Stora Enso sells stake in Chinese paper mill

Stora Enso, a global forest products company headquartered in Helsinki, has completed the sale of its 60 percent equity stake in the Dawang paper mill, which is based in Dongying in the Shandong province in China, to its joint venture partner Shandong Huatai Paper. 

Stora Enso had first announced the sale of this asset in July, the company reports in a news release on the sale. The mill has an annual production capacity of 140,000 metric tons of supercalendered (SC) magazine paper and other publication paper grades based on recovered fiber. 

In July, Kati ter Horst, executive vice president of Stora Enso’s paper division, had stated in July upon announcing the transaction that Stora Enso believes that “Huatai can develop [the] Dawang mill for the long-term benefit of Chinese paper customers.” 

The transaction will not have any material impact on Stora Enso’s operational earnings before interest and taxes (EBIT). Following the transaction, Stora Enso’s net debt will decrease by approximately 22 million euros (or about $24 million) and annual sales by approximately 60 million euros (or about $67 million).

With the completion of this transaction, Stora Enso has no paper production in China.

Organizational changes

In related news, Stora Enso has announced plans to make organizational changes to its paper division following the announced conversion of its Oulu mill in Finland to produce virgin kraft liner paper for packaging. The conversion is expected to be completed by the end of 2020. When fully operational, the new line will have an annual capacity of about 450,000 metric tons of both brown and white-top kraftliner.

With the conversion of the mill to linerboard, Stora Enso reports that the planned changes could result in a reduction of a maximum of about 135 employees in the paper division by the end of next year.