Good morning, everyone, and welcome to Norske Skog's second Capital Markets Day since our reintroduction to the Oslo Stock Exchange in October 2019. Very happy to see so many faces here today, in the audience and also hopefully online. My name is Even Lund. I'm the Investor Relations Manager in Norske Skog. I will not be talking for too much today, but I thought I would perhaps say a few words of, about what's happened since we were in this room two years ago at our last CMD in 2021. Our enterprise value is more or less the same, but we have come a long way with our strategic transition. We've invested a little more than NOK 4 billion since 2021, since the CMD in 2021.
We have a little more to go, about NOK 1.2 billion, before we have completed the final containerboard conversion we have announced so far, at least in Golbey, the conversion of PM1. PM1 was originally built in the early 1990s. It actually entered the market in the early 1990s when it was a really, really weak newsprint market, so it started off actually not earning any significant cash flows for the first two or three years. But since then, it's been an amazing newsprint machine for us, earning significant cash flow, and we hope it will continue to do so for several decades when we have completed this conversion. This is our portfolio when we were here two years ago.
We had 1.4 million tons of newsprint capacity, 400,000 tons of SC magazine paper capacity, and 400,000 tons of LWC magazine paper capacity. Now, after the conversions, which will be completed in the second half of next year, we'll have around 1 million tons of newsprint, 200,000 tons of SC magazine paper. This, of course, excludes the Saugbrugs PM6 machine, which is temporarily idled. 400,000 tons of LWC magazine paper, and 800,000 tons, or 760,000 tons, to be exact, of containerboard capacity. So it will be a dramatic shift in our portfolio, and we will have approximately one third of our production capacity in a growing market. And we have been through a huge upcycle in the publication paper market.
As you can see, our last 12 months financials are quite a bit better now than what they were two years ago. We are in a cyclical business. It goes up and down, but we think we have competitive assets that will continue to earn us strong cash flows for the years ahead. Here's the agenda for today. First off, Geir Drangsland, our CEO, will give a few words on the fiber processing industry and Norske Skog as a whole. We have invited almost all of our mill directors, not everyone were able to come, but most of them were here today to present the industrial sites, the core of our business, our five industrial, industrial sites. We'll have a small break with a snack and some Q&A if you have any questions, 15 minutes. We'll go into the markets.
We'll present both the publication paper market, the packaging paper market, and our raw material markets, energy and fiber. Then Rune will give a few words on the financial position and the financial development in the company, before we close out with a few concluding remarks from Geir and a Q&A session after that. So hopefully this will be a good and insightful teach-in for everyone in the audience. I'll now give the word to Geir Drangsland. He's our largest shareholder, our CEO, and has 25 years of experience from the fiber processing industry.
Thank you, Even. Good morning, all of you. Very nice to see you. It's a lot of familiar faces here, a lot of clever people, analysts. Probably some of them know almost more about the company than we do. And, a lot of people here who has invested a lot of money in the company, so we are happy here to share with you not only information, but also that we could have a arena for a physical meeting, and not everything should be on a digital arena. And, I'm very proud to be the CEO of Norske Skog. I have followed the company for some years, but I've only been the CEO for nearly three months, so I'm cumulating knowledge all the time to achieve knowledge, to be a good decision maker.
I'm very proud to introduce you to some of the clever people that we have in the organization, both mill directors and also some of the key executive from the head office. Yep... Norway, we are a part of a region in Scandinavia which have one of the best sources of fiberwood. Norske Skog is one of the key players in the Nordic region and the biggest refiner of fiber in Norway. We also have, of course, operations elsewhere in Europe and in the world.... So that's the DNA of the company, to refine fiber. There are two main sources to do that. The end products to consumers is the energy supply, and it's the fiber, and we add things to get excellent quality through the process. So the sourcing, we have long-term competitive green electricity contracts.
It's very valuable for us. We have internal heat production through biomass and waste-to-energy boilers. We have evenly balanced exposure to recycled paper and fresh fiber. Focus on short in-and-outbound transportation and efficient logistics, large industrial sites and paper machineries yielding fixed cost efficiency. That's in a way, the platform for existing. So how is it going with the company regarding the profit and loss accounts and the balance sheet? And as you can see here, in a timeline for 2015 until now, last twelve months, revenues are fluctuating, and you here see a proof of the, price fluctuations, price fluctuations, 2021, 2020, and then from NOK 10 million up to NOK 15 million in 2022. It's not because volume, it's because prices accelerated. Now prices are dropping, and you see the correlation here from what's left in the EBITDA.
Here, it's the price is very sensitive, and when we achieve prices, its impact is enormous on the P&L. But net cash earnings also from operation after subtracting maintenance investments, it's always making money, which is a good sign and a strength and a health sign for the company. Net debt been for some years very low compared to equity base and the total assets we disposal. Now, it's increasing due to more than NOK 4 billion invested last two years in conversions to containerboard. Here, we have made some deduction even for compensation from the insurance company for the landslide in Sarpsborg, so that in a way releases some of the debt amount in the balance sheet. So this is a map where we are having operations. In Norway, we have two plants. It's Skogn.
They have three machines running for producing newsprint. Very, very good machines. It's a very favorable site, very good site, very clever people, very experienced. They have also, on the logistics side, along E6, the main road crossing almost all of the country for inbound and outbound logistics. They have deep sea harbor for transporting to the customers far, far, further away. They have a regime for energy supply, which is very favorable, and the profitability of Skogn is very, very good. So we know about the decline of demand for newsprint, but still, on the mill gate cash cost, it's a world-class within its segment. And we have Sarpsborg in Halden, where there are three machines only producing SC, supercalendered paper for publication paper.
There was this landslide, where the biggest machine producing 260,000 tons is for temporarily not producing, of course, due to the damage. So we have the number four machine, which always has been going, still producing approximately 100,000 tons, but we are starting up with machine number five. Per Ivar is here, the mill director. He will go deeper into it. So we will, in short term, produce, have an output of approximately 200,000 tons. And we have been very well treated by If as the insurance company, and we have achieved NOK 2.4 billion in compensation for the damage. That's the component.
They do the payments for insurance of re-establish the buildings and reading, taking care of the landslide, the materials, and we get cash compensation for the machinery, and we get the cash compensation for interruptions for 18 months. So that's NOK 2.4 billion, which is making us able to... And also, they have allow us to have optionality to reinvest in other things than SC, which also has a value to us. So now, the company has a focus on in which direction and which kind of income streams should we create in Halden? And they are very clever people. They, we will come back to it. I think on energy savings, on reducing cellulose, using TMP instead, they are also world-class.
I don't think there are other producers in the world producing SC as cheap cash mill gate cost as Saugbrugs. Golbey in France, there are two machines, as Even said, in 1990, the first one was built. Until now, there has been two machines producing newsprint. The one has been stopped because has made a decision to rebuild one of them for containerboard. That is in progress. Also, Yves is here, the mill director for Golbey. And this is also where we have the highest output of paper. It's really AAA site. Also, a very good energy supply, good premises for the downstream, for the customers, the take-off of the products.
We have Bruck in Austria, and also Enzo is here, who will inform a little deeper about that, where we have had the one newsprint machine and one LWC publication paper machine. The other machine, LWC machine is running, but we have also there converted. There, we actually have come to the finishing line, and are producing LWC. So, we are very proud, and so I'm very happy with your management. You've done an excellent job, almost within the limits of money that you were allowed to use to make it within the timeline. And also, perhaps the most valuable thing of all, the feedbacks from customers regarding quality and on-time deliveries is very good. So this will be a good and profitable project, I promise you. So thank you for that.
Also, we have a mill in Boyer with two machines. One of them is producing newsprint, and the other one, LWC. And they are approximately 30%-40%, Robert, for the domestic market, and the rest is for serving customers in India, China, and other parts of Asia. Yeah, this is to show you a little, to visualize the situation regarding investments. So you see the acceleration here for 2022, 2023, more than NOK 4 billion. So out of the total program, NOK 5.4 billion, NOK 1.2 billion remaining. So the cash impact on the balance sheet is in a way, we are almost getting towards the finishing line here as well. And still with this, we still have a very strong balance sheet with good cash positions after spending this. So it's the containerboard, very much of this.
It's waste to energy, to energy supply. It's Green Valley Energy in Golbey. We will come back to that, energy efficiency, and also in Saugbrugs. TMP, they are excluding the sourcing of recycled raw material in Skogn, and just using fresh fiber, and it's standardized and make lean leanifies the processes up there. That will give value to us. We are sure of that. Yeah, so there is also here, just to visualize the history for where paper, newsprint, LWC, SC, has been, how it's been. So in coming years, it will be more when we introduce income streams to you like this. Yeah, also here, to visualize a little for you, this is the new machine in Bruck, Styria factory in Bruck. Started Q1 2023. Spending is EUR 120 million.
Capacity, 210,000 tons of containerboard. Marleen is also here. She is in charge of sales for containerboard, and will also do some analysis for you for how it's going there. This is the improvement of the energy supply situation in Bruck. Started in second quarter 2022. Net CapEx, EUR 72 million. 50 MW heat. It's made us more independent from gas and the fluctuation in energy sector, making risk release for the mill gate cash cost for the products we produce in Bruck, and it has improved the mill a lot. And there we see a picture on the ongoing containerboard conversion in Golbey, starting second half 2024, which it should be, yeah.
Yeah, yeah, that's it.
Net CapEx here is around EUR 300 million, and the capacity is 550,000 tons. So it's 2.5x the output, so it's a large mill, large machine. And this is the energy supply in Golbey, which is very favorable. This is the biomass boiler, GV, starting second quarter 2024. We have an equity share here, EUR 5 million, and the capacity is 125 MW. So these are what's going on, which is as the management focus from Norske Skog for the time being, to get to the finish line here. And this is a picture of Saugbrugs in Halden. The rock slide on 27th of April, damaging buildings and machinery, no one physically harmed.
That was actually not obvious, because in the area where the landslide came into actually the building, normally, Per Ivar, there is a lot, actually a lot of people there.
Yeah.
So it's, yeah, really a reminder of what can happen. Excellent effort from personnel and other stakeholders to the mill, following up a wide range of tasks after the rockslide. It's very focused here to clean up. Yeah, and this is the settlement. Some money we already have achieved, some will be more in the near future, and, or, these days, we collect it as cash, and there will be residual of NOK 6.6 billion when we start to rebuild equipment. And also, we have actually achieved, Amund, the CEO, Amund Saxrud, and I had the, this, the dialogue with If, and we actually achieved acceptance to rebuild and being given optionality to rebuild just within the fiber, but this should not necessarily be an SC machine.
That's an important task for the management and the board in company now to see how should we spend the money to the best for shareholders and our employees to collect income streams for the future. Yeah, it's clever people down there. It's clever people in Saugbrugs. I think they have the lowest mill gate cost per ton of SC. They had done a lot on the energy side to improve the consumption of energy. They have almost even fjernse fra cellulose.
Yeah, taken away the need for kraft pulp.
Yeah, and it's mechanical, which is savings, and they use filler in an efficient way, so it's very... And it's not obvious. It's because the management there are very focused on improvements, so I'm very happy about that, Per Ivar. Yeah, and we will stay loyal to the mill and make it profitable for the future, I promise you. So this is just charts. Where are we, and what's the game plan for the... When we have done the conversion in France, it's completed, and not as today, where the utilization in Bruck, it takes time, Marleen, to get full utilization, even if we have completed the investment, and in France, it's still ongoing. It will take time because until we actually achieve acceptable profit from that machine.
But at the end, when we, at the time in 2025, we'll have all mills normalized, running with stable speed, this is how the company will look like regarding what do Norske Skog do, what do they produce? It's 2,350,000 tons, and this is the key components per mill. I don't go into detail now. It's the Norwegians. But you see, when this conversion in France is done, this, this is really a AAA site, what we have in France. So that's what we are focusing on, and not so much else. I, I don't focus on too many things at a time. I like to focus on a few things, but do that focus with quality and see to it that it's done according to the plan. So, yeah, I think next one is-
Okay, Enzo.
Enzo, yeah.
I present him. Okay, thank you, Guy.
I have this question.
Do you have any questions to this or shall we-
I think we wait with the Q&A before the break. So after a presentation from the mill directors, we will have a Q&A session. And thank you to you, Guy. Now I will present Enzo Zadra. He's the mill director of Bruck, the mill that has completed the transition of both on the energy side, but also on the conversion of the to containerboard. And Enzo has been in the company since 2001, so he's a really experienced engineer, and he has also been the mill director in Bruck since 2018. The word is yours, Enzo.
... Thank you very much, Carsten. Can you hear me in the back? Okay, that's fine. Thank you. Good morning. I'm really proud to be here today and give you an update on our project we have realized in Bruck. We call them the Lighthouse Project. And the mill itself, sorry, who—I can do it? Okay, thank you. Oh, no, I got it. The mill itself, you can see it in the picture, it's located in the green heart of Austria, in Central Europe. We have excellent road access and rail access as well. That's also important for the future, to put more on the rail, and we are really very close to all of our customers.
We are operating two paper machines, one for the production of containerboard, the other for the production of publication paper, and we are backed by the, our new waste-to-energy plant. We call it K9 Boiler Line. And on top of the paper business, we are also creating financial value with the supply of balancing energy to stabilize the European power grid and to prevent blackout in the European power grid. The annual production capacity in Bruck is about 475,000 tons of paper, and thereof, we are talking about 210,000 tons of containerboard paper and 265,000 tons of publication paper. And what this graph really shows, it's waste-to-energy plant. It helped really a lot to reduce our fossil CO2 emissions.
What happened therefore: previous costs on CO2 transferred to an ETS revenue position in the Bruck mill. That, that's very important. And what you can see on the right graph is, after the startup of BM3 in Q1, we are now ramping up delivery volumes on a quarterly basis. By the startup of the new waste-to-energy facility, K9, we have also significantly reduced our gas consumption. These are the blue bars. So it came down. So we have been one of the biggest consumer of fossil gas in Austria. Now, we are a small consumer, and that's good. So it's a lot of biogenic in the energy now in Bruck. And what also happened then, with the start of the containerboard production in Q2 this year, we are now increasing the share of recycling fibers in our paper in Bruck.
What you can see on the third graph here, I call it a success story. That's, that's really a very good story to tell. Already after the 5th month, after the startup of BIM3 containerboard, we have almost tripled the production. That's a very good development, this steep curve, and we've already reached our annual target for operating efficiency for containerboard production already after the 5th month. It was shown before. This picture shows our first lighthouse project, our new waste-to-energy plant, together with the fuel storage and the delivery of the RDF and sludge to the boiler. It was started in Q2 last year. Since the beginning of 2023, it's now fully utilized, and it was just taken over from Valmet, a month ago. And this waste-to-energy facility delivers really highly competitive energy for the production of containerboard.
That's really fantastic. Yeah, this is a brand-new picture, Monday, 6:00 A.M. So our second Lighthouse Project, a brand-new, rebuilt containerboard machine. What you cannot see on this picture is the fantastic staff around this machine. So they are really ramping up the machine and trying to put the record every week, and they're really pushing hard to create value. I have to say, I'm really proud and grateful for the trust placed in us. So I was asked, "Enzo, can you handle two such large projects?" I told you, "Yes, we will do.
We can handle." In times of a pandemic and also conflict in Ukraine, it was a challenge, I have to say, but it was a pleasure and really fantastic to see how motivated the whole project group, the whole project team, production, how dedicated and competent they were on the project. And I have to say, they made the project fly. And this was also honored in Austrian politics. So the climate minister, also the vice prime minister, they both joined during the opening ceremony, and they told us, "You're part of this solution. You're part of the transformation to the EU Green Deal." And that was very nice wording from politics and also very good support. And I have to say, both projects, they are the perfect match to create value for the mill and therefore for Norske Skog. Thank you.
Thank you, Enzo. Thank you for the presentation. Now we will move to France. We will have a presentation from Yves Bailly. He has been the mill director at Golbey since 2006, and he has worked in Norske Skog since 1992, just six months after the startup of PM1. Golbey mill was built in the beginning of the 1990s, so he has been there from the beginning, and has extreme experience from pulp and paper production. I would say that the mill is the state-of-the-art in its class.
Thank you. Thank you, Carsten. Good morning, everyone. I'm very happy to be here to explain a bit more what Norske Skog Golbey is. As he said, I've started it in 1992. At that time, the market was extremely bad. We were... I still remember, we were losing FRF 1 million per day. And now, since, it's been a very cash machine, a good cash machine, a good cash flow delivered by Golbey. And Golbey is a large industrial site, 70 hectares. It used to be the biggest production unit in Europe, in Western Europe, producing 600,000 tons newsprint. So now you know, we have stopped PM1 in order to convert in the containerboard.
This machine will start second half 2024, and we will be using only recovered fibers, either for newsprint or for containerboard, using old containerboard. And the mill is very well located because we have to take into account also the logistics is one of the key indicators for the performance or the competitiveness of the mill. And we are very well located in terms of connection to the road, but also to the French railway. And we have also very good energy supplies, thanks to access to the nuclear historical nuclear energy. In France, you know, where is a nuclear power plant.
Also a big contract we have signed 10 years ago, one called Exeltium, when we get access to very competitive price of energy for the 10 coming years. And we have here very good skilled people operating for a long, long time this mill. And as you can see, again, the mill tomorrow will have a capacity. I say tomorrow because, as I said, we start converting machine in H2 next year, but we will have a capacity close to 900,000 tons. Two-thirds of this converted volume will be for containerboard, and the rest is newsprint. And even the PM2 is a world-class machine for newsprint.
Even if the market is decreasing, the PM2 is one of the top machine over the world. We used to say, Golbey is located in the center of Europe. I know it's not so easy to go to Golbey, but what I mean by that is, with a radius of 800 km, we reach the major cities, meaning the major consumers, which is key for the future because logistic is key for the future. You see, we have a pretty good setup in term of CO2 emissions, and we have also happy to have a surplus allowance, more than 100,000 tons. The quarterly deliveries, you can say, okay, it's pretty low now, but as I said, we are running just one line.
By next year, second half, we will add a pretty high volume on this slide. When it comes to energy consumption, as you know, we maybe don't know, but we stop Q4 our thermomechanical pulp usage, so very energy intensive energy users. Nowadays, we are only using recycled fibers, 100% recycled fiber, and we reduce the intensity of electricity. Before we were using close to 1 TWh, 1,000,000 MWh per year, and now we are coming down to 600,000 MWh, which dramatic reduction. The quarterly consumption of fibers, now, as I said, is only based on the recycled fiber.
Tomorrow, after the startup, Golbey will use more than 1 million tons of recycled fiber. We will be the biggest recycling center in France. Here you can see maybe the fixed cost are seen as being a bit high, but I can assure you that it will come down as soon as the PM1 will have started up, because so far we just run with one line. It's why you see a high fixed cost. When it comes to the... You have heard about the Green Valley Energy. This is the name of the project, the biomass boiler and the steam turbine generator. This project is around EUR 200 million project. It's on time, on budget.
It will start quarter two next year. This is extremely good setup because this is the largest biomass boiler in France so far, and it will produce steam from demolition wood. This steam will go through a 25 MW steam turbine generator, and the steam out of the steam turbine generator will go to produce containerboard. This is excellent setup at the very competitive price, and it's extremely important for us in the 20 years. This is a 20 years contract done with JV partners. Norske Skog is 10% shareholders. It will be operated by Veolia, which is also 10%, and the owner is Paprec Infrastructures. When it comes to the conversions, okay, we say we're talking conversion, and people not knowing conversion, what does it mean?
think we just change few pieces on the machine. But actually, more than 95% of the equipment of the pieces of the machine are changed. This is a brand new machine, with a brand new wrapping line, and also with a winder. All is new. You can't imagine here the all we kept the building, but all the rest, more of the rest has been changed. The conversion, this machine is a state-of-the-art. It will be one of the top machine over the world, I would say. And with the high capacity, 550,000 tons, big width, high speed, big range of production, from 70 grams to 140 grams. I can assure you, it will be really tomorrow a cash machine.
We are doing our best to deliver what we should deliver. I know we are a bit late, but as Enzo said, we have been struggling with COVID situation and Ukrainian war. There is a lot of project going on, on stream, and in this area, we have three big project at the same time, and it's a big challenge, but we will do the job. And it's EUR 300 million net project. But maybe, and maybe it's—I'm sure it's the one of the top ten, within the top ten project in France. Because when you look at the project, all together, the JV and the box is more or less EUR 500 million. It's a huge money.
I'm very happy that Norske Skog trust in Golbey to have this big investment. I can assure you that tomorrow, Golbey will be still a cash machine, a cash, and we will have very low mill gate cash cost. But maybe, it's maybe better than words to show you a short video what's the conversion is. ...Now, just to tell you that today we are doing our best and to go to the finish line. Today, we have more or less than 700 people working on this site, excluded the one producing paper, to build this two huge projects. Thank you for listening.
Thank you, Yves, for a very good presentation. Now I give the word to Per Ivar Berg. He is the Mill Director at Saugbrugs, and he has been also a Mill Director at Follum and also at Parenco. He has extensive experience from the pulp and paper industry. The word is yours, Per Ivar.
Thank you. Good morning. In the Halden and at the site of Saugbrugs, it has been industrial activities for more than 160 years. There's been a lot of product and processes, but always it has been timber involved and also wood processing. That's also the case today. We are an industrial site based on fresh fiber and green energy, with a lot of possibilities, and we have a extremely good infrastructure. As Geir said, before the landslide, end of April, we were among the biggest SC producers in the world, and for sure, the most cost-effective. In a benchmark for 2022, we were by far the, have the lowest mill gate cash cost. At that moment, the capacity was 360,000 tons.
And of course, suddenly we are without PM6, and we have decided to start up PM5, and that give a capacity of 200,000 tons. The same as Golbey, we have very good energy situation. We have long-term contracts when it comes to electricity, and we have a biofuel boiler, the biggest one in Norway. And another thing which is extremely good at Saugbrugs, we are also located very close to the raw material source, and we have very good access for wood, which is extremely important because all the raw material is based on 100% wood. And it's pre-processed in the TMP plant.
It's a thermomechanical pulp line, and the capacity of the TMP plant is for sure at least 450,000 tons, which is a big surplus compared to what we are utilizing at the moment. So big opportunities there. Yeah, with the biomass boiler as one of the biggest, it's the biggest one in Norway, we also have a surplus of CO2 allowances, quite a big number. Another thing that is normally not thought over so much, but you see it when you have a greenfield project or scale-up of a production site, is that the limitation is often the grid, the electricity grid.
In Halden, we have at least 280 MW, can even be higher, up to perhaps 400 MW or 500 MW, and we utilize only 50% of that. The PM 5 was stopped in 2020 due to market situation and has been stopped since then, so it's more than three years. And immediately after the landslide, we considered, is it possible to start it up again? We haven't done any maintenance on it for these years, and through the summer, we did an investigation and concluded shortly after the summer that we wanted to start it up again. And it has been done some maintenance on smaller investments, and last weeks, we have been doing the testing and commissioning of the machine. And yeah, this week we are testing the drives.
It means full speed on the machine, and hopefully, next week we will be able to produce the first paper on the machine. And then we will have a capacity of 200,000 tons. Of course, it will take some time to ramp up, but if you look at the quarterly production, hopefully, quarter two will be closer to 50,000 tons. As I said, we have we are more or less 100% biogenic CO2 emissions, and it means that we can sell a lot of allowances, and we will also do this this year. One of the reasons for being one of the most cost-effective is that it has been worked very good with how to reduce the electricity consumption in the TMP plant.
And we did some bigger investments a few years ago, and we were able to reduce the electricity consumption for pulp production with 45%. And that's extremely important because that's it's very high intensity energy demanding to produce TMP, and that's one of the reason for being among the best. At the moment, of course, we are suffering of only having PM4 in production, so that's around 30% of the capacity with PM6 in operation. But we, for sure, we will improve the specific consumption, both on wood and the fixed cost is of course, influenced by the landslide and cleaning up and securing the rock, and also reconstruction of the building for the third quarter in this year. As Geir said, we have settled the insurance. The insurance is settled.
That gives us flexibility to either reconstruct PM6 as an SC paper machine, or we can do other products, and we want to look into other products. As I said, we have a very good infrastructure, and like the biomass boiler, we're utilizing 20 MW, 25 MW at the moment, and has a capacity of 75 MW. The water treatment plant was built for 600,000 tons of SC paper production, so it has a huge overcapacity. And the TMP lines, as I said, we have a big surplus. So we have a lot of opportunities, and of course, we have a very skilled and experienced organization at Saugbrugs, and we are very good located near the forests. So, if we are going to do something else than to restructure PM6, we will save a lot of investments in the infrastructure.
Yes, we're also doing some real estate business, and we have a big or large property outside the mill. If you look down here, this—we built a school and sold that last year together with PUAS. A gross property value of NOK 730 million. These days, we have started up a new project to see more possibilities together with Akershus Eiendom, and we will look at the areas numbered two to five. Two is not a clear ground, it's not a building there anymore. We will also look at Sarpsborg, which we own, and have the logistic center and the harbor, but we will go on the east side.
The plan is to build the housing and flats, and of course, it needs to be re-regulated, but we are in very good contact with the community, and it fits into their plans, what they want to do in this area, the southwest of Halden City. As you know, we have been busy by making new products based on fiber, bio-based raw material. Last year, we have had good progress, both with the CEBINA and CEBICO. CEBINA is the nanocellulose product, and we have been working close with different users, and we have supplied CEBINA for commercial production, for paper production in Sweden and Finland. We are working close with Hunton to improve their fiber board. Another example is the foam for the furniture industry.
It's also added the nanocellulose to get... Yeah, to reduce the cost and to get the other properties. Last year, we also started up our installation for making CEBINA masterbatch, which means that we can make masterbatch internally and not depending on an external company for that, which we were in the past. CEBICO has had extremely good development through the year, and one of the reason is that we installed a pilot at Saugbrugs, which was opened or started to take in use beginning of next year. And we have increased the number of recipes extremely, so we are now at the level of 500, and we can work much faster with end users. And today, we have like a letter of intent with Höganäs.
So they want to replace all the plastic on the, hot water tanks with CEBICO, and, we have produced eight of the nine, so that will be launched next year. We've been working with Swix, then we launch product on CEBICO next year. CTM Lyng, are now starting production of downlights with CEBICO, and of course, it's about sustainability and it's the CO2 footprint, but it's also about that we can do other strength, or we can do other properties, like it increase the strength and we can reduce the material. Yes, and, I think that was an introduction, at least, to Saugbrugs. So thank you.
Thank you very much, Per Ivar. That was a very good presentation, and now we will go to present two mills, the Skogn mill and the Boyer mill. We are unfortunately not having the mill directors from those mills here today. They are excused because they're doing important business for their companies and for the mills, and we have the Chief Operating Officer, Amund Saxrud. He's gonna present both the Skogn mill and the Boyer mill. And Amund has been in Norske Skog since 1996 as an engineer, and he worked a long time at Moelven, and also he was the mill director at Skogn for eight years. And since 2019, he has been the Chief Operating Officer. You're welcome, Amund.
Thank you, Carsten. Starting with Skogn, then. I still live in Levanger, so I can see this view every weekend, at least. This is a greenfield site from the 1960s. So the first machine at Skogn started in 1966. As you see, it has very good location and we have both a railway, road close to the mill, and as you see, also sea transport directly in the Trondheim Fjord. So it's... And actually, more than 85% of the paper is going out by vessel. So good logistics setup for the mill. Have also two biomass boilers. That means that we are not using any fossil fuel at all at the Skogn mill, and have also long-term energy contract with Statkraft.
And, as you know, maybe that, the NO3 area in Norway is quite a good price, both now and also-
... in the longer term, so, the energy prices in this region is very competitive towards both other areas in Norway, but also to continental Europe then. So, and I also will comment that we are now running also a TMP project at the Skogn mill. That means that we will increase the TMP capacity and allows us actually to run 100% TMP from quarter two next year. And, as also Per Ivar mentioned from Saugbrugs, so it's also a good grid. We have more than 200 MW capacity, grid capacity into the mill. Yeah, the capacity has been mentioned before, total for 510,000 tons on newsprint capacity. Very competitive.
Also on the CO2 emissions, as you see, it's almost no, fossil emissions, and this is then the allowances that we get, so we have quite a high surplus on allowances from the Skogn mills. And you see also, the volumes on the right-hand side, quite stable volumes, that you can also see here, also on the electricity consumption, energy per ton. Fiber consumption is also quite stable, and I think the main reason of this is, of course, that, even if the market is going a bit up and down, we see that the cost position at the Skogn mill is very strong, and we have been utilizing the full capacity of this mill now for several years. On the right-hand side, you see the fixed cost development.
You see some increases there, the last year. This is, of course, driven by some inflation, but we should also say that the last two years, the market conditions and the competitiveness of the Skogn mill has been very good, so we have been running full capacity, and we have also been running, you can say, all red days, meaning that there has been some additional fixed cost linked to that. But I would say that this is also possible in a way to take down again if we come into a position that we are not able to utilize the full capacity. But as I said, the cost competitiveness of this mill is very, very strong.
So then moving into a complete other region, we, we were actually down there last week. So, this is the Boyer mill, and, that was the first production site in Australia, and it's actually now the last one. So. And the history of this mill is actually that, after World War I, Australia, Australasia, they said that it was—they were very much dependent on imports, so they, they tried then to, during the 1930s, to build up capacity to be more, have more domestic supply. That was not only in paper, but a lot of other industries as well. So the first production in the Boyer mill was in 1941. And as I said, now it's also now the last actually domestic producer of, of paper in Australia, Australasia.
So it's, it's two machines, one producing newsprint and one producing, magazine. Total capacity around 280,000 tons, only TMP, and the, the wood is locally sourced there in Tasmania. So, so now you can say, a very efficient transport of, of wood into the mill. We also at the Boyer mill have a, a long-term, low-priced energy contract with the state-owned TasHydro company, so, a good setup there. On thermal energy, it's, maybe a, a bit more demanding because we have a coal boiler at that site, so that is, of course, not, the best we can have in, in regards to CO2, emissions.
But that it was what we have, and we have been looking into investment possibilities also to see if it's possible to build more typically boilers that we have in Europe using biowood instead of coal then. But as of now, it's a coal boiler at the site. Yeah, here you see actually the location. It's in Tasmania. And if you look into the CO2 emissions, you see that it's a bit different picture from what you see in Europe due to the coal boiler.
Then we have a lot more emissions of fossil CO2, and also in Australia now, they are introducing what they call a safeguard mechanism, but it's similar to what we have in Europe, linked to CO2 quota systems. And this will be introduced now, and this will, of course, also influence the cost at the Boyer mill. This will be stepwise introduced, so it's not a huge cost, but it's around AUD 5 million- AUD 10 million from July 2025 then.
... And as you see on the volumes on the right-hand side there, the volumes has been quite stable. This is, of course, also linked to the capacity closures that we have done in the region. Both we started with the closing the Albury mill and also have closed the Tasman mill in New Zealand, so both these mills are closed now. The two machines that we are running now in this region is serving the mainly domestic market in Australia, with some smaller export volumes into China, so and India. I think in the end, this is also just showing the energy consumption, wood consumption. It's more the same picture when we have stable production, and we have had that the last years now.
This is very stable, and also some increases in the fixed cost here, linked to higher inflation. But I think the energy contract we have is long-term and very competitive on prices. So I think that was it on the two last machines or mills.
Thank you, Amund. Thank you for the presentation of Boyer and Skogn. And now we will have a short Q&A session. So be ready. Guy, he's ready for questions, and you can raise questions. Anybody who wants to start? And we have to use this microphone, otherwise we won't stream it on the, on the... so we have it later. And both we are sending live also, so we will stream it. So if you present yourself and then the question, it will be very nice. Thank you.
Thank you. My name is Hans Christian Molstad. I'm a shareholder, as you. I wonder, I was hoping to hear a little bit more about the future business plan of Saugbrugs. But I understand we have to wait a little more for that. But could you meanwhile tell us if you decide to go on with the PM 6 and rebuild it, what would be the marginal CapEx to do that?
Sorry. Unfortunately, we are processing the ideas and collecting information to have enough information to do the best decisions for the company. But there are other options than SC machine, which are being explored to see what to do to create income and to utilize the clever people we have on the mill. But, unfortunately, I cannot share information. It has to be sent to the Oslo Stock Exchange first, I think. So I cannot share that here, but, it's very enthusiastic about all the opportunities that we have. So sorry for not can say anything more about it. It's-
Okay.
- premature.
Another more, not that difficult question, then. You, you're speaking about cost efficiency. And, what about the cost efficiency at the production of PM4 and PM5 at Saugbrugs? It's smaller machines than-
Mm-hmm.
you used to have with the PM 6.
Mm-hmm.
Will they have the same standard or low cost efficiency as the others?
Now, of course, when we have a machine which produced 260,000 tons, which is stopped, and we have now a restarted PM5 with 100,000 tons to replace that, the total output is reduced by 160,000 tons. That means less income and less contribution to share the fixed cost of the mill. But that is the way, not the game plan for the future. So for the future, this could open up a situation where we actually, if we do something else than rebuild equipment on the machine number six to do something else of income than SC, then perhaps that will create a new income stream for another segment. And then we could keep number five, which before the landslide was closed.
So then we can create income from number six, from other income streams, and then keep number five and number four to serve existing customer portfolio for the LWC products.
Yeah.
So that will mean in the future, three mills could be running, but that's, in a way, too premature to conclude. So for next year, we have this 18 months interruption compensation, which will anyway be added to the P&L until October 7th. So that will in a way reconcile the P&L for the company, at least until October next year, with the insurance compensation. Yes?
Kenneth Sivertsen, Pareto Securities. Just a follow-up on the Boyer mill. You have been in process of selling the divesting this mill on the area. Could you just update us on the process? I know it's time-consuming, but just give us an update there.
Yeah, it's... There are some interaction among investors, or industrial investors, I would say, which has an interest of the mill. Could not go too much into detail, but there are, on the downstream side, talk of its partners on the downstream side, which in a way perhaps has some ideas about how to could utilize the mill for to go vertical in the value chain backwards. So there are some interaction where there could be some situation for us, but it's also not allowed to say more than that. There are processes ongoing.
Please speak loud because, so everybody can hear the questions.
Yes.
It's important.
... Ole Næss, I'm Conceptor. Can you tell us, please, what was the main reason why you invested in Norske Skog?
I like fiber. I've been working with fiber-
Is it only that?
- for 20 years in Byggma Group, where I also am a main shareholder.
You can, you can work in the wood then, well-
It's not the same smell as from the dust and the-
No, but please, can you tell-
- chips
... why, what was the main reason?
Several, I think, actually, gives me a kind of competence, being on the, from the, upstream side. I have deep relations with the Viken and Glommen Mjøsen and, the sawmills, Moelven, Bergene Holm. I feel in a way, at that part of the value chain for the company, quite secure in my role, with my experience. And, I'm also kind of a little, Buffett man in my head. I like proven records. I like strong balance sheets. I like, proven things in a way. So I feel, if you look on the balance sheet of Norske Skog, the quality of the mill, and it's written down, I think if you should, in a way, on greenfield, establish Norske Skog's mills today, it would be like, EUR 4 billion-EUR 5 billion.
So you could access that. And last year, NOK 2.7 billion EBITDA. This year, one point something. You can see it, the third quarter, plus the fourth quarter, even with not so strong market. And the proven records I showed you for some years, even in the low cycles, we make money, and it's accrued competence in the company. And for Norway's part, it's a platform, it's the main player for fiber refining. So that's, in a way, some of the factors that's together made me be willing to invest some of the accrued earnings in my life to put that into Norske Skog, and I'm very pleased to have my role, to try to help the company to achieve profitability in the future.
Morten Normann, Carnegie. Could you give us some more flavor of the delayed startup from Golbey? And secondly, you give a wide range of you're saying second half of 2024. Could you be a little bit specific? Are you closer to the first of July or New Year's Eve on that?
Mm.
A third one, you're also saying that it takes about two to three years to reach what you called full capacity.
Mm.
Can you tell us a little bit more, or how do you reach that full capacity? Is it technical issues, or is it that you have to, to sort of, work with, with the customers?
Mm.
Finally, what do you think the capacity utilization will be one year after the startup?
Yeah. Four questions. The first one is, I think what Norske Skog... Remember, I have just been the CEO for three months. But what I can, what I have collected of information is that I also have the same experience with rebuilding of rebuilding of equipment in Byggma, in the particleboard mills. It's if you invite a supplier to build something for you on a greenfield, it's like, this is the speed, this is the quality, and this is the output. And then you should, and I pay for it, and I should just push the button. This is not possible when you do rebuilding of equipment.
It's kind of perhaps if, and so you can confirm, rebuilding of this kind of huge upscaled machines, like you've said, it's not like just some parts, it's almost complete rebuilt of equipments. The knowledge we have collected is it should be humble to how the complexity of it. So that is main reason for we have to inform that it will take a little more time than what we initially thought it would take. And regarding utilization, I think you should remember the, on the downstream side, the customer base, which we should serve, all of those customers, they have a supplier. We have to force somebody out and motivate them, with Marleen and Robert, to prefer Golbey, prefer Bruck. It's not like it's open doors, so it's a battlefield.
We have to chase customers, we have to collect them. I think you can follow up on that question afterwards, Marleen and Robert. So it's not a walk in the park. So the first paper rolls goes to the first customer, then number two, then number three. So this is accelerating rate, which we are, as Enzo said, on track with that. And first year, the third question, what would be after the first year, the utilization? Yeah, what do you think, Marleen?
Well, it depends very much on the market, as we will discuss later on in the presentation.
Mm-hmm.
Utilization rates are, will be around 84%-85% in 2024 and 2025. It has more to do with the market circumstances than actually the startup of, the machines.
Perhaps there was another question I didn't answer now, Morten. That was-
Be more specific,
Oh, yeah. Second half, is it first of July or, thirty-first of December? I understand. No, we cannot, cannot.
Cannot answer that, no.
No.
Cannot. Okay, we will have a break. It's about 15 minutes. We will start here at 10:30 A.M., and you can go out in the hall, and you will get some refreshments. Thank you. Okay, we are moving on in our program, and the next speaker is Marleen van den Berg. She is from Holland, and she is the Vice President of Containerboard, and she started to work in Norske Skog in the year 2000. But she has been away and worked for some of our competitors, and we were very fortunate that we could bring her back to Norske Skog three years ago. And now she's responsible and vice president for Containerboard.
She's now on the edge of launching the new containerboard from Bruck, and you will hear her experience about that. The word is yours, Marleen.
Thank you very much. Can everybody hear me? Good. Yeah. Okay, good to be back here after two years, two years in which, a lot has happened. We've seen a war. We've had another one recently. Inflation. So a lot of things happening in the global economy and geopolitically, and it all influence the demand for packaging, as we will tell you later on. But first, let's dig into a little bit back into the details of two years ago, just to tell you what exactly we are producing, and exactly Enzo is producing in Bruck. We are producing containerboard. Containerboard is paper that we sell in reels to corrugating companies. Corrugating companies produce corrugated sheets. We produce actually two grades. We produce testlin er and fluting.
Testliner is the top and the bottom of a corrugated sheet, and fluting is actually the waves. It's a commodity, a pure commodity, but there are many, many weight varieties in these papers. Yves already said that they were producing Golbey from 70 gram-130 gram, and actually, Enzo produces from 90 gram- 160 gram. So a lot of variety in the grammages. Basic markets are industrial packaging and transport packaging, boxes for e-commerce, boxes for retail, boxes for transport. So that's basically what we produce and what we already sell from Bruck today. These products make about 60% of the packaging market, so 60% of the papers are these containerboards. Of course, there are also other packaging products. As we all know, you have your cartonboard, which is primarily a consumer packaging product.
Because of the end users, which is food, cosmetics, pharma, these are normally virgin fiber products, and they also have more challenging properties when it comes to the production. So that's cartonboard, and of course, as we all know, as consumers, there's also other packaging products, more bespoke, more tailor-made, like, for example, paper pouches, sack kraft, and that's a total other segment. But again, we are in containerboard, reels that we sell to corrugators. Now, how have we positioned ourselves? This is also a little bit of information that you got last time. You see here the value chain of our product: selecting raw material, producing containerboard, producing paper, corrugating, making the sheets, from the sheets, making the boxes, and the boxes go to brand owners, retail, what have you, the end customers.
There are players in this field who are active, actually, in the entire chain. So they collect raw material, they process it, they make the paper, they design boxes and packaging together with OEMs, and those we call integrated players. Think of people like DS Smith, Smurfit Kappa, Mondi, Saica in Spain, big players, integrated. But you also have independent players. Independent players focus on one part of the chain. We are an independent paper producer because we only produce paper, but you also have independent packaging producers. They only produce corrugated sheets and packaging. Now, you can imagine that these players, so the independent packaging producers, do not like to buy their paper with one of the integrated because they compete with each other downstream. So they prefer to buy paper from independent players like Norske Skog.
That is why we very much position ourselves as an independent paper producer. Because if you look at the largest markets in Europe, think of Poland, Germany, Italy, those are very much dominated by independent packaging producers. That doesn't mean we only sell to them, though. We also sell to the integrated players. They are usually short on paper as a strategy, so they're always on the lookout for new strategic partners because usually they have a growth scenario, and that usually is more focused on the corrugating side than on the paper side. So they're also part of our customer base. Also we sell to smaller and larger customers, of course. A small customer can be up to 1,200 tons per year, so only 100 tons per month. But a large customer can have around 4%-5% of our total capacity.
So there's a real mix in our customer base. In total, we have around 70 customers, and we supply around 120 sites, once Golbey is up and running, also 100%. The entire market is somewhere between 650-700 corrugating machines throughout Europe, and they are owned by 300-400 companies. So in that sense, we have quite a nice customer base with both machines. Of course, that is very much determined by where both mills are, because you don't want to transport this paper too far away from the chimneys. So containerboard is what we produce. We position ourselves as an independent packaging producer, and that's how we started to enter the market with Bruck. Now, looking at the European market, I already said that most of the integrated players have a growth scenario.
Basically, the independent players also have growth scenarios. So you see, there has been a lot of investment in either new builds or conversions of paper machines, like we are doing. So right now, the market is 26 million tons, and next year, with a lot of growth, we will end up at 29.3 million tons, which is, again, a lot of growth, especially looking at the market where we are today, because the market is unfortunately under pressure. As I said before, we had a war, we have inflation, we have a lot of aspects that make sure that we do not buy as much as we did before. We, as consumers, do not buy as much produce as we did before, and that means that we need, in general, less packaging, very much influenced by the factors.
For example, inflation, very clear, then you focus on the things you need to buy, your food and what have you, but you don't buy as much furniture or other stuff, and that is the things that need packaging, that need our paper. So in that sense, we have seen a decrease in demand, basically since the last one and a half years. And you see that also here in the price index of Germany. Basically, starting June 2022, you see the price index decreasing, and that is what we're facing today, and that is also why looking at this picture, it is extremely important that both Golbey and Bruck are on the left side of the cost curve.
So we can actually survive this period, and then go and move on to a period where we see the normal traditional growth in this industry again, because there will be growth again in this industry. What is also important to understand is, on this side of the cost curve, we see at this moment, capacity being taken out. The last couple of months, we have seen four announcements of mills actually being idled. The last one only a few days ago, a mill from Smurfit Kappa. If you look at Smurfit Kappa and other integrated, they will have some assets that are not as profitable as ours are, and you will see that in the future, some of these assets will be taken out due to the market circumstances. Now, again, are we not positive? Yes, we are positive.
At this moment, we see, of course, like we just talked about, the operating rates. We will see a decrease in demand in 2023, probably about 6%-7%. Long-term, the prediction is still, though, that there is growth, growth between 1% and 3%. Some people already predict this growth in 2024. So let's see if that happens. At the moment, the signals are quite neutral, but at the moment, 2023, a decrease in demand. Long-term, the drivers that we discussed in our first Capital Markets Day are still the same, though. Sustainability, switching to sustainable packaging, switching to renewable packaging, increase in e-commerce, because everybody is badmouthing basically the growth in e-commerce, but mind you, that is still 10% per year. So in that sense, we're still profiting from that growth as well.
Of course, global GDP, international trade, it will all pick up again. You are all investors here. You know that what goes up must come down, but also the other way around. So in COVID, people bought a lot of durables, like whatever, sofas or garden furniture. At the moment, they're not buying that. Logically, you don't buy a sofa every year, but it will happen again, and hopefully already in 2024 with Golbey coming, so we can definitely profit from that when it comes up again. So, long story short, the destination is still the same. The road has been a bit more bumpy than we all expected, but we are still definitely going to be a leading independent paper producer. Thank you very much.
Thank you very much, Marleen. Now the next speaker is the most experienced Norske Skog presenter today. He has been in Norske Skog for more than 30 years, and he has been managing director of the German sales office. He has been the managing director for the Pan Asian office in Asia 20 years ago, and he also worked for Herald and Times in Glasgow, and he is originally a policeman from Glasgow, isn't it? You're welcome. The word is yours.
If you're not nice to me, Carsten, I'll take you away.
Thank you.
Thank you for that introduction. Yeah, when I started out in this industry in 1987, I had a full head of hair, but like the publication paper markets, it has declined a little bit. So, yes. Clearly, we see demand for publication paper has been declining for some years now, and mainly because of the digital transformation, which has resulted in less ad spend for printed media. You see the graph to the left showing that the newspaper ad spend peaked just prior to the financial crisis and has come down quite dramatically since then. However, print still represents more than half of the publisher revenues through both advertising and circulation, and worldwide still accounts for close to $70 billion. So, I mean, we're still talking big numbers. We're still talking significant revenues.
The industry is not dead yet. It's clear that even if publishers state that their aim is to be fully digital, even in 2023, they're still not there. They cannot find a way to fully replace the considerable revenues that they get from print. And that's significant, and it's the same for retailers. We see in the retailer market that some retailers want to go to a full digital marketing. Others firmly believe in paper, and the jury is out as to what the best approach is. Clearly, for us, some who have paper and digital are preferred.
But those who've gone solely to digital, some of them have already started to come back to paper because they see that it drives footfall in the stores, and particularly in times of recession, that's important. So it's not dead yet. There's a long way to go. And clearly, the other factor that we need to remember is that paper is a small share of those publisher costs. If you look at the graph, print production and distribution is less than 20%, and that's including the paper. And clearly, recently, the distribution costs have shot up for publishers and retailers, and that's what they're trying to focus on. Of course, it helps us.
It helps the customers if the paper prices are lower, but at the same time, they can afford to accept higher prices, and we saw that in 2022 when the prices peaked. As we've said, still a long way to go before we're dead. We're not there yet. Long, long way to go. And what's key for Norske Skog is that we're a trusted and long-term supplier to more than 400 customers across the world. We've got a very diversified base in Europe. We've got, you know, 43% of the sales to the top 15 customers. And the same in Australasia. We've got 30% to the two long-standing customers.
We've got 70% to the rest of the market, and actually, we're still, as Amund mentioned, we're still, for Boyer, focusing on the Australian and New Zealand markets. We have a fairly dominant position there, albeit that there is some need for exports into China and India. And just as an example, why are we still with all these customers? Because it's a people business. Geir, Amund, and I were down last week in Australia, and I was in New Zealand, and we met the two largest customers there. They appreciate that you travel all that way because it's important business, and we learn a lot from them when we're down there about what the trends are, and they still believe in paper, as I said.
And they still see a future for the Boyer mill in supplying that region, so that's good. Okay, on... We know we're in difficult markets. Clearly, you've seen the operating rate come down, the end of 2022 into the start of this year, but we do see a little bit of stabilizing demand now. I think there was a large stock build-up towards the end of 2022 because of the fear of the energy position, particularly in Europe. The impacts of the war have been felt, but we start to see a little bit of light at the end of the tunnel now, as we're in Q4, and the graph shows that the operating rate has come up a little bit.
And also significantly, the stock levels have started, the producer stock levels have started to stabilize down towards the trend line on the 25 days. Albeit that within that 25 number, the coated mechanical stocks are still relatively high. Newsprint and SC are a little bit better, maybe around 20 days. And from our perspective, Bruck is extremely efficient at making short-term deliveries, you know, in the main markets that we supply LWC from Bruck. So our stocks are nowhere near the industry level at Bruck. We're very happy with that. I think the key is we've talked about the mills. You've seen the different portfolios.
The key for us is to be competitive on the cost curve, and we will then, as Geir says, continue to make positive profit and generate cash. It's difficult, the markets just now, but if you've got the right assets, then you can still make money even when the prices are in the low point of the cycle. And then when things turn up, and I'll come back to the capacity, when things turn up again, then we can make a little bit higher revenues and profit, as we've seen in previous years. So we are comfortable with our capacities, where they're located, and where the access to the markets are.
Albeit that, yes, there are differences if you take Australasia compared to Europe, and there are differences between the mills as we see, for example, Bruck, compared to, say, Saugbrugs, Skogn, and Golbey. Certainly, there is significant overcapacity just now. I think we all realize that. You, who are analysts, analyze the markets perhaps even in more detail than we do. Where we're exposed, of course, is across all of the grades: newsprint, uncoated mechanical, which contains the SC, and then coated mechanical. And clearly, at the moment, newsprint is the most balanced, albeit more capacity will have to come out.
Magazine grades are very weak in terms of the operating rates, and more needs to come out in coated mechanical. But as always happens, the market adjusts to the reality, and already we see announcements of further capacity closures, mainly within the magazine grades. You see on the chart what's been announced for closure before the end of this year. 10% in coated mechanical, 22% in uncoated mechanical, including SC. So that, that's... These, these are, you know, large chunks that are coming out. There still needs to be more coming out, that's for sure. But as the markets will adjust to those closures and further closures, then as long as you're on the right or the on the left-hand side of the cost curve, then you're well-positioned to take benefit from that.
So I think that's the signal. Yes, the markets are tough just now, but we've got good assets. We will strive to keep the assets running as best we can. And then we're able to take advantage of the situation when other capacities come out. Of course, the prices are important. You see the effect of the prices on the EBITDA. What we see now is that they're starting to stabilize a bit in Q4. We've seen contract periods dramatically reduce when we were in this huge pressure with the costs. We were down almost to monthly contracts on newsprint in Europe, continental Europe. We've started to see that move back to quarterly, and I certainly think that we will continue with that into next year. And maybe even we'll look at six-month contracts in some areas.
It's a bit dependent on what happens with the energy situation in Europe, where the prices go. My feeling is that we're kind of at the bottom, maybe a little bit of movement further into Q1, but not much, dependent on the energy, and then we'll see what happens with further capacities coming out. For us, we have got some contracts that are of longer duration, albeit we're not fixing the prices for those longer durations. So we've got some volume contracts that are longer, but we have specific price points that we adjust to. So we're following the market in that respect. So I think the cost position is important. I'll hand over to Amund, who will start to talk about the raw materials and where we see our key input factors, because that's critical to us being competitive on the cost position. Okay.
Thank you, Robert. Hi again. I think I will try to give a bit more flavor on, as Robert said, the most important cost factors for our mills. So starting... But before, I think we can start with also a bit about, you can say, our industry is an important part of being a circular business. And I think we, if we start with the end products, 71% of actually what we produce is based on recyclable raw materials. And it's not only that it's recyclable, but it can also be recycled many times. So up to seven times, in a way, it's what is stated for recycled pulp. You can drive it through the value chain seven times before it, it's out.
So this is, of course, good. We utilize also more or less everything of the raw materials. Only 2% of what we use is going to landfill, and this is mainly an ash from the boilers. And also on energy, you can say with the last project now in Bruck, moving from gas into waste energy, we have 84% of our energy production is based on green energy then. And this also, when we measure this in the right there, you can see the Scope 1 and 2 CO2 emissions. You see that we have quite a huge reduction then. And, of course, the main driver of this is the new boiler in Bruck.
So actually we have already achieved our ambitions on Scope 1 and 2 up to 2030, and now we are also focusing more on Scope 3, on the CO2 emissions. Then moving into recycled fiber, and I think now actually we have to divide in two types of recycled fiber. We have for the newsprint and, or you can say the printing paper, we have the RCP, and for containerboard, we have the OCC. Starting with the RCP, the demand is going down on printing paper, and that means also that the availability of RCP is going down. So even if we have had the price reduction, this is showing the price on the RCP itself.
We see that the reduction actually in cost delivered to the mill is a bit lower, and the driver of this is, of course, that with less volumes, we need to extend, you can say, the area that we are collecting RCP from, and that means more transport cost. So that is actually explaining why we don't see that same reduction, you can say, in our cost delivered to the mill compared to what actually the market price is. On OCC, it's a bit different because there it's still a bigger volume. But I think generally we can say that we try to source recycled paper directly with communities, and this has been a very important part of the business in Golbey. So we try to bypass, in a way, the traders.
We have direct, deliveries from the local communities, and this is of course, an very competitive, towards being then exposed to, to spot volumes, on, on recycled fiber. So I think that is, the headlines on, on the recycled fiber. If you then move to, fresh fiber, and, and this is, you can say that recycled fiber, this is, for, for mainly for Bruck and Golbey then. Fresh fiber, this is from, for the two Norwegian mill and, and Boyer. But if you concentrate on the Norwegian wood market, you, you see that this has been quite a steep increase in, in the, in the, the prices, and... But we see now, we believe actually that the prices is, is on a high level now. We see signals that, pulpwood prices in Sweden are moving down.
So we believe that we are on the top of the cycle on that. And you see this is, in a way, the market price delivered to road. Here you see actually then the price delivered to the mill, and again, you see also a bit higher cost increase than we can see in the market, and again, this is driven by logistics. And I would say in Norway now, it's two drivers behind that, and for the Skogn mill, it's actually the flooding that we had. We have only one rail track to Skogn from the eastern part of Norway now, so that is limiting away a bit the transport possibilities by railway and some increased cost linked to that.
Of course, also the landslide at Saugbrugs, taking down the volumes. Also, the wood supply into the Saugbrugs mill hasn't been, in a way, optimal in having low logistics costs, so we have some additional costs due to the volume decrease there. But with. As I said, we believe that we are on the peak on the cost level on wood in the Nordic area now. If we move then into energy, and again, divide in two, it's both electricity and thermal energy is very important. If we start with electricity, then it's the TMP process, the pulp process, where we produce the pulp for the paper machine, is the most energy-consuming part of our production facilities.
And so, so to optimize this is important, but also to have long-term, you can say, competitive energy contract is important for us. And, and we have that in Norway for, for both the, the, the two Norwegian mill. In, in Golbey in France, we also have two energy contracts that, in a way, is serving, at least 70%-80% of the energy volumes to that mill, and also with a new boiler in, in Bruck, we have, reduced our exposure to both electricity and gas. So generally, we can say that, we have, competitive electricity contracts, for, for more or less all our units now.
And if you also remember what I started with earlier today, also in Boyer, in Tasmania, we also have a long-term agreement with the government in Tasmania. So if we move to thermal energy, thermal energy is, of course, very important to for us to drying the paper. So thermal energy is either produced by heat recovery from the pulp process or from energy produced in boilers. And in Europe now we have, at Skogn, we have two bio boilers, and we have heat recovery from TMP. No exposure in the way to fossil fuels. Same for Saugbrugs. Golbey now with the new GVE, that will deliver thermal energy to the rebuilt PM1 machine. We will also have almost no fossil exposure in Golbey.
And in Bruck, with the new waste-to-energy boiler, we have reduced our gas and electricity exposure heavily in that mill. So, I think I can say that, and we also showed that actually back in, in the history where we had the very volatile energy markets, we are quite competitive also in the way when energy prices is going up because we have long-term agreements and, on the energy side. So this, we have been commenting a bit earlier also. This is showing the CO2 allowances that we have in Norske Skog. At the left-hand side, you see the price development, and of course, this is making the CO2 quotas and allowances quite important for us, and...
But we commented it mill by mill, but you see, there is a huge reduction then, and as I said earlier, the main driver by this is, of course, the new boiler in Bruck, taking down the gas consumption and then the cut CO2 emissions. So all in all now, we have a net, you can say, positive situation on CO2 allowances available in the company. So this is a good situation. Yeah, and on the fixed cost, I think, as I also said earlier today, we have been through a phase now with good market conditions. We have been operating our assets more or less full, both in 2022 and 2021.
With the weakening markets now, we are not utilizing our capacity full at all, all machines, but, but that also means that we have to put even more pressure on the fixed costs. So, you see that this has been increased, a bit, the last two years. And, as I said also earlier, this is also, linked a bit to that we have, been utilizing the capacity full. We are now working hard also to, to push the fixed cost down, to, to, to be available, to be, be competitive, even you can say, with the lower operating rates than that we, we see now in the, last quarters in 2023. And, and we, we also believe that the, the markets will be a bit weaker in 2024 than we have seen now the, the previous years.
So, yeah, summarizing this, this is in a way showing everything put in together, but I think we can say that even in a situation where the raw materials has been quite volatile, I think we can say that we have been quite competitive in all our mills. And we were able to run through the periods where energy prices were peaking. A lot of our competitors had to close down for periods due to that they were not able to to run profitable. So, I think we have proved that we have a good cost position, and this is, of course, something that we will continue to to work with, to be in front of that, because it's all about being better than our competitors.
If we are that, we will be able to utilize our production capacity even in times where the market is a bit weaker than. So I think that was it, so.
Thank you very much, Amund, for the presentation. This was a deep dive into the raw material situation, and now we will get a deep dive into the financials. Rune Sollie, he has extensive experience from Norske Skog. Since 2014, he has been the CFO of the company, and before that, he worked for KPMG for a while as an auditor, and also he worked for Yara International and Statoil Fuel and Retail, and now Circle K. You're welcome, Rune.
Thank you, Carsten. I had hoped you were not going to mention the auditor part, but now it's out. But there you go. Yes, I've only been here 10 years, when you hear to these others. Unlike Robert, I still have my hair, but it's getting grayer and grayer. So, but, it's as we'll see now, and as you know, it's been 10 years where things have gone down, and they've always come up again. So I think what Marleen said has been true in this period, and will probably, possibly be true in the coming periods, from where we are now, at a down in the cycle. Is this the one that... That was the wrong way. That was also the wrong way?
...Okay, so here's a bit history of the delivery from the same periods that we have shown before, illustrating here both the declines in volume from a market retracting in certain periods, but also that we have stopped newsprint machines in this, and also illustrated the quarterly deliverables on the shaded green here on the left-hand side, where the deliveries will be increasing from the containerboard projects as they ramp up going forward. I think that has been well covered earlier, where we are in that here, but that is, of course, what we are now we will surely see on Nexus, starting to harvest for, and we'll harvest more and more to come in the near-term years. And also just on the right-hand side is just the quarterly deliveries by middle here.
It shows, of course, the same picture. Some, some have been closed, some have been taken out now for conversion and are fully converted, Golbey being converted, Bruck has been converted and is now running and producing. So here you see what we have communicated for many, many years, that the publication paper business over the cycle should be able to produce an EBITDA around 10%. We will see later how that has gone. Here you see Europe and Australia separately, as we regard them as two separate businesses and with very little synergies. And, for those of you at the back here, for the right-hand side, there is something on this slide, actually.
This is showing that we have now started the harvesting of the containerboard project that also has led to a successful start. And these graphs will then grow in the coming quarters and also further growth when these projects comes on stream. So it is not a slide without any contact. There is some bars showing we are on the journey now to harvesting. Yes, and here is the covenant on targets, covenants, and policies that we have talked about many, many years. As we say, we've said the container publication paper should be able to generate with the portfolio of machines we have that has been thoroughly covered where their favorable cost position and other advantages are to around 10%.
We still believe that to be the case, and then we also have, now moving into the packaging paper market, which we believe will be at a higher, profitability level, than we have seen in, publication paper, and also a growing market, contrary to the publication paper market, which is in a structural, decline. The covenants, I'm sure you are well, familiar with. We have a maintenance covenants with equity ratio above 25%. Interest rates will cover, 2x , and a minimum cash above NOK 100 million. And our financial policies here, we aim to have a leverage less than 2x , in the longer term.
As we said last time on the Capital Markets Day, we will peak above that, when we are at the peak for the investment project, but the leveraging of that will come relatively swiftly afterwards. But also, our aim is to have the financial flexibility to fund short and long capital requirements that will come along, as a large industrial company that has plans for growth and divesting into other areas, possibly, and also have a capital structure of the group that suits this strategy. But also have a diversified range of access to capital sources. So we have local loans, we have bonds that we will see either here. But also important, have a maturity profile that is spread out in this, and also do any things that need to be done well in advance of any maturity.
So we do the optimal when we can do it, not when we need to do it. As I said, we've had targets for our operations, here, both on utilization rate, and here you see utilization rates per quarter and also the target rate, which you've seen we've been around, up, below, and above, a bit dependent on the markets, here. And the same, for EBITDA targets. We've been above, below, and I'm sure you're gonna appreciate which period has been below here with the COVID and everything going on in 2021. And I'm, I think I ever, forever will remember Q2 2021, where NOK 17 million in EBITDA, which means the bar is there. But, as you can see here, there's been a nice return, from this.
So that is why we say we have competitive markets that can leverage on competitive assets and competitive mills that can leverage on the market dynamics. So we have, in our opinion, managed to achieve the targets we have set us for the publication paper, but not least to all the hard work of the people that have spoken before me today at the mills. Yeah, so here is just a summary of where we have been on the covenants throughout this period. Cash position, of course, has been well above the covenant level that we have. Equity ratio has also been well above in the whole period, in reality, from we were listed, where we did some changes in the debt conversion to equity.
And also the interest rates coverage is also, except for the period when things were a bit gloomy in the COVID period, also well above at the moment. And the leverage ratio we are still well below at the time being. So here's a bit flashback to last Capital Markets Day. If you recall, then we had some targets or illustrations on where we look to be going forward after the investment projects and things were announced. And I think we're pleased to say that we have been within the range of what we communicated in 2021, both for the net debt to be in the range, but also the liquidity to be in the range of what we communicated then in 2021.
For those of you, which I assume is all of you, follow our maturity or things, here is our maturity profile. Of course, we have the EUR 150 bond that matures in 2026, and then we have the local loans combined with the Aker financing here that matures from started amortizing now, but maturity is in 2023. So we have spread out all the local financing over a longer period, and then, of course, there's the bond that we will deal with in due course.
Yeah, and here also, history, we've seen the cash generation in periods, as you see, Even has in this presentation illustrated once again the COVID impact, which was poor, but in general, the uptick in things have contributed to a significant share of the expansion CapEx has been covered by the operating cash flow after maintenance CapEx in the period. And here you also see the maintenance CapEx and depreciation in the middle slide, showing it's higher than the maintenance CapEx, but these are very well invested assets, the old ones from history. So it is keeping the maintenance CapEx at a level where we can run them at the utilization that we would like and what we have communicated.
Yes, and the expansion CapEx, no surprises there, that has increased from what we announced in 2021 when all the projects were announced. As said, said before, we've done the K9 boiler, waste-to-energy boiler in Bruck. We've done the conversion to containerboard in Bruck, and we are fully doing the conversion at containerboard now in Golbey. So the expansion CapEx is in line what we have communicated then and subsequent updates to the market. And here's just an overview of where we are at the moment. We have a combination of debt at group level, the bond, and we have also local financing made mainly at Golbey and Bruck as the projects have been financed locally.
Here you can also see the varying terms that are. It's a bullet amortization, as I've said before, of the bond, and which coincides also with the RCF, which are connected. Golbey, last amortization in 2031. Similar for Bruck, the last amortization is also in 2031, and the Bruck waste-to-energy has its last amortization in 2027. So we've tried to do it locally, project financing for all the projects and also spread out the maturities here, and it's done at competitive terms for all the local financing that we are pleased with. Yeah, and here's just a snapshot of the balance sheet. I think the main point here now is that the balance sheet, although it's growing, most of it is, of course, newly invested assets. The largest chunk of it is here.
There's still some of the publication paper assets that are producing well and are on the books, but the main increase in our balance sheet is, of course, the investments that we have done now into new assets that will be producing shortly, and the harvest will become evident in the years to come, come after that. And then, of course, you can also see here what share of the balance sheet we've done a cash and annual sales for receivables and inventories.
Similar for the other side of the balance sheet, equity and liabilities, share 42% is equity, and then we have liabilities and other smaller bits and pieces, but making it all in all, a solid position with new assets on the asset side and a healthy equity ratio on the equity and liabilities side. Okay. That was it, and then I'll now like to ask Geir to come up and Carsten?
Thank you, Rune, for the presentation. And now Geir will give us the final remarks, some concluding remarks, and after Geir's concluding remarks, we are opening for Q&A session.
Is this the one, Carsten?
Yeah.
Yeah. I'm happy that you have been introduced to some of my good colleagues. Thank you all for sharing your knowledge to the guests we have here today. Final comments, what we do is optimize cash flows from publication paper production across all mills.... continue to increase production of packaging paper over the next three years. Further exploration of new products based on fiber processing, significant focus on project execution and cost efficiency going forward. Earnings from investments projects starting to take effect and expected to grow over the next three years. So you just have to be a little patient. Ensu has completed the conversion, and in France, you saw the film. I hope you saw it's not a small shop. It's, it's really a AAA large-scale plant with the newsprint machine, as you said, is really top world-class.
It's 10 meters wide. It could run up till 1,800 meters per minute. It's really something. Combined with the containerboard and energy supply, and as you said, the downstream, where are the customers? It's. We're really looking forward to that, so but we, we just have to be a little patient, please.
Okay, we are having time for some questions, so if anybody wants to raise some questions, you're welcome. Yeah? Just present yourself and then raise the questions. Try to speak loud so everybody in the hall can hear.
Thank you. I'm still Hans Christian Molstad.
Yeah.
I wonder, you sound glad to hear that you are still optimistic, despite, say, a couple of setbacks this year, rockslide, CapEx increase, and so on-
Yeah
... and a bit slow market. But you are optimistic. So what can happen to change that? What black swans or white swans can happen in the future, which change this picture? That's one question. And another question is, the business in the supply side in Europe is pretty diverse. It's a lot of suppliers, particularly for publication paper. What do you think about the future consolidation of the business? Is anything going on there of interest?
Yeah, well, it's always risk factors. If you look upon, if you divide in two on the upstream, on the for outside, for the outsourcing of energy and fiber, I think, acceptable and not too volatile risks. We have very good condition on the energy supply. So the mill gate cash cost for us is, in a way, not, should not be too volatile. So the main risk factors is on the downstream, on the demand side. If the demand is in a way declining, and without the unnecessary, as you said, Robert, adjustments on the supply side, that of course, the determination of the price for our, the output of our products will-could be struggling and challenging for us. That's what we see now. We see the RCP prices has dropped.
So even if we are on best practice on production, if we don't get enough paid for our products, it's, of course, that will hit the P&L sheet for us. So, so that's what we are monitoring, and we try to be best practice, and that's, yeah, short way of answering to your question.
Any other questions? Yes.
Joel Sigurdsson, Yuko. Thanks for doing the highly accretive buyback program. You didn't speak so much about future capital allocation today, but question is really, how do you decide in terms of potential new buybacks compared to new project or capacity investments, when it seems that the market has difficulty in paying for the long-term investment and substantial new capacity investment programs? And in relation to that, your ownership, your personal ownership, together with Byggma, will increase gradually as you do buyback, and potentially you might approach where you need to bid for the company. Is that a bottleneck to buyback in any way?
No, I think what I, when I advise the board regarding the buybacks program, could be an alternative distribution to the shareholders, of course also my family, is quite common sense thinking. If we feel that how the share is valuated at Oslo Stock Exchange per share, compared to our own valuations of how much value is behind each share of Norske Skog, if there is a discount there at a level, it should always be considered by the board if the cash positions are there, that we could distribute by doing buyback of shares. Not necessarily, but it's an option to cash distribution. And regarding, yeah, if as for all of you, when we do buybacks, you all get the largest stake of the cake. So also, that's also the same for me and my family's shareholder position.
But that, that's it. Yep.
Okay, thank you,
... Now, well, did I get an answer for, did I?
I think it's the-
Okay.
Okay. Thank you, guys. Any other questions? Yes.
Morten Nordman, Carnegie. I have a follow-up to the, you call it, dividend or buyback policy. I understand that there was quite a fight with the banks last year or this year. How do you have any view of how those talk will be for potential buybacks, dividends for the year 2023?
I think I need some help from you, Rune, to answer that. There are. It's a little premature. We are not processing for 2023, to be paid in 2024. It's not actually on the table yet, so it's just distributed for this year. So there are some regulations, Rune?
Yes, we are, of course, in the loan documentation, we are not allowed to do dividends until 2025 or distributions. I'm not sure I would consider it as a fight, so I don't know where you had that thought. But of course, when you ask for a waiver, you need to produce them with documentation, which they then granted. Going forward, we will, until 2025, as it is, we will need to go through a similar process if the capital in the company is at a level that that becomes a subject again. But it was a normal waiver process to put it that way.
Any other questions? Yes.
Preben Rasch-Olsen, investor. I guess this question might be for Marleen. There's a lot of new volumes that you are supposed to sell into the market, and I was just wondering, what are your key selling points to new customers? What are sort of getting their attention when you call them for the first time?
First of all, this is a business that has been traditionally always growing. So in that sense, new suppliers are always welcomed. These past one and a half years have actually been exceptions in this business, and we have started to introduce the company already two and a half years ago. So the contacts were already there. And then when Bruck came, we had already prepared that people would get samples, we would sell sample trucks. So basically, the process was already going on before we actually started producing. So first of all, the fact that it has been traditionally growing, so the door was always open for new suppliers, any new supplier. Secondly, the independence plays a very big role. Even today, in difficult markets, you will see integrated behaving always, of course, in the interest of their own companies.
For us, as an independent player, the interest of our independent customer or integrated customer is of course key. So that is also a very important issue to get in, and those are basically the two biggest one. As I told you, the product is a commodity, and we were extremely lucky with the product from Bruck because we were basically in spec very fast. So the product is also accepted really well and really fast, and that was also an advantage. But people do understand that when you start, there will be beginning issues. So, but the fact that it was good right from the get-go really helped as well. So those were basically the three main issues. And when it comes to the market and when it comes to pricing, yeah, we have to move along with whatever the market does.
Does it answer the question? Perfect.
Thank you to Marleen. Any other questions? I don't see any other hand raised. Okay, thank you for the presentations, and it has been a deep dive into Norske Skog's business and operations. Thank you for attending here today. The next webinar will be on 8th of February, and we will have published the Q4, the fourth quarter results, at 7:00 A.M., and at 8:30 A.M., we will have a short webinar based on that presentation. So 8th of February is the next time you are able to see and talk to the management of Norske Skog. So thank you for today, everybody attending.