Sweden's SCA to end publication paper production at Ortviken

STOCKHOLM (Reuters) - Swedish forestry group SCA SCAb.ST said on Wednesday it planned to discontinue production of publication paper at its Ortviken mill in central Sweden, switching to the production of mechanical pulp in a move that would affect hundreds of jobs.

“In line with our strategy, we have gradually reduced our exposure to publication paper,” SCA CEO Ulf Larsson said in a statement. “We now initiate negotiations to leave this product segment completely.”

Demand for publication paper has been falling by around 5% per year for more than a decade in Europe. SCA said that the coronavirus pandemic, had caused a further drop of 30-40%.

Currently, SCA produces coated and uncoated publication paper on three paper machines at Ortviken paper mill with annual sales of approximately 4 billion Swedish crowns ($456.28 million).

The company will invest 1.45 billion crowns to shift production at Ortviken to produce 300,000 tonnes of chemically pre-treated thermo-mechanical pulp annually, with production expected to begin in early 2023.

SCA said the end of publication paper manufacturing at Ortviken would affect about 800 employees across the group and result in non-recurring costs, with cash flow effects of up to 900 million crowns and an impairment charge of 1.1 billion.

Reporting by Simon Johnson; editing by Niklas Pollard