The reduction is planned to counter newsprint overcapacity in the European industry, a move which goes against recent plans to build new newsprint mills in the UK.

The Norwegian papermaker will cut 70,000 tonnes of production in the second half of 2007 and a further 200,000 tonnes are due to be with­drawn next year.

Chief executive Christian Rynning-Tønnesen said: “Norske Skog’s economic results are not satisfactory and measures to improve profitability are essential. Acceptable earnings are a prerequisite to the development of Norske Skog as a strong and dynamic company.”

The cuts in capacity will take place at two mills in Norway, one in the Netherlands and one mill in France. This corresponds to around 10% of the firm’s total newsprint capacity.

Norske Skog’s decision comes against a background of major investment in the UK newsprint industry which could add up to 600,000 tonnes of annual capacity.

UK firm Ecco Newsprint plans to build a £325m recycled newsprint mill in Teesside, while German manufacturer Palm Paper plans to build a plant in Norfolk. Aylesford Newsprint is also considering investment in a new paper machine at its Kent site.

One observer said: “Palm Paper will be a large concern for UK newsprint manufacturers because they will have state-of-the-art paper machines and systems. Ecco may have made noises but hasn’t officially ordered anything so they may not make it through depending on Palm’s successes.

“Norske Skog was at over capacity itself, which means it is wide open for any small changes on the market.”

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NORSKE SKOG MILL CUTS
Norway
Skogn: 89,000 tonnes/year
Follum: 64,000 tonnes/year
Holland
Parenco: 24,000 tonnes/year
France
Golbey: 24,000 tonnes/year