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Largest paper mill in Bulgaria closes because of crisis

Date: 20.03.2009

The largest paper producing mill in Bulgaria in the town of Stamboliyski, central Bulgaria, is closing down until further notice because of the world financial and economic crisis, Bulgarian-language Dnevnik daily said on March 19 2009.

The mill is owned by the world leading Mondi Group which has just recently published its annual results on the London and Johannesburg stock exchanges.

The information about the mill's closure was confirmed to Dnevnik by its executive director Alexander Krikler.

The shutdown is part of Mondi’s restructuring plan aimed at curbing the effect of the crisis. The company has temporarily closed or offloaded factories in the UK, Sweden, Hungary, Denmark, France and Spain to focus on core operations and optimise production.

"The difficult situation on the market and the problems we have with suppliers of energy and timber are the main reasons behind our decision," he told Dnevnik.

The little over 400 workers in the mill, one of the biggest employers in the small town, will be laid off. They will be paid compensation provided by law.

According to Krikler, the mill would stop operations in May. Operations would resume once demand returns and the mill signs favourable long-term contracts with its suppliers, he said.

Another negative impact on Mondi in Bulgaria has been the significant rise in natural gas and timber prices which, according to Kriler, were above western Europe’s average.

An expected reduction in gas prices from April would be insufficient and the government has not been specific enough about the expected second decrease in June, Krikler said.

Mondi set foot in Bulgaria in 2006 and in 2008 its Bulgarian subsidiary worked at around 60 per cent of its top annual production capacity of 120 000 tons.

The mill in Stamboliyski was established in 1957.

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