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Nordic Paper decides on strategic investments for Bäckhammar

Nordic Paper decides on strategic investments for Bäckhammar
Nordic Paper Bäckhammar is a pulp and paper mill with an annual capacity to produce 230,000 tonnes of pulp and 159,000 tonnes of paper (photo courtesy Nordic Paper).

Sweden-headed Nordic Paper, a leading independent international specialty kraft- and greaseproof paper producer, has announced that it has decided to invest approximately SEK 850 million (≈ EUR 71.58 million) at its Bäckhammar mill in Kristinehamn, Sweden. The investment will further improve sustainability performance and strengthen the competitiveness of the pulp and paper mill.

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Nordic Paper currently operates five paper mills – three in Sweden, one in Norway, and one in Canada. At its pulp- and paper mill in Bäckhammar, the company manufactures unbleached kraft papers of different qualities primarily for packaging end-uses.

Products made from paper from Bäckhammar include for example sacks for flour, carrier bags, and bread pouches. The main market is in Europe but paper is shipped all over the world.

New wood handling- and dust emissions control

The raw material used at Bäckhammar is pulpwood from sustainably managed forests in mid-Sweden as well as woodchips from sawmills.

An important component of the investment is a new wood handling system providing for both strategic flexibility in raw material sourcing and efficiency gains in production.

The emissions of dust will be reduced by more than two-thirds through an investment in a new electrostatic precipitator (ESP).

The investments are expected to add about SEK 100 million (≈ EUR 8.42 million) annually to Nordic Paper’s EBITDA.

Furthermore, the investments set the foundation for future growth in production output.

Approved under existing permit

The investments are approved under the current, existing, production permit. A new production permit was granted for the Bäckhammar mill on January 31, 2023.

The new production permit was appealed by a third party and has as of yet not entered into force.

Bäckhammar is a highly competitive production unit. It is also 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. The investment decision has been made considering our strong balance sheet and opportunities for organic growth in Bäckhammar in the future, said Anita Sjölander CEO of Nordic Paper.

The investments will be carried out in 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 SEK 300 million (≈ EUR 25.26 million) each year.

There will also be a cash flow effect in 2023 most of which in Q4, as well as a minor effect in 2026. The additional EBITDA of about SEK 100 million (≈ EUR 8.42 million) from the investments will have full effect from 2026.

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