M-real plans to take capacity out of the European woodfree market with the closure of its Silverdalen paper mill in Sweden.

The company said that production would continue at the mill, which has an annual production capacity of 120,000 tonnes, until March 2002 and that existing customers would be provided with alternate sources.

The company said that the mill, which has 200 employees, had failed to make a profit for several years and was competing in a market with 20% overcapacity. It was acquired by M-real through its purchase of Modo Paper last year.

M-real is also to close down Paper Machine One, which has a capacity of 25,000 tonnes a year, at Zanders Gohrsmhle mill in Bergisch Gladbach.