Sustainable packaging and paper company Mondi is to permanently close the Stambolijski mill in Bulgaria after a fire at the facility.
The group said on Friday a fire at the mill on September 24 caused extensive damage to the 100,000 tonne per annum brown kraft paper machine and stopped production at the site.
“Thanks to the swift and professional response on the day, everyone on site remained safe,” the group said in a statement.
After evaluating the options for repairing the mill and the ongoing investment required for it to remain competitive into the future, Mondi has concluded that closing the mill and serving customers out of its network of other kraft paper mills is the best course of action overall.
This decision will affect about 300 Mondi Stambolijski employees, it said.
There is expected to be about €100m of net closure costs, primarily related to a non-cash asset impairment which the group will book as a special item.
The Stambolijski pulp and paper mill was established in 1952 on the banks of the Maritsa river in Stambolijski, about 120km from Sofia and 20km from the historic Roman city of Plovdiv, according to Mondi's website.
The mill operated in a region abundant in softwood, pine and spruce, ideal for making sack kraft paper. The central geographical location and excellent manufacturing capabilities enabled Mondi to produce high-quality kraft paper there.
Business Day reported earlier this month that Mondi’s earnings were lower in the third quarter due to more planned maintenance shuts and a forestry fair value loss.
Underlying ebitda for the quarter to end-September was, as expected, lower — at €223m compared with €351m in the second quarter. This was primarily due to more planned maintenance shuts and a forestry fair value loss, which together resulted in a difference between the third quarter and second quarter of about €90m. This was in addition to softer seasonal demand and higher input costs, Mondi said.
Earlier in October, Mondi, which is valued at about R128bn on the JSE, said it would buy Schumacher’s German, Benelux and UK corrugated converting and solid board operations. Mondi did not disclose the price, but said the assets had an enterprise value of €634m (R12.2bn) and would be financed from existing facilities.
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