Schweitzer Gears Up to Meet EU LIP Demand

Source from:  Tobacco Reporter 05/06/2010

Schweitzer-Mauduit International on Monday announced plans to establish EU production sites to produce cigarette paper for lower ignition propensity (LIP) products. The announcement, which also included customer supply arrangements for LIP products, was made in advance of EU regulations requiring cigarettes to be LIP compliant, which are expected to become effective next year. According to a PRNewswire story, the company is establishing capacity to produce its proprietary Alginex® LIP cigarette paper in up to three EU locations. One will be at an already established third-party manufacturing facility in Belgium, while another will involve a new wholly-owned operation in Lodz, Poland. A third operation could be established at SWM's paper manufacturing facility, Papeteries de Mauduit, at Quimperle, France. The Lodz facility, which is to be called SWM-Poland and which is expected to be the company's main production center for LIP products in Europe, will be built so that it can be readily expanded in capacity beyond the initial planned level. It is projected to be operational in November upon completion of equipment installation and building modification investments totaling about $25 million, which will be funded from existing credit facilities and available cash. SWM's planned EU LIP capacity is expected to meet up to one-half of EU market requirements and the company says that it has already secured LIP supply agreements that will utilize about 30 per cent of this capacity. "Schweitzer-Mauduit is in advanced discussions with several multinational cigarette companies regarding their EU LIP cigarette paper requirements," the PRNewswire story said. "It is expected that the remaining capacity will be fully committed through additional customer agreements during the course of 2010." "Additionally, Schweitzer-Mauduit recently renewed two existing multi-year LIP supply agreements for North American customers." Enditem