MEPCO Delays Startup of Containerboard Mill and Tissue Paper Line

Middle East Paper Co. (MEPCO) has revised the expected startup timelines for its containerboard mill project (PM5) and sixth tissue paper production line, citing supply chain disruptions linked to surrounding geopolitical conditions.

Pilot and commercial production at the PM5 containerboard mill is now expected to begin in the first quarter of 2028, compared with the previous target of the fourth quarter of 2027, the company said in a statement on Tadawul.

The estimated cost of the containerboard project has increased to SAR 1.88 billion from SAR 1.78 billion, a 5.7% rise. MEPCO attributed the increase to higher civil construction costs, enhanced energy and steam solutions, and increased global shipping and logistics costs. The project's updated estimated internal rate of return is 12%.

MEPCO said the delay is expected to postpone the positive impact of commercial production on its financial statements. The additional financial impact is expected to be reflected in EBITDA once operations begin.

The sixth tissue paper production line has also been delayed. Pilot and commercial production are now expected to start in the first quarter of 2027, compared with previous targets of the third quarter of 2026 and fourth quarter of 2026, respectively.

MEPCO attributed the delay to supply chain disruptions arising from surrounding geopolitical conditions. The company said commercial production is expected to have a positive impact on its financial statements, while associated project costs remain unchanged from those previously announced. Any differences will be explained when applicable.

MEPCO announced the PM5 project in April 2024, with a production capacity of 450,000 tons and an approved budget of approximately SAR 1.78 billion. In August 2024, its board approved the addition of a sixth tissue paper machine, TM6, at its subsidiary Juthor, at a total cost of SAR 345 million.