HELSINKI (Reuters) - China's Shanying Paper 600567.SS will take a majority stake in a new Finnish company Boreal Bioref, securing financing for a planned 950 million euro (850 million pound) pulp mill project in northern Finland, Boreal said on Friday.
The plant is scheduled to begin operating in 2020 with an increased annual capacity of around 500,000 tonnes of pulp, Boreal said.
Another Chinese company, CAMC Engineering 002051.SZ, also has a stake in the project and most of the pulp will be shipped to China.
“Shanying will become the majority owner of Boreal Bioref, as well as a buyer of the pulp and other bioproducts and an operative partner,” Boreal said in a statement.
It declined to disclose specific shareholdings and investments as the final investment decision is yet to be signed.
The Finnish forest industry is recovering from a long slump because a shift to online publishing hit demand for paper. Several paper plants had to close and thousands of jobs were axed.
The paper market continues to decline in Europe, but pulp made from northern spruce and pine has a brighter outlook as it is needed for tissue and packaging board - products seen growing on the back of Chinese demand.
Boreal’s project is one of several new plants in the pipeline in Finland.
Metsa Fiber last year started a new 1 billion euro pulp mill in central Finland, making the Finnish company the world's largest seller of softwood pulp ahead of Sweden's Sodra, Canada's Canfor Corp CFX.TO and Mercer International MRIu.TO.
A new Finnish company Finnpulp is planning a 1.4 billion euro pulp mill while China’s Sunshine Kaidi New Energy Group has been planning a 1 billion euro biodiesel plant in northern Finland, but that project has been put on hold.
Three quarters of Finland’s territory is covered by forests and the industry accounted for 22 percent of all exports in 2016.
Reporting by Jussi Rosendahl, editing by Anna Ringstrom and Elaine Hardcastle
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