Eren will change the mill into producing cardboard instead of newsprint. And, the materials recycling facility at the plant is to remain open “during the conversion process” and is also expected to continue once the plant has been converted.
UPM said today (14 May) that it had reached an agreement to sell its Shotton newsprint mill site in North Wales, United Kingdom and all related assets to Eren Paper Ltd, a subsidiary of Modern Karton Sanayi Ve Ticaret A.Ş., the containerboard and corrugated packaging business of the Turkish industrial conglomerate Eren Holding (“Eren”).
The transaction is due to be completed in the third quarter of this year, around September, and all 190 employees currently working at UPM Shotton will be part of the transaction, said UPM.
UPM said that Eren’s plan is to integrate the Shotton site into its existing business units and to make further investment at the site.
Newsprint production is planned to stop by 30 September 2021 and Eren will take over responsibility for the mill as of 1 October 2021.
Winfried Schaur, executive vice president of UPM Communication Papers said: “While the concrete timeline for the conversion plans will be communicated by Eren, it is already known that the Renewable Energy Generation plant and Material Recovery and Recycling Facility (MRRF) will continue operations throughout the conversion process, corresponding to their role in the regional utility infrastructure.”
Mr Schaur continued: “We are very pleased with this agreement. It will provide a long-term future for the employees at our Shotton paper mill and a continued use of the site infrastructure. It will help UPM to further consolidate its newsprint production capacity while leveraging the value of the site and its assets. This sale will also support Eren in expanding its business in the UK market.” said .
And, the UPM vice-president added: “The negotiations with Eren have been transparent and fair throughout and we have agreed close collaboration over the coming months to support the transition with both internal and external stakeholders.”
UPM plans to continue serving UK newsprint customers after the sale and will continue sourcing recovered paper in the UK. UPM and Eren have agreed to “co-operate closely” during the transition period to ensure a smooth transfer of the operations.
The transaction will reduce UPM’s annual newsprint capacity by 250,000 tonnes and fixed costs by EUR 30 million upon closing of the sale. The fixed costs reduction is in addition to the earlier communicated fixed costs savings impact of EUR 130 million from actions implemented during H2 2020 and 2021.
A successful sale of the mill is expected to be welcome by the UK paper sector overall as it means that the Shotton will continue as a paper manufacturing base. Its switch from newsprint to board production had been widely expected. The UK has three major board mills already – DS Smith in Kent; Smurfit Kappa in Birmingham and Kent; and SAICA in Manchester. There is seen as room in the market for the Shotton production.
On the newsprint front, Palm Paper will be the only UK producer of newsprint although volumes of newsprint are also imported to the UK.