Paper landscape taking new shape
Wednesday, October 26, 2022
Do you know of Aurelius? This is not a quotation from the film Gladiator, it’s a reference to Aurelius Group, the huge investment business that owns a diverse range of businesses from comfy shoes brand Scholl to swishy yacht manufacturer Hanse.
Aurelius is likely to become rather more significant to us in the printing industry as it’s in the midst of finalising two substantial deals – the €92m (£78.7m) purchase of Agfa’s €748m- turnover Offset division, and the acquisition of three of Sappi’s European graphic paper mills that have a combined turnover in excess of €1bn.
The latter deal is part of the latest swathe of paper industry changes across the European paper making landscape.
We’ve been through a period involving multiple mill closures and conversions (see our ‘Navigating the Paper Supply Crisis’ article published in the spring) with the result that some 6m tonnes per annum of commercial printing paper and newsprint production has already been taken out of the market.
Now, we’re in a new phase involving some super-significant changes of mill ownership.
The aforementioned Aurelius/Sappi deal is one such deal. The acquisition has an enterprise value of €272m and is due to be completed in Q1 2023.
Sappi is selling the mills in order to reduce its exposure to graphic papers, and it will be fascinating to see whether Aurelius can work the same sort of magic on this latest purchase as it did on solid board manufacturer Solidus Solutions, which it sold for 16 times its investment in 2019 – at the time Aurelius’ biggest exit.
Maastricht mill in the Netherlands produces coated woodfree paper and paperboard and has capacity of 260,000tpa. Stockstadt in Bavaria is Sappi’s only uncoated mill in Europe. It makes coated and uncoated woodfree paper (220,000tpa) and chemical and kraft pulp (145,000tpa). Kirikniemi mill in Finland makes the Galerie range of coated papers for heatset web offset, with three paper machines and 750,000tpa capacity, as well as 300,000tpa of pulp.
Importantly given the current energy crisis, each site has its own power plant that generates electricity and steam.
“Developments to further increase the optimisation of energy sourcing processes are underway,” says Aurelius.
Sappi retains six other European mills making speciality papers and boards, and says its future focus regarding graphic paper will be on “the stronger commercial print market”.
Elsewhere, Stora Enso’s exit from graphic arts paper to focus on packaging materials continues apace.
After putting four of its remaining five paper mills up for sale earlier this year, it has now found new owners for two of them: Sylvamo (the $21bn turnover business formed when International Paper span off its printing paper operations last year) is buying Stora Enso’s Nymölla mill in Sweden – once viewed as a flagship site for the Swedish group.
Nymölla makes pulp (340,000tpa) and woodfree uncoated paper, including the Multicopy brand. Its paper making capacity is 485,000tpa.
Sylvamo, which decided to sell its 720,000tpa Svetogorsk mill in Russia because of the invasion of Ukraine, says the Nymölla buy will strengthen its uncoated freesheet product mix, and “enable us to serve customers across Europe and around the world more effectively”.
Nymölla also generates 85% of its energy needs from carbon-neutral, renewable biomass residuals.
Meanwhile, Lidl owner Schwarz Group is buying Stora Enso’s Maxau mill in Germany via its Schwarz Produktion division.
This deal delivers something of a plot twist. Schwarz has confirmed to Printweek that the rationale for the deal involves securing its own supply chain, as it’s a major user of the type of SC paper made at Maxau for the promo supermarket flyers that are a key marketing tool for its Lidl and Kaufland brands.
Schwarz is certainly big enough to take matters into its own hands. With sales of €133.6bn last year, the €210m asking price is mere bagatelle.
And after the supply issues and spiralling prices paper buyers have experienced over recent months, who can blame them?
Maxau has annual production capacity of 530,000tpa of paper, and 270,000tpa of pulp.
It will become part of the Schwarz Produktion operation, which makes food and drink for the stores.
Schwarz also confirmed to Printweek that some paper sales to third parties will also be continued. One industry expert estimated Schwarz’s own requirements at around 200,000tpa.
What’s next? We still await news on two other up-for-sale Stora mills: Hylte in Sweden (one of the largest newsprint mills in the world at 245,000tpa) and Anjala in Finland (435,000tpa of book, magazine and improved newsprint papers).
Stora Enso is retaining Langerbrugge mill in Belgium while a feasibility study takes place into converting one of its two paper machines to make recycled containerboard.
Langerbrugge currently has the capacity to make 540,000tpa of recycled newsprint and recycled SC magazine paper.
One way or another, people who’ve been buying graphic grades from Stora and Sappi for years, will be dealing with some new names come 2023.
And, sadly, it looks like more closures are on the cards too. At the time of writing the future for Arjowiggins’ historic Stoneywood and Chartham mills in the UK looked bleak. Will new owners be found for the group’s Chinese and Spanish mills? For some paper assets willing buyers abound – Sappi had multiple offers for its mills. Watch this space.