The funds will be used for the 124m newsprint-recycling project. Approval follows an in-depth formal state aid clearance investigation into WRAPs funding award started by the Commission last October (PrintWeek, 4 October 2002).

UPM-Kymmene (UK) managing director Martin Gale said that although the company was disappointed it wouldnt receive the full 23m, it had agreed to accept the 17m award.

The shortfall in grant aid does create the need to consider alternative funding options, which may be internal, but we will also need to explore external avenues, said Gale.

A spokeswoman for WRAP said the aid had been granted under slightly different guidelines to the original application.

WRAP chief executive Jennie Price added: Over the next five years this will mean that over 1.6m tonnes of newspapers and magazines will be diverted from landfill to make new products.

The project will create 321,000 tonnes a year of extra capacity to recycle recovered papers and magazines, an increase of over 30% on the UKs current capability.

The European Commission launched the investigation after it had said it had serious doubts on whether the aid could be approved under current guidelines on State aid for environmental protection.

UPM-Kymmene is providing 90m of the 124m. The project includes a new recycled fibre pulp facility at Shotton in Deeside, North Wales, which will convert the plant to 100% recycled fibre.

UPM-Kymmene continued with the development of the project throughout the investigation. The recycled fibre facility is scheduled for commissioning this November, its original target date, while full production is slated for next April.