The Taplow Mill near Maidenhead, Berkshire has been sold by DS Smith to commercial property developer Towntalk for £30.25 million.
A DS Smith statement said: Taplow Mill, which currently manufactures 95,000 tonnes per annum of corrugated case material, has been adversely affected by difficult market conditions and substantial increases in energy costs.
It made losses in financial year 2005/06 and is not expected to return to adequate profitability.
While consultation with the mills 85 employees will commence immediately, it is proposed that the closure will be implemented by the end of October 2006. The groups Severnside waste collection depot, which also operates on the site, will be relocated.
The statement continued: The consideration for the sale of the site will result in an exceptional profit in the current financial year of £20.7 million, net of the book value of the site of £9 million and related disposal costs.
It is also estimated that the proposed closure and relocation will result in an exceptional charge to the profit and loss account in the current financial year of the order of £12 million; approximately one third of which will be cash costs and the remainder will be the write-down of assets.
The company stated that the move is another important step towards raising the returns of the groups paper operations.
St Regis principal mill at Kemsley will now represent approximately 70% of the divisions output of over 840,000 tonnes per annum, but the closure of the Taplow mill is seen as a taste of things to come.
It is the seventh closure in the last six years representing a loss of 1.7 million tonnes of UK capacity, with the Confederation of Paper Industries (CPI) warning that massive gas and electricity price increases mean that we could see more problems during the coming winter.
CPI head of regulatory affairs David Morgan said: The UK paper industry is likely to be hit by extremely high energy prices again which could result in more mill closures and further job losses.