering to transfer the Simpele speciality paper production to Gohrsmühle mill in Germany and consequently to close the Simpele paper machine. The statutory cooperation negotiations related to the possible closure and the investment in board production will be commenced on 24 September 2010.

The potential transfer of the production would improve M-real’s operating result by approximately €4m per annum. As a result of the planned Simpele paper machine closure Consumer Packaging’s 4Q 2010 result will as non-recurring item include €12m write offs. The planned closure would reduce European annual speciality paper overcapacity by about 50 000 tonnes.

M-real CEO Mikko Helander stated that company is planning to take step to moderately increase the capacity to be able to serve customers even better.