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BUSINESS FOCUS - THE NETHERLANDS - DUTCH COMPANY SAYS SLOVAK WOOD IS TOO GOOD TO BE USED AS BIOMASS

Waiting for the boom

THE MARKET prices of fluting, which is the main product of a daughter company of the Dutch concern Kappa Packaging based in Štúrovo, are decreasing, though demand is still strong. However, the company is in the process of modernisation and expects growing production in the future.
The company in Štúrovo has 30 years of experience in the paper industry. Its first foreign investor was the Swedish company AssiDomän.
Kappa Packaging entered the Slovak market in the summer of 2001 when it bought the company in Slovakia from the Swedish firm.


PAPER processors to get recycling plants rolling.
photo: Courtesy of Kappa

THE MARKET prices of fluting, which is the main product of a daughter company of the Dutch concern Kappa Packaging based in Štúrovo, are decreasing, though demand is still strong. However, the company is in the process of modernisation and expects growing production in the future.

The company in Štúrovo has 30 years of experience in the paper industry. Its first foreign investor was the Swedish company AssiDomän.

Kappa Packaging entered the Slovak market in the summer of 2001 when it bought the company in Slovakia from the Swedish firm.

Kappa in Slovakia produces fluting for use in corrugated cardboard. Its current production volume stands at 180,000 tonnes a year. The company exports about 80 percent of its fluting, mainly to the countries of southern and western Europe.

It also has a daughter company, Kappa Obaly Štúrovo, which produces corrugated cardboard and packaging and sells the majority of its products on the Slovak market. Part of its products go to Hungary and the Czech Republic.

"The modernisation of production intensified after the Dutch concern Kappa Packaging entered the Štúrovo firm. Decades of experience in paper production, a favourable geographical location near the growing markets of central Europe, and favourable transportation infrastructure were factors supporting the intention of developing paper production in Štúrovo," Ľuboš Lopatka, the general director of Kappa in Štúrovo told The Slovak Spectator.

The project consists of modernisation and production development. So far, the modernisation phase has cost about €20 million. The development phase will ask for additional investments in the tens of millions of euros.

After the first phase, the volume of production should climb to 200,000 tonnes of fluting a year.

The potential of new manufacturing machines will allow the company to produce 300,000 to 320,000 tonnes of fluting a year in the future, said Lopatka.

The new technology should also improve the plant's ecological impact and prolong the lifespan of its equipment.

"This new technology is being used for the first time in Europe. So far, only 15 companies in the USA and Canada are using it," added Lopatka.

However, the fluting market was hit by a recession in recent years, causing falling prices. "Last year, prices were the lowest since 1998 and the current recession is lasting longer than usual," said Lopatka.

"However, we still have no problem with demand and sales. Production grows every year. The problem is just the market price. We hope that the growing global economy will pump market prices up to previous levels."

He also sees potential in the development of central and eastern Europe. Consumption in this region is about half that of the western end of the continent. Kappa expects increasing demand in central and eastern Europe as their economies grow.

The Dutch company appreciates the improving business environment in Slovakia, mainly the tax reform that brought lower income tax rates.

"For a company making a profit, this means an increase in property and resources. Favourable tax conditions have a positive impact shareholders' decisions regarding the expansion of production, which benefits the state as well," said Lopatka.

On the other hand, as a company processing wood, Kappa would welcome a more transparent situation in the Štátne lesy (The State Forests) enterprise.

"We are interested in clear commercial relations based mainly on long-term contracts that would ensure a stable outlook for wood shipments.

"The problem is also that domestic wood is often exported abroad to be used only as biomass, while domestic industry would be able to add much higher value to this material," said the general director.

Kappa Štúrovo is the largest company in Slovakia that processes used paper. This was another reason it decided to establish six plants for the collection, sorting, and pressing of used paper in cooperation with other companies in the industry. They will be located throughout Slovakia in Bratislava, Trnava, Bajč near Nové Zámky, Žilina, Poprad, and Košice.

The first plant is expected to open in the middle of July in Bajč. Those companies will sort collected paper in three categories: corrugated moult, newspaper, and white office paper.

Kappa and other companies working in the paper and cellulose industries will process the collected paper. Kappa Štúrovo invested €2 million in the project, while the Slovak government's Recycling Fund contributed €1.1 million.

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