MEPCO Updates Timeline and Cost for Cardboard and Tissue Projects

Middle East Paper Co. (Mepco) has updated the project timelines and capital budgets for its fifth containerboard machine and its sixth tissue paper production line, citing supply chain disruptions and geopolitical conditions across the region and globally.

Containerboard Machine Timeline and Budget Adjustments

The company filed disclosures on Tadawul stating that the expected start date for trial and commercial production at its fifth containerboard manufacturing plant has been pushed to the first quarter of 2028, moving back from previous projections for the fourth quarter of 2027. Mepco reported that the delay stems from supply chain pressures tied to surrounding geopolitical conditions, which will correspondingly postpone the commercial production’s positive reflection on financial statements.

Alongside the schedule shift, Mepco revised its capital expenditure budget for the containerboard project upward to 1.88 billion Saudi riyals, compared with an earlier estimated cost of approximately 1.78 billion riyals, according to corporate filings. The 5.7% budget increase is driven by higher civil construction costs, enhanced technical solutions for power and steam generation, and rising global shipping and logistics expenses. Following these adjustments, the updated internal rate of return for the project is estimated at 12%. Mepco anticipates that the financial impact will show up in earnings before interest, taxes, depreciation, and amortization as soon as commercial operations begin in early 2028.

Tissue Production Line Expansion Schedule

For its sixth tissue paper production line, known as TM6, Mepco adjusted the expected operational schedule to target trial and commercial production during the first quarter of 2027. Previous forecasts had pointed to trial production in the third quarter of 2026 and commercial production in the fourth quarter of 2026. The company noted that geopolitical supply chain impacts also triggered this schedule adjustment.

Unlike the containerboard plant, Mepco stated that the capital costs for the tissue line project remain unchanged from previous disclosures. The expansion is managed through Mepco’s subsidiary, Joodhe, at King Abdullah Economic City, with the goal of doubling annual production capacity to tissue paper and jumbo rolls. Management expects the project’s commercial output to positively influence financial statements once operational, despite the short-term scheduling shift.