Smurfit Kappa slams government aid as latest closure revealed

The Dublin-based group is to begin consultations with staff and relevant authorities over the closure of the Sturovo mull, which has annual production capacity of 200,000 tonnes of semi-chemical fluting.

The group blamed overcapacity in the European containerboard market, a drop in demand and inventories caused by the recession and advances in the recycled containerboard industry that, it said, have resulted in the “widespread availability of the less expensive but equally strong high performance fluting”.

However, Smurfit Kappa also hit out at public subsidies for investment in recycled capacity in Europe’s developing economies.

It said: “Further factors contributing to the proposal to close the mill have been currency swings and, in Smurfit Kappa’s view, unwarranted government aid for new recycled capacity additions in Central and Eastern Europe.”

The company assured customers that there would be no interruption to supplies as all production would be absorbed elsewhere in its network of plants.

Today’s announcement is Smurfit Kappa’s latest move to counter the effects of overcapacity in the European market. In the last two months it has twice announced price rises for recycled-grade containerboard; the second, a EUR60/tonne rise, comes into force today. 

At the time the second rise was announced, chief executive Gary McGann described the condition of the European containerboard industry as “progressively deteriorating” as inventories and demand have been hit by the recession.

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