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Willamette expands in U.S. South Willamette Industries Inc. plans to purchase and restart this year an idled market pulp mill in Port Wentworth, Ga., for a total of $90 million and invest $475 million for a new paper machine and virgin pulp line at its Kingsport, Tenn., mill over the next four years. The company’s CEO, Duane C. McDougall, defended the new capacity expansions, stating the Southeast U.S. assets will be among the lowest-cost production in the world. “I know this move is not going to be popular with Wall Street,” he said to shareholders at the company’s general meeting in April. “The conventional wisdom is that American producers just can’t be cost competitive with Asians and Brazilians. That’s simply not true.” He said those producers benefit from lower fiber costs, but Willamette mills will benefit from lower freight and handling costs in selling in the U.S. market. The hardwood pulp mill in Port Wentworth can operate with a cash cost of production well below $300/ton, he said. Willamette intends to purchase the Port Wentworth mill from Smurfit-Stone Container Corp., which closed the mill in 1998. Willamette said the total investment to acquire the 9-year-old pulp mill and restart it by Oct. 1 will be $90 million. About two-thirds of that sum was likely paid for the mill itself, sources estimated. Capacity will be 900 tpd or about 324,000 tpy. It will re-employ about 190 workers. The company plans a potential future conversion of Port Wentworth in 2004 to a mill that can produce both hardwood and softwood pulp, McDougall said. The Georgia mill will supply the needed extra fiber for the Tennessee paper expansion beginning in 2002 until a new pulp line is installed there. Willamette’s sales of hardwood pulp have been reduced following its new paper machine startup in 1998 in Hawesville, Ky. More hardwood pulp is being dedicated to the new Kentucky machine than anticipated, and less is being directed to market pulp production. According to McDougall, the acquisition of Port Wentworth will allow Willamette to maintain the presence it desires in both the domestic and export hardwood pulp market.
Kingsport Investment. Willamette is investing in a large new uncoated free-sheet machine in Tennessee slated to start up in the second quarter 2002 at 800 tpd of capacity. Two older, smaller paper machines that have total capacity of 500 tpd will be shut down. By 2004, the new machine will increase to 1,200 tpd or 430,000 tpy, increasing net free-sheet capacity at Kingsport by 250,000 tpy. The mill will get a new pulp line in fourth quarter 2003 in a total $475 million, four-year investment. The planned new unit will be a machine previously destined for Asia. A Willamette official said it has an option to purchase a 345-in. unit from Valmet. Further details were not revealed. “We’ll be closing inefficient equipment and reducing our labor and operating costs at Kingsport, allowing us to increase our total productivity and profitability,” McDougall said. The Kingsport mill currently employs about 460 workers.
Willamette’s new paper machine in Hawesville, Ky., has increased the company’s hardwood pulp consumption.
IP makes $8.5 billion bid for Champion International Paper Co. in late April made a rival offer to purchase all outstanding shares of Champion International Corp. in a cash and stock transaction worth an estimated $6.2 billion. The bid countered a previous deal to merge Champion with Finland’s UPM-Kymmene Corp. in an all-stock deal. Including debt, the deal is worth $8.5 billion. In a letter to Champion’s CEO, Richard Olson, IP CEO, John Dillon, said his company’s offer was clearly superior to the UPM-Kymmene deal. IP offered $64/share for Champion shares, paid with $43 in cash and $21 in IP stock. Based on NYSE closing prices in April, the IP offer was a 20% premium over the implied value of the UPM-Kymmene proposal. IP also announced plans to sell more than $3 billion in assets by the end of 2001 as part of the company’s increased focus on its identified core businesses of printing and communications papers, consumer and industrial packaging, distribution, timberlands and building materials. Further details were not revealed. Norske Skog to buy Fletcher Challenge In a deal that creates the world’s second-largest newsprint and groundwood papers producer, Norway’s Norske Skogsindustrier ASA said it will acquire the paper division of New Zealand’s Fletcher Challenge Ltd. Including Fletcher Challenge Canada Ltd. for $2.5 billion. The transaction, which was not expected to close until July, involved a cash payment of $840 million and the assumption of $1.6 billion in debt. Norske Skog said its annual newsprint production capacity will rise to 5.1 million mtons, plus an additional 700,000 mtons of groundwood specialty papers, placing it second worldwide only to the pending final merger of Abitibi Consolidated Inc. and Donohue Inc. The deal strengthens Norske Skog’s global presence with Fletcher Challenge Paper’s mills in Canada, Australia, New Zealand, Brazil, Chile, and Malaysia. In North America, the acquisition will include FCC’s three pulp and paper mills in British Columbia. The Elk Falls mill in Campbell River produces 400,000 tpy of newsprint, 220,000 tpy of market pulp, and other grades; the Crofton mill has capacity for 375,000 tpy of newsprint and 360,000 tpy of market pulp; and the Mackenzie mill produces about 240,000 tpy of market pulp. Menasha makes two acquisitions Menasha Corp. announced it has acquired the assets of Package Products Inc. of Pittsburgh, Pa., and Pennsylvania Container Corp. of Latrobe, Pa. Package Products produces packaging and folding cartons, and Pennsylvania Container produces corrugated boards, sheets, and containers. With the acquisitions, Menasha manages 20 corrugated and sheet plants in the U.S.
Quebec forms paper investment fund Concerns over the competitiveness of Quebec’s pulp and paper industry has led the government to include a category in its proposed 2000 provincial budget for the upgrade of inefficient mills. Known as INNO-PAP (Innovation Papier), the C$100 million fund is intended to spur improvements at older, smaller pulp mills to enhance the province’s market position and preserve jobs. Recipient companies have not been named. The report suggests ideal projects include replacement of older stone groundwood or sulphite pulping processes, replacement of machines to redirect a mill toward production of higher value paper, installation of higher-capacity paper machines to achieve economies of scale, and integration of paper machines at stand-alone market pulp mills. Separately, the government has kicked in another C$5 million to be used for job creation in the pulp and paper industry for the 2000 budget. Kruger spent C$205 million in 1999 Montreal-based Kruger Inc. said it spent more than C$205 million on its operations in 1999 to increase capacity, improve quality and service, and develop value-added products. Nearly one-third of the capital projects were carried out at the company's newsprint and coated paper mills in Trois-Rivieres and Bromptonville, Que.; Corner Brook, Nfld.; and Manistique, Mich. Machine speed and capacity were increased, quality was improved, and technological enhancements were introduced, the company said.
Union clears way for Oregon mill sale Unionized workers at Smurfit-Stone Container Corp.’s 240,000 tpy Oregon City, Ore., paper mill have approved a concessions package that clears the way for its sale to an investor group. The new deal was approved by members of the Assn. Of Western Pulp and Paper Workers by just over a 50% margin. A name for the new company is under discussion, and the sale is expected to close by the end of May. Union members rejected the first concessions package reportedly because they were unhappy with the size of the 33% ownership stake. The new agreement calls for the union to receive a 35% ownership stake and includes changes to the profit sharing plan. FSC Paper sold to Madison Paper A Chicago bankruptcy court judge in April approved the sale of the assets of FSC Paper Co. to an entity controlled by Madison Paper Co. of Maine, an affiliate of Myllykoski Corp. of Finland. The court authorized the sale of the assets, approving Madison’s earlier $44 million bid. A Madison official said there were no other bids submitted for the assets, which include a one-machine newsprint mill in Alsip, Ill. FSC filed for bankruptcy Feb. 17 to allow the potential buyer to acquire the assets of FSC but not the associated liabilities, which total about $80 million. The 330 tpd mill is currently producing 100% recycled newsprint, and the Madison official said they plan to continue producing newsprint in the immediate future.
Canfor in C$8 million chip project Canfor Corp. announced the opening of a new woodchip handling facility at its Prince George, B.C., pulp and paper mill. The C$8.2 million project, partially funded by BC Rail, is expected to increase chip-handling capacity at the mill by over 50% to approximately 6,000 mtpd. BC Rail contributed C$3.5 million to the project, a high capacity chip dumper and conveyor belt system, as part of a six-year transportation agreement with Canfor. Sonoco to shut woodyard in S.C. Sonoco Products Co. said it will permanently close its woodyard and related crosstie plant at its mill in Hartsville, S.C., over the next few months. The woodyard converts longwood to woodchips for the mill’s only paper machine that utilizes virgin pulp. The machine is dedicated to making corrugating medium on a fee basis for Georgia-Pacific Corp. The crosstie mill converts roundwood into railroad ties and pallet carts. Up to 25 employees will be offered other jobs. The company said all woodchips will be produced by in-woods, portable contract chip harvesting crews and delivered to the Hartsville mill in vans.
Cascades builds Quebec power plant Boralex Inc., a subsidiary of Cascades Inc., held a groundbreaking ceremony for a 32MW wood waste power generation plant in Senneterre, in the Abitibi region of Quebec. Representing an investment in excess of C$50 million, this plant will be the company’s largest facility in Quebec. Boralex is currently preparing the construction site and the main building should be erected by the end of November. The new power facility should be operational by June of 2001.
Smurfit-Stone mill faces fine Smurfit-Stone Container Corp. said it would “vigorously defend” itself against charges that it violated “specified environmental standards” at its 230,000 mtpy New Richmond, Que., linerboard mill in 1999. Last August, the Quebec Ministry of Environment fined the mill C$6.5 million for the infractions. Smurfit-Stone entered a plea of not guilty as to all of the citations and the matter is currently under review. In its 10-K report, Smurfit-Stone indicates that the majority of the citations alleged that the company had “discharged total suspended solids (TSS) in the mill’s treated effluent which exceeded the regulatory limitations for the rolling 30-day average. The remainder of the violations were for monitoring, reporting, and administrative deficiencies uncovered during an inspection performed by the Ministry earlier in 1999.” TSS refers to small particles of solid pollutants that float on the surface of, or are suspended in, sewage or other liquids. U.S. court upholds some EPA authority on TMDLs In what the U.S. Environmental Protection Agency (EPA) called a “landmark clean water decision,” a federal court on Apr. 5 upheld the agency’s longstanding interpretation and practice whereby the EPA and the states identify which U.S. waterways are polluted, regardless of the source. However, the court noted that non-point sources—which include forestry and agriculture—still remain under the state’s authority as far as executing any action to clean up those waterways. Currently, the EPA is readying a final plan to implement total maximum daily loads (TMDL), which set strict pollution caps for sources of pollutants in waters designated as impaired under the CWA’s Section 303d. For paper mills, this could change requirements for getting discharge permits, among other things; while forestry could be reclassified as a “point” source of pollutants and put under the stricter federal National Pollution Discharge Elimination System (NPDES) regulations. Now, most forestry activities are “non-point” sources and are regulated by the states under more flexible Best Management Practices programs. Minnesota group sues over permit The Minnesota Center for Environmental Advocacy filed a lawsuit against the Minnesota Pollution Control Agency (MPCA) for giving Boise Cascade Corp. (BCC) an air-quality permit as part of the expansion of its pulp and paper mill in International Falls, Minn. The MPCA Citizen’s Board voted that an additional environmental impact statement (EIS) was not needed to examine impacts of increased timber harvesting in that area. The lawsuit asks for the permit to be rescinded and reissued with the addition of timber-related conditions after more updated timber harvesting studies have been conducted. An attorney for the MPCA said the lawsuit is not intended to stop BCC from starting the mill expansion.
Industry labor strike ends in Finland A strike by 30,000 workers that halted Finland’s pulp and paper mills for more than a week ended after the Finnish paper workers’ union accepted a state-mediated three-year labor contract. Workers were reported to have returned to work Apr. 19 and production at the mills restarted that afternoon. Full capacity was expected to be reached within 24 hours. The agreement, which is valid until Jan. 31, 2003, gives employees a 3.1% wage increase this year, with the possibility of additional increases between 0.1% and 0.7%, depending on the operating rate of the mills. The wage increases for the next two years will be negotiated at a later date. Finnish producers reported significant losses due to the strike. In a press release Stora Enso Oyj reported the strike cost about Euro 40 million in lost operating profit and Euro 100 million in lost turnover. An initial report from UPM-Kymmene Corp. estimated a loss of approximately Euro 60 million. All told, the pulp and paper industry has estimated the strike cost it somewhere near $160 million in lost export earnings. CMPC plans two Latin America pulp mills Chilean forestry firm CMPC plans to invest $1.6 billion over the next 10 years to build two new pulp mills, one in Chile and one in Argentina, according to a local press report. Citing CMPC sources, the financial daily Estrategia said one $800 million plant would be located in Argentina’s Corrientes province, which borders Paraguay. Estrategia said the start-up in Argentina would be in a timeframe that coincided with the maturing of the company’s plantations in Argentina. It added that CMPC, at the end of 1999, had 81,500 acres planted in Argentina and was expanding at a rate of 14,800 acres/year. Another mill would be built in Chile in the next five years. It gave no location details, although all of Chile’s forestry companies operate in the heavy-wooded south. CMPC’s plans are to double its pulp capacity to 2 million mtons per year from a current capacity of one million mtons. Willamette to buy Mexico box producer Willamette Industries Inc. said it has agreed to pay $71 million in cash for a corrugated container plant and a small recycled containerboard mill in Mexico operated by Corrugados Tehuacan SA de CV. Known as Cotesa, Corrugados Tehuacan is a subsidiary of Mexico’s largest beverage maker Femsa (Fomento Economico Mexicano SA de CV). Cotesa would be Willamette’s second corrugated container operation in Mexico. In December 1997, Willamette purchased a 46% share in a corrugated container plant near Mexico City, Corrugados La Colmena. The deal also allows Willamette to increase its share in La Colmena in the future. Japan’s Nippon and Daishowa to merge Two of Japan’s leading paper producers, Nippon Paper Industries and Daishowa Paper Manufacturing, were reported in final negotiations to merge their operations, according to a local Japanese newspaper report in April. It said the two firms are in negotiations aiming to join their operations under a holding company as early as April 2001. Nippon, ranked among the top 10 paper companies in the world, has paper/board capacity of about 4.3 million mtpy, while Daishowa has capacity of about 2.5 million mtpy, according to estimates. The respective management boards are expected to endorse the merger plan by the end of this month, the Nihon Keizai Shimbun newspaper said.
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| Pulp & Paper Magazine, June 2000 | CONTENTS | ||
| Columns | Departments | Focus/Features | News |
| From the Editors | News of people | Finishing & Converting | Month in Stats |
| Maintenance Management | Conference Calendar | Information Techology | Grade Profile |
| Chemical Markets | Product Showcase | Financial Services | News Scan |
| Comment | Supplier News | Recycling | |
| Mill Operations | Drying | ||
| Wet End Chemicals | |||
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