Mondi buys Canada’s Hinton Pulp mill for $5m
Paper and packaging group Mondi has bought Canada’s Hinton Pulp mill for $5m (R94.7m) as part of its strategy to bulk up production of kraft paper and paper bags, amid rising market demand for sustainable packaging products.
Mondi announced its bid to buy the North American mill in July last year, saying that the transaction would enable it to meet growing customer demand for sustainable packaging solutions as paper is increasingly being used for packaging across the Americas.
On Monday, Mondi — which has a premium listing on the London Stock Exchange and a secondary listing on the JSE, where it has a market capitalisation of R143bn — said that it had completed the acquisition of the Hinton Pulp mill.
As part of the deal, Mondi is entering into a long-term partnership with West Fraser Timber to access local, high-quality fibre from a well-established wood basket, it said.
“We are delighted to welcome our new colleagues from Hinton Pulp mill to Mondi and look forward to working together to secure the mill’s future and support Mondi’s growth in North America with our portfolio of sustainable packaging,” said CEO Andrew King.
After the acquisition of the 250,000-tonne-a-year pulp mill from West Fraser Timber, Mondi intends to invest €400m (R8.1bn) in the expansion of Hinton.
The plans, which are subject to pre-engineering and permitting approvals, include Mondi investing in a kraft paper machine that will produce an additional 200,000 tonnes per annum from the second half of 2027.
Kraft paper is used for the paper sacks in which cement and flour are often sold, and to make sandpaper.
Mondi was upbeat about the deal improving productivity and sustainability performance.
The company said that the new kraft paper machine would integrate its paper bag operations in the Americas and support future growth.
Mondi also said that the move would enable it to secure a long-term supply of high-quality, cost-competitive kraft paper into its network of 10 paper bag plants in the region, better positioning the firm to support the growing market demand for industrial and mailer bags.
Moreover, customers will benefit from a fully integrated and much shorter supply chain, which will also reduce the carbon footprint of Mondi’s packaging products in the region.
With three business units — corrugated packaging, flexible packaging and uncoated paper — operating in more than 100 production sites in more than 30 countries, Mondi faces many geopolitical and macroeconomic issues of concern.
WAR SANCTIONS
The multinational packaging and paper group in October finally completed the sale of its remaining business in Russia amid continuing sanctions against the country because of its war against Ukraine.
Mondi Syktyvkar was sold to Sezar Invest, a Moscow-based real estate development company, for 80-billion roubles (R15.5bn).
Mondi’s share price rose 0.71% to R327.48 on the JSE on Monday.