Stora China III

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The Project is to build plantation-based integrated board and pulp mills in the Tieshangang Industrial Zone of Beihai city in Guangxi, southern China. The mill will in the first phase of investment include a 450,000 tons per annum (tpa) state-of-the-art paperboard machine with an integrated 200,000 tpa capacity bleached chemical thermo mechanical pulp (BCTMP) mill, a cogeneration power plant based on a coal-fired power boiler and 50 MWe of electrical generation capacity and necessary auxiliary facilities. Following the completion of Phase I the second investment phase will comprise a kraft pulp production line giving a total pulp capacity of 900,000 tpa, recovery boiler and chemical recovery units. On completion of Phase II the mill’s energy sources will predominantly be met by renewable sources. The board and pulp mills will be integrated with wood supply from self-managed eucalyptus plantations. The project currently operates 90,000 hectares of land and will continue to develop its plantation base until the conclusion of Phase II, with a possibility for expansion through further land acquisition. Some wood and softwood pulp will be bought as raw materials to the Project, while the Project will sell hardwood kraft pulp to the market. The Project will serve the fast-growing market for liquid packaging board and other premium consumer board grades. The Project is subject to regulatory approvals, the signing of final documentation and other customary conditions precedent. Preparation for construction at the industrial site has started, and full-scale construction will commence when the mentioned preconditions have been fulfilled, which is expected to be at the beginning of 2014 at the latest. Production is estimated to start in early 2016. Stora Enso Pulp & Paper Asia AB (“Stora Enso” or the “Company”), an existing holding company domiciled in Sweden, will implement the Project through three subsidiaries: two sino-foreign joint venture companies to be created with 85% ownership by the Company and 15% ownership by Guangxi Forestry Group Co. Ltd., a state-owned company under the Guangxi provincial government; the third is the existing Guangxi Stora Enso Forestry Co., Ltd., fully owned by the Company and to be reincorporated as a sino-foreign joint venture company upon the Project implementation with 95% ownership by the Company and 5% ownership by Beihai Forestry Investment & Development Company Ltd., a state-owned company under Beihai city government. The plantation assets are concentrated in four regions in central and southern parts of Guangxi – Beihai, Yulin, Qinlian, and Nanning. These and the mill site are shown in Figure 1.