UNITED KINGDOM (From news reports) -- Turkish industrial and retail group Eren Holding AS has secured a €775 million ($854 million) loan to finance a $1.3 billion container-board and tissue mill in Wales, in a boost to foreign direct investment in UK manufacturing.
A mix of 13 international and Turkish banks, alongside three credit export agencies, provided the loan to Modern Karton, a unit of the Istanbul-based Eren Holding, according to Sabri Cimen, chief executive officer of the group's paper business unit, Eren Paper. The money will help build a new plant in Shotton, which will have the capacity to produce 750,000 tons of container-board and 67,000 tons of tissue paper a year, he said in a video call with Bloomberg News.
The financing agreement came together at a challenging time for global and local borrowing markets, Cimen said, but the "sustainable nature of the project" made the financing more attractive for lenders.
The deal bucks a recent downward trend in foreign direct investment in manufacturing projects in the UK. An EY report published in July found there were 14% fewer such projects in 2023 compared with the previous year, even as the overall number of FDI plans rose by 6%. Across Europe investment in R&D and manufacturing also fell, according to the report that argued multinationals may have preferred the US -- due to the high energy costs in Europe and the attractiveness of the US Inflation Reduction Act.
The new paper mill in Wales will use the UK's surplus in container-board waste that it's current exporting as raw material, Cimen said. Turning it into finished products will help cut the UK's container-board imports.
"As of today, the UK is a net importer," he said. "After the launch of Shotton Mill, the UK will be transformed into a net exporter country in the container-board industry." The plant is envisaged to start operations in the third quarter of 2025.
When operations begin, Eren Holding will have an annual production capacity of 2.6 million tons of paper and 1 million tons of corrugated packaging, making the group the third-biggest producer of paper and packaging in Europe, according to Cimen.
Eren's Interests
Apart from paper industries, Eren Holding has interest in energy, textiles, cement and port industries. It's the retailer in Turkey of world-renowned clothing brands such as Lacoste, Burberry and Converse and produces yarn for many international ready-to-wear makers.
The conglomerate launched its strategy to invest overseas six years ago. In 2021, its Modern Karton subsidiary bought the Shotton Mill newsprint plant and the land around it from Finland's UPM-Kymmene Oyj. The company is also investing in a cardboard factory in Turkey's Zonguldak province for €650 million ($715 million).
As part of the redevelopment of the Welsh paper mill, Modern Karton will also build a new renewable energy power plant. The manufacturing facility will employ around 400 people, Cimen said.
Valmet Corp., a paper machinery company from Finland, will supply the container-board machine at the site, he added. Turkish builder and contractor Enka Insaat will carry out civil works while project management will be carried out by Tekfen Insaat.
Modern Karton also has contracts with Anel Elektrik of Turkey, Solar Turbines, Siemens AG, Atlas Copco and Sulzer among others for the mill.
