The company announced its plan to close the Kvarnsveden paper production site last April, attributing the move to the structural decline in demand for graphical paper. It finalised negotiations at the mill, which was founded in 1900, last summer and production ended in September.

Northvolt plans to develop the site into a battery manufacturing plant, reusing and refurbishing the existing facilities and site infrastructure.

According to Northvolt, the gigafactory is expected to start the first part of its operations in late 2024, and will employ up to 1,000 people.

“Sustainability is the main priority for Stora Enso, and this also has to be addressed in difficult times,” said Per Lyrvall, Sweden country manager at Stora Enso.

“Hence, a key focus since our decision to close the site has been to find a new owner that can continue Stora Enso’s long and sustainability-driven legacy at Kvarnsveden, to the benefit of the local society.

“Like Stora Enso, Northvolt delivers modern and innovative solutions that contribute to a climate-friendly future. Through this agreement, Kvarnsveden will become a foundation for continued growth, both for Northvolt and the city of Borlänge.”

Northvolt said the site will be powered using 100% clean energy and will feature both cathode material and cell production.

Northvolt co-founder and CEO Peter Carlsson said: “Since Northvolt was founded, we have focused on circular battery production, but this is the first time we are reusing an entire production site.

“With its access to energy, industrial water and the broad production know-how in the region, Kvarnsveden is an optimal site for a gigafactory. We are thrilled to be able to open a new chapter in Borlänge’s history as a global industrial hub.”

The final agreement regarding the transaction is expected to be signed in the next few months. Certain infrastructure and equipment, including the boiler, are subject to separate processes and are not included in the Northvolt scope.

The transaction impact on Stora Enso’s operational EBIT or net debt is not considered material.

Earlier this week Stora Enso said it is starting a feasibility study for the possible conversion of an idle paper machine at its Oulu mill in Finland for a high-volume consumer board line.