The mill primarily made plasterboard liner for use by the group but also supplied converting businesses in the UK with reels of thick paper. The mill is expected to close in June 2005 and this will mark the group’s expected exit from paperboard manufacture and leave it to focus on the plasterboard and plasters business.
BPB said: “With the trend in the paperboard industry towards lower grammage and lower cost papers, made possible by increasingly large-scale investment in new capacity, BPB’s remaining paper mill (located at Aberdeen and producing higher grammage liner from what is now a relatively narrow-width paper machine) has become uncompetitive despite the hard work of everyone involved with the site. It is therefore with considerable regret that BPB proposes to close the operation. Consultations with employees are now underway regarding the likely mill closure during this Summer which could result in around 270 redundancies.”
Supply arrangement
A statement from the company revealed that it had entered into a long-term supply arrangement for substantial quantities of plasterboard liner from the St Regis paper division of DS Smith Plc, complementing last year’s successful sourcing of greater volumes of European liner from Tecnokarton, BPB’s 29% owned German associate.
The new arrangement, said BPB, “represents an important part of BPB’s global plasterboard liner sourcing strategy, aimed at reducing operating costs while strengthening security of supply from a range of third parties and facilitating management’s sharpened focus on developing BPB’s growing core plasterboard and plasters business.”
Exact figures for the volume of used cardboard taken in annually by Muggiemoss were not revealed by BPB today but it is thought to be in the order of 300,000 tonnes annually. As a result there will be a substantial volume coming into the UK market which is only likely to find a use in the paper sector if it is exported to an overseas mill.
As a result, industry experts say that this could put considerable pressure on the domestic price for old-KLS (used cardboard) and that overseas buyers may take advantage. The UK is rapidly losing boardmaking mills – several have closed in recent years including BPB’s mill at Purfleet which shut in December 2003.
Fewer PRNs
The loss of the UK tonnage will also see fewer PRNs available for sale within the UK. This could have an impact on the market, at least in the short term, and there are some expectations that prices will edge up as a result. In recent days they have edged down from about 12 to nearer 10 but a price hike is possible.
The decision by BPB to propose closure of Muggiemoss may also mean that the St Regis group, which owns the UK's largest paper recovery business Severnside, revives its proposals to build a new board mill in the north east of England, most probably in Hartlepool. It is thought that St Regis had been in talks with a partner about the site but interest had waned. However, now the company may think again.
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