Bio-Insight

SANDERSDORF-BREHNA, Germany , Oct. 7, 2021 (Press Release) -Doing business sustainably to benefit generations to come is a key component of Progroup’s strategy. This is why the family-run company is planning to build a state-of-the-art refuse-derived fuel (RDF) power plant right next to its high-tech paper factory PM3. It will supply a large share of the process heat and electricity for PM3 in the future. For this purpose, waste materials from the company’s own production and from the region will be thermally utilised. This will save valuable fossil resources. The company is investing around 135 million euros in the project. Construction of the combined heat and power plant is scheduled to start at the end of 2022. It is set to be commissioned by the end of 2025.

The paper factory PM3 in Sandersdorf-Brehna is one of the most modern and high-performing paper machines in the world. More than 100 million euros have already been invested in the latest technologies to protect the environment at the site. This has enabled the amount of fresh water used in the production process to be reduced by 80 per cent. The papermaking in Sandersdorf-Brehna is already part of a sustainable circular economy today: Containerboard is made entirely from recovered paper using the fewest possible resources. After it has been used, it is recycled again as recovered paper.

RDF power plant as the next development step on the path to carbon neutrality

“As a family-run company, we consider it to be part of our philosophy to think and act long term and sustainably. Climate change is real and we take our role very seriously,” stresses Maximilian Heindl, deputy CEO of Progroup. “By building the combined heat and power plant for our paper factory in Sandersdorf-Brehna, we will achieve another important milestone on the road to fully self-contained material cycles in order to achieve carbon-neutral recycling.”

With the paper machine PM2 in Eisenhüttenstadt already having its own power plant that supplies it with electricity and heat, PM3 is now also getting its own sustainable energy supply. This is where the impurities contained in the recovered paper as well as waste materials which are produced in production are thermally utilised. This reduces the use of fossil fuels and therefore CO2 emissions.

The paper factory is already saving 170,000 tonnes of CO2 each year by using the very latest technology. When the new CHP plant is added from the end of 2025, this will add another 80,000 tonnes, allowing a total of 250,000 tonnes of CO2 to be saved at this site each year.

In addition, the level of efficiency of the RDF power plant is particularly high thanks to a highly efficient combination of heat and power. The waste materials can be recycled to produce electricity and heat much more efficiently than in conventional power plants.

About Progroup

Progroup AG, located in Landau in the German state of Rhineland-Palatinate, Germany, is one of the leading manufacturers of containerboard and corrugated board in Europe. Since it was founded in 1991 in Offenbach/Queich, the company has been pursuing a consistent growth strategy which, in addition to technological leadership, is also based on the use of innovative and environmentally friendly production technologies. Progroup operates production sites in six countries in Central Europe. These currently include three paper factories, eleven corrugated sheetfeeder plants, a logistics company and an RDF power station. With 1,455 employees, the company generated sales of around 881 million euros in 2020.

KOSTRZYN, Poland and GOTHENBURG, Sweden, Oct. 4, 2021 (Press Release) -With the new group strategy for 2030, Arctic Paper accelerates the transition to becoming a more versatile company with synergies and competencies from its existing operations. With a stronghold as a premium paper producer and owner of strong brands in graphic paper and pulp, the four-pillar (4P) strategy means that the group will invest in two new business areas where sustainability and renewable resources play a key role - packaging and power:

• According to Management Board estimates, revenues will increase by 25 percent to 2030.
• For the same period, Management Board calculate EBITDA to grow around 70 percent and the EBITDA-margin to reach 15 percent by 2030.
• Total investments in all four pillars are planned at over 1.5 bn PLN for the period 2022-2030, of which the new assets account for around 40 percent.
• The Group will reach carbon neutrality at the latest 2035.

Although the graphic paper market has limited potential to grow, demand for pulp, innovative packaging solutions and green energy will continue to increase due to the e-commerce boom, the transition from plastics to more sustainable solutions, increasing prices of energy and CO2 emissions allowances.

“Premium paper will remain one of our core businesses. Together with our holding in the pulp producer Rottneros, it has been an effective hedge in volatile markets, but we must grow and increase our margins. The new 4P strategy for 2030 points the way for the future Group”, says Michał Jarczyński, CEO, Arctic Paper S.A.

In 2030, the new pillars packaging and power are estimated to make up about 25 percent of the revenues, pulp for 29 percent, while graphic paper will still be an important part of the group with 46 percent of the revenues. The four-pillar strategy allocates investments to areas based on natural renewable resources, which combine the existing experience of Arctic Paper. Together the four pillars will provide a more balanced development as the business cycles are different, but also better margins and higher profitability.

“Our goal is to diversify into fast-growing areas where we find strong synergies and greater resilience. We will develop the group in renewable activities to help customers and communities function in a more environmentally neutral way and adapt to the circular economy”, he continues.

Combating climate change through products and solutions based on renewable materials and renewable energy, while replacing plastic with pulp as a renewable material, is a natural part of Arctic Paper's new strategy. For paper and packaging, the goal is to become carbon neutral by 2030, and for the Group this will be achieved by 2035.

Arctic Paper has a long-standing commitment to sustainability. Becoming carbon neutral is an important step in that direction. The new strategy combines the continued development of our business and value creation with driving the transition to a circular economy, concludes Michal Jarczyński.

Packaging

Packaging plays a vital role in modern societies. Paper is a natural, renewable alternative to plastics and many companies shift to pulp and paper-based packaging solutions. Arctic Paper launched its first papers for packaging 2019 and has a fast-growing range that is planned to reach 120 000 tons 2030. Above that, additional investments will be made in new projects in fully owned plants or joint ventures with industrial partners. Beside packaging paper, barrier papers and pulp fiber-based packaging are the areas pointed out in the new strategy. For 2030, the packaging business is expected to reach an annual revenue of 800 MPLN.

Power

The shift from fossil to non-fossil energy is imperative to meet climate goals. Arctic Paper has a long tradition of investing in renewable energy sources with the ambition to become self-sufficient in green energy. Biomass, hydro energy and solar panels are used at the three mills today, resulting in a 40 percent reduction of group CO2 emissions during the last 15 years. Based on that experience from renewable energy, Arctic Paper will build up a separate power segment independently and in co-operation with partners to become self-sufficient. Additionally Arctic Paper will be involved in the process of energy management and trading to third parties. By investing in green energy, the goal is to reach 250 GWh new power generation by 2030.

Graphical paper

Since hundreds of years paper is the base for communication. Today, Arctic Paper is a European producer of premium paper with strong brands and a leading position in the markets for high quality book and design paper. Paper will remain an important part of the business. Arctic Paper will continue to develop its position in stable, profitable niches of the market with the help of new innovative products and recognizable brands. Arctic Paper plans to modernize the three mills during the strategic period and to increase production capacity. In 2030, the graphical paper segment is expected to generate revenues of 2.2 bn PLN.

Wood pulp

As a material based on a renewable resource, wood pulp plays a key role in the circular economy. Through the ownership of 51 percent of the Swedish pulp producer Rottneros, Arctic Paper is well positioned to grow sustainable pulp production for paper, packaging, tissue and technical applications.

To summarize: Arctic Paper will invest 2022-2030 more than 600 MPLN within packaging and power to diversify the group´s business into four pillars, providing 25 percent growth in terms of revenues and better margins.

Arctic Paper S.A. is one of the leading producers of high-quality graphical fine paper in Europe and consists of three paper mills and four eco-friendly strong brands, Amber, Arctic, Munken and G. Most of the products are sold through the company’s sales offices in Europe. The Group is the main owner of the listed Swedish pulp producer Rottneros AB. Arctic Paper S.A. is listed on the Warsaw Stock Exchange and NASDAQ in Stockholm.

SWINDON, UK, Sept. 29, 2021 (Press Release) -The impact of the continuing high prices of energy in the UK are acute on several sectors of the UK’s Paper-based Industries.

Sectors as diverse as food packaging, toilet tissue and newsprint are facing unprecedentedly high energy prices which are curtailing their ability to manufacture in the UK.

In the coming months, this situation risks generalising across the industry as a whole as energy buyers are forced to renegotiate gas and electricity contracts at current market prices.

The UK energy situation is worse than in both the EU and the rest of the world. As Ofgem and BEIS have reported, the policy costs for the UK market on both network and carbon costs are higher than in Europe. For example, network charges make up 14% of UK bills after rebates while the same charges are under 5% of French and German bills. Moreover, current carbon costs show that UKA futures are trading at €74.5 per tonne, while the equivalent EU contract is trading at €62 per tonne. The lack of liquidity in the UK carbon market is starting to generate unwarranted and uncompetitive upward pressure on prices – and is likely to lead to a further crisis in April next year when the surrender of allowances for 2021 compliance is required.

Commodity prices globally are also significantly cheaper than in the UK – especially in countries such as the US, Canada and China which can and do export paper/board to the UK.

Indeed, the UK is the world’s largest net importer of paper and UK production of 3.63 million tonnes (2020) is wholly insufficient to meet the UK’s consumption of 9.9 million tonnes (2020). This import pressure, coupled with long term supply contracts means that the UK’s Paper-based Industries cannot raise prices in response to cost pressures that are UK specific, without immediately causing a spike in imports through the already widely used supply chain.

Commenting on the current situation, CPI Director General, Andrew Large said:

“The UK is in a worse position than competing nations, due to a combination of both wholesale and policy costs on energy, coupled with the UK’s reliance on gas for electricity generation as well as domestic and industrial heat.”

“The Government therefore cannot simply sit back and let this crisis develop before it. Action must be taken now to secure the affordable supply of UK gas and electricity for the forthcoming winter and beyond. As an emergency measure the Government should provide a support scheme for companies already forced to suspend production due to unsustainable energy costs.”

“The Government must make a clear statement that it will do whatever it takes to maintain affordable gas and electricity supply to both domestic and industrial users.”

CPI is the leading trade association representing the UK’s Paper-based Industries, comprising paper and board manufacturers and converters, corrugated packaging producers, makers of soft tissue papers, and collectors of paper for recycling.

CPI represents an industry with an aggregate annual turnover of £12 billion, with 56,000 direct and a further 93,000 indirect employees.