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OSLO, Sept 29 (Reuters) - Norwegian conglomerate Orkla (ORK.OL) said on Monday that its chemical unit Borregaard would close its pulp mill in Switzerland due to financial losses stemming from a tough market and rising costs.
Borregaard works in the field of wood-based specialty chemicals and has positions in ingredients, fine chemicals and energy industries.
“The outlook for the company indicates continued losses, and therefore a process to close the mill in December of this year has been initiated,” Borregaard said in a statement.
The mill, which is Borregaard’s second biggest and produces 110,000 tonnes of cellulose a year, had 2007 turnover of 105 million Euro ($153.6 million), the company said.
Borregaard said it would provide financial support and help find new jobs for 450 employees at the mill.
Its biggest mill is located in Norway, and the group said this business was not in any danger, although raw material prices had risen also there.
“We are doing well at home, we have had a surplus every year,” spokeswoman Tone Horvei Bredal told Reuters. “But we are feeling the consequences of increased raw material prices also here,” she added.
The Swiss mill also produces specialty wood-based products such as bioethanol and yeast products. Borregaard said some of the specialised production would be moved to its Norwegian mill.
Shares in Orkla dropped 5.3 percent to 54 crowns by 0939 GMT, underperforming the Oslo bourse benchmark index .OSEBX which was down 3.7 percent.
Reporting by Aasa Christine Stoltz; Editing by David Cowell