Finnish UPM states commitment to Asia

Finnish UPM states commitment to Asia

HELSINKI (Reuters): Finnish forest industry group UPM-Kymmene said on Monday that it remained committed to doing business in Asia, despite the unraveling of its 1997 strategic alliance with Indonesian APRIL.

"We are still committed to an Asia strategy, and we are pursuing it very actively in China for the moment," UPM's Senior Executive Vice President Martin Granholm told Reuters.

His remarks came after UPM-Kymmene said it would not exercise its option to swap a US$121 million loan to APRIL (Asia Pacific Resources International Holdings Ltd.) for a 15 percent equity stake in APRIL's Riaupulp pulp mill in Sumatra.

The decision not to use the option followed the scrapping last year of UPM's and APRIL's plans to swap 30 percent of their fine- paper assets and followed a decision to end cooperation in fine- paper sales after APRIL failed to meet the terms of their 1997 alliance.

Granholm said UPM-Kymmene did not need any other strategic partner in Asia.

"We have a strong presence and a substantial investment at our Chinese mill," Granholm said, referring to the Changshu fine- paper mill which UPM owns jointly with APRIL, near Shanghai.

"We are also in China with our Raflatac (specialty papers) unit," he said. UPM's Raflatac has a self-adhesive laminate factory in Shanghai.

Granholm said the Changshu fine-paper mill, with a capacity of 350,000 tons, was operating smoothly and would produce around 300,000 tons of paper this year.

It produced 91,738 tons in the first nine months of 1999 after coming on stream in March.

Granholm said the mill provided an excellent logistical base for UPM's export operations in Asia.

The infrastructure for the mill, especially the power system, would support more paper machines, but Granholm said that so far there were no plans to build another machine there.

"There is enough capacity in China for the moment, so we have to look at the market and how it develops," he said.

"As such it is a very good site and a good location where we are looking forward to develop our cooperation with APRIL and to enlarge the site in the future," he said.

UPM-Kymmene's Chief Executive Juha Niemela said in October that it would be feasible to put half a dozen machines on the Changshu mill site.

UPM-Kymmene owns 49 percent of the Chinese mill, and Singapore-based APRIL and associated groups have 51 percent.