670 to lose jobs as Stora Enso to close Kemi Veitsiluoto mill

A total of 670 employees of the forestry products company Stora Enso will lose their jobs in Finland as the company has decided to close down its Veitsiluoto Pulp and Paper Mill in Kemi, said the company in a press release on Tuesday.

The company also decided to shut down its Kvarnsveden Mill in Sweden, where 440 people will lose their jobs.

Stora Enso will start co-determination negotiations with employees at the two mills, in Finland and Sweden, regarding the plan to permanently close down pulp and paper production at both the mills.

The planned closures would take place in the third quarter of 2021, said the company.

The company took the decision following a declining trend of demand for paper in Europe For more than a decade now. This trend has further accelerated due to the coronavirus pandemic.

Both Kvarnsveden and Veitsiluoto mills are losing concerns, and their profitability is feared to remain unsatisfactory also going forward.

“This is heavy news for our company and our colleagues at Veitsiluoto and Kvarnsveden mills. Our people at the sites are very competent and have done their best during very difficult circumstances. Unfortunately, in the rapidly declining paper market, we need to adjust our production capacity to improve the competitiveness of our total paper business,” said Stora Enso President and CEO Annica Bresky.

“We have examined several options to improve the financial situation for Veitsiluoto and Kvarnsveden mills. However, none of these options have proved feasible in ensuring a cost-competitive future for the mills,” said Stora Enso’s Paper Division’s Executive Vice-President .Kati ter Horst.

The planned mill closures would reduce Stora Enso’s paper production capacity by 35% to 2.6 million tonnes a year.

Stora Enso’s annual paper sales would decrease by approximately EUR 600 million and the operational EBITDA is expected to improve by approximately EUR 35 million annually. The share of paper division of the group’s sales would be reduced to slightly more than 10% after the planned closures.

Stora Enso has recorded an EUR 127 million non-cash impairment cost related to Kvarnsveden and Veitsiluoto mills in its Q1/2021 results as an item affecting comparability (IAC).

In Q2/2021, the group will record a cost of EUR 104 million, of which the cash impact is EUR 96 million as an IAC relating to the potential lay-offs and restructuring expenses at the two mills.

Stora Enso would continue to source wood from northern Finland and central Sweden, as the regions continue to be important sources of wood for the company’s operations.

Veitsiluoto Mill in Kemi, Finland has a total annual production capacity of 790,000 tonnes on three paper machines. Two machines produce wood-free uncoated paper (WFU) for office use and one machine produces coated paper grades mainly for magazines as well as packaging applications.

The sawmill at Veitsiluoto would continue operating at the site under the Wood Products division and employ some 50 persons. Stora Enso would aim to sell its shares (50%) in the port operator Kemi Shipping Oy.