As previously stated, Mondi continues to assess capital investment opportunities centred on the Group’s high-quality, low-cost packaging paper assets in central Europe.
The Mondi Boards have approved the modernisation and expansion of the Steti mill for a total investment of €470 million, subject to obtaining approval for various tax incentives and necessary permitting. The project consists of the installation of a new recovery boiler, the rebuild of the fibre lines, the debottlenecking of the paper machines and an investment in a new 90,000 tonnes per annum machine glazed kraft paper machine. Key benefits of the project are:
• Increased electricity self-sufficiency, lower energy costs and reduced environmental footprint of the mill
• Increased pulp production of 130,000 tonnes per annum and lower pulp production costs per tonne
• Debottlenecking of existing packaging paper machines providing total incremental production of 55,000 tonnes per annum
• Additional capacity to produce 90,000 tonnes per annum of machine glazed kraft paper to supply fast growing end-uses in flexible packaging and food service applications
• Avoidance of maintenance capital expenditure over the next five years of around €105 million.
The new recovery boiler and rebuilt fibre lines are expected to start up in late 2018 while the new paper machine is expected to start up in the first half of 2019. Based on the current timetable, capital expenditure on the project is expected to be incurred in the three years from 2017 to 2019.
Given the approved project pipeline, the Group’s annual capital expenditure is now expected to be in the range of €600-650 million in 2017 and €800-850 million in 2018.
Commenting on the project, Mondi Group CEO David Hathorn said, “This investment represents an exciting step in the continued development of our Packaging Paper business, further leveraging our low-cost production footprint in central Europe to produce high quality products that meet the growing needs of our customers.”