Stockholm, Sweden, 02 February 2011 -- (BUSINESS WIRE) -- Holmen Paper (STO:HOLMA.st - News)(STO:HOLMB.st - News) will be shutting down production of printing paper at its smaller paper machine in Madrid. This equates to almost 10% of the business area’s production capacity. Approximately 170 employees will be affected.

“We’ve been working to make PM 61 profitable for a long time now, both through cost savings and the development of new products. Our employees have made an excellent job, but we’ve been forced to concede that it’s not enough,” said Magnus Hall, president and CEO of Holmen. “The machine is not sufficiently competitive to justify continued operation either in the short or long term. The decision is part of a strategy to focus our business on printing paper segments where Holmen Paper has high competitiveness.”

PM 61 has a capacity of 170,000 metric tons per year and produces coated magazine paper (LWC) and, to a lesser extent, improved newsprint. In recent years, the machine has seen low capacity use.

Holmen acquired the mill in Madrid in 2000, by which time PM 61 had been operating for two years. In 2005 the mill expanded with the addition of PM 62, a new paper machine for large-scale production of newsprint. Paper manufacture in Madrid is based 100 % on recovered paper as the raw material and the plant has its own energy supply in the form of a gas-fired CHP. After the closure, PM 62 will give the mill a capacity of 330,000 metric tons.

The financial consequences of the closure are outlined in the company's year-end report for 2010.