Energy deal to boost Aylesford efficiency

The agreement is seen as helping significantly to boost the mill’s cost-efficiency because its energy bill represents about 20% of its overall costs and the new arrangement is at a better rate for the mill than before.

Aylesford said the new “joint initiative” will provide an energy supply contract that offers a better and more secure outlook covering the next four years and will also help reduce overall CO2 emissions.

The agreement covers the gasto feeda combined heat and power (CHP) plant on the site. Since 1993 npower Cogen has been supplying steam and electricity through the CHP plant and invested about 60m into the facility.

Aylesford workers operate the plant but it is maintained by a dedicated team of engineers from npower Cogen.

Energy management

RWE npower said that it understood the challenges of energy management to modern business, particularly in the current harsh economic climate, and has worked flexibly with the paper mill owners to agree a revised energy supply contract which offers a better and more secure outlook for all parties through a structure covering the next four years.

Mark Lunabba, Aylesfords managing director commented, We are confident that this new agreement, together with the on-going efficiency and cost reduction programme, will further enhance Aylesfords competitiveness and support the continued production of high quality Renaissance Newsprint.

Pressures

The cost saving comes as Aylesford continues to try to compete in the newsprint sector which across Europe is facing ongoing cost pressures with demand for newspapers down. The company itself has not made a profit for a number of years and the energy savings are part of ongoing work by Mr Lunabba to reduce costs and regain profitability.

“We have a unique position being in close proximity to our customers”
Mark Lunabba, managing director, Aylesford Newsprint

Earlier this month, international paper firm Mondi, which jointly owns Aylesford with SCA Forest Products, commenting on the first quarter of the year, commented that it was “assessing alternatives” for the business. It has highlighted Aylesford’s losses on a number of occasions.

Mondi said: The very weak European newsprint market continued to impact on Aylesford Newsprints ability to return to profitability. Management has implemented restructuring and cost reduction initiatives and is actively assessing alternatives for this business.

Ownership

Today (10 May 2012), SCA Forest Products told letsrecycle.com: “The owners of Aylesford Newsprint, SCA Forest Products and Mondi, have initiated a cost-cutting programme that is being implemented, and results are starting to become material. Improving efficiency and profitability is important regardless of the future development regarding ownership. Aylesford has a unique position just outside London, both with regard to supply of recovered paper and proximity to some of the largest newsprint customers in Europe. To improve and maintain profitability, SCA is always working with its product portfolio.”

Comparable

Speaking to letsrecycle.com, Mr Lunabba, who was appointed in November 2011,said that he was tasked with improving the efficiency and the profitability of Aylesford. The agreement on the gas price means that we are now on a comparable price basis with Europe.

He noted that in terms of energy costs for newsprint production, that mills using recycled fibre have lower energy costs than those using virgin fibre.

And, commenting on other savings, he said that the number of full time employees at the mill had been reduced by 10% to 285.

Acknowledging the continuing pressure on the newsprint sector, Mr Lunabba said demand was reduced in the UK and Europe for newsprint in the first quarter of the year by 5-10%.

But, he remained very optimistic about the position of the mill, particularly because of its location close to London. He said:”We have a unique position being in close proximity to our customers.

One area which still causes Aylesford problems is the quality of material it receives from commingled streams. Mr Lunabba remarked: This is something of a catastrophe for the UK and its a pain for us.