Stora Enso's massive new investment in plastic-free board

Finnish company Stora Enso (STERV.HE) is considering investing up to 1 billion euros to produce more packaging board for consumers, customers, makers of paper cups who are increasingly seeking renewable materials at the expense of plastic, the paper group said. 

Customers such as food group Nestlé (NESN.S) or online fashion retailer Zalando (ZALG.DE) are responding to consumer demands by replacing plastic with wood-based board in packaging.

To meet growing demand, Stora Enso is studying the possibility of converting an idle paper machine at its Oulu site in Finland into a production line for renewable consumer packaging board.

The project would involve an investment of 900 million to 1 billion euros ($1 to $1.13 billion) over the period 2023-2026, according to the company.

"If the world does not change and our investment case stays as it is, it is very likely that this project will go ahead," Hannu Kasurinen, head of packaging materials at Stora, told Reuters.

Once the feasibility study is completed, Mr Kasurinen said a final investment decision could be taken in the fourth quarter, for a start-up in 2025.

The conversion would mean potential annual sales of 800 million euros, an increase of 8% over the group's current level, while packaging materials and solutions already account for nearly 50% of Stora's sales.

"For the first time, we have seen demand for wood-based packaging materials exceed that for plastic, and this is very encouraging," said Kasurinen.

Stora Enso said it is the largest producer of consumer board in Europe, where it competes with Finland's Metsa Board (METSB.HE) and Austria's Mayr Melnhof Karton (MMKV.VI), while globally it competes with US companies Westrock (WRK.N) and Graphic Packaging (GPK.N).

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