Ahlstrom to open manufacturing plant in Brazil

Ahlstrom, a manufacturer of fiber-based materials, has announced that it has signed a Memorandum of Understanding with Brazilian Votorantim Celulose e Papel (VCP) to form a joint venture for specialty paper production in Brazil.

The assets in the joint venture, currently owned by VCP, comprise a paper machine, an offline coater and extensive finishing equipment at the Jacarei mill, close to So Paulo. According to the Memorandum of Understanding, Ahlstrom will hold a majority of the joint venture.

Ahlstrom expects to close the deal on or before June 30, 2007, subject to antitrust clearances and satisfactory conclusion of the ongoing due diligence process.

The paper production capacity of the assets is approximately 110,000 tons per year. The joint venture will be part of Ahlstrom's Specialty Papers segment and serve mainly the labeling and flexible packaging markets. In addition, it will continue to produce coated and uncoated paper grades for other end-uses. Currently, most of the paper production is supplied on the local markets but Ahlstrom aims to expand the customer base and serve the markets by utilizing its global specialty materials sales network.

The Jacarei facility is an integrated pulp and paper mill and one of the most modern and competitive eucalyptus pulp producers in the world with a pulp production capacity of one million tons per year. VCP has been supplying eucalyptus pulp for Ahlstrom on a global basis for more than seven years.

‘The deal is in line with Ahlstrom's strategy to expand its operations in the fast-growing markets outside Europe. Moreover, the joint venture offers us an excellent opportunity to strengthen our position as the global leader in the specialty papers markets. The integrated mill also gives us an exceptional access to competitively priced eucalyptus pulp and energy,’ commented Jukka Moisio, president and CEO of Ahlstrom.

‘We will develop this state of the art site into a highly competitive manufacturing platform to serve our customers in the labeling and packaging industry. This move is also a strong sign of commitment and confidence in the Latin American markets showing rapid economic growth,’ said Diego Borello, senior vice president, label & packaging papers of Ahlstrom.

The global market for Ahlstrom's label and packaging papers is estimated to grow 3-4 per cent annually with double-digit growth rates seen in Latin America and Asia. Ahlstrom's current operations in Brazil consist of a plant manufacturing filtration materials in Louveira. In 2006, Ahlstrom announced an investment in a wiping fabrics production line utilizing spunlace technology, also located in Louveira. The new line is estimated to be operational in early 2008.