Rottneros has decided to discontinue the production of groundwood pulp in Rottneros Mill as there are no prospects for long-term sustainable profitability. The decision means that about 40 people will be made redundant. The cost of the closure is expected to amount to approximately SEK 60 million. Production is expected to cease at the end of 2022, following the conclusion of trade union negotiations which are now beginning. The Group plans to invest SEK 160 - 200 million to significantly increase capacity and production in the mill's CTMP line.
The extensive strategic analysis carried out by the company shows that the prospects for long-term sustainable profitability are insufficient for groundwood pulp. Partly due to the dramatically changed situation on the electricity market with very high and highly volatile prices as a result. Partly a structurally decreasing demand for the end products where groundwood pulp is used, mainly printing and writing paper, which makes it difficult to reach a sufficiently high price level.
In 2021, the Group's production of groundwood pulp amounted to 64 000 tons, corresponding to 16% of Rottneros' total production of 395 300 tons. During the same year, the groundwood line's share of the Group's net sales amounted to just over 10%, while the contribution, including electricity hedges, to the Group's net profit was marginal.
The Group is conducting a pre-study for the further development of the CTMP line. The goal is to reach a production level of at least 150 000 tons annually from today's 120 000 tons, with an expected investment cost of SEK 160 to 200 million. The pre-study also addresses the issues of raw material supply and long-term stable and competitive electricity prices. The pre-study is expected to be completed in the 4Q 2022.
Rottneros is an independent producer of market pulp.
