Austrian paper giant announces closure of containerboard mill and UPM sells the asset again…

Heinzel Group officially announced that its Raubling mill in Bavaria, Germany, plans to cease operations at the end of 2024. The decision was made after reaching a settlement with the union. At present, the management has begun the closure process and is preparing to sell the machinery and equipment of the mill. In April this year, the group considered closing the mill due to the continued difficult market environment and severe economic conditions.

Heinzel Group owns pulp mills in Austria and Estonia and carries out papermaking operations in Laakirchen, Pors and Raubling. The Laakirchen mill produces a variety of containerboard and supercalendered publishing paper. In addition to pulp production, the Pors mill also produces high-grade bleached kraft paper. After the acquisition of the Steyrmur mill, a state-of-the-art machine for producing bleached and unbleached kraft paper will be put into operation later in 2024.

The Raubling mill operates two paper machines with an annual containerboard production capacity of up to 240,000 tons. The group acquired the Raubling plant from Mondi on January 1, 2016, and initially produced mainly corrugated box materials such as kraft paper, imitation kraft paper and recycled corrugated paper, with an output of 242,000 tons in 2021.

Due to the decline in demand for corrugated box materials, the Raubling mill added kraft paper for shopping bags to its product line in 2022, producing 100% recycled kraft paper and mixed fiber kraft paper, which are sold under Heinzel's Starkraft brand. In 2023, the plant produced about 181,000 tons of corrugated box materials and kraft paper, with net sales of 98 million euros, a decrease from 156 million euros in 2022.

The 2023 fiscal year was challenging for the Raubling mill, with a decline in demand and sales prices for corrugated box materials and kraft paper. Even the specialized production of niche products such as kraft paper for shopping bags failed to offset the adverse market effects, with the average net sales price falling by about 32% compared with the previous year. On the cost side, unfavorable natural gas forward purchase agreements and rising costs for recovered paper and pulp had a negative impact on the company's earnings. The EBITDA loss in 2023 was 10.4 million euros and the EBIT loss was 26.6 million euros, which was aggravated by the losses in 2022.

Veolia Holding Deutschland GmbH, the operating unit of the Veolia Group, headquartered in Paris, recently announced two important transactions completed in Germany. The two transactions involve the acquisition of shares of its joint venture partners in two waste paper sorting plants in Germany.

In the first transaction, Veolia reached an agreement with UPM Communications Paper, based in Augsburg, Germany, for the latter to sell its 50% stake in ASD Waste Paper Sorting Dachau GmbH (ASD) to Rowe. Rowe is part of the Veolia Group and operates in Nuremberg, Germany under the name of Veolia Environmental Services Group. ASD will now be fully owned by Rowe, a professional waste paper processing company with more than 50 years of industry experience. Neither UPM nor Rowe disclosed the transaction price and confirmed that the transaction will not affect the jobs of ASD employees.

“We are pleased to sell the ASD business to Rowe because of their long-term perspective on wastepaper lifecycle management,” said Thea Kontori, UPM’s Fiber Procurement Director. She also highlighted ASD’s partnership with Rowe and Veolia to seize opportunities for growth and optimization in the wastepaper supply market.

Guido Adoncent, COO of Veolia Environmental Services Germany, welcomed the full acquisition of ASD and looks forward to building on this partnership with UPM.

UPM Communication Paper is one of the world’s largest users of wastepaper for printing paper production, operating 11 mills, four in Germany, five in Finland, and two in Scotland, UK and Grand Rapids, Minnesota, USA.

In a second transaction, Veolia announced that it would acquire the remaining 51% of Fels Recycling GmbH in Wolfsburg-Fallersleben, Germany, previously held by James Hardie Europe Ltd. Upon completion of the transaction, Fells Recycling will be fully owned by Veolia.

"We are pleased to fully integrate Fells Recycling Ltd. into Veolia Environmental Services," said Jeff Lippert, Managing Director of Veolia Environmental Services North. He emphasized the strategic importance of the company's location in Veolia's core region. Fells Recycling is approved under the Federal Emission Control Act and specializes in the collection, treatment and recycling of waste, with a variety of vehicles and container systems and 12 professional employees.