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Construction of Stora Enso pulp mill in Uruguay is further delayed

Thursday, December 10th 2009 - 11:36 UTC
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Financial Director Markus Rauramo Financial Director Markus Rauramo

Finaland’s Stora Enso, Europe’s largest paper and forest products’ company said Wednesday that the decision whether to construct a pulp mill in Uruguay could take “well over a year”.

Earlier this year Stora Enso and Arauco, belonging to the Chilean group Angelini purchased the right to build a pulp mill and 130.000 hectares of forested land in Uruguay on a 50/50 basis having paid Spain’s Ence over 350 million US dollars.

However the decision to invest in the pulp mill remained pending.

“We are beginning assessment studies and this is normally a process that takes over a year. We could only speculate as to when we could begin the construction of the mill, but before we would have to decide what we are going to build” said Stora Enso’s financial director Markus Rauramo, interviewed by the Swedish agency SIX.

“A pulp mill with an annual production capacity of over a million tons demands an investment close to a billion Euros”, he underlined.

In related news Stora Enso has been ordered to pay a EUR 30 million penalty for collaboration and exchange of information with other forest products companies concerning prices for purchasing roundwood in Finland from 1997 to 2004.

In its ruling issued today, the Finnish Market Court found that Stora Enso, UPM-Kymmene and Metsäliitto Cooperative had infringed the Act on Competition Restrictions by exchanging detailed information.

Although the companies had not been proved to have agreed prices for purchasing roundwood, the Market Court regarded the collaboration as intended to stabilize roundwood prices. In the opinion of the Market Court, no specification of the economic benefit of the infringement of competition restrictions had been presented.

Initially, the Competition Authority had proposed in 2006 that a EUR 30 million penalty payment be imposed on Stora Enso.

In a release Stora Enso said it will examine the ruling and then decide whether to appeal to the Supreme Administrative Court. No provision has been made in Stora Enso's accounts for this matter. Stora Enso will record a EUR 30 million negative non-recurring item related to it in its fourth quarter 2009 results.

Stora Enso is a global paper, packaging and forest products company producing newsprint and book paper, magazine paper, fine paper, consumer board, industrial packaging and wood products.

Stora Enso’s sales totaled EUR 11.0 billion in 2008. The Group has some

29 000 employees in more than 35 countries worldwide.

Categories: Investments, Uruguay.

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