By John Acher
HELSINKI (Reuters) - The world's biggest paper and board producer Stora Enso (STERV.HE: Quote, Profile, Research, Stock Buzz) is looking for ways to boost its energy self-sufficiency, including by investing more in power plants, its chief executive said on Wednesday.
Pulp and paper making is an energy-intensive activity, and rising energy costs have hit paper producers around the globe, along with higher raw material costs.
Chief Executive Jouko Karvinen told a Reuters Paper Summit that Stora Enso's overall energy self-sufficiency is about two thirds and it is well hedged on electricity, but sufficiency could be improved to reduce volatility in costs.
"Better than hedging though is that you have to invest," Karvinen said and pointed as an example to an investment in a multi-fuel power plant for its Langerbrugge mill in Belgium and Maxau mill in Germany to boost self-sufficiency.
That 260 million euros ($383.9 million) project is due to come on stream in 2010.
"We are looking also at other places where we can improve our self-sufficiency by building a power plant," he said, but declined to say where it could happen.
He said that would depend on such things as which paper grades need the most energy to produce.
"I have a very simple rule," Karvinen said.
"How can you do two things -- minimize your costs and then, with this experience of rapid cost changes, how can you reduce your volatility and become more self-sufficient so that you are not driven by so many factors, like oil prices, which I cannot do anything about," Karvinen said.
Stora Enso's energy self-sufficiency comes largely through its strong position in chemical pulp, a highly energy-intensive segment where it is second biggest in the world.
"The bigger challenge globally is that fuel-based, gas-based energy costs are not that well hedged," he said. "We have a very good group-level risk management policy -- we need to look at the gas."
He said, however, that steeply rising gas prices have also shortened the payback time on the energy assets.
(Reporting by John Acher)
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