South Korea’s fourth largest newsprint producer Bowater Korea Ltd. will withdraw from the Korean market, a move expected to benefit its rivals suffering from falling newsprint demand amid shift from traditional print news media to digital media.

According to the investment bank industry on Wednesday, Bowater Korea’s largest shareholder Resolute Forest Products, a Canadian pulp and paper manufacturer, announced on Tuesday that it will terminate the operation of Bowater Korea’s plant in Mokpo, South Jeolla Province in Korea on March 9 and embark on sale process of the site and the building.

Bowater Korea was founded in 1996 when the Canadian paper maker acquired Halla Paper. It has a capacity of producing 200,000 tons of newsprint a year, following Jeonju Paper Corp. with a 1.02 million-ton-capacity, Daehan Paper Co. and PaperCorea Inc. with a 280,000-ton-capacity, each, in the country’s oligopolistic newsprint market. However, the paper producer finally decided to pull out of the Korean market as the newsprint demand is on a steady decline due to people’s increasing reliance on digital media.

Bowater Korea’s withdrawal would provide some breathing room to the industry competitors struggling to keep their business afloat through cooperation and business diversification.

Morgan Stanley Private Equity and Shinhan PE that respectively acquired a 58 percent stake and a 42 percent stake in the industry leader Jeonju Paper at 640 billion won ($561 million) in 2008 have trouble in selling the company and recollecting their investment due to the industry slump. As one of the breakthroughs, Jeonju Paper announced last month that it would sell its plant in Cheongju, North Chungcheong Province, to PaperCorea for 20.4 billion won and establish a joint venture.

By Kang Doo-soon and Han Woo-ram

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