SWEDEN – The Board of Directors of Nordic Paper has announced plans to invest approximately SEK 850 million (US$78m) at the Bäckhammar mill.
This strategic investment will help in improving the sustainability performance of Bäckhammar mill, while strengthening the overall competitiveness of the facility.
The investment will be used for establishing a new wood room that will provide strategic flexibility in raw material sourcing as well as promote efficiency gains in the production process.
The company will further install a new electrostatic filter, which is expected to minimize over two-thirds of emissions from dust to air.
Bäckhammar plant produces different qualities of unbleached kraft papers mainly for packaging end-uses, such as sacks for flour, carrier bags and bread pouches.
Nordic Paper CEO Anita Sjölander said: “Bäckhammar is a highly competitive production unit. It is also one of the most climate-efficient production plants in the global kraft paper industry.
“The investment decision has been made considering our strong balance sheet and opportunities for organic growth in Bäckhammar in future.”
Nordic Paper said that this investment will add approximately SEK100 million(US$9.17m) to its earnings before interest, taxes, depreciation, and amortization (EBITDA), annually.
The latest decision, which was taken by the company’s board of directors, has been approved as part of the existing production permit.
The company added that it was granted a new production permit for the Bäckhammar mill earlier this year on 31 January, and this new permit was appealed by a third party and has not gained legal force until now.
The investment, which is planned to be carried out between 2023 and 2025, will be financed utilizing existing credit facilities.
The effect of this investment on main cash flow is projected to occur in 2024 and 2025, with SEK 300 million (US$27.50m) each year, the company noted.
A similar cash flow effect is also expected to arise in 2023, mainly in the fourth quarter, and a minor effect in 2026. An additional SEK 100 million (US$9.17m) EBITDA from investments will have full effect from 2026.
Last August, Nordic Paper temporarily stopped production at its Greåker plant in Norway due to very high daily prices for electricity in Norway.
The plant is part of the segment Natural Greaseproof and corresponds to about half of the production capacity in the segment.
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