The papermaker described the move as a “major step” in its shift towards “growing and high-margin business”.
The machines being converted are at its Golbey mill in France and the Bruck mill in Austria.
The conversions will reduce Norske Skog’s newsprint production capacity by around 360,000 tonnes per annum, which it said would “balance the market” for its remaining European publication papermaking capacity.
“Norske Skog will continue to be a reliable supplier of all publication paper grades after the planned conversions,” the firm stated.
When the conversions are complete, the Norway-headquartered group will be able to manufacture 765,000 tonnes of renewable containerboard.
It plans to focus on the production of unbleached testliner in weights from 90-200gsm, and fluting in 75-170gsm. Both made from 100% recovered fibre.
The containerboard will be made using recycled fibre, and will also reduce electricity consumption at the mills. “Boilers to be constructed at the sites will provide efficient and environmentally friendly off-take of residual materials, and in return generate green steam,” the firm said.
There is a considerable timeframe to the conversion investment, with final plans expected to be finalised in the first half of next year, conversion to begin in H2 2021, and containerboard production starting up in 2023.
Around €250m (£225m) will be spent at Golbey, which has two paper machines both currently producing newsprint. The 8.7m-wide PM1 will be converted from making 235,000 tonnes of newsprint to 555,000 tonnes of containerboard.
At Bruck mill the investment will be around €90m. This will involve converting the 5.3m-wide PM3, which currently has the capacity to make 125,000 tonnes of newsprint, into 210,000 tonnes of containerboard.
When the conversions are complete, Golbey will make more containerboard than newsprint, with the tonnage split 555,000 and 330,000 tonnes respectively.
Bruck runs two paper machines and will retain the capacity to make 265,000 tonnes of LWC coated magazine paper on its PM4.
Norske Skog expects the investment to generate EBITDA of around €70-80m a year once the converted machines reach full utilisation.
In a statement, Norske Skog CEO Sven Ombudstvedt said: “The conversions at the Golbey and Bruck mills are profitable investments that will enable Norske Skog to establish a strong presence in the growing packaging market.
“In addition, it represents a major step in our continued effort to direct Norske Skog into a growing business, enhancing value to our shareholders and ensuring sustainable cash flow growth.”
Ombudstvedt said he believed the move would strengthen the firm’s remaining portfolio of publications paper making capacity.
The group said that the switch would catapult Norkske Skog into the top ten of European containerboard producers, and that Golbey PM1 and Bruck PM3 would be “among the most competitive machines post conversions”.
As well as newsprint and magazine papers, NOK12.9bn (£1.1bn turnover Norske Skog also makes papers for book, directory and catalogue printing.