Norske Skog Plans to Enter the Pulp Market with New Production Line at Saugbrugs

June 3, 2024 - Norske Skog announced the start of a study to form the basis of building a bleached chemi-thermomechanical pulp (BCTMP) production line at its Saugbrugs mill in Halden, Norway.

The potential new pulp line is based on reutilizing a portion of the mill that housed PM6, which was heavily damaged during a rockslide that occured in April of 2023. PM6, which had the capacity to produce 260,000 tonnes per year of SC (supercalendered) magazine paper, was shut down and remains idle.

In addition, Norske Skog said that part of the investment to build the new pulp line would be covered by the portion of the insurance settlement that has not yet been paid out by the insurance company, amounting to NOK 615 million, for the development of new business opportunities at the plant.

According to Norske Skog, the new BCTMP line will produce approximately 300,000 tons of competitive pulp to meet the growing demand, especially for products in the packaging market. Saugbrugs has adequate access to green energy, and thus continue to deliver products with very low carbon footprint.

"Norske Skog will initiate a main study that will form the basis for a final board decision to build a BCTMP plant at Saugbrugs in Halden," said Geir Drangsland, CEO of Norske Skog. "The net investment in BCTMP production will range between NOK 1.5 to 2 billion (EUR 140-180 million). The construction period is expected to last for two years starting in the second half of 2025. We expect to achieve a return on net investment of more than 20%. This will be the first significant investment at Saugbrugs outside of publication paper in modern times."

The BCTMP production will be based on fresh fiber, and the mill already has access to adequate energy capacity.

Norske Skog noted that the investment will utilize existing machinery, equipment and infrastructure, reducing the total investment by approximately 50% compared to a pure greenfield investment case. There will be minor adjustments to the existing infrastructure such as in- and outbound distribution systems, raw material processing machinery and equipment, in addition to the wastewater treatment plant.

Saugbrugs will apply to appropriate authority for electrical grid access and all necessary emission permits, building construction permits and other regulatory necessities, the company said.

Final investment decisions are planned in the first half of 2025, and the start of BCTMP production is planned in the first half of 2027, and full utilisation is expected in first half of 2028.

"It is gratifying for equipment suppliers, lenders, wood and other raw materials suppliers, shareholders, and customers that we are investing in and establishing a plant for bleached chemi-thermomechanical pulp at Saugbrugs. But those who have the most reason to rejoice, are our employees at Saugbrugs. The new revenue streams from mechanical pulp, along with the production of SC paper at Saugbrugs, will make the factory more profitable and robust, ensuring job security," Drangsland concluded.

The Saugbrugs mill currently operates two paper machines for the production of SC paper: PM4 has the capacity to produce 100,000 tpy and PM5 has the capacity to produce 100,000 tpy.

Norske Skog emphasized that the Saugbrugs mill will continue to be a reliable supplier of SC-publication paper also after the start of BCTMP production.

Norske Skog is a leading producer of publication paper with market positions and customer relations in Europe and Australasia. The Norske Skog Group operates four mills in Europe, which produce publication paper, recycled packaging paper, energy and bioproducts. In addition, the Group operates one paper mill in Australia.

SOURCE: Norske Skog