As previously reported, Mondi, South Africa, continues to assess capital investment opportunities centered on the Group’s high-quality, low-cost packaging paper assets in central Europe. In this regard, the Mondi Boards have approved the modernization and expansion of the Steti mill in the Czech Republic for a total investment of EUR 470 million, subject to obtaining approval for various tax incentives and necessary permitting. The project consists of the installation of a new recovery boiler, rebuild of the mill’s fiber lines, debottlenecking of the paper machines, and an investment in a new 90,000 metric tpy machine glazed kraft paper machine. Key benefits of the project are:

• Increased electricity self-sufficiency, lower energy costs, and reduced environmental footprint of the mill
• Increased pulp production of 130,000 metric tpy and lower pulp production costs per ton
• Debottlenecking of existing packaging paper machines, providing total incremental production of 55,000 metric tpy 
• Additional capacity to produce 90,000 metric tpy of machine glazed kraft paper to supply fast growing end-uses in flexible packaging and food service applications
• Avoidance of maintenance capital expenditure over the next five years of around EUR 105 million.

 

The new recovery boiler and rebuilt fiber lines are expected to start up in late 2018, while the new paper machine is expected to start up in the first half of 2019. Based on the current timetable, capital expenditure on the project is expected to be incurred in the three years from 2017 to 2019.

 

Given the approved project pipeline, the Group’s annual capital expenditure is now expected to be in the range of  EUR 600-650 million in 2017 and EUR 800-850 million in 2018.

Commenting on the project, Mondi Group CEO David Hathorn said that "this investment represents an exciting step in the continued development of our Packaging Paper business, further leveraging of our low-cost production footprint in central Europe to produce high quality products that meet the growing needs of our customers."

 

Mondi is an international packaging and paper group, employing around 25,000 people across more than 30 countries. Its key operations are located in central Europe, Russia, North America, and South Africa. The company offers more than 100 packaging and paper products, customized into 100,000-plus different solutions for customers, end consumers, and industrial end uses—touching the lives of millions of people every day. In 2015, Mondi had revenues of EUR 6.8 billion and a return on capital employed of 20.5%.