Just what's behind Stora Enso's withdrawal from North America?

Implications: Jouko Karvinen became CEO in 2006 and obviously has a different vision than his predecessor Jukka Harmala did 7 years ago when they purchased Consolidated Papers.  Last year the N.A. division generated 2 billion Euros and produced a profit of $295 million.   Does he see little growth in N.A. or is it that there are much more attractive options in Latin American market pulp mills and in Chinese paper mills?  Should other global players be considering these same opportunities? The sale of these 8 mills into which $250 million was poured in upgrading the operations now presents yet another opportunity for a private equity firm (Cereberus in this case) to acquire a renovated mill which it can operate in such a way as to maximize profits.  If these 7 mills had been part of NewPage (i.e.Cereberus) in 2006 they would have generated $4.1 billion in revenue and produced a profit of $583 million - this is according to AmericanCity Business Journals, Inc.

Analysis: This rather radical move for Stora Enso represents a backtracking on the global ambitions it expressed 7 years ago when it purchased these mills from Consolidated Papers.  What has changed to cause it to sell at such a loss?  It could be argued that they obviously see much better opportunities in Latin American market pulp mills and in papermills to supply UFS for the Chinese market.  Or, it may be that they see a shrinking market for higher quality coated papers in North America couped with more threats from lower costs countries like Korea, China and Indonesia.  Perhaps it a combination of all three.
Let's consider first their Latin American interests.  They already have a 900,000mt/year Bleached Eucalyptus pulp mill in Brazil as a joint venture with AraCruz (it's known as Veracel) and is considering a world class 1.1 million mt/year pulp mill in the southern state of Rio Grande do Sul - which will cost US$1.4 billion by the time it's finished.  Brazil, with its extensive eucalyptus plantations is recognized for its low wood costs and relatively low labor costs. The profit potential becomes most impressive if one assumes a cash cost for the pulp at, say, US$255 and a mill net on sales of $600+/mt. Their portion of the Veracel mill goes 100% to China to supply its four mills which produce UFS for the fast growing Chinese market.  The PRC has estimated that the per capita consumption will grow from its present 50 kg/person to 70 kg/person in 2010.  This will require the building of several dozen word class paper machines to meet the need.
Stora Enso obviously wants to be both a supplier (of BEKP for these machines) as well as a producer of A4Copybond, envelope paper, book paper, forms bond, tablet and offset paper for commercial printing.  These grades are all broad based commodities which will be consumed by China's fast growing middle class.  In other words, there's very little risk involved...their Brazilian Eucalyptus will constitute as much as 80% of the short fiber furnish for these paper grades and the paper produced will be sold into a huge expanding market.  The paper machines which have been installed since 1999 (from Metso and Voith) are state of the art in every way and capable of producing paper at costs/ton that other countries can only dream about.
While it may seem on the surface that Stora Enso has sold for a song a group of mills for which they perhaps paid too much, it is very possible that their decision to refocus on Latin America pulp and Chinese paper may turn out to be a very wise (and immensely profitable!) decision.