Good morning, ladies and gentlemen. Good morning to you on the live stream, and indeed, good morning to you the Hotel Continental here in Oslo. We're all happy to see you and ready to present Nordiskarskog's Q3 2020, an eventful quarter, as I'm sure you would agree. Very briefly, the EBITDA reported is NOK73 1,000,000 for the quarter. This is a slight improvement from the 2nd quarter underlying.
So in the Q2, we had the one off related to the sale of the Tasmanian Forest asset in Australia. Correcting for that, this is a slight improvement, somewhat better volumes in the 3rd quarter as the market has recovered from its worst COVID drought in May June. The cash flow is positive in the quarter. This is quite a healthy cash flow considering the trading conditions. Obviously, the cash position has been affected by the dividend payment, which was paid about NOK 250,000,000, NOK 3 per share in the Q3 in September.
Net interest bearing debt of around NOK 600,000,000 basically reflects the fact that we have a positive cash flow from operations. We are investing, as you know, in Austria and in Sverdrup in projects in addition to maintenance. So that roughly balances out. So the net interest bearing debt increase from the 2nd quarter basically equals to dividend payments. In the response to COVID and the market situation, we have decided to permanently close PM5 at Sibryx, producing supercalendered paper, taking out 100,000 tons of capacity.
This machine has had or indeed, the whole Sverdrup's mill has had a low capacity utilization throughout 2020. So the actual impact of the shutdown is less in terms of raw material consumption in terms of tonnage sold. However, we will take out fixed costs, and we believe that we can take out about SEK 80,000,000 per annum, full effect from 2021 at the one off cost recognized in this quarter of SEK 40,000,000. Importantly, the strategic projects are progressing to plan. We will come back to most of them during the presentation.
And more recently, we've also introduced circa into Europe. Circa is an Australian startup company, which has worked for many years on a very interesting product called Cyrene, which can I will come back to a little bit of the usage of this? But importantly, we now own 27.7%. We are the largest shareholder in this company who now aims to establish themselves inside the EU with a production unit in the north of France. Underlying EBITDA, somewhat better from 2% to 3%, still obviously at a low level, but we can see some improvement in underlying trading conditions.
Net interest bearing debt, I've already referenced. Main difference is the dividend payment. So while we still struggle from the COVID effects in the Q3, We have seen some modest volume improvements and particularly on the sales side. So we have also taken down inventories a little bit in the quarter. So the sales figures are somewhat more impressive than the production figures.
All in all, a slight positive. Fixed cost variable cost is also contributing positively to the quarter, while other effects, including a foreign exchange effect is negative. And then finally, as I said, we had in the second quarter a one off gain from the sale of the Tasmanian Forest. All in all, a slight improvement. If you look at our strategy, you are well familiar with that.
We want to diversify and innovate within fiber and energy, which obviously is our business. We also have said on the 17th June that we aim to become a leading producer of renewable packaging in Europe, establishing ourselves as one of the 10 largest player in a very, very large and important future oriented marketplace. And obviously, at the same time, conserving, improving the cash flows from the paper business. So going through this in a little bit more detail. Clearly, we will remain a producer of all publication paper grades for our customers.
The PM5 shutdown will not mean any change to the product offering. We also have to remind ourselves and everyone that we still invest in the Sibrugs Mill despite this machine closure. We are investing now more than NOK 140,000,000 in energy efficiency in the two remaining machines, which probably already has the best energy efficiency of any mill producing SC in the world. I will also come back to a little bit to how we can also use our facilities for property development, quite an interesting one called Poshne Suu Teakling, which unlocks significant value, in my opinion, of the facilities that we do operate. And finally, in addition to the Sverdrup's PM5 closure, we have also reported in the in early October that we are repositioning the Tasman Mill.
This means that newsprint will cease to be produced during the Q1 of 2020 at the Tasman Mill. And we are opening up the discussion with other players in New Zealand and in Asia to see what the fiber and energy resources and the site infrastructure can be used for. We think it's a site that has a value, but not for newsprint. The segments, I'm not going to spend too much time on the segments, but just very briefly that the underlying EBITDA in Europe is around 5%. There is an improvement, as I said, mainly due to volumes.
In terms of the market, referencing that very briefly, we have seen and we indicated already early in the COVID period that demand in Europe, by and large for our products will fall about 20%. That seems to be also the case after the Q3 with a little bit variance when newsprint and lightweight coated is down more than supercalendered. But I think we can still say that it looks like this year will be around 20% down on 2019. However, as I briefly alluded to, the publication paper market reached this trough in May June. And certainly, with figures down with more than 30%, this was indeed a very difficult period.
It still is difficult in the market, but we have seen significant capacity closures from our competitors and today also from ourselves. So if we look at the loss estimated for this year because of COVID, it's about 2,500,000 tons in the relevant product grades in Europe. We have seen now more than 2,000,000 tonnes come out of the market. And also importantly, this will come out rapidly. SCA is leaving the market by year end.
UPM, Store Enso and now ourselves have also closed capacity, which is removed from the market this year and into early into next year. So while we would still need more capacity closures in the industry to have a healthy balance, we are seeing clear improvements, and we are seeing that the industry is reacting to reality swiftly. In terms of the pricing, we have indicated that from the first half to the second half, we've seen price declines in Europe of about 5% to 6%. So this was negotiated into the second half and will imply also to the Q4. For next year, it's too early to say.
We obviously have a positive in terms of the capacity closures. While the market is still unbalanced today, we believe that over time, again, this will rebalance. We cannot give good guidance if it's early next year or if it's into next year. But as always, this market will respond and again find a new balance. A few words on the permanent closure of PM5 at Sverdrup's.
You can see from this graph that the sales over the last 12 months rolling has come down, and we have this year a sale of between 300,320,000 tons from Sverdrup's. And this is with the capacity of PM4 and PM6, this is enough to cover the market. So I think the message is that we will still be there with all our SC type of paper grades, and we will be there for all customers. But we do have to take out fixed costs as the machines are now not fully utilized, which is obviously inefficient. Just to remind you, we use about 900,000 tons full cubic meters of wood.
I don't think that will change significantly. And about 1.1 terawatt hours of electricity, again, that won't change much given the fact that we have produced less than full capacity. So this is an efficiency measure more than anything else. I mentioned that the Sverdrup's area and the mill area can be used for other things, and we can create value from that. This is just an example together with Ringsta in Halven.
We have a fifty-fifty joint venture called Posne Surtrigling, who is now building a secondary and upper secondary school, an extension of the upper secondary school, which also has vocational training facilities, also useful for industry, both from ourselves and from the total area. It's a 35 year lease with the county, and we have also now full financing, and we're just now in the process of finding the right supplier to actually do the construction. Very interesting project, very value creating. And I think in terms of what we can do also outside of this, there is an enormous amount of possibilities in the area. We have obviously the decommissioning of the nuclear reactor, which we will support together with Halton Municipality and the Norwegian government.
But we also have significant other facilities. And this is an example of what can be done creatively by using local resources, our industrial knowledge and our bases and local resources working together. I think this can be sort of a new start for the Southeast of Norway and the oldest for county. Very interesting project. If we move down under briefly to Australia.
Australia this year, if we adjust for the positive one offs, has basically been running neutral at EBITDA underlying and with some improvement into the Q3 helped by volumes. Clearly, with the Tasman repositioning, once again, we have to more rapidly than we thought, but we have to rebalance the market locally. We have long term customer contracts locally. So as long as they consume paper, we will be there to supply them. At the same time, the footprint will be less.
And again, we have to find other values in our industrial infrastructure and our contracts. In terms of illustration of that fact, we see that Albury was closed at the end of 2019. So volumes clearly went down, but most of that was for export, which all of you know is not particularly favorable for us. Now the Tasman Mill is also coming down. You can see from the slightly reddish middle shade on the graph that this is Tasman's capacity, which will then be repositioned.
So we will then be left with about 300,000 tons of capacity, half lightweight coated and half NewSpring, which again fits relatively well with the new rebalanced Australia and New Zealand after the COVID effects have been taken into account. There are with 300,000 roughly tons of wood available and high availability of renewable energy, this site has a value for other activity, and this is what we now are working on. We expect a conclusion within the Q1 2021. Now moving on into packaging. We announced then on 17th June that we will become a packaging producer in Europe in the renewable packaging space.
Just to remind you, this is conversion in Brok and Gobei, replacing newsprint with containerboard. We expect EBITDA then fully ramped up in the range of SEK 700,000,000 to SEK 800,000,000 based on long term average margins. And start up, first half twenty twenty three. That has not changed since the presentation in June, and also this one has not changed. The main point is that we bring competitive machines into the market because of geography, because of size, availability of raw materials.
So both on consultants analysis, both PM1 in Golbe and PM3 in Bouygues will be in the absolutely lower quartile. And we know this from other commercials that, that is what can be achieved given location and scale. Again, very briefly, what will happen, PM1 in Golbei will then be converted to about 500 and 50,000 tonnes of recycled containerboard, and 1 new sprint machine will go out. Dollars 250,000,000 is the expected CapEx at Golbei, While Bruk, a smaller one, will be a 210,000 ton containerboard, replacing 125,000 tons on newsprint, estimated CapEx of $100,000,000 So altogether, dollars 350,000,000 in CapEx. We do have project competence at the mills.
We have done large scale projects before. We have also sourced in a handful of experts, which have done these things before, most notably with the Parenko Mill in the Netherlands. So the technical expertise and the technical risk of the project should be very, very manageable indeed. If we look then at our other pallets of products, we have quite a few projects. Some of them are in production, some of them are waiting to come on.
If we look at the pellets in New Zealand, which is now on stream, 85,000, maybe even 90,000 this year of renewable pellets with local contracts, particularly with the local dairy, which is a big industry in New Zealand. This is competitive. We are also qualified with large scale shipments into Japan for the pellets to power, which is renewable rather than their old coal fired power plants. This expected annual EBITDA of about NOK 30,000,000. This could probably be more, but also importantly, it's very, very tough to replace this investment, partly because of fiber and energy availability and also the cost of new machinery.
So this has a significant value indeed. You all know that we are building a sustainable energy of 50 megawatt hours in Bruk in Austria with an EBITDA estimate of $200,000,000 on track for start up in the first half of twenty twenty two. Also very interesting, a big large scale waste to energy boiler in Austria, which has not seen this type of construction for almost 10 years, And the market is screaming for renewable energy assets. Sabina, most of you will remember that we've also shown you some examples of this product, which can be used in glue, which can be used in paints, which can be used in even our own paper production, could be used in oil field fluids, oil well fluids. We have come quite far in terms of the prequalification, and we do target commercial production in Q1 2021.
Very interesting feedback, both from group producers but also from furniture producers, from basically everyone who has been in contact with Sabina. Biocomposites, we are expecting a decision from Innovation Norway on the ground now in Q4. We expect that will be forthcoming, which means there will be constructed a pilot facility. We work, as you probably know, with Borigoye on this one. And I think importantly, biocomposites will be a big solution to the plastic issue as it replaces plastic, but it also binds plastic more tightly together, so it's more difficult to produce waste from plastic.
Circa, I alluded to already at the start, quite an interesting prospect. We will come back a little bit more to that later on. And finally, the Fiber Matrix project, which is producing fiber boards without glue, is also quite an interesting one. And we are now in partnership discussions for mainly main study, which we can possibly start Q1 2020. A few words on the boiler.
This is a large scale investment for us, 50 megawatt hours as I said. About 160,000 tonnes of waste will be taken in where there's a gate fee to be had. And as I said, euros 200,000,000 sorry, NOx, I wish it was euros, NOx EBITDA from 2022. This is standard technology from Valmet. We have already placed the order, so the work is ongoing.
Today, the foundation is being built, and the construction will then, in earnest, take place next year. CO2 footprint at the Bruk Mill will be reduced by 150,000 tons. Today, Bruk is the only mill where we have to buy CO2 quotas, so that will be gone by 2022. And the landfill regulations in the EU and in Austria, but also in Eastern Europe is significant. So there's a big pressure for incineration capacity to take care of that problem.
The last one was built in 20 12, almost 10 years ago, and it's quite difficult to get the permitting. So this one had the advantage of already having a pre approved permit. So quite interesting. And as you can see, we're already there. We're doing this.
The foundation of the boiler is now being laid. Just a few words on the CapEx as well. We have spent about €15,000,000 as of the end of the third quarter with €4,000,000 drawn of the local debt facility. It means that the remaining €57,000,000 about €50,000,000 will be funded locally by the debt as the CapEx is incurred. So we have overspent, if you like, on the equity side of this investment in the early phases.
Now for something which is quite interesting in these days. It's the circa company producing Cyrene. So Circa has over many years together with us in Tasmania, in Australia, has developed what is called the fuel cell process, which basically replaces chemical products in various uses by bioproducts, basically waste from forestry industry. We have had multiple pilot plants from very, very small lab scale up to semi industrial pilot plants. And we were the first one in the world who could produce this in more than grams.
So we have now produced several 1,000 kilos of it, sold through Merck and others directly to various end customers. And this has been received very, very well in all segments. They can be used in a variety of sectors. The first idea was pharma. And even including COVID-nineteen treatments, this is has been tested and been tested well.
There are also other applications like agrochemicals, electronics, etcetera, this can be used in a wide variety of places where small amounts of petrochemicals today are added, which can be replaced by biochemicals. Concretely, circa has now been awarded $12,000,000 from the EU flagship grant system for building a 12 sorry, 1,000 ton plant in the Northeast of France. This is a big industrial site operated by Total today. And circa will be on-site in order to benefit from scale and other advantages in an industrial area. At the same time, the EU is tightening its chemicals strategy, partly from an emission point of view and partly from a public health point of view.
So the EU doesn't like that you put plastic and petrochemicals into your body. So they would rather see that you put biological material into your body. So all of this is now tightening and will tighten significantly towards 2,030 and even further towards 2,050. And I think here, this is a solution, which can also then be added up concretely. What we will do with circa is that we will seek pilot plant, which needs to go in addition to the EU flagship grants.
Very briefly on the outlook. We have rather clear priorities. We need to adapt to market changes. So the Tasman change and the PM5 closure in Sverdrup is clear reaction that we are, as always, proactive to adapt to market. The Australian operations again need to be repositioned.
This is the second time in a short period of time, but we are doing it. We it's our responsibility. We have to take that task, and we think that it still is a very valuable position that can give us many benefits financially. We will do this with a robust balance sheet. As you know, we have a really still a strong balance sheet, and we have been able to maintain that throughout the COVID period.
At the same time, the strategy is clear. We need to execute both in the medium and the long term. We still be a producer of all publication paper grades. All our customers will still get a full range of supplies from us. At the same time, we will be a leading European renewable packaging producer in the next few years, one of the 10 largest, the most competitive.
And finally, as you've seen, a lot of new interesting developments in Norway, in Australia, in various fiber and energy projects. This is also something and again, we are very flexible to how we develop it. It could be with partners. It could be with financial institutions. It can be with anyone who can bring these projects forward.
We probably have more than what we can eat on our plates alone, but obviously shared with others, it can be quite a nice meal. Also towards the end, I would draw your attention to the Capital Markets Day. We hope sincerely that the COVID restrictions are lifted sometime by the by we get into Q1 2021. If not, we will adapt to reality as always and still do a Capital Markets Day sometime in Q1, probably late February, early March as an indication today. So that was the outlook.
We now want to share with you a little bit more detail on the Circa company, which we think is quite interesting. So we're going to show a film.
Then we take some Q and A. We start with the web. We received 3 questions. First question, can you give some more flavor on your energy situation, of the contracts are structured and how it has affected the Q3 results?
Yes. So in general, if you look at Norway, we have long term contracts for about a little bit more than twothree of our estimated annual needs. Similarly, in Australia and New Zealand, long term contracts. Europe is a little bit more short term, and there's a more wide energy mix of gas and electricity. The main effects on energy contracts is in Norway and both in the second and the third quarter this year.
So due to the COVID situation, we have had to resell quite a lot of energy into the market. The market obviously was already weak from a hydrological situation with too much water in the magazines. So we estimate that due to this, we have extra costs of about SEK 20,000,000 per mill, so about SEK 40,000,000 in the second and the third quarter. Negatively affects us given the electricity situation domestically here in Norway.
And then another question. Will you be reducing the workforce at the Seberg's Mill now that one machine is being shut down?
Yes. So one of the ideas now is to match capacity to demand as always. And we have been doing that with temporary stops and running below capacity. Everyone in the industry has done that for some time. Now everyone is taking out capacity.
So we need to take out fixed cost in the mill. I said that we estimate a fixed cost saving of about SEK 80,000,000 from 2021 onwards. And that means indeed reducing fixed costs, including manning.
And the last question, can you give some comments on the financing of the containerboard projects?
Yes. So I can give comments similarly to the ones we have given in the past that we are still working out the financing for these projects. We still have in mind the structure where a big part of it is financed locally in Austria and France based on export credit agency guarantees for the amounts which is allowed under the EU rules. So this is still the idea, local financing for both of them. In addition, we still expect that we also will do a refinancing at the top level, where we think that we may get more interesting terms than what we have seen last
year. Any questions from you here?
Yes? On the packaging side, have you seen any positive effects since COVID-nineteen? You've seen that in plastics?
In the market. Yes, indeed. So in general, packaging is going quite well as a broad worldwide basis after COVID. So there's more shipment, particularly of lighter products, which benefits the recycled containerboard also in Europe. It's not you cannot say that Europe has grown massively because European economy is obviously down in the same period.
But we have seen a positive shift, if you like, towards lighter containerboard and more recyclable as a mix. So we've seen now, for instance, industry is in the middle of COVID, is able to raise prices again from a declining level. It's come back again at €50 now in the autumn. So the market balance is tighter, and this is because more people are using more light packaging, which containerboard fits quite well. In other words, people are ordering more online than they were before COVID, even more if you will.
So the investment case is
Wait, wait.
How would you see the investment case on the packaging?
I think if you look at the markets, it's more or less as expected, maybe slightly better timing than we thought. In terms of the investments themselves, we haven't really seen any changes in terms of the CapEx or in terms of the technical layout.
Any other questions?
No? Okay. On that note, it seems like there are no further questions. So I will thank you all for your attendance and wish you a very good day. Thank you.