Södra to divest its Södra Cell Folla CTMP mill in Follafoss, Sweden, as part of plan to leave the CTMP market by Nov. 1 due to profitability struggles; mill produces average of 107,000 tonnes/year of pulp, employs 51 workers

VAXJO, Sweden , August 28, 2012 (press release) – At a Board meeting on 27 August 2012, Södra Cell, which owns Södra Cell Folla, took the decision to divest the mill at Follafoss.

The Södra Cell Folla management has been given the task of creating a divestment plan for Södra's ownership of the mill.

The Follafoss mill produces CTMP (chemithermomechanical pulp) which has a variety of uses including the manufacture of paperboard and tissue. Södra Cell is planning to leave the CTMP market from 1 November 2012.

"We've been struggling to create profitability in CTMP for several years. In spite of all the measures we've taken, we've found it increasingly difficult to find a profitable market for what we produce," explained Gunilla Saltin, President of Södra Cell.

Södra has used considerable resources to reverse the negative trend, including energy efficiency improvements, product development and cutting the workforce.

"We've been trying for a long time to find a solution to make operating the mill profitable but we now have to accept that previous conditions for profitable CTMP production at Follafoss no longer exist. We deeply regret that this is the case," said Saltin.

"The flexibility and creativity of Folla's employees have kept quality and productivity at a high level and they've fought valiantly to keep production costs low," she added.

The Folla mill produced 83,500 tonnes of pulp in 2011. Average annual production has been 107,000 tonnes. There are currently 51 employees at the mill. If it closes, a career transition process will be initiated that will include all employees.

Facts about Folla

Pulp production started at Follafoss in 1909. Södra purchased the mill in 2000. The mill produces CTMP (chemithermomechanical pulp) which has a variety of uses including the manufacture of paperboard and tissue. Annual production capacity is 100,000 tonnes and timber consumption is 300,000 cubic metres. The mill employs 51 people.

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