Stamboliiski paper mill shuts down under crisis

Mar 20, 2009. /Lesprom Network/. Bulgaria’s biggest paper factory, owned by international paper and packaging group Mondi, will be idled due to the global financial crisis until market conditions improve, as Dnevnik daily informed Lesprom Network. The news was announced in the group’s annual financial statement filed with the stock exchanges in London and Johannesburg and was confirmed by Mondi Stambolijski managing director Alexander Krikler. The hard market conditions and the troubles with main raw material supplies – energy and timber – are the main reason for the decision, he explained. The company will dismiss of all of its little over 400 employees and pay the compensation provided by law. Production operations are expected to be halted in May and resume only when demand steadies enough and the company signs favourable long-term supply contracts, Krikler said. Another negative impact has been the significant rise in gas and timber prices to above Western Europe’s average, according to Krikler. The expected cut of gas prices from April would not be enough and the government has not been specific about the expected second decrease in June, Krikler said. Mondi set foot in Bulgaria in 2006. Last year its Bulgarian subsidiary worked at around 60% of its top annual production capacity of 120 thousand tonnes. The shutdown is part of Mondi’s restructuring plan aimed at curbing the effect of the crisis. The company has temporarily closed or offloaded factories in the UK, Sweden, Hungary, Denmark, France and Spain in order to focus on core operations and optimise production.