Packaging manufacturer SCA has announced it is to close its New Hythe mill, at Larkfield, with 130 jobs to be affected.

The neighbouring corrugated cardboard plant and office, which employs a further 137, is to be sold to a Spanish firm, SAICA, as part of a £100 million cash sale of SCA operations in the UK

SCA spokesman Par Altan said the cardboard mill, known in the industry as a containerboard mill, will close by the summer of 2010 with 130 staff affected.

He said the mill closure, together with the sale of SCA’s "conventional corrugated" operations would help the firm to focus on its profitable UK specialised packing operations, which are not part of the sale.

He said of the mill closure: "One reason is that the new focus doesn´t require local paper production. Consultation with the unions will be initiated."

At present the mill produces 240,000 tonnes of cardboard a year.

An employee at the plant, who did not want to be named said staff had been told SCA would be "working towards" closing the mill for 2010.

The moves come against a background of falling demand for UK-made cardboard boxes.

Jan Johansson, SCA president, said: "The European packaging market is in great need of consolidation.

"SCA’s focus is on increasing value added parts of the packaging business and also on creating growth in the Eastern part of Europe, while consolidating our existing operations in Western Europe.

"We carry through the deal, as the investment required to rebuild a competitive position in the segments we divest is not justified, given our chosen strategy."

The purchase price of £100 million is to be paid "in cash".

The Swedish SCA group was set up in 1929. All inquiries are being referred to its offices in Sweden.

SAICA is a privately owned Spanish paper and packaging company, which operates paper mills and corrugated cardboard sites throughout Europe, including some in the UK.