Norske Skog to close Norske Skog Union mill at Skien in Norway

Aug 05, 2005. /Lesprom Network/. The board of directors has approved the management's proposal to initiate a formal process with a view to the permanent closure of the Norske Skog Union mill at Skien in Norway. This facility has an annual capacity of 260 000 tonnes of newsprint, improved newsprint and bulky book paper. Its closure will reduce Norske Skog's capacity for newsprint and related grades in Europe by about 11%, and allow the company to transfer production volumes to other mills with surplus capacity and lower costs. The company also aims to concentrate deliveries to European customers, while deliveries outside Europe will be mainly covered from the mills in Australasia, South America and the PanAsia joint venture. A final decision by the board and corporate assembly is expected in September, with the intention of shutting the mill at Skien in Norway during the first quarter of 2006. "Closing Norske Skog Union will be the first step in a restructuring plan for investment in our Norwegian facilities," says chief executive Jan Oksum. "The background for the recommendation is persisting excess capacity in European newsprint production, which caused unsatisfactory results for some time. The fundamental reality underlying the proposal to close Norske Skog Union is that our capacity for paper production in Europe is too large in relation to customer needs," says Mr. Oksum. "A closure of the mill will strengthen the rest of the group as well as more than 6 000 jobs in Norway and abroad, which can take over the volumes from Norske Skog Union." He says that the company has assessed an outline proposal from the Norwegian industry minister for a package of measures relating to the mill. "We will improve our annual results by more than NOK 200 million ($31.4 million) by closing the mill. In that perspective, the minister's proposal represents just one-two months of savings for us. I have great understanding of the uncertainty felt by our employees at Norske Skog Union. We will continue to work closely with the mill workforce and the authorities in the ongoing process." Norske Skog is a global supplier of publication paper with mills and sales offices on five continents. The core business is newsprint and magazine paper for some of the world's major publishing houses. The company is based in Norway.