21 Dec 2007

Norske Skog makes forward-looking investment in timber-based biofuel

Norske Skog will, in cooperation with the Norwegian forest owners, establish a joint venture to develop and produce wood-based biofuel. A prototype facility for biodiesel will be built in connection with Norske Skog Follum at Hønefoss.

"I consider this a very exciting and future-oriented project which will open up new opportunities for Norske Skog," says chief executive Christian Rynning-Tønnesen.

The new the company will be jointly owned by Norske Skog (60 per cent) and the forest owner cooperatives (40 per cent), and will be established with equity of NOK 30 million.

"We have processing industry competence and a good infrastructure at Norske Skog Follum. In addition, the mill has a central location with good access to wood," says Rynning-Tønnesen.

Norske Skog aims to establish full-scale biodiesel production. Such a plant will require 1-1.5 million cubic meter of wood per year and will produce 65 000 - 100 000 tonnes of biodiesel, corresponding to 4-6 per cent of Norway's overall consumption of diesel in the transport sector. The long-term objective is to develop a global enterprise in biodiesel production and sale.

The investment in a prototype for biodiesel production at Follum is estimated at NOK 100 - 200 million. Further capitalisation will be decided at a later date.

The agreement is subject to approval by the board of directors of the companies involved.
Oxenøen, 21 December 2007 

Norske Skog
Corporate communications