Hi, and welcome to today's presentation with Rottneros. Today, the CEO, Lennart Eberleh, will be presenting. If you have any questions for Lennart, please use the form that is located to the right. With that said, please go ahead, Lennart.
Thank you, Martin. Good morning, everybody. Thank you for joining us on such a short notice. We have decided after a thorough, and extensive strategic analysis, to close down one of the two pulp lines at our Rottneros Mill in Värmland. It's what we call the groundwood pulp line. This is pulp primarily for the printing and writing sector. While at the same time, we are also starting up, and have come quite far in a pre-project to further investigate increase in CTMP production, which is primarily pulp for packaging, where we have seen some good growth over the recent years. It is with great sadness that we are announcing that today, but it is necessary given the background, and the business environment that we are operating in.
Pulp for printing and writing, as we call it groundwood, is a segment which is structurally on the decline. We have seen this over many years, and we can follow how players in this market are consecutively announcing closure of mills, or reorganizing of mills from printing and writing into the packaging segment. However, the groundwood line is the smallest line within the Rottneros Group, and this will have only a marginal impact on our group sales and net results. Groundwood is around about 16% of our volume, but just about 10% of net sales, and it contributes marginally to the net result despite the effect of our electricity futures. We believe we will have one-off costs of about SEK 60 million. This is primarily coming from redundancy payments, and some write-offs of old assets.
At the same time, this will be partly offset by our electricity futures. We are now entering union discussions, so what the final cost and final date of the discontinue will be is not clear, but our aim is to do this by the end of 2022, also in order to honor relations with our raw material suppliers as well as very long-standing customers in this segment. Ultimately, this means that we also have notified today, 40 people of being made redundant at the mill. We have to note this is the starting of a union negotiation, and a notification of redundancy doesn't necessarily mean that this will be the final number of people made leave. I'm talking about the cost, and one of the largest costs for mechanical pulp, which we are making at Rottneros, is electricity.
It is at the Rottneros Mill where we consume the majority of our electricity from the grid, around about 300 GWh on an annual basis. This can correspond roughly to 20,000 households. Given the recent cost increase for electricity, it becomes abundantly clear how much this is a constraint on our profitability while operating in a segment where customers cannot fully compensate us for the cost increase that we have incurred. Just to give you a brief overview on how the Rottneros Mill looks like today. Last year, we made some 173,000 tons. Sixty four comes from the groundwood line and 110 from the CTMP. Over the years, we have made more than SEK 600 million in investments, both in the CTMP line.
This line has increased from about 80,000 tons at the beginning of 2015 to what we believe will be some 120,000 tons in capacity in 2022. We have also made investments in the energy systems. Apart from electricity, there is steam and heat that is needed to run a pulp operation. We have invested in a fossil free energy system for drying the pulp, and we also have a state of the art effluent treatment system which will generate two MWh of biogas once finally trimmed in. This means that we will have a very good and resilient energy supply to the CTMP line, which we're looking forward to improve over the time. We are, a specialty producer. We are proud in making very many different products, which many of them also tailor-made to our customers.
This is part of the legacy which really dates back to 1887 when we started making pulp, as one of the first market pulp producers. Industrial production has been on the site since 1630. Looking at the market segments, I talked about that we're having two lines at the mill. CTMP is a more modern way of making mechanical pulp, and that is primarily useful and adds customer value in the board and packaging segment, but also within the filter tissue as well as special applications. Very few volumes are going into the printing and writing. Groundwood on the other line is predominantly sold into the printing and writing segment, thus, the problems that have occurred and that have accelerated over the last month.
We don't really see how the situation will improve back to a level where we see that groundwood will have a financial situation, and contribution to the company where it makes sense to continue the production. The groundwood line is old. It's difficult to find spare parts. Stones which are used to grind the wood are basically made from two suppliers. One had been a Russian, which is now off-limits and cannot be sourced from anymore, and the other one is a Canadian, and their market also is shrinking. There is a limited time for groundwood stones in the future. Also, giving the specifics of these lines, it is difficult to increase production, improve productivity, and keep up with cost increases by consecutively increased volumes going out. Again, it's a product that has outdated itself.
Turning over to the project we are running for increasing our pulp for packaging, the aim is to increase production from today's 120,000-150,000 tons by 2025. We're in the midst of a pre-project, and we believe this will be put forward to the board later this year during quarter four. This will mean an investment of SEK 160-200 million. We see that CTMP pulp is contributing with a much better profitability, also in a very challenging environment, as well as is exposed to a growing market, and we foresee the packaging market to grow going forward. Nonetheless, we believe ourselves so strong that we're investing in molded fiber, for example, both in Sweden as well as in a project in Poland to substantially increase our capacity for packaging.
What impacts does this have on Rottneros as a group? While the fundamentals still are there, we are part of the circular economy. We have a sustainable business model, and a renewable resource that we're using. We are, and continue to be an established niche supplier with customers that are following us in good and bad times, I would say. If anything, this would even further enhance and improve our strong cash flow as we're exiting the least profitable product line within the group. To summarize it, the groundwood line will be discontinued. We're aiming to do this by the year-end, once the union negotiations have been concluded. This will lead to one-off costs of SEK 60 million, which will be partly offset by electricity futures.
Once we know our need for electricity going forward, and the final date of the groundwood line, we have electricity futures which today have a high level in our balance sheet, and we will realize those which are not needed at market price, which would contribute strongly to mitigate the effect of this discontinuation. It will have a marginal impact on group sales and net results, and we strongly believe both in Rottneros Mill as a producer of high-class CTMP pulp for the packaging industry. With this, I hand the word back to Martin and open up for Q&A.
Thank you very much, Lennart, for that presentation. Now we'll jump into the Q&A here. We'll start with the first question. Why is it a good time to close the mills today, or now?
We are in a position where we are financially strong enough to both offer a good package for those who will be made redundant, as well as we can continue to develop our mill for making pulp for packaging. We have made investments of SEK 600 million. We see that with a minor investment of SEK 160 million-SEK 200 million now going forward, we can further enhance the mill. This is made in a situation while the group is financially strong, and has the ability to do this.
Okay, thank you. We'll take the next question. You're planning to increase the CTMP production. Could you comment on how much that would increase?
The increase will be, as I've said, from today's 120,000 tons to 150,000 tons. This will be an additional 30,000 tons or 25%. This will be done over the course of the next three years once we have concluded the pre-project and can put an investment proposal to the board later on this year.
Okay, thank you. You have more than 25 different products as of today. Could we possibly see an increase of that number in the future?
I would absolutely not include that. We have also during the last years, put resources into R&D. We have formed an innovation team, which is, increasing. We are very small player, but we are very good and, intense, contacts with universities that are focusing on, pulp products. Absolutely, this is in our DNA to make pulp that the market and our customers are asking us to do.
Thank you. Rottneros is an established niche supplier. Would you say that you have any direct competition?
Of course, there's always competition. The market pulp market is extremely big. It's more than 60 million tons. The high-yield pulp market is around about four million tons. The NBSK market, which we have at Vallvik Mill, is 18 million tons. Absolutely, we do have competition. In those chosen niches and segments that we operate, we are known and renowned for the quality and service that we give to our customers. We like competition, and we take it as a challenge to further develop our product portfolio.
Okay, thank you, Lennart. That was all the questions that we had from today. Would you like to finish off with some closing remarks?
Yes. Thank you, Martin. Again, thank you all for joining in on such a short notice. It is a very sad day. We have to think about the people and our employees and colleagues that with this message got the notification of being made redundant, and that is never something that we take lightheartedly. This is the focus now for us for the next coming weeks and month to make this as good as possible under the given circumstances. To our investors, I have to say that this is something we believe we have done after a thorough investigation, and this is something in order to strengthen Rottneros for the future to come. Thank you very much.
Okay. Thank you very much, Lennart. A big thanks to all of you who have followed today's presentation with Rottneros. I wish you a great rest of the day. Thank you.