The $5m (£4.32m) purchase of Hinton Pulp Mill, from West Fraser Timber (WFT), will see Mondi and WFT enter into a long-term partnership to secure local fibre.
Mondi plans to invest €400m into the plant, primarily for a new 200,000 tonne kraft paper machine, due to come online in late 2027.
The plant’s purchase and development will allow Mondi to supply its 10 paper bag factories in the Americas with high quality, low-cost kraft paper, shortening supply chains and reducing the carbon footprint of its products.
Andrew King, Mondi’s CEO, said: “Strategically, we are focused on investing to support the growing market demand for our sustainable packaging products, while delivering attractive mid-teen returns through cycle.
“The acquisition of Hinton is an excellent opportunity for us to secure locally produced kraft paper for our bags customers, helping to meet the current and anticipated future growth in demand for industrial and mailer bags in the Americas.
“This acquisition will also enable us to further strengthen our position as the global market leader in the production of kraft paper and paper bags.”
Subject to regulatory clearance, the deal is expected to close at the end of 2023.
Mondi has also recently teased a €16m investment at its Polish Solec plant, which will expand its FunctionalBarrier Paper portfolio for food and atmospherically sensitive product applications.
The ultra-high barrier paper, called FuntionalBarrier Paper Ultimate, will be suited for items like dried foods, powdered milk, and toiletries, and protects goods from water vapour and oxygen to preserve their shelf-life.
Designed to replace current aluminium foil or plastic-based barriers, the range will be entirely recyclable in paper waste streams.
Dirk Gabriel, COO of consumer flexibles at Mondi, said: "As a global leader in sustainable packaging solutions we have been focused on the aluminium barrier challenge for some time.
"We knew that with research, development, and investment in new technologies, we would find an effective replacement that would provide the necessary protection for our customers' food products.
"It is a tangible example of our Mondi Action Plan 2030 commitment to making all our packaging solutions reusable, recyclable and compostable."
Mondi has said it will be able to produce the entire product – manufacture, coating, printing and conversion – in-house.
Scale production of the FuntionalBarrier Paper Ultimate is expected to commence in Q1 2024.
