Paper Industry Oct 2008 News

Stora Enso and Arauco conclude acquisition of the majority of Grupo Ence's operations in Uruguay ahead of schedule

STORA ENSO OYJ STOCK EXCHANGE RELEASE 16 October 2009 at 13.30 GMT

Stora Enso and Arauco have completed the acquisition of the majority of Grupo ENCE's operations in Uruguay announced on 18 May 2009. The joint acquisition on a 50/50 basis includes approximately 130 000 hectares of owned land and plantations, 6 000 hectares of leased lands and other operations owned by Grupo ENCE in the central and western areas of Uruguay. As previously announced, the
enterprise value of the transaction, which was completed ahead of the original target of the end of 2009, was USD 344 (EUR 253) million, including USD 33 million of assumed debt. Stora Enso's share of the enterprise value is 50%.

“I'm very proud that our team in seamless co-operation with Arauco has been able to finalise this project ahead of the original schedule. That is a promising start and will give us a solid platform to go forward with our joint venture and plans in Uruguay,” says Stora Enso CEO Jouko Karvinen. “Cost-competitive plantation-based pulp is an essential part of Stora Enso's strategy and in one step, this transaction has secured the strategic raw material supply for a world class pulp mill in Uruguay that we are planning jointly with Arauco.”

Stora Enso and Arauco have established a 50/50 joint venture to combine their existing assets in Uruguay. The parties will integrate the assets acquired from Grupo ENCE into this joint venture, creating a total land base of approximately 250 000 hectares, nearly half of which is planted with hardwood and softwood.

Stora Enso and Arauco have not taken any investment decision concerning the construction of a pulp mill in Uruguay.

Domtar to convert Plymouth mill to 100% fluff pulp production

(All figures in U.S. dollars)

MONTREAL, Oct 20, 2009 /PRNewswire-FirstCall via COMTEX/ -- Domtar Corporation (NYSE/TSX: UFS) today announced that it will convert its Plymouth, North Carolina mill to 100% fluff pulp production. This will require a $73.5 million investment, in line with the Company's previously stated capital expenditure levels. Domtar's annual fluff pulp making capacity will increase almost threefold to 444,000 metric tons.

The mill reconfiguration, which will be completed in the fourth quarter of 2010, will also result in the permanent shutdown of Plymouth's remaining paper machine. This will reduce the Company's annual uncoated freesheet production capacity by approximately 200,000 tons. The mill reconfiguration will help preserve approximately 360 positions.

"We are refocusing Plymouth's operations to capitalize on its competitive strengths. As an experienced fluff pulp manufacturer with an established presence in a growing market, we can expand our capabilities with confidence," said John D. Williams, President and Chief Executive Officer. "Plymouth is well-positioned geographically with ready access to export markets through ocean ports as well as competitively-priced fiber ideally suited for the manufacture of premium quality fluff pulp," added Mr. Williams.

Commenting on the permanent reduction of papermaking capacity, Mr. Williams said, "The redirection of orders to other paper mills in our system will help bring up operating rates and lower manufacturing costs. Upon completion, Plymouth will become a world-class fluff pulp operation with direct access to a dynamic export market."

Fluff pulp is bleached softwood cellulose fiber used worldwide in absorbent applications such as baby diapers, feminine hygiene and adult incontinence products.

Metso-supplied world’s largest fine paper line starts up at Portucel Soporcel in Portugal

Oct. 20, 2009 A Metso-supplied fine paper production line of the Portucel Soporcel group was successfully started up at the group's Setúbal mill in Portugal on August 15, 2009. The 11.1-m-wide (wire) PM 4 will produce close to 500,000 tonnes of uncoated fine papers annually.

Metso's delivery included a complete OptiConcept paper machine line from headbox to roll handling, with related air systems and some stock preparation equipment. Metso also supplied an extensive automation package, including a quality control system with web-wide non-scanning moisture measurement, wet end analyzers, machine controls as well as a runnability and condition monitoring system.

The new Setúbal PM 4 is the largest and most sophisticated paper machine in the world for the production of uncoated fine papers.

The Portucel Soporcel group, with a net sales of approximately EUR 1.1 billion, has three mills producing pulp and paper, situated at Setúbal, Figueira da Foz and Cacia. The Setúbal mill houses four uncoated woodfree paper machines with a total capacity of 780,000 t/a and a 510,000 t/a bleached eucalyptus pulp mill. The new PM 4 boosts Portucel's total uncoated fine paper capacity to over 1.5 million t/a.

Metso is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries. We have about 28,000 employees in more than 50 countries. www.metso.com

International Paper to Shut Down Three Mills

Permanent closures to reduce IP's North American capacity by 2.1 million tons

MEMPHIS, Tenn., Oct. 22 /PRNewswire-FirstCall/ -- International Paper (NYSE: IP) today announced plans to close its paper mill and associated operations in Franklin, Va., and its containerboard mills in Pineville, La., and Albany, Ore. The company also announced it would permanently shut down the previously idled No. 3 machine at its Valliant, Okla., containerboard mill. The Valliant Mill's other two machines will continue to operate. These permanent shutdowns will reduce the company's North American paper and board capacity by 2.1 million tons.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020701/IPLOGO )

"We recognize these are very difficult decisions affecting our employees, their families and the communities surrounding these mills," said Chairman and CEO John Faraci. "We have concluded that we have excess capacity in our North American paper and packaging businesses, and these decisions will better match our supply with our expected customer demand."

Since the onset of the global recession, the decline in demand for International Paper's uncoated freesheet in North America has accelerated, and consequently the company has decided to further reduce its uncoated freesheet capacity.

In its containerboard and coated paperboard businesses, International Paper expects demand to resume growth as the economy rebounds. However, the company's demand is not expected to return to 2008 levels in the near future. Therefore, permanent IP capacity closures are necessary.

The closures, which will impact about 1,600 employees, will result in permanent North American capacity reductions as follows:

         Mill                       Annual
    (# of Impacted    Products     Capacity      # of     % of IP  Estimated
       Employees)                   (Tons)     Machines   Capacity  Closure
    --------------    --------     ---------   --------   -------- ---------
                      Uncoated
      Franklin, Va.   Freesheet     600,000        3         19%   Spring 2010
                      ---------    ---------   --------   -------- -----------
       (1,100)         Coated                                        By 2009
                     Paperboard     140,000        1          7%     Year-End
    --------------   ----------    ---------   --------   -------- -----------
      Albany, Ore.                 580,000(1)      2
         (270)
    --------------                 ---------   --------
    Pineville, La.  Containerboard  390,000        1         12%  Mid-December
         (230)                     ---------   --------
    --------------
     Valliant, Okla.
     (No Additional                 430,000(2)     1
         Impact)
    --------------  -------------- ----------  --------   -------- -----------

    (1) Includes 250,000 tons of capacity previously idled in October 2008
    (2) Capacity of No. 3 paper machine previously idled in November 2008

Following these permanent shutdowns, International Paper will have approximately 10 million tons of North American containerboard capacity, 2.6 million tons of North American uncoated freesheet production capacity, and 1.7 million tons of North American coated paperboard capacity. These capacity shutdowns will not impact the company's ability to serve its customers.

International Paper is committed to helping employees through this transition. The company will work closely with union officials concerning severance benefits for hourly employees. Salaried employees impacted by these shutdowns will be offered severance packages and outplacement assistance consistent with company policy. Employee assistance providers will be available to support employee and family needs.

The company estimates that these closures will result in noncash asset write-off and accelerated depreciation charges of approximately $1.1 billion and cash severance charges of approximately $60 million to be recorded in the fourth quarter of 2009 and first quarter of 2010, plus additional closure costs to be determined and recorded as the facilities are closed.