Holmen's New Paper Machine - Pre-Project Starts in Spain

Stockholm, SWEDEN

STOCKHOLM, Sweden, Jan. 10, 2002 (PRIMEZONE) -- Holmen's Board has decided, on the basis of the decision in principle made in April 2001, to move ahead with a pre-project for a new newsprint machine in Spain. The intention is to build the machine at Papelera Peninsular, Holmen's newsprint mill in Fuenlabrada, 17 kilometers south of Madrid. This means that the Braviken Paper Mill in Norrkoping, which was studied parallel to Papelera Peninsular as a possible location, is at present no alternative.

Holmen's Board has had to decide between two sound, profitable alternatives. The decision in favor of Spain is based on market strategic factors. An increase in capacity there is believed to be most favorable to the Holmen Paper business area's overall development just now.

The final decision of the Board is expected in the second half of 2002 once the necessary operational permits have been obtained and the necessary agreements reached with the authorities. The cost of the new machine, which will have a capacity of 350,000 tonnes per year, is estimated at EUR 400 million. The machine will start production by the beginning of 2004 at the earliest. It will be Holmen Paper's tenth paper machine, and will raise total newsprint and magazine paper capacity to more than two million tonnes per year.

The investment is fully in line with Holmen's strategic direction, which is to concentrate on growth and development within newsprint and magazine paper. The machine will be dedicated to the production of standard newsprint. However, the total additional volume will also be allocated to other product areas within the newsprint and magazine paper segments, by redistributing production on existing paper machines. The process will also include devoting substantial resources to the development of new products in the lightweight-coated magazine paper segment. The net addition of standard newsprint capacity will be in the region of 180,000 tonnes per year.

Papelera Peninsular was brought into production in 1998 and was acquired by Holmen in July 2000. The company includes a newsprint mill with one paper machine, a waste paper recovery operation, and a power plant.

For further information please contact Goran Lundin, President and CEO of Holmen, on +46 8 666 21 00, or Magnus Hall, President of Holmen Paper, on +46 11 23 50 00.

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