Finnish owned paper mill closed after sale to Thailand fails

The Alizay paper mill closes after months of sales negotiations fall through Finnish paper giant M-real has closed its Alizay paper mill in Normandy, France, significantly affecting the European paper market as a consequence.

The mill, home to the company’s Evolve recycled paper range was reportedly losing over €3m a month. The closure followed several failed attempts to sell the mill to Thai company Double A and French turnaround company Fin’active.

M-real approached over 80 companies to try and sell the mill and of these at least 18 demonstrated a preliminary interest.

Despite entering into “serious negotiations with the two remaining candidates” it was found that none of these companies could turn the paper mill in to a profitable business and therefore the decision was made to shut it down. M-real currently owns a quarter of the European market share and on 15 September 2011 implemented a European-wide paper price increase, at a rate of six per cent per ton due to the increasing cost of key raw materials like pulp, energy, starch and other chemicals.

Edmund Rϋch, marketing manager at M-real spoke to Dealer Support about the closure.“In the past the mill was simply not making money… Over years and years they just decided not to continue,” he said.“The closure is likely to have repercussions on the European paper market,” said Rϋch, quoting the 300,000 tons of paper the mill was producing each year, primarily renowned Evolve recycled paper brand and is equivalent to roughly three per cent of Europe’s total annual uncoated fine paper capacity.

Rϋch mentioned the repeated attempts and “significant investments” made to try and save the mill from closure and that M-real had made the decision reluctantly.  “The market is declining anyway,” he said. “When you make no money year over year, there is no choice.”                         

The closure of the mill is set to have profound repercussions on the recycled paper market channel in Europe. Workers at the plant reacted to the decision by immediately halting production at the mill and commencing industrial action and attracting attention from the French media.  M-real is also set to close the Gohrsmuehle mill in Germany after failing to find a buyer.

The closure of both mills combined will reduce M-real’s sales by roughly 15%, though will increase their operating result by €70m and have profound effects on the future of the European paper market. 

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