It will be made at its Papelera Peninsular newsprint and magazine mill in Spain. Holmen Paper president Magnus Hall said the company would also move ahead with a pre-project for a new newsprint machine in Spain, which will be built at the Papelera mill in Fuenlabrada.

He said the decision was made due to Holmens need to move forward with new capacity to meet its customers demands.

The Papelera Peninsular mill was selected ahead of the Braviken paper mill in Norrkping, Sweden, due to its strategic positioning for Holmens European customers.

"The investment is in line with our strategic direction to concentrate on growth in newsprint and magazine papers," said Hall.

He said that other mills within the company would also benefit from its strategy to increase capacity. The cost of the machine is estimated at 246m (E400m). It will have a capacity of 350,000 tonnes a year and is to start production by the start of 2004 at the earliest.

The new machine will be Holmens tenth paper machine, and will be dedicated to the production of standard newsprint.

Once the machine at Papelera is fully operational Holmens total newsprint and magazine capacity will stand at more than 2m tonnes a year.

Story by Andy Scott