Vicenza, Italy 24 March 2017 -- Discussion with potential strategic partners on the conversion of LWC paper machine PM 2 to packaging paper production at the Duino site have come to a halt.

Italy's Burgo Group is mulling over the possibility to divest the idled light-weight coated (LWC) magazine paper machine PM 2 at its Duino paper mill instead of converting it to packaging paper production. At the latest meeting with government and employee representatives, which was staged last Monday at the offices of Italy's Ministry of Economic Development in Rome, the company explained it was in exploration talks with an unnamed Italian industry-related company interested in acquiring and converting the production line.

PM 2, which has an installed production capacity of up to 150,000 tpy of coated mechanical papers, had been subject to numerous commercial stoppages before it was shut down permanently in December 2015, due to weak market conditions.

Last year, Burgo had advanced the option of rebuilding PM 2 at the Duino mill and converting it to recycled corrugated case material production. The project, which would require about €40m in investments, was counting on financial support from the regional government of Friuli Venezia Giulia and was conditioned upon the participation of a strategic partner already active in the packaging paper business.

However, this plan seems to have received some setback due to organisational issues and the industrial setup of the Duino site. The company had contacted diverse potential partners from the packaging industry, but talks on the conversion of LWC paper machine PM 2 to packaging paper production at the Duino site have been suspended for the moment, Burgo's CEO Ignazio Capuano has been quoted as saying in an official document published by the Ministry of Economic Development. He mentioned "governance issues" and the "lack of a [waste] incineration plant" at the Duino site as some of the reasons why the potential strategic partners decided not to go ahead with the project.

Last January, Burgo Group announced its decision to rebuild PM 2 at the fine paper mill in Avezano to packaging paper production and enter the recycled containerboard market with an initial production capacity of 200,000 tpy of testliner and recycled fluting.