The Fife-based company said this has resulted in increased efficiency and provided financial savings in its sheeting process.

It has also reduced the need to outsource parts of the company's paper cutting requirements.

The new cutter can handle products from 95gsm plain paper to 500gsm coated paper in sizes from 400x400mm to 1,200x1,400mm.

Malcolm Sinclair, sales and marketing director, said: "These investments form an integral part of our wider strategy for increasing our performance and efficiency and, at the same time, reducing our carbon intensity."

Earlier this year, Tullis finally secured the funding for a £100m, 45MW biomass combined heat and power plant at its site in Markinch, Scotland.

The agreement, which saw an £8.1m regional selective assistance grant awarded by the Scottish government, followed the introduction of the Large Combustion Plants Directive (LCPD), which came into force in the UK on 1 January this year.

Tullis' incumbent coal plant was in breach of the ruling, which bans the use of coal to combustion plants with a thermal input of more than 50mw, and will be replaced with the new plant that is expected to be operational by 2011.

The plant will reduce Tullis Russell's annual carbon emissions by 250,000 tonnes, which will generate 6% of Scotland's renewable generation targets.