Norske Skog plans to enter the pulp market

03 Jun 2024 07:00 CEST

Norske Skog will initiate a main study aiming to enter the bleached
chemi-thermomechanical pulp (BCTMP) market by starting production at Norske Skog
Saugbrugs in Halden. The rockslide at Saugbrugs in April 2023 causing heavy
damages on the PM6 machine, released available termo-mechinalcal pulp capacity
that can be utilised to produce BCTMP (bleached chemi-thermomechanical pulp) at
Norske Skog Saugbrugs. Part of the investment will 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 activities at
the plant.

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

"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. 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," says Norske Skog's CEO Geir Drangsland.

These investments represent the latest initiative in enhancing the circular and
industrial ecosystems at the Saugbrugs mill. The BCTMP production will be based
on fresh fibre, and the mill has already access to adequate energy capacity.
Norske Skog Saugbrugs investment will exploit existing machinery, equipments and
infrastructure; thus, reducing the total investment with 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 waste-water
treatment plant.

Saugbrugs will apply to appropriate authority for electrical grid access and all
necessary emission permits, building construction permits and other regulatory
necessities. 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,” concludes Norske Skog’s CEO Geir Drangsland.

About Norske Skog Saugbrugs
Norske Skog Saugbrugs has 400 employees including apprentices with a turnover of
NOK 1.8 billion, and a production capacity of 200,000 tonnes of magazine paper
with main markets in Europe and North America. Saugbrugs annually produces 2.7
million cubic meters of biogas. Norske Skog Saugbrugs has established the
companies CEBINA and CEBICO to handle the new commercial segments within
nanocellulose and bio composites.

About Norske Skog
Norske Skog is a leading producer of publication paper with strong 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. Norske Skog aims to further diversify its operations
and continue its transformation into a growing and high-margin business through
a range of promising energy and bio product development projects. The Group has
approximately 2 100 employees, is headquartered in Norway and listed on the Oslo
Stock Exchange under the ticker NSKOG.

Press
There will be an information meeting for the employees at Saugbrugs (Halden,
Norway) at 10:00 AM CEST today where the press is welcome to attend. CEO Geir
Drangsland and Managing Director Per Ivar Berg at Saugbrugs will be available
for interviews after the meeting.



Norske Skog
Communications and Public Affairs

For further information:

Norske Skog Saugbrugs:
Managing Director
Per Ivar Berg
Email: per.ivar.berg@norskeskog.com
Mob: +47 979 58 583

Norske Skog media:

Vice President Communication and Public Affairs
Carsten Dybevig
Email: carsten.dybevig@norskeskog.com
Mob: +47 917 63 117

Norske Skog capital markets:
Vice President Corporate Finance
Even Lund
Email: even.lund@norskeskog.com
Mob: +47 906 12 919

More information:
Access the news on Oslo Bors NewsWeb site

620452_240603 Norske Skog - BCTMP Saugbrugs FINAL ENG.pdf
620452_240603 Norske Skog BCTMP presentation - FINAL ENG.pdf