New Hythe to close as Spanish plan new mill

At the same time a new mill is to be built in Manchester by Spanish group SAICA which is buying SCA's UK and Ireland conventional corrugated business for £100 million cash. This will boost overall UK production by 160,000 tonnes as the new mill will produce 400,000 tonnes a year – New Hythe currently produces 240,000 tonnes.

This is expected to be good news for suppliers of mixed paper (including material from materials recycling facilities) and used cardboard used in the production process for corrugated materials.

The announcement comes only a week after SCA announced that its waste paper and card collection business SCA Recycling was being allowed to invest about £15 million in a materials recycling facility in Southampton.

Losses

Company president and CEO Jan Johansson told letsrecycle.com that SCA's tissue mill at Prudhoe would not be affected by the shake-up which comes in the wake of losses at New Hythe and a need for considerable investment if the plant was to continue operations. At present New Hythe produces 240,000 tonnes of material a year.

He also explained that the closure “by mid-2010” will not take place sooner because there are customers still to be supplied.

The Kent closure will tie in closely with the investment by SAICA which will be at Partington near Trafford on a brownfield site in an area which has a history of papermaking. As the New Hythe mill shuts in mid-2010, the new mill will open.

Mr Johansson of SCA said: “The European packaging market is in great need of consolidation. SCA's focus is on increasing value added parts of the packaging business and also on creating growth in the Eastern part of Europe, while consolidating our existing operations in Western Europe. We carry through today's deal as the investment required to rebuild a competitive position in the segments we divest is not justified, given our chosen strategy.”

He added: “The purchase price is GBP 100 million (EUR 125 million) and will be paid in cash. This transaction will improve operating profit and cash flow and will not result in neither capital gain nor capital loss. The transaction, which is subject to approval from relevant authorities, is expected to be completed during the third quarter this year. Approximately 1,800 people are currently employed in these operations. A supply agreement has been signed, where SCA will supply kraftliner at today's volumes to SAICA over a five-year period and for testliner over a three year period.”

No agreement

Despite the agreement to supply the kraft- and testliner, there is no agreement for SCA Recycling to supply SAICA with material, Mr Johansson said.
 
SAICA is a privately owned Spanish paper and packaging company with sales of approximately 1,600 million Euros. SAICA operates paper mills and corrugated facilities in a number of European countries, including the UK.

SAICA said: “Our proposed investment in Partington will be in the region of £250 million. The mill will use recovered paper to produce approximately 400,000 tonnes a year of 100% recycled paper to be used in the manufacture of lightweight corrugated boxes and boards. The proposed 7.8m wide paper machine will operate at speeds up to 1500m/min to produce high performance Corrugated Case Materials in the 75 to 125 gm-2 range.

World

“If the planning application is successful, the paper mill will be one of the world's most advanced recycled mills. The facility will be fully integrated and use state-of-the-art technologies including a dedicated Combined Heat and Power Station, a fully automated warehouse and an advanced effluent treatment plant.”

SAICA continued: “The mill will operate to the highest safety and environmental performance standards using highly energy and water efficient equipment. The proposed mill will be well located in relation to the major North West and North East conurbations from which much of its raw material will be drawn, and will be well positioned relative to the motorway network for distribution of product to its customers.”

SAICA describes itself as a “world leader in the production of lightweight corrugated papers”. It employs over 7,000 people in Spain, France, Portugal, Italy, Ireland and has an annual turnover of 2.1 billion Euros. It has two corrugated box plants in the UK and one in Ireland.

St Regis

St Regis, which owns Severnside Recycling, is also investing in the corrugated case sector with investment in a new 260,000 tonne lightweight corrugated case materials machine at the New Thames Paper Mill. (see letsrecycle.com story)

One waste paper sector expert told letsrecycle.com that the development was good news for the UK in terms of UK production. And, commenting on the fact that St Regis is also expanding its production of corrugated casemaking material at Kemsley, Kent, he said: “This means that we will have a strong production centre serving the south of England and a new facility for the north. If more material continues to be collected for recycling there will be the benefit of confirmed UK demand for it.”