Sweden’s SCA has signed a €300 million (£257m) loan agreement with the European Investment Bank (EIB) to help make its paper packaging mill more efficient in terms of production and energy use.

The financing will support the upgrade of its kraftliner mill at Obbola, which will include the installation of new equipment, further enhancing production of recyclable and renewable packaging with a process known as papermaking 4.0 and helping reduce its carbon footprint.

SCA Obbola produces packaging paper for consumer and transport packaging, largely based on fresh wood fibre.

The modernisation of the mill will boost production of the packaging solutions from recycled fibre and renewable and sustainable wood sources.

Ulf Larsson, President and CEO of SCA said: “The demand for sustainable packaging is increasing and SCA decided in 2019 to expand the manufacturing capacity at the Obbola mill from 450,000 tonnes to 725,000 tonnes.

“Through this investment the need for fossil fuels in critical parts of the production process will be eliminated resulting in a significantly lower carbon footprint. As a result of this investment in the world’s most advanced kraftliner facility we will considerably improve the mill’s competitiveness, sustainability footprint and product quality.”