Pulp Update

• Sawlog prices were up in most regions worldwide as demand for lumber continued to be healthy this fall. The only exceptions were US Northwest, British Columbia and Sweden, where log prices fell between 3 and 10%.

• The WRQ Global Conifer Sawlog Price, based on sawlog prices in 19 key regions around the world, was up by 4.7% in the 4Q reaching a new record of $90/m3.

• Demand for lumber in the US declined in the 4Q as the residential construction sector continued to weaken. In December, housing starts were only 1.0 million units (annually adjusted), which was the lowest level in 16 years. The US National Association of Home Builders (NAHB) predicts that the housing market will bottom out in the 1Q/08 and start recovering early 2009.

• Lumber production in Canada has fallen 10% in 2007 as compared to 2006, and the industry was running at a 73% operating rate in October. Canadian lumber producers exported 14% less the first nine months of 2007 compared to the previous year. The good news was that shipments to Europe were up 81% and that the Middle East increased imports from Canada by 151%.

• Lumber prices in Europe declined in the 4Q as the market was oversupplied. As a result, lumber prices were down between 15 to 20% as compared to a year ago.

• Imports of lumber to Japan in 2007 were the lowest since 1998 as the economy is in a slump. In October, imports were down 40% compared the 2006, with the biggest reduction being lumber imported from Canada and Europe. Prices for imported lumber to Japan have declined the past 12 months. In December, whitewood stud prices averaged $440/m3, while Canadian KD hemlock squares were US$550/m3 delivered to wholesaler.

Global sawlog and pulpwood market updates are included in the publication Wood Resource Quarterly, which tracks the evolving global sawlog and pulpwood cost situation including regular updates of the biomass market, timberland investment trends and forest industry profiles in important world regions.

The 50-page report, with readers in over 20 countries, is published by Wood Resources International LLC. Link: www.woodprices.com

AMERICAS

U.S. Paper Chemicals Demand to Reach $8.8 Billion by 2011

U.S. demand for pulp and paper chemicals is projected to reach 20 billion tons in 2011, valued at $8.8 billion, according to the new “U.S. Pulp & Paper Chemicals Market” report by Reportlinker.com. This demand will be supported by increases in paper and paperboard production, as well as the need to comply with stringent environmental standards, the report notes.

Commodity chemicals such as calcium carbonate and clays will continue to be the largest products (by quantity) consumed in the pulp and paper industry. Through 2011, specialty additives are expected to record the fastest growth. Among the specialty additives, products such as biocides and deposit control agents, and retention and drainage aids, should continue to experience the fastest gains. Growth will be based on the increasing use of recycled fibers and reuse of water, which put greater strain on machinery and equipment. Further supporting demand are ongoing efforts to reduce mill emissions as well as efforts to reduce production costs by using higher filler loading levels, which require the use of greater quantities of specialty additives.

Fillers and coating pigments will continue to be the largest pulp and paper chemical segment. During the past decade, calcium carbonates (especially precipitated varieties) have taken significant market share from clays in paper and board fillers and coatings, so that they have now surpassed clays in this segment. This trend should continue, supported by greater demand for brighter printing and writing papers, which can be achieved with calcium carbonates at a lower cost than competing products, such as titanium dioxide or kaolin clay, the report concludes.

Paper mills, the largest end-user of pulp and paper chemicals, are expected to record the fastest growth in chemical demand through 2011. More specifically, the printing and writing papers and tissue paper markets will provide the best opportunities. Demand for pulp and paper chemicals in these markets will result from increases in production of these paper grades, as well as stricter requirements, such as increased brightness and printability for printing and writing papers, and increased softness and wet strength for tissue paper. In addition, the use of recycled fibers and other environmental issues will encourage a shift in product mix to higher value chemicals.

Ahlstrom Completes Friend Group Acquisition

Ahlstrom, Helsinki, Finland, today announced that it has completed the acquisition of Friend Group Inc., which consists of West Carrollton Parchment Co. and West Carrollton Converting Company. The Group is a producer of vegetable parchment and has parchmentizing and converting operations located in West Carrollton, Ohio, USA. The parties have agreed not to disclose the acquisition price.

Friend Group employs 162 people and has two sites in West Carrollton serving mainly the food packaging market in the U.S. Net sales of the group in 2007 were $47 million. The new entity is consolidated in Ahlstrom's group financials as of February 1.

Catalyst to Acquire AbitibiBowater’s Snowflake Mill for $161 Million

Catalyst Paper Corp., Richmond, B.C., Canada, recently announced that it has agreed to acquire AbitibiBowater’s Snowflake, Ariz., USA, recycled newsprint mill for $161 million in cash. The purchase price excludes trade receivables of some $19 million that are being retained by AbitibiBowater. The acquisition will be financed through a combination of Catalyst Paper's revolving credit facilities and a proposed C$125 million rights offering. Catalyst’s board of directors has approved the acquisition, which is expected to close in the second quarter of 2008.

The Snowflake mill, with an annual production capacity of 375,000 metric ton on two paper machines, is regarded as one of the lowest cost newsprint mills in North America. The acquisition will increase Catalyst’s total newsprint production capacity to approximately 980,000 metric tpy. The Snowflake facility also houses a corrugating medium machine owned by Smurfit Stone Container, which is operated by the Snowflake mill. The Apache Railway Co., a short-line railroad operating freight service between Snowflake and Holbrook, Ariz., is also included in the transaction.

In 2006, the Snowflake mill generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of $58 million on net revenues of $195 million. For the 12 month period ending Sept. 30, 2007, the mill generated EBITDA of $30 million on net revenues of $185 million. These EBITDA figures exclude AbitibiBowater corporate charges.

"Snowflake is a first-class newsprint mill," noted Richard Garneau, president and CEO of Catalyst. "We are very pleased to announce this transaction as the Snowflake mill will improve our cost-competitiveness, strengthen our presence on the west coast of North America, and provide us with a more freight-logical way to serve existing as well as new customers. In addition, this acquisition will provide Catalyst with a natural hedge against Canadian dollar fluctuations and is particularly timely in the current environment of virgin fiber supply constraints."

The two parties agreed to a three-year supply contract under which AbitibiBowater will provide approximately 40% of the Snowflake mill's recycled fiber supply in the first year, decreasing in proportion over the life of the agreement. Catalyst says it intends to source the remainder of the mill's fiber requirements directly from the recycled fiber market in western North America.

In addition to mechanical printing papers, Catalyst also produces market kraft pulp and owns western Canada's largest paper recycling facility. With five mills at sites within a 160-km radius on the south coast of British Columbia, the company has a combined annual production capacity of 2.4 million metric tons.

Catalyst Approves $12 Million Upgrade for Port Alberni Mill

Catalyst Paper, Richmond, B.C., Canada, today announced a $12 million capital upgrade and the restart, by mid-year, of the No. 4 paper machine at its Port Alberni, B.C., mill. The investment in the mill's thermo-mechanical pulp facility and restart of the machine was approved by the company's board of directors recently.

The board also approved a $14 million early retirement and severance package associated with a new labor agreement. This step follows months of discussions with community and local union leaders on actions required to improve the mill's business climate and cost competitiveness.

"The two union locals (CEP 592 and 686) are to be commended for reaching a landmark agreement that puts in place modern work practices and brings labor costs to competitive industry levels," said Richard Garneau, president and CEO of Catalyst Paper. "Knowing we have the support of our employees means we can move forward with the thermomechanical capacity increase project and return to a two-machine mill, with a significantly improved cost structure."

Catalyst indefinitely curtailed PM 4 (its highest cost machine) on Sept. 1, 2007. This followed repeated appeals to major stakeholders to change business conditions, including bringing the mill's property taxes in line with competitive jurisdictions. As the city's largest taxpayer, the Catalyst paper mill paid $7.1 million in 2007, approximately three times the Canadian average and more than twice the British Columbia average in property tax per ton.

Port Alberni's city council has approved a gradual reduction of major industry property taxes over five years. "We acknowledge this is a first step, but we remind civic leaders that to be competitive today, our annual municipal tax bill in Port Alberni should be $2 million less than it is now," Garneau said. "We are looking to senior levels of government to also act on this critical tax issue to help municipalities improve the hosting conditions to attract industries."

Catalyst is a producer of mechanical printing papers in North America, headquartered in Richmond, British Columbia. The company also produces market kraft pulp and owns Western Canada's largest paper recycling facility. With five mills at sites within a 160 km radius on the south coast of British Columbia, Catalyst has a combined annual capacity of 2.4 million metric tons of product.

Fraser to Indefinitely Shutdown Two More Paper Machines at Gorham

Fraser Papers, Toronto, Ont., Canada, plans to curtail production of commodity freesheet paper grades on paper machines No. 13 and No. 14 at its paper mill in Gorham, N.H., USA, for an indefinite period starting April 13. Production on paper machine No. 12 was suspended late in 2007. The mill expects to continue operating two of the five paper machines (No. 11 and No. 19) in Gorham that produce specialty printing papers (mainly lightweight opaque papers) and industrial towel. The three machines to be curtailed represent a collective annual production capacity of 109,000 tons.

"The impact of rising input costs, particularly oil and market pulp, has resulted in significant operating losses for certain of the grades produced at the Gorham mill," said Peter Gordon, president and CEO of Fraser Papers. "Increases in the selling price of commodity freesheet products have not been sufficient to offset these rising costs," he noted.

The company will fulfill all of its existing commitments to customers and expects to operate at current production levels until April 13, depending on demand. If cost pressures ease and the profitability for the grades produced on these machines improves before April 13, Fraser says it may cancel or defer the curtailments.

The State of New Hampshire has been working with the company on alternatives to address increasing costs at the mill. During this temporary shutdown, Fraser will continue to work with the State to explore various initiatives to reduce the mill's reliance on oil as a fuel source.

As a result of the production curtailments, 167 employees at the Gorham operations will be laid off indefinitely. The company has given employees 60-day notice under the Workers Adjustment and Retraining Notice (WARN) Act. Under provisions of the WARN Act, affected employees will be paid through the notice period, even if the production cuts are implemented earlier.

Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The company has operations in New Brunswick, Maine, New Hampshire, and Quebec.

Pope & Talbot Sells Three Mills

PORTLAND, OR -- Pope & Talbot announced that it has agreed to sell three pulp mills to one or more affiliates within the Sinar Mas Group. The value of the transaction to Pope & Talbot is approximately $225 million, including the assumption of certain liabilities and $100 million of working capital proceeds that is not subject to the sale, to be realized after closing. The three pulp mills, located in Nanaimo, BC, Mackenzie, BC, and Halsey, OR, are producers of high-quality softwood pulp.

"We are delighted with this development, as this is an important milestone in maximizing value for our stakeholders," said Harold Stanton, Pope & Talbot President and CEO. "The past 6 months have been very trying on our folks and it is exciting that they will have the opportunity to join a world class pulp and paper producer like Sinar Mas Group."

The sale is subject to approval by the US Bankruptcy Court and the Canadian Court, and will be effected under procedures that provide for opportunity for other parties to submit competing proposals subject to court approved bidding procedures and protections for the purchaser(s). The transaction is also subject to customary regulatory approvals in Canada and the United States, and Pope & Talbot expects to receive such approvals and close the transaction in the first quarter of 2008.

Pope & Talbot Announces Buyers of Fort St. James, Midway Sawmills

Pope & Talbot, Portland, Ore., USA, recently announced that it has agreed to sell its Fort St. James and Midway sawmills in British Columbia, Canada. The Sinar Mas Group has agreed to purchase the Fort St. James Sawmill for approximately $6 million. Fox Lumber Sales, Inc. has agreed to purchase the Midway Sawmill for approximately $750,000. Pope & Talbot expects to receive appropriate court approvals to close these transactions in the second quarter of 2008.

Pope & Talbot produces market pulp and softwood lumber at mills in the U.S. and Canada. Markets for the company's products include the U.S., Europe, Canada, South America, and the Pacific Rim. Sinar Mas Group has significant interests in pulp and paper in Indonesia, China, and elsewhere. It is the largest producer of pulp and paper in Asia and is one of the top five in the world. Fox Lumber Sales, Inc. is a full service lumber manufacturing business headquartered in Hamilton, Mont.

Newpage Acquisition of Stora Enso's NA Business Complete

Miamisburg, OH -- NewPage Corporation announced the completion of the previously-announced acquisition of Stora Enso Oyj's North American paper manufacturing operations.

The combined product portfolio is the broadest in North America. The new organization will have approximately $4.3 billion in pro forma net sales for the last twelve months ended September 30, 2007, and exceptional platforms in the company's core businesses including coated freesheet, coated groundwood, supercalendered and specialty papers. These papers are used for corporate collateral, high-end advertising brochures, magazines, catalogues, books, coupons, inserts, packaging applications and direct mail advertising.

"We have an excellent senior leadership team in place and are creating new opportunities for our employees to grow and succeed. We know there are many challenges ahead of us, but we believe we're well positioned for success and look forward to making the company prosper and grow," said Richard D. Willett, President and Chief Operating Officer of NewPage. With this combination and the powerful businesses it creates, NewPage has improved its ability to meet the needs of its customers with the high quality customer service and products they've come to expect from both companies. This should also enable us to deliver higher returns on investment and meet our return on capital goal. Our plan to achieve $265 million in annualized cost synergies is just the first step toward that goal."

NewPage operates 12 paper mills with 26 paper machines located in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia.

American Securities Acquires FiberMark Holdings

New York, NY -- American Securities announced that they have completed the acquisition of FiberMark. Terms of the transaction were not disclosed.

FiberMark is a leading producer of fibre-based specialty materials that support global industries and applications. Products include: distinctive covering materials that express brands, inspire designs, and make lasting impressions in premium packaging and publishing; innovative technical papers and non-woven materials that are used in construction and renovation, medical supplies and electronics; and strong, durable cover stocks that meet the demanding requirements of school and office products applications. FiberMark materials have been recognized worldwide for their superior quality and consistent performance.

FiberMark has seven manufacturing facilities in the U.S., as well as an operation in the U.K. FiberMarks management team will continue with the company in partnership with American Securities.

Anthony MacLaurin, President and Chief Executive Officer of FiberMark stated, We are looking forward to investing with American Securities to further grow FiberMark. Whether through acquisitions such as our June 2007 addition of Permalin, or through innovation such as the recent launch of our 100% recycled-content Reprise line for packaging and printing, FiberMark will continue to expand both in products and in geographical markets. We relish our longstanding customer relationships while continually seeking new application and markets.

Commented Matthew LeBaron, a Managing Director at American Securities, We are pleased to have partnered with Anthony and the rest of the senior management of the company. FiberMark is a market-leading business with highly regarded products and strong prospects for growth. We look forward to working with the outstanding management team of FiberMark to support the continued growth of the company.

Kimberly-Clark to Invest $60 Million in Peru

Kimberly-Clark Corp., Dallas, Texas, USA, will invest $60 million in Peru, according to a Reuters News report, effectively doubling production at the company’s existing facilities in that country. Blanca Aquino, K-C’s general director in Peru, said that Peru will become a regional center for K-C., supplying Chile, Bolivia and Ecuador. K-C becomes the first major U.S. company to announce expansion plans in Peru since that country signed a free-trade pact with the U.S. this past December.

Peru's economy, one of the fastest growing in the world, expanded about 8.5% last year. It has been growing for six years, Reuters noted.

TimberWest to Permanently Shutter Elk Falls Facility

TimberWest Forest Corp., Vancouver, B.C., Canada, announced that it will permanently close the Elk Falls sawmill in Campbell River, B.C. The last full operating shift will be May 9, 2008. The sawmill closure will include the associated shipping operations at Stuart Channel Wharves located in Crofton, B.C.

TimberWest has been engaged in a process to sell the mill since October 2005. Despite widespread exposure across Canada and elsewhere, no purchasers came forward with a bid proposal to acquire the mill. The mill has high operating costs and a history of losses even before the most recent decline in lumber markets and the strengthening of the Canadian dollar.

"Decisions like these are very difficult, given the dedicated workforce at the mill and the obvious impact on families and the community," said Paul McElligott, TimberWest president and CEO. "TimberWest will honor all of its obligations to its employees as a result of this decision. In addition, our manager of human resources will meet with each of the affected staff employees during the next week."

A total of 257 hourly and staff employees are affected by this announcement. TimberWest says it will continue to operate the mill during the next three months, as market conditions permit, and will ensure customer orders are filled.

TimberWest is Western Canada's largest private land management company, owning some 322,000 hectares or 796,000 acres of private land, including 75 km of waterfront that, during the previous five years, have provided an annual average timber harvest of 2.565 million m3 of logs and have an approximate annual growth rate of 8.0 m3 per hectare per year on the productive land base. These lands are located on Vancouver Island and the majority supports the growth of Douglas fir, a premium tree species.

A2A Stock Holders Approve Boise Acquisition

Aldabra 2 Acquisition Corp., New York, N.Y., USA, announced that its stockholders have approved its acquisition of Boise Cascade LLC’s packaging and paper manufacturing businesses. The vote to approve the merger took place today at Aldabra’s special meeting of stockholders. Aldabra anticipates the transaction to close during the last week of February.

Aldabra plans to change its name to Boise Inc. and list its common stock and warrants for trading on the New York Stock Exchange under the new symbols BZ and BZ.WS, respectively, upon the consummation of the acquisition. The acquisition is subject to customary closing conditions and the completion of Aldabra’s previously announced financing.

“We are happy with the performance of the company and the growth prospects of Boise Inc. as a standalone public company,” said Alexander Toeldte, the designated CEO of Boise Inc. “The paper market dynamics remain positive, and our business continues to perform very well. Additionally, we are beginning to see positive results from the acquisitions and investments we have made over the past 24 months. We are pleased with the momentum we have in the business as we enter the public company arena.”

Boise manufactures and sell uncoated free sheet (including printer and copy paper, label and release papers, envelope and commercial printing papers, and a wide range of premium and specialty papers), market pulp, and containerboard (corrugating medium). The company has approximately 4,700 employees.

Eucatex to Build New T-HDF/MDF Plant in Brazil

Eucatex S/A Industria e Comercio ,Sao Paulp, Brazil, reports that it plans to build a new thin-high density fiberboard (T-HDF) and medium density fiberboard (MDF) plant in Brazil. It will be the first Brazilian manufacturer to install a special production line for thin hardboard using the dry production process.

The plant will involve an investment of R$ 130 million, 80% of which will be drawn from the company’s own funds, and will be installed in the city of Salto, located in the inland region of Sao Paulo state, where Eucatex already has two hardboard production lines and most of its infrastructure, such as equipment and finishing lines. The new plant will produce 110 million sq. m. of thin hardboards each year, increasing the company's annual production capacity from 70 million sq. m. to 180 million sq. m., and will also lead to cost reductions in the chipping and stocking areas of existing lines. The new line will be operational by the first half of 2009.

The T-HDF production technology was developed for applications requiring high mechanical resistance, such as the manufacture of flooring, doors, and partitions. With this new line, expected to increase annual gross revenue by approximately R$ 250 million, Eucatex notes that it will become a long-term supplier of thin hardboard to furniture and other manufacturers both in Brazil and abroad.

EUROPE

SCA Starts up New Anaerobic Reactor at Lucca Mill in Italy

SCA Packaging , Stockholm, Sweden, has started up a new R2S Anerobic Reactor in the effluent treatment plant at its Lucca containerboard mill in Italy. Installed at the 330,000 metric tpy linerboard and corrugating medium mill in Tuscany, Italy, by Voith Paper Environmental Solutions (VPES) beginning last March, the reactor has been achieving very high COD (chemical oxygen demand) reduction levels during the startup phase, according to Voith.

The new R2S Anaerobic Reactor is 9 m in dia and 27 m high. It is designed to handle a feed volume of 240 m3 of effluent per hour and a COD load of 38 metric tons. The unit was put into operation in early December, and subsequent performance during startup has been highly “flexible,” Voith reports.

While being filled with activated sludge, the R2S Reactor was able to take over complete anaerobic clarification of the mill’s waste water, reaching high COD reduction levels from the outset. Even at low operating temperatures of around 30°C, the reactor achieved a COD reduction of more than 80%—despite repeatedly occurring fluctuations in the feed volume as well as COD concentration.

SCA’s Lucca mill uses 100% recycled fibers to produce containerboard using two two-ply fourdrinier machines. PM 1 (4.61-m trim and 500 metric tpd capacity) makes white-top linerboard, corrugating medium, and testliner. PM 2 (4.91-m trim and 600 metric tpd capacity) produces corrugating medium and testliner.

Cascades, Reno De Medici Merger Approved

Cascades Inc., Kingsey Falls, Que., Canada, announced that the merger of the recycled boxboard operations of its European subsidiary Cascades SA and Reno De Medici S.p.A. has been approved by the competition authorities in Germany and Italy. The parties expect to be able to sign the definitive agreements necessary to complete the merger by the end of February. The merger will combine an annual capacity of more that 1.1 million metric tons.

"This merger results in an operationally and financially stronger company that will be better able to respond to the demands of global customers and shareholders," said Alain Lemaire, president and CEO of Cascades.

Cascades produces, transforms, and markets packaging and tissue products, employing nearly 14,000 workers in some 100 modern and flexible production units in North America and Europe. Cascades S.A. is a European division of Cascades Inc. It includes primarily four virgin and recycled manufacturing boxboard mills in France, Germany, and Sweden, a sheeting operation in England, and a sales structure in Europe.

Propapier Orders New Board Machine for Greenfield Mill in Germany

Propapier GmbH has ordered a new papermaking line from Metso Paper for its Greenfield mill in Eisenhüttenstadt, Germany, near the Polish border. The new line will produce up to 650,000 metric tpy of liner and fluting grades (70-130 g/m2). The total value of the order is approximately EUR 200 million. It will come on-stream in late 2009.

Propapier is part of Progroup, a group of companies offering products and services for the corrugated board-processing industry. Propapier currently produces 320,000 metric tpy of testliner and corrugated medium with one of the most modern production lines in the world.

DS Smith to Acquire M-Real’s Thames Paper Mill in England

DS Smith, U.K.-based packaging manufacturer and office products wholesaler, announced today that it will acquire M-real Corp.’s Thames Paper Mill (TPM) adjacent to its U.K. paper mill at Kemsley in Kent. The acquisition includes the 50% balance of Grovehurst Energy Ltd., the mills’ energy and services supplier, not already owned by DS Smith. The cost of the acquisition will be £60 million in cash.

The TPM facility currently produces uncoated fine papers. DS Smiths says it plans to install some of the latest technology at the mill, investing an additional £37 million during the next 12 months to enable production of 260,000 metric tpy of high-quality lightweight recycled corrugated case material (CCM), with startup planned for January 2009. Total cost of the project is expected to be some £104 million, which will be funded from the company’s existing debt facilities.

“This significant development will create, in a highly cost-effective way, one of the most flexible and cost-competitive CCM mills in Europe at our principal site at Kemsley,” said Tony Thorne, group chief executive of DS Smith. “It will strengthen our important U.K. paper and corrugated packaging business and give us a significant capability in the growth segment of high-quality lightweight CCM paper. We are confident it will provide very good returns for our shareholders.”

ASIA

Kazakh Paper Company to Install Rebuilt Fine Paper Machine

Ilisky Paper-Board Plant (IKBK) of Kazakhstan has awarded Voith Paper a contract to rebuild a used paper machine form Zwingen, Switzerland. The rebuilt paper machine will be installed in the metropolitan area of Almaty in Kazakhstan. After startup near the end of this year, the 3.66-m wide machine will produce some 200 metric tpd of copy and offset paper with a basis weight range of 65 - 80 g/m2.

A DuoShake and a DuoFormer D will be installed in the fourdrinier section, which . in combination will achive excellent formation values, according to Voith. The DuoShake allows the tensile MD/CD ratio to be optimized, while the DuoFormer D provides uniform filler distribution in the sheet. The fourdrinier will be cantilevered to allow faster wire change. A SpeedSizer will be installed on the machine, and the contactless CB Turn will help ensure a trouble-free web run. All Voith components are designed for a potential increase in speed in the future.

Papers produced on the rebuilt machine will be targeted for the Kazakh market, which has previously been supplied only from abroad. In addition, paper will be exported to neighboring countries.

IKBK currently operates two production facilities, one of which has a second-hand board machine. Two new lines for production of newsprint and tissue paper will be installed in the near future, along with a second board machine. The company employs 500 people.

Stora Enso Inaugurates SC Paper Machine in China

Stora Enso, Helsinki, Finland, recently inaugurated its 200,000-metric tpy supercalendered (SC) paper machine at Dongying in Shandong Province, China. The new SC paper machine is operated by Stora Enso Huatai Paper Co., in which Stora Enso has a 60% shareholding, and its Chinese partner Shandong Huatai Paper, which holds the remaining 40% of shares. Hannu Alalauri, Stora Enso’s executive VP, Magazine Paper, and representatives of Huatai Paper and local government attended the ceremonies.

"The SC paper, which is based mainly on recovered paper, fills a gap in the market since there is currently no other manufacturer of SC paper in China.," says Markku Pentikainen, Stora Enso executive VP, Asia Pacific and Russia. Customers for the new SC paper are printing houses with heatset web offset printing facilities, retail chains, publishers, advertising companies, brand owners, and merchants, mainly in the more developed coastal markets such as Beijing, the Yangtze River delta area (including Shanghai), Guangzhou, and Shenzhen. "There is also good potential in several inland cities with high populations," Pentikainen noted.

"Customers have chosen Stora Enso's SC paper because it is an interesting new paper quality that combines optimum printing properties with runnability in printing presses. It is ideal for their end-uses and available from a manufacturer in China. Our professional know-how in SC production and extensive sales network were also decisive," Pentikainen added. The financial results of the joint venture are consolidated in Stora Enso's accounts and reported in the Magazine Paper business area.

McIlvaine Company

Northfield, IL 60093-2743

Tel: 847-784-0012 Fax: 847-784-0061

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