Paper and packaging group Mondi has bought a pulp mill in Canada for $5m (R94m) to support its growing paper bags business in the Americas.
The company said the Hinton pulp mill in Alberta, which produces about 250,000 tonnes per year, bought the mill from West Fraser Timber and will enter into a long-partnership with the seller to access “local, high-quality fibre from a well-established wood basket”.
Mondi, valued at about R141.9bn on the JSE, added that the deal would help it to secure a long-term supply of high-quality, cost competitive kraft paper into its network of 10 paper bags plants in the region, to “better position Mondi to support the growing market demand for industrial and mailer bags”.
Kraft paper is used for the paper sacks in which cement and flour are often sold, and to make sandpaper.
The plan, subject to approval, is to invest €400m in the expansion of Hinton, primarily in a new kraft paper machine that will produce 200,000 tonnes annually, and is expected to come online in the second half of 2027.
“The acquisition of Hinton is an excellent opportunity for us to secure locally produced kraft paper for our bags customers, helping to meet the current and anticipated future growth in demand for industrial and mailer bags in the Americas,” Mondi CEO Andrew King said.
The deal is expected to be closed towards the end of 2023.
Mondi produced 1.3-million tonnes of kraft paper, according to its 2022 year-end results. Kraft paper forms part of Mondi’s largest segment by revenue, with flexible packaging bringing in nearly half of last year’s external sales.
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