Graphic Packaging Holding is set to invest $600m in a new coated recycled board (CRB) machine in the US Midwest region.

The company has received the approval of its board of directors for the investment and expects to make the investment in either Ohio or Michigan.

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Following the completion of the investment, the CRB machine is expected to add 500,000t of annual coated recycled board production to the company’s North American portfolio.

The company will fund the investment from cash flow and existing credit facilities with most of the spending occurring between 2020 and 2021.

The investment is currently subject to various conditions, including environmental permitting and negotiations currently underway relative to government incentives and labour relations.

Graphic Packaging president and CEO Michael Doss said: “Importantly, the investment will be capacity neutral as we expect to reduce production at other higher-cost CRB facilities after we ramp up production of this highly productive CRB machine starting in early 2022.

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“Increasing consumer preference for sustainable packaging is expected to drive steady, long-term demand for packaging solutions manufactured from 100% recycled fibre.

“We are confident the investment will deliver returns well above our cost of capital and remain fully committed to executing our balanced approach to capital allocation as we continue to build a growing, highly integrated, low-cost paperboard packaging platform.”

The packaging firm also expects to offer further details of the investment and the location in late September.

Last month, Graphic Packaging agreed to buy all the assets of Artistic Carton, a package manufacturing firm that operates three facilities in the US.