• Suzano announced a new 2.3mtpa BEK project in Brazil and is expected to start-up in Q1 24e:  The “Cerrado Project” is expected to cost R$ 14.7bn or USD 2.8bn (implying CapEx/t of USD 1,218) between 2021 and 2024 in Ribas do Rio Pardo, the Mato Grosso do Sul state in midwest Brazil. The pulp mill is expected to be fossil fuel free and have surplus capacity of renewable energy generation of c.180MW.    
  • Paper Excellence to acquire Domtar: The deal is expected to close in
    H2 21E, with an implied EV of USD 3bn (44% premium to 30-day VWAP) and EV/EBITDA of c.5.3-5.6x. The deal means Paper Excellence will continue its growth strategy, enter the US market, and expand its customer base and product offering. Currently, Domtar is a leading UFS producer in the US but with significant plans to convert capacity in favour of containerboard.
  • Klabin announces second phase for the Puma II project: In addition to its kraftliner machine (450ktpa: expected start-up in July 2021), Klabin is adding another machine with an expected capacity of 460kpta coated boxboard paper machine (expected to start-up in Q2 23E) and will be export focussed. This raises the total investment to R$ 12.9bn and cements Klabin’s position as a global producer of paperboard for liquid (milks and juices) and processed foods. Previously Klabin flagged that phase two was likely to involve a kraftliner machine but has now opted for boxboard based on market dynamics. We note however that the new machine will be able to swing from boxboard to kraftliner.
  • Stora Enso partners with Pulpex to produce eco-friendly paper bottle and containers: This will provide an alternative to PET plastics and glass. The Stora Enso/Pulpex partnership is expected to reach industrial scale production by 2022 using fibre pulp, thus significantly lower the carbon footprint compared to glass or PET. Pulpex already has commitments from consumer-packaged goods companies to produce 750mn paper bottles pa. The global beverage packaging market is worth c. USD 117bn and is expected to grow by 4.5% to reach USD 170bn by 2027. Plastic packaging comprises c.40% of global beverage packaging and only c.30-40% of plastic bottles in the EU and US are collected for recycling vs. 80% for paper and cardboard recycling and 75-80% for glass and aluminium.
  • Further wood pulp capacity approved in China to alleviate pressure from fibre shortage following the waste ban: Dongguan Jianhui Paper obtained approval for its 400ktpa wood pulp expansion (two 200ktpa pa thermomechanical pulp lines: fed with hardwood chips) in Guangdong. This follows other wood pulp projects already announced: Nine Dragons 600ktpa (Q2 22e start-up); Lee & Man Paper 400ktpa (end of 2022 start-up).
  • Sateri is set to acquire Funing Aoyyang Technology’s VSF business: No price tag disclosed but the deal if approved will increase Sateri’s VSF footprint by 330kpta to 1.83mtpa (across 6 mills).

Mondi newsflow

  • Mondi’ Frantschach sack kraft mill in Austria has restarted production (but at a modified capacity), following a fire last month. The mill has 290ktpa of kraft paper capacity (350kpta of pulp), which is 22% of MNP’s total kraft paper capacity.
  • PM19 at Ružomberok (Slovakia) has started delievering kraft top white to customers. The new machine will consumer c.200ktpa of PfR from Slovakia.

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