Norske Skog will be able to rebuild production of SC paper on PM 6 at the Saugbrugs mill in Norway with the help of advised insurance payments, but is also considering "investments in other product alternatives". A company spokesperson said that there would be a thorough evaluation of product alternatives.
A settlement has been reached with the insurance company for both business interruption and property damage, estimated up to total of NOK2.4bn, which will jointly be covered by the insurance company, the Norwegian Natural Perils Pool and reinsurers.
On 27 April this year, the building, equipment and the PM 6 at the Saugbrugs mill in Halden, Norway, were damaged by a rockslide, and production on the machine (260,000 tpy of SC paper) was halted. Then in August, in order to secure customer deliveries, Norske Skog had decided to restart PM 5 (100,000 tpy SC paper), which was shut down in 2020. Norske Skog said that the machine is currently being prepared for start-up and production would be ramped up during the current quarter.
The property insurance will cover the costs of securing the area around the factory and rebuilding the buildings, which has been estimated at around NOK550m. A settlement was also reached on an insurance payment of NOK1bn for investments in production equipment. The company already received NOK59m in the third quarter of this year, and another NOK326m will follow in the fourth quarter. The remaining NOK615m have been agreed upon as investment costs accrue.
The insurance company has recognised NOK850m for the loss of operations at the Saugbrugs plant, of which NOK225m is for the first five months of the loss and NOK625m for the remaining 13 months of the 18-month period. Norske Skog already received NOK267m of the settled insurance payment in the third quarter of this year, and a further NOK215m and NOK368m will be paid out in the fourth quarter of 2023 and the first quarter of 2024, respectively.
Norske Skog said the Saugbrugs mill has a very efficient production of SC papers. With PM 5 currently back in operation, it has a capacity of 200,000 tpy to meet customer demand, the company explained. The insurance benefits would enable the company to rebuild PM 6 for the production of SC papers, but also to consider "investment in other product alternatives". Norske Skog said it would work closely with stakeholders to find the most suitable path for the Saugbrugs mill.
