Stora Enso to start liquid packaging board production in joint venture in China
STORA ENSO OYJ Stock Exchange Release 11 August 2005 at 11.30
Stora Enso to start liquid packaging board production in joint venture in China Stora Enso has signed a letter of intent to start a joint venture with Chinese board producer Foshan Huaxin Packaging Co., Ltd. The final agreement establishing the joint venture, in which Stora Enso will have a clear majority shareholding, is expected to be signed during the fourth quarter of 2005. Foshan Huaxin Packaging Co., Ltd. has begun investing USD 160 million in building a white lined chipboard (WLC) machine with an annual production capacity of 250 000 tonnes. Through the joint venture company, Stora Enso plans to change the scope of the investment by modifying the machine to manufacture primary-fibre-based products such as liquid packaging boards, cupstock, cigarette boards and other cartonboards at an estimated additional cost of USD 90 million, thereby becoming the first producer of liquid packaging board for aseptic end uses in China. The machine will be completed during the second half of 2006. Key strategic aims for Stora Enso are to increase the size of the packaging boards business within the Groups portfolio, to grow with its key customers and to continue to expand its operations in emerging markets. Demand for liquid packaging boards is expected to continue to grow globally, with the biggest growth markets in Asia. China is the worlds fastest-growing market for liquid packaging boards. Stora Enso is already the worlds leading producer of liquid packaging boards and production in China will further strengthen this position. Logistically, the location of the board mill in Zhuhai in southeast China is good, being close to Macao and Hong Kong. Short-fibre pulp for the mill will be imported from Veracel Mill in Brazil and long- fibre pulp from Stora Ensos Enocell Pulp Mill in Finland. Chemi- thermomechanical pulp (CTMP) will initially be supplied from Stora Ensos Imatra Mills in Finland, but Stora Enso is studying the possibility of producing CTMP and chemical pulp in the future in Guangxi Province, China, where the company has plantations. Foshan Huaxin Packaging Co., Ltd. is listed on the Shenzhen Stock Exchange. The companys major business is manufacturing WLC and converting printed cartons, and its primary market is southern China. Foshan Huaxin Packaging Co., Ltd. has 1 270 employees and two board machines with a total annual production capacity of 140 000 tonnes. Stora Enso in China Stora Ensos Suzhou Mill in Jiangsu Province with an annual production capacity of 240 000 tonnes is one of the largest manufacturers of coated fine paper in China. In Hangzhou Stora Enso has a core factory with an annual production capacity of 30 000 tonnes. In 2004 Stora Enso started a joint venture with Shangdong Huatai Paper of China to assess the feasibility of publication paper production in China. In Guangxi Province, southern China, Stora Enso has established 20 000 hectares of plantations. For further information, please contact: Kai Korhonen, Senior Executive Vice President, Stora Enso Packaging Boards, tel. +358 2046 21496 Niilo Pöyhönen, Executive Vice President, Stora Enso Consumer Boards, tel. +358 2046 22160 Markku Pentikäinen, Executive Vice President, Stora Enso Asia Pacific, tel. +86 21 6335 3050 Kari Vainio, Executive Vice President, Corporate Communications, tel. +44 7799 348 197 Keith B Russell, Senior Vice President, Investor Relations, tel. +44 20 7016 3146 On Thursday 11 August you are most welcome to participate in the PRESS CONFERENCE in HELSINKI hosted by SEVP Kai Korhonen at the Stora Enso Head Office, Kanavaranta 1, Helsinki at 14.00 Finnish time. For those unable to attend the press conference, presentation material will be available on www.storaenso.com/investors An image bank of pictures that may be freely used to illustrate articles about Stora Enso is available at http://www.storaenso.com/images www.storaenso.com www.storaenso.com/investors Previous press releases concerning Stora Ensos activities in China available at www.storaenso.com/press - 10 June 2005: Stora Enso signs loan agreement with International Financing Corporation - 31 March 2005: UNDP to Assess Environment and Social Impact of a Forestry Investment Project in Guangxi, China - 28 October 2004: Stora Enso joint venture in China - 4 February 2004: Stora Enso to modernise its fine paper machine at Suzhou, China STORA ENSO OYJ p.p. Jukka Marttila Veli-Matti Tahvanainen