Ence's owners lash out at Portucel

A war of words is boiling up between the Iberian pulp producers, Ence and Portucel, over the pending privatization of the Spanish company. Ence's owner, the Spanish state holding company, Sepi, is considering a change to its privatization plans after several Portuguese companies increased their stakes in the Spanish pulp producer.

Reports in the Spanish press suggest that Sepi is trying to fend off interest in its 51% stake from Portuguese companies such as Tafisa (part of Sonae) and Portucel, which recently purchased shares in Ence. Sepi's president, Pedro Ferreras, is quoted as saying, "Ence will only finish in Portuguese hands if we agree to it."

One industry analyst claimed that Sepi is trying to protect Ence's position ahead of the privatization later this year. "Ence has increased its muscle on the industrial side with the acquisition of Ceasa. It is now a larger producer than Portucel," he said.

Analysts are also convinced that Portucel is trying to boost its share in Ence indirectly or directly, as the owner of Sonae and Tafisa also controls 10% of Portucel.

Portucel has totally dismissed the idea that it is trying to pump up its stake in Ence. The company revealed in its 1998 results that it now owns nearly 7% of Ence, an apparent increase from the earlier 5%. But according to the director, Victor Coelho, Portucel bought the shares just a few days after the original stake was purchased. Under Spanish stock exchange laws, Portucel was obliged to declare its 5% interest but not the smaller increase in shares.

As Coelho put it, "If we were interested in increasing our stake in Ence, we would not have increased by just a little bit. Portucel has no plans to buy any more shares in Ence. Our agenda is in Portugal."

Portucel was previously interested in merging with Ence, but Sepi called off the proposed merger in favor of privatization. Portucel was keen to merge as it would have provided many synergy benefits for the companies. But as Coelho said, "You can't merge with someone who doesn't want to. It's like trying to marry someone who isn't interested."

Stora Enso waits for Hylte verdict

Stora Enso is optimistic that it will soon receive approval for a 50,000 ton/yr newsprint capacity increase at its Hylte mill in Sweden.

The company applied to the Swedish environmental authorities for a permit in April 1998 and the procedure was expected to take about one year to complete.

The two parties met in March to discuss the proposals and raise any outstanding issues. The matter is now in the hands of the environmental authorities.

If approval is given, Stora Enso will be able to raise newsprint capacity from 750,000 tons/yr to 800,000 tons/yr at the Hylte mill. The mill's design capacity is already slightly higher than 750,000 tons/yr, but the company needs some additional investment before it can start producing 800,000 tons/yr.

Specialty mill to shut

Felix Schoeller has decided to close its Glory mill in Buckinghamshire in the UK. The specialty paper mill will be shut during 2000.

Felix Schoeller has found it impossible to run the mill economically as the two PM unit is no longer competitive. The company has suffered from slower market growth and tough price competition in the wake of global economic upheavals.

Production at the 16,000 ton/yr mill is concentrated on photographic base and inkjet papers. Felix Schoeller plans to transfer the inkjet paper production and coating plant to its mill in Weissenborn, Germany.

AssiDomän deal put back on track

AssiDomän's plans to sell its forest holdings back to the Swedish state are back on course. The change in fortunes came after the agriculture board reversed an earlier rejection of the proposed sale.

The agricultural board's initial worry was that the land might not end up in the state's hands, but remain under the control of AssiDomän or another large company. Such a move would have jeopardized Sweden's forest ownership structure which aims to protect the rights of small and medium-sized forest owners.

Since the original rejection, AssiDomän has held several meetings with the agricultural board and convinced its members that the government will be the ultimate owners of the land.

AssiDomän is optimistic that the deal will go through. A final decision should be available shortly after the company's shareholder meeting in June 1999.

The Swedish papermaker plans to spin off 883,000 ha of forest land and create a new company, Sveaskog. The state would then take control of this new unit by offering its AssiDomän shares in return for Sveaskog shares. For every 10 Sveaskog shares, the Swedish state will offer shareholders three AssiDomän shares. Shareholders have from 11 May to 9 June to accept the offer.

The company also announced that the transaction would cut annual net sales
by SEK 560 million ($67 million). AssiDomän's operating income would also fall by SEK 255 million/yr. But if the deal goes ahead, one of the benefits for AssiDomän is that the Swedish state will reduce its stake in the paper producer from 50.2% to around 35%. The move will boost the company's liquidity, according to AssiDomän.

M-M wipes out recycling division

The cartonboard giant, Mayr-Melnhof (M-M), has shed its recycling division. The Austrian company held on to just three of its 14 recycling units in the UK, Austria and Germany. The three remaining companies will be integrated into M-M's cartonboard division as they supply a significant amount of raw materials to the mills.

Difficult market conditions led M-M to sell off 10 of its German recycling plants - including NGV of Nuremberg, the three units in Gera (OTR, OTE and RSI), SRS of Schmölln, Altpa in Frankfurt and Knoll in Großfriesen. Rowe of Nuremberg and Weinbrecht of Karlsruhe were sold in September last year, while Reitner & Böhle in Essen went to a local buyer last October. No buyers or price tags were disclosed for the deals.

Rena fails to find buyer

The Norwegian company, Rena, failed to find a buyer for its cartonboard mill by the deadline of 6 April and the unit is now set to be split up and sold off.

The mill was in advanced negotiations with two interested parties, but no final agreement was reached.

The mill's owner, Motorcompiet, said the interested groups were investors, one with financial muscle and the other with industry know-how. A possible scenario was for the two companies to work together, but the investors did not know each other well and felt their business relationship was not close enough.

Motorcompiet specializes in buying and selling bankrupt assets. The company snapped up the bankrupt plant at the end of last year.

Now that the sale has fallen through, the plan is to sell off the assets individually. Companies are being invited to take a look at the assets and place an offer. Several companies are reported to have shown an interest in the individual assets. Ekman Machinery of Sweden has been appointed to handle the sale of the equipment.

260 jobs to go at UK Paper

UK Paper is the latest business to be hit by the wave of consolidation that is running through the pulp and paper industry. The company's new owner, Metsä-Serla, has decided to cut 260 jobs at UK Paper's operations in the southeast of the UK.

Some 230 people will be made redundant at the Sittingbourne and New Thames fine paper mills in all areas. The remaining posts will be transferred to Forest Alliance, Metsä-Serla's UK sales organization.

The company plans to axe the jobs by the middle of next year.

The rationalization at UK Paper follows a spate of job losses across Europe in the wake of restructuring programs by companies such as Stora Enso, UPM-Kymmene and AssiDomän.

Cartoinvest expands plans in the UK

Cartoinvest is speeding ahead with expansion plans at its new subsidiary in the UK, North Wales Tissue. Plans for two new tissue machines have been brought forward and the PM capacities have significantly increased.

The initial plans called for two PMs with a 20,000 ton/yr capacity to start up in January 2000 and 2001. Recard was due to supply the first PM, but this machine will now be used for another Cartoinvest project which is being kept under wraps. For the UK project, the company has placed orders with Overmeccanica for two machines.

For PM 1, Overmeccanica will supply a complete machine from the headbox to the winder, with a capacity of 75 tons/day. PM 1 is to have a wire width of 2.82 m and a design speed of 1,600 m/min. Startup is scheduled for July 1999. At 200 tons/day, PM 2 will be significantly larger than the first machine and is scheduled to start up in January 2000. Overmeccanica will again supply the whole machine, apart from the winder.

Suppliers sign merger

Ahlstrom and Kvaerner have signed an agreement to merge their pulp and paper machinery units.

The 50:50 owned company will have annual revenues of approximately $1.2 billion. The deal is subject to approval from EU competition authorities.

Attisholz tries to dispose of tissue

Attisholz is going through the motions of due diligence in a bid to sell off its hygiene paper operations, raising speculation that a sale may be imminent.

The process should be completed by May this year.

Attisholz said its hygiene paper sector is no longer big enough to serve its European customers, given the ongoing consolidation in the retail market. The company added that its tissue division would be able to realize its full potential as part of another European group.

The sell-off is part of a larger restructuring program at Attisholz. Last year, the company revealed plans to focus its pulp production on specialty pulp. The move means that Attisholz will be less dependent on outside factors such as overcapacity and price fluctuations.

Iggesund invests in Swedish board

Iggesund Paperboard is to invest SEK 210 million ($26 million) on board machine #1 at the Iggesunds Bruk mill in Sweden.

The machine produces solid bleached board (SBB) which is mostly used in the tobacco industry. The modernization will increase capacity by 10,000 tons/yr from today's 125,000 tons/yr.

A major part of the investment will be a brand new press section. The rebuild will also include a new control system for the stock preparation, press and wire sections. The Swedish group placed the order with Beloit and the work is scheduled for May 2000.

The rebuild will help meet customer demand for better surface quality and lower grammages without a reduction in the board stiffness, according to Iggesund.

There are proposals for further modifications to the machine at a later stage, but no decision has yet been taken on when this stage of the work might take place. A second stage would increase capacity and improve quality.

Iggesund Paperboard is part of the MoDo group.

EC to investigate alleged newsprint cartel

European newsprint producers are preparing to defend themselves against allegations of operating a price cartel, after receiving a "statement of objections" from the European Commission (EC).

The EC has been investigating the business practices of newsprint producers between 1989 and 1994 for almost four years, but has only just issued its interim report. The probe is wide-ranging, covering issues such as pricing questions and accusations of close cooperation between companies in several areas.

Some 15 to 20 groups have received a copy of the statement of objections and have up to two months to make a formal response. Two of the big names on the list are UPM-Kymmene and Stora Enso.

If the EC discovers that there was a serious infringement of the law and that European newsprint producers were operating a price cartel, the minimum fine would be Euro 20 million ($21.5 million), an EC spokesman said. The maximum penalty for each accused company would be 10% of the company's turnover.

One point at issue is the sharp rise in newsprint prices at the end of 1994. Pentti Arvela, president of UPM-Kymmene's newsprint division, strongly refuted the accusation that such price movements were proof of a cartel in operation. "[Those making the allegations] do not understand the dynamics and the cyclicality of the industry, or the market forces prevailing at the end of 1994," Arvela said. Arvela was keen to remind people of the sharp slump in prices in 1991, which resulted in a prolonged period of poor profitability. By the end of 1994 there was a clear shortage of paper, he said, which provided the right market conditions to implement a price increase. As for the similar timing of the move by several producers, several sources confirmed that it is standard practice in the newsprint business to set annual contracts.

AIPM names Turkish buy

American Israeli Paper Mills (AIPM) has finally revealed the identity of its Turkish takeover target. The company has wrapped up a deal to become the new owner of Ovisan, a baby diaper and hygiene pads producer based in Turkey.

Under the agreement, AIPM's tissue subsidiary, Hogla-Kimberly, will pay $17.25 million for 100% of Ovisan's shares. The deal is subject to obtaining outstanding permits from the Turkish authorities.

Hogla-Kimberly is 50.1% owned by AIPM, with the remainder controlled by the US tissue giant Kimberly-Clark.

Mayr-Melnhof develops facilities in Slovenia

Mayr-Melnhof (M-M) has started to upgrade its Slovenian unit, Kolicevo Karton. M-M took full control of the operation in December last year.

M-M's investments focus on cost reductions to bring the Slovenian plant into line with the Austrian company's other mills. The group plans to improve formation, reduce energy consumption levels and slash the volume of broke generated.

Kolicevo Karton has two cartonboard machines with a total capacity of 120,000 tons/yr of mainly coated white lined chipboard (waste-based cartonboard) and a small volume of GC (virgin fiber) cartonboard.

As part of the investment project, M-M plans to transfer two suction formers from its Frohnleiten mill in Austria on to board machine #3 at the Slovenian unit. The Frohnleiten formers came from PM 3, which was rebuilt by Voith Sulzer in January this year.

The upgrade at Kolicevo Karton will result in a slight capacity increase. "We will increase capacity in line with market developments," M-M said. Investment costs are estimated to be in the region of DM 5 million, according to one source.

SCP starts major machine revamp

Severoslovenské Celulózky a Papierne (SCP) has set to work on a major rebuild of PM 7 at its mill in Ruzomberok, Slovakia. Fine paper capacity will rocket from 46,000 tons/yr to 100,000 tons/yr as a result of the rebuild.

The company aims to focus the machine's production on large folio sheets. PM 7 will be back in action in June this year.

SCP is also planning to rebuild another fine paper machine at the mill. PM 8 is set for a revamp in 2000 or 2001, but the company has yet to hammer out the details of the project.

Added to the PM improvements, the company has decided to upgrade the pulp mill at Ruzomberok. Work will be carried out in stages over the next few years. SCP has chosen Ahlstrom as the main supplier for a rebuild of the evaporation plant, while Sunds Defibrator will replace the debarking drum. This stage of the project will be carried out in August this year.

Packaging pact creates pan-European alliance

Three packaging giants have joined forces to form a pan-European sales alliance. The UK's David S Smith, Spain's Saica and Kappa Packaging of the Netherlands have linked up to supply corrugated packaging across a host of European countries.

So far, the linkup covers just the corrugated packaging side. But according to a David S Smith spokesman, the alliance could also be stretched to include recycled linerboard supplies at a later date. The alliance will operate under the name of InpAct from 1 April 1999.

The driving force behind the agreement are the opportunities to cut total costs, improve supply chain efficiency and to cater for customers whose needs could not be met economically with just one supplier. InpAct aims to provide European customers with a one-stop supply of every type of corrugated board packaging, the new alliance claims.

David S Smith runs plants in the UK, France, Germany, Italy, Poland and the Ukraine. Kappa Packaging's units are located in the Benelux countries, Germany, the UK, Norway, Poland and the Czech Republic. Saica's operations focus on the Spanish, Portuguese and French markets.

Kaunas axes three PMs

Lithuanian paper producer, Kaunas, is streamlining operations at its mill.

The company plans to sell off PM 3 this year as part of a mill-wide restructuring program. The machine has a capacity of 60 tons/day.

Kaunas was forced to part company with two other PMs last year. The mill sold fine paper PMs 4 and 5 for scrap. PM 4 had a capacity of 60 tons/day, while PM 5 was a third of the size at 20 tons/day.

Despite the downsizing measures, Kaunas still operates PMs 1 and 2 at the mill. PM 1 has a 30 ton/day capacity of fluting and wrapping papers and PM 2's output reaches 45 tons/day of fine paper.

Oji restructures in bid to boost profits

Oji Paper has announced a number of restructuring measures designed to improve the company's financial performance. Oji's paper converting business and value-added products group is to be reorganized into the "Specialty Paper Company". This will have four units covering communication paper, specialty paper, electrical and plastic materials and self-adhesive papers. The household products business will be reorganized into the "Household Products Company".

A new company is to be established for boxboard products. The boxboard products division at Oji's Fuji mill will be transformed into an independent company. Another Oji boxboard products subsidiary will also be included in this group, but the firm said that it would not disclose the identity of the subsidiary at present.

Oji plans to unite all companies related to board manufacturing and converting in Hokkaido, while some subsidiaries may be sold off.

Oji also said that it plans to freeze all capacity increases and get rid of excess output. The company estimates that it will take 4-5 years to equalize the current supply/demand imbalance. During this period, Oji will freeze all investments aimed at raising capacity and may integrate or close some obsolete facilities, including paper mills.

Oji has already shut down three paper machines in the past two years with a total capacity of some 150,000 tons. By the end of the 2000 fiscal year, the firm aims to close another seven paper machines, reducing capacity by another 180,000 tons/yr.

Oji will also rationalize its self-adhesive paper products business in a bid to return to profitability in the financial year 2000.

Oji plans to carry out the restructuring measures by the end of the 2001 financial year, achieving a net staff reduction of 2,000 across the group.

Nippon joins restructuring wave

Nippon Paper Industries has joined the wave of industrial restructuring in Japan, with the news of a major restructuring program. The company plans to implement several measures in the next few years, which should improve profits by around Yen 25,000-28,000 million ($210-235 million).

Nippon plans to shut down six out of 48 machines at 12 of the company's mills. The closures will remove 160,000 tons/yr of capacity. Nippon's total capacity is 3 million tons/yr of paper and board. The company has yet to decide which machines will be shut down. The closures will be carried out over the next three years and will involve closing or consolidating some mills.

The firm intends to reduce its workforce from 6,800 people to 5,500 by 31 March 2002. The total number of group employees will be slashed from 15,000 to 12,850.

Nippon plans to cut interest bearing debt by more than Yen 50,000 million to just under Yen 350,000 million by 31 March 2001.

APRIL starts up fine Paper PM in China

Singapore-based Asia Pacific Resources International (APRIL) has started up a new fine paper machine at its Changshu mill in China. Trial runs began on 13 March.

The PM has a capacity of 350,000 tons/yr of uncoated woodfree printing and office papers. APRIL has invested over $500 million in the Chinese mill. The Changshu PM is identical to the Valmet machine and production systems at APRIL's uncoated woodfree mill in Indonesia, Riaupaper.

The group also has a 30,000 ton/yr converting plant in Suzhou, which is already in operation. The facility manufactures stationery products such as exercise books and spiral bound notebooks.

APRIL will serve customers in China through four regional distribution and sales offices in Beijing, Shanghai, Guangzhou and Chengdu.

APRIL said the successful startup of the Changshu mill brings the group another step closer toward its year 2000 goal - becoming a leading integrated forest products company with an annual production capacity of 1 million tons/yr of uncoated woodfree paper.

The group currently has an uncoated woodfree capacity of 700,000 tons/yr, which is evenly split between the Changshu mill and Riaupaper in Sumatra, Indonesia.

The Changshu mill is a joint venture between APRIL and the Finnish company, UPM-Kymmene. Both parties own 49% of the plant.

APRIL confirmed that financing has yet to be finalized for the completion of the second 350,000 ton/yr uncoated woodfree PM at Riaupaper. The group originally expected the machine to be ready for startup around the end of this year, but the project has been delayed due to the economic problems that have hit Indonesia.

Shandong Chenming PM goes commercial

Shandong Chenming Paper Holdings has begun commercial production on a new paper machine at its mill in Shandong province, China. Output is being sold on the domestic market. The company said it may also be interested in branching out into exports if the conditions are favorable.

The new machine can produce lightweight coated and uncoated woodfree paper in a basis weight range of 40-120 g/m2. The 4.55 m wide Valmet PM has an online coater and its capacity range is 100,000-140,000 tons/yr.

The company is also investing in a new pulp mill to supply the paper machine. Work is set to begin in the first half of this year on a 300 ton/day deinked pulp facility, with startup following one year later.

SCA to press on in eastern Europe

SCA is heading for more adventures in eastern Europe with plans to double its packaging capacity in the region over the next five years. The company would not reveal any specific targets, but SCA confirmed it plans to strengthen its position at existing packaging plants in Hungary, the Czech Republic, Slovakia and Poland. Future moves will also include branching out into other markets, the company said.

Consolidation in western Europe remains SCA's number one priority, but the east still holds its attraction for the company. SCA's president and CEO, Sverker Martin-Löf, said, "In eastern Europe, we will see more synergies with western Europe over time. But we have to find the right balance between risk and reward there."

One of the countries under SCA's microscope is Romania, but the company is only at a preliminary stage of looking into opportunities. Two of the Romanian companies hoping to catch SCA's eye were Celrom and Pehart Petresti. Stakes in the packaging and tissue paper companies are up for sale as part of the privatization push in the Romanian pulp and paper industry.

SCA is also keeping its eyes on Latin America even though "the opportunities look shaky in the short term". The company's potential deal with the Brazilian tissue producer, Melhoramentos Papeis, has still not been signed and is "up in the air". Martin-Löf said, "We are closely following what is happening in Latin America, but with some skepticism. There are now more opportunities and cheaper opportunities as people in Latin America look for partnerships."

Celulosa Argentina strikes deal to restart mill

Staff are back at work at Celulosa Argentina's Capitán Bermúdez mill. The printing/writing paper plant is gearing up for action after a lengthy shutdown during the first quarter.

Celulosa Argentina sent its staff on vacation in early February when the mill hit financial difficulties and unsold stocks built up at the plant. The situation then deteriorated as protests kept the mill shut.

The main bone of contention was the company's proposals to cut the workforce. But union and company representatives finally managed to hammer out a deal at the end of March, which allowed the mill to restart and provided for cost cutting measures to be implemented.

The company aims to cut 40% of maintenance costs and reduce salaries and related items by 31%. Under the deal, some 27% of workforce, or 135 people, are being shown the door. But their payoff is 20% above the normal severance package, according to the company. The remaining staff will take a salary cut of 13%.

Champion invests at Inpacel mill

Champion is boosting capacity at another of its Brazilian mills. The company has decided to revamp the coating equipment at its Inpacel mill. News of the investment follows hot on the heels of Champion's announcement that it intends to rebuild three PMs at its Mogi Guaçu plant in Brazil.

At Inpacel, Champion will replace
PM 1's existing coaters with new free-jet systems from Voith Sulzer. The rebuild will result in an immediate capacity increase of 10% on the 170,000 ton/yr lightweight coated (LWC) machine. The investment will also allow capacity to climb to 200,000 tons/yr in the future, according to the supplier.

The new JetFlow F coating equipment has a working width of 5,400 mm and a maximum operating speed of 1,600 m/min. Startup is scheduled for August 1999.

Venepal sorts out financial difficulties

Venezuela's Papelera Aragua has been split up and sold off. The sale follows financial problems at Papelera Aragua's main shareholder company, Venepal.

The company's tissue division is now in the hands of Inversiones Papeleras and will be run as part of the Papeles Nacionales Flamingo group. But the boxboard division remains under the same management with a name change to Corrugadora Suramericana.

Papelera Aragua is just one of Venepal's non-core assets which is being sold off in a bid to raise $30 million for the company's cash-strapped operations.

Venepal is also in talks with several companies in an effort to find a "new strategic partner". The cash-strapped Venezuelan group has appointed Credit Lyonnais Securities of New York to help with the search. Venepal has not yet determined the terms of any possible alliance, but dismissed the suggestion that it was looking for a merger. No timetable has been fixed, but Venepal said it hoped to find a partner "as soon as we can".

Pulp boost doubles Amir's output

Amir Paper is boosting capacity at its mill in the Jabel Ali "free trade zone" in the United Arab Emirates. The company plans to double capacity on its testliner and fluting PM by the middle of this year.

Amir Paper will rebuild pulping facilities at the mill to enable the 200 ton/day PM to run at its full design capacity. The machine is currently running at just 50% of capacity.

As part of the rebuild, Ahlstrom is installing a new fiber flow drum to improve pulping capacity at the mill. Amir Paper will also be able to use liquid packaging board as a raw material when the new equipment comes on line in May or June. At present, the mill uses OCC (old corrugated containers) and mixed waste as its fiber base.

Amir Paper exports the majority of its output to the Far East as well as to other Arab and Gulf states. The remaining 25-30% of the mill's output is converted into boxes on-site.

Zhongshan Rengo boosts capacity

China's Zhongshan Rengo Hung Hing Paper is to raise capacity at its mill in Zhongshan, Guangdong province. Corrugating materials output will increase by 45,000 tons/yr to 200,000 tons/yr from the year 2000. The company said it intends to boost capacity on the existing equipment to achieve the increase.

The Zhongshan mill has three machines. Last year, PM 1 produced 70,000 tons of corrugating medium, PM 2 manufactured 50,000 tons of linerboard and 20,000 tons of corrugating medium. PM 3 had an output of 27,000 tons of corrugating medium in 1998.

The company, Zhongshan Rengo Hung Hing Paper, was set up as a joint venture by the original Zhongshan Paper Mill, Japan's Rengo Corporation and Hung Hing Printing Group of Hong Kong.