JSE-listed packaging and paper company Mondi will acquire the 250 000 t/y Hinton Pulp mill in Alberta, Canada, from forestry company West Fraser Timber for $5-million.

Mondi intends, subject to pre-engineering and permitting, to invest €400-million in the expansion of Hinton, primarily for a new 200 000 t/y kraft paper machine, which is expected to be operational from the second half of 2027.

"The acquisition of the mill, and investment in the paper machine, will fully integrate operations in the Americas and enable Mondi to secure the long-term supply of high quality, cost competitive kraft paper into its network of 10 paper bags plants in the region, better positioning Mondi to support the growing market demand for industrial and mailer bags," the company said.

As part of the transaction, Mondi will enter into a long-term partnership with West Fraser to access local, high-quality fibre from a well-established wood basket.

Customers will benefit from a fully integrated and much shorter supply chain, reducing the carbon footprint of Mondi’s packaging products in the region.

The kraft paper produced at Hinton will have the highest quality and strength parameters, which, in combination with Mondi’s expertise, will meet customer requirements for sustainable packaging solutions as paper is increasingly being used for packaging across the Americas.

“Strategically, we are focused on investing to support the growing market demand for our sustainable packaging products, while delivering attractive mid-teen returns through cycle. The acquisition of Hinton is an excellent opportunity for us to secure locally produced kraft paper for our bags customers, helping to meet the current and anticipated future growth in demand for industrial and mailer bags in the Americas,” said Mondi Group CEO Andrew King.

“This acquisition will also enable us to further strengthen our position as the global market leader in the production of kraft paper and paper bags.

“We are delighted to be making this investment in Canada and look forward to working with Hinton colleagues, West Fraser as a long-term partner, and other local stakeholders towards improving the mill’s environmental footprint and securing its sustainable future,” he said.

The acquisition is subject to customary regulatory clearance and is expected to close towards the end of 2023.