SCA president and chief executive Jan Johansson said the decision to close the mill was because of the "great need" for consolidation in the European packaging market.

He said: "SCA's focus is on increasing value-added parts of the packaging business and also on creating growth in the eastern part of Europe, while consolidating our existing operations in Western Europe."

The mill has an annual capacity of 240,000 tonnes and it is expected to close by the middle of 2010.

Johansson said one reason for the closure is because the company no longer requires local paper production.

Consultations with the unions will be initiated.

SCA is also expected to sell its UK and Ireland conventional corrugated business to privately-owned Spanish paper and packaging company SAICA for £100m.

The transaction is subject to approval from relevant authorities and is likely to complete during the third quarter of the year.

After the sale, SCA will focus on specialised packaging in the UK and Ireland.

SAICA operates a number of paper mills and corrugated facilities in a number of European countries, including the UK.