Alliance Forest Products has moved aggressively to transform the company since it was formed by the 1994 acquisition of two former Domtar newsprint mills. By this fall, completion of a major capital investment program will have changed these non-competitive assets into state-of-the-art printing paper mills. The program kicked off with the 1997 startup of a new machine at the Dolbeau mill. It will culminate with the fall startup of a new machine at the Donnacona mill. Employing the latest in technology, the mills will produce a wide range of soft-nip and supercalendered uncoated groundwood grades for heat set offset and rotogravure printing markets.
As the company began to develop a long-term strategy following its formation, they faced a daunting challenge. But at the same time, notes CEO Pierre Monahan, they had an unusual opportunity. The two mills, located in Quebec, had been built earlier in the century to produce newsprint using the technology of the day--stone groundwood pulping and fourdrinier papermaking. Through the years the mills were upgraded, such as switching to thermomechanical pulping (TMP) and the addition of bleaching to move into high brightness newsprint and machine-finish grades. But they were essentially high cost mills using old equipment.
Company management readily realized that the mills could not compete over the long term in the newsprint market. However, they were excited about some of the strengths inherent in these facilities and the options those strengths provided, notes Monahan. Among key advantages were an excellent fiber base of black spruce and the years of knowledge they had acquired in TMP.
The combination of TMP fiber fractionation and the new Voith Sulzer wet end results in excellent sheet formation at Dolbeau.
||Mill/Paper machine producing
||28, 30, 32
||Allbook 60, 65, 70, 75
||33 to 45 lb.
||60, 65, 70 and 75 brt. grades
||Dolbeau PM 2 and Donnocana PM 3
||Albright 65, 70, 75
||65, 70, 75 brt.
||Dolbeau PM 2 and Donnocana PM 3
|33 lb and 35 lb
33 lb and 35 lb
|65 and 70 brt, 20 to 25 gloss
||Dolbeau PM 5
||Eminence Plus 65
Eminence Plus 70
|26, 28, 30, 33, 35 lb
30, 33, 35 lb
|65 and 70 brt, 30 gloss
||Dolbeau PM 5
||To be determined
|Notes:1. Newsprint weights are for 24x36 ream. Other grades are for 25x38 ream. 2. Approximate values 3. Startup September 2000
TABLE 1. Alliance will produces a full range of uncoated groundwood grades once the No 4 paper machine is installed.
When considering options, the company was willing to take some risk, but the scale of the risk was a key, Monahan says. Thus, they ruled out, for example, a conversion to coated papers. In evaluating key market trends, the company identified the shift in inserts and catalogs from lower to higher quality printing papers that was occurring. Thus, they saw an opportunity to serve these markets with soft-nip grades. This led to the conversion at Dolbeau, and later on, at Donnacona. While costs were carefully considered, the investments at the two mills totaled more than C$500 million.
In the current climate, such aggressive investment plans go against the common wisdom coming from the financial community, which advocates a “wait and don’t spend” mentality. However, many Canadian mills did not invest sufficiently to maintain competitiveness, notes Monahan, and now have low quality assets that are unable to compete. Alliance decided that it was necessary to invest these funds despite the apathy of Wall Street and the general industry regarding capital investments.
Roll are wrapped and labeled, then shipped via truck and rail
|Notes: year installed; r indicates date of major rebuilds. Capacity data are in metric tons
TABLE: 2.Alliance will operate 7 papermachines once PM 4 is online at Donnaconna.
The market did react to the strategy, and it wasn’t all positive. The company’s stock has been trading at C$18-19/share, while it has a book value of C$26. However, a number of investors have kept the stock, believing the company is positioned for growth. While the company has acquired debt to fund the expansion, the debt ratio remains under 30% and the goal is to keep it under 40%, notes Gagnon.
The company believes its strategy has been sound and that the real payoff is imminent--debt will soon be down and cash flow strong. Furthermore, the company will be well positioned to compete in up and down markets, with two of the most modern mills in North America on specialty grades. In addition, work recently announced for the company’s Coosa Pines, Ala., mill will increase competitiveness there as well. Overall, the Coosa Pines acquisition and other moves have grown the company from $300 million in sales to $1.1 billion.
Alliance Forest Products was created in 1994 via the issue of common shares that allowed it to purchase Domtar’s two newsprint and specialty paper mills as well as part of its lumber operations. Included were sawmills at Mistassini and St. Felicien, all located in Quebec. In 1995, additional sawmills were acquired, and the company embarked on a four-year investment plan to upgrade its two mills. In 1996, Alliance acquired the Coosa Pines mill from Kimberly Clark for C$800 million. In 1998, it’s the company’s stock was listed on the New York Stock Exchange.
Alliance acquired the Coosa Pines, Ala., mill in the early stages of the consolidation sweeping the newsprint business. The company is pursuing a clear strategy to improve competitiveness at the mill, with a $113 million project to convert to 100% recycled fiber-based newsprint production, according to Gerard Renaud, v.p.-operations. This includes installation of a 1,700-tpd recycled fiber plant. This will be the largest line in North America.
The mill uses groundwood pulp, TMP, old newspapers (ONP), and kraft pulp to make 400,000 tpy of up to 40% recycled content newsprint. All groundwood specialty production at the mill is to be phased out. The recycled fiber plant is under construction with startup in 2001. By 2002, the mill has targeted paper machine speedups and wrapping line improvements.
The mill was a key aspect of company strategy, which was to stay in newsprint, as well as expand into printing papers. It is well positioned in the one area of the U.S. where newsprint demand is expanding—the U.S. southeast.
Portions of the kraft mill will be shut and about 210 employees let go. Of its current 350,000 tpy of production, 90,000 tpy goes to the newsprint mill. Once the recycled line starts up, production will be targeted 100% at the fluff pulp market, with most of it going to Kimberly-Clark. Capacity will be limited to 260,000 tpy due to being recovery limited, and the mill won’t sell hardwood pulp any longer, and that portion of the pulp mill will be shut down.
The investment in the pulp mill will improve quality and conform the mill to Cluster Rule requirements. The shift to recycled means the mill will go from the fourth quartile to the first quartiles in terms of newsprint production costs. The shifts in fiber use will cut wood demand from 2.4 million tpy to 1.2 million tpy, thus one rationale of selling the woodlands, which raised C$440 million. One remaining cost issue at Coosa Pines is energy costs, which are reasonably high due to it being an old mill using coal fired boilers.
DOLBEAU REVAMP. The Dolbeau mill was the first choice for investment. The facility is typical of many newsprint mills built in Canada and the Northern U.S. during the 1920s and 1930s. It had two nearly identical machines, in this case originally Dominion Engineering fourdriniers located adjacent to one another with only a machine isle separating them.
As Alliance evaluated options for Dolbeau, given that it was a new company, there was a desire to control project costs and not take on too much debt. The mill had a good pulp mill and power plant. Among the issues considered were use of the existing CTMP plant and sizing of the paper machine to meet market needs and pulp capacity. Thus, a new machine was designed with a 232-in. width and capacity of 370 mtpd. The No. 1 machine at Dolbeau was essentially dismantled, with only the dryer cans used in the new machine. The No. 2 paper machine continues to run groundwood grades, principally groundwood book publishing grades.
Two soft-nip calenders (soft roll in bootom on left, top on right) produce high sheet gloss levels
The centerpiece of the Dolbeau project was a C$177 million investment to build a new No. 5 machine designed to produce 132,000 mtpy of soft-nip calendered grades. Voith Sulzer supplied the major machine components. The No. 5 machine came online in mid-1997 and soon began producing soft-nip calendered grades under the Eminence brand. Later, a higher quality Plus grade was added. The machine uses a Voith CFD gap former, widely utilized on uncoated groundwood grades, and a standard tri-nip press.
Two two-roll Voith Sulzer soft-nip calenders are a centerpiece of the machine. In the first calender, the soft roll is in the bottom position, and in the second, it is in the top. Surface temperature can run up to 200 degrees C, and each calender can be loaded up to 350 KN/m. A 44-zone Nipcorect roll for caliper cross direction profile control and two 22-zone steam boxes for gloss and smoothness CD profile control are included.
Typical calender operating conditions on the standard Eminence grade are about 150 degrees C to 160 degrees C on the hot roll (or about 50 to 60 degrees C on the soft roll), with a 265 KN/m load in the first nip and 200 KN/m load in the second calender. On the higher quality Eminence Plus grade (Table 1), the hot roll target temperature is about 180 degrees C to 200 degrees C. Filler loading is targeted at 8% for Eminence and 12% for the Eminence Plus grade.
Damage to the soft cover is always an operational issue for mills. However, roll damage has not been a big problem at Dolbeau. To ensure it won’t be in the future, the mill is adding doctors on the soft rolls to avoid problems with pitch spots. Grind intervals on the roll are running about 3 months. Sheet quality is controlled using a PaperLab testing system, which feeds data to the distributed control system (DCS) so operators can view lab data on the previous roll to compare against current data on the machine.
Since startup, the machine has produced a very high quality sheet, according to mill manager Daniel Laberge. The most notable aspect, however, may be the effect on sheet furnish of the combination of the fiber used, the special pulping process, and the machine system. The sheet on No. 5 can be made with a furnish of TMP and filler. Laberge considers this a real advantage.
Alliance believes both the Dolbeau and Donnacona mills (with the new machine) are well positioned from a cost competitive standpoint in the first quartile for these grades, since they are able to use less, or no, kraft pulp and the company controls its own wood supply. With the work at Coosa Pines, the company will have three modern mills running seven paper machines (Table 2).
Most soft-nip papers and SC grades in North America, including the Alliance sheet, are clay filled. Clay is brought to Dolbeau by truck at 70% slurry from Trois-Rivieres, supplied by Imerys (formerly ECC). Some mills are looking to move to calcium carbonate--for example, Madison Paper and the Inexcon (formerly Great Northern) mill in Millinocket, Me., mill are switching.
The Dolbeau mill invested C$1.5 million on training mill staff on the new equipment and on the change from producing printing papers instead of newsprint. At Dolbeau, staff swings from machine to machine, using five operational people and one support staff per shift, using a 6/3 schedule (6 days on/3 days off). At Donnacona, each paper machine will have a dedicated crew.
The startup of the machine went well, but there were numerous challenges. The mill not only had to train the staff and learn to make a new grade that went well beyond standard newsprint production but to market it as well. In addition, this change opened up a new set of customers. The mill sells direct to the end-user as well as through standard distribution channels.
SC and Soft-nip paper market trends
Groundwood specialty printing and writing papers comprise a variety of grades. The grade structure is divided along end use lines (e.g. directory, paperback book, etc.), printing process (heat-set offset or rotogravure), as well as by sheet quality.
The development of soft-nip calendering (SNC) has opened up a new series of products that compete against both traditional machine finish grades on the low end and standard supercalendered (SC) grades and SC-A+ on the upper end. Traditional SC grades are finished off-machine. Major North American traditional SC-A/SC-A+ producers include Madison Paper, Abitibi, and Stora-Enso at Port Hawkesbury and Duluth.
|Share-of-Market (all SC grades)
|Source: Jaakko Poyry Consulting, GAPTRAC, March 2000
Note: 1 indicates compound annual growth rate
TABLE 3. Demand for SCA/SCB/SNC grades is expected to continue to expand strongly in the future (USA basic demand, short tons).
The primary markets for the grades made at Dolbeau, and the new machine at Donnacona, are newspaper inserts, retail flyers, magazines, and catalogs. As shown in Table 3, the current market for all SC grades in the U.S. is estimated at 2.5 million short tons. Growth rates for all grades are projected to be excellent, but growth for SC-B and SNC grades is expected to outpace growth of SC-A.
Soft-nip papers have emerged in recent years as a major product and are further blurring the line between grades, according to Kevin B. Wassil, senior v.p.-sales and marketing with Alliance. Groundwood specialty producers used to compete with newsprint, bleached newsprint, and machine finish grades. Now with the wide use of heat-set offset, they are competing against coated grades and high end European SC-A.
It appears that mills with off-machine finishing are moving into SC-A+ grades as competition from on-machine calendered grades continues in traditional SC-B and SC-A markets.
||Less than 5%
|Note: Values are guidelines only
TABLE 4. General sheet characteristics for supercalendered papers.
ALPHABET SOUP GRADES. The dividing line between various grades has been brightness, but smoothness and gloss are other key sheet attributes. There are about four major SC qualities (including grades produced using supercalenders and soft-nip machine calenders), but even with these groups wide variations exist, as shown in Table 4.
Alliance’s Eminence Plus SC-B grade is at the high end of the gloss spectrum for the grade, with better opacity than standard SC-B and with better heft and body.
A major advantage of the Dolbeau mill is the ability to produce down to 26-lb/3,300 ft.2 weights. Customers value this due to savings on postage, which is very important to catalog producers. SC-A sheets are available at these weights, but they tend to get "flimsy" due to the sheet compaction of the supercalender. The process used at Dolbeau allows the mill to produce a sheet that is two to four pounds lower in weight at similar opacity.
Grades produced by the No. 4 paper machine at Donnacona will target the insert, catalog, and magazine market as well. Gloss off the sheet at Donnacona will be in the 45-plus range. Dolbeau’s sheet is geared to the heat set offset market, while Donnacona will target both heat set offset and rotogravure markets with an ability to serve up to 137-inch roll sizes.
A number of other producers make soft nip grades. These include Irving Paper, which makes a product at the St. John mill, using a six-roll, five-nip calender to make product in the 38-40 gloss range. The Dolbeau sheet, at 30 gloss, is still short of this level, but is able to compete with these grades. This is a blurring of the traditional grade lines, where SC-B normally had gloss in the 25-27 range. Thus, the sheet off the No. 4 paper machine will have gloss higher than any other on-machine grade in North America and will position it at the top end of the SC-A range. More traditional SC-B/SNC producers include St. Marys Paper, Fletcher Challenge, Pacifica Papers, and Abitibi-Consolidated.
FIBERLINE & CO-GEN PLANT. A key to the very high quality sheet produced is the use of "super" thermomechanical pulp (STMP) the Dolbeau mill produces (and Donnacona will, as well) that was started up with the No. 5 machine. A key to the STMP process is use of fractionation on No. 5 stock to separate long and short fibers, allowing added energy to be applied separately to the long fiber and short fiber.
For the No. 2 paper machine, TMP is sent directly to the machine without fractionation. Donnacona will go one step further and use screens and Hydroclone fractionation. The TMP plant, built by Sunds Defibrator (now Valmet) in 1987, has three primary, three secondary, and two reject refiners.
A new C$66 million co-generation plant was also installed to produce 300,000 lb/hr of steam and provide electrical power. The bark-fired boiler was upgraded with a fluidized bed to increase capacity. A second bark handling line was installed to provide the increased bark required for the new co-generation plant. Included was a truck dumper and a second bark shredder. The plant has eliminated the need to bury bark, produced at the regional sawmills, in the landfill.
A Siemens turbine and Alstom generator provide 20 MW of power, or 20 % of the electrical power need of 100 MW. The co-generation plant was sold to Boralex, a unit of Cascades, and Boralex operates it for the mill under contract.
MAJOR EQUIPMENT/SERVICE SUPPLIER
FOR DOLBEAU PROJECT
||Two Deltascreen fractionators; CD 70 long fiber refiners; two JC-04 post refiners; WinBelt winder
|Voith Sulzer Papertechnology
||Approach flow screens; dilution headbox with module jet; CFD former; DuoCentri II three-nip press section; five-section dryer unit; two two-roll Flexonip calenders; TR-125 reel
PREVIEW: NO. 4 AT DONNACONA. With the Dolbeau machine experience behind them, Alliance looked to the Donnacona mill, a three-machine facility that produces a variety of book, hight-brights, and machine finish groundwood papers and newsprint. Two 150-inch trim machines will be shut down. The No. 3 machine will continue to make uncoated grades, but gradually, all newsprint production will be shifted to Coosa Pines.
The success at Dolbeau provided the confidence to go even further at Donnacona. A new 152,000-mtpy, 234-in-wide No. 4 machine, at a cost of C$275 million, is under construction. The No. 4 paper machine will go beyond the capabilities of the No. 5 machine at Dolbeau by installing additional finishing capability via the use of an eight-roll, seven-nip on-machine Voith Sulzer Janus calender. This will provide the capability to produce a high quality SCA sheet. In addition, it will allow the mill to serve rotogravure markets, particularly the latest generation 137-in. rotogravure presses.
Other options were considered, such as a machine similar to Dolbeau’s No. 5, but it was decided that the ability to produce a wide array of grades was an advantage. Startup is planned for September. Once running, the new machine will have an online capability unmatched by almost any mill. A similar configuration is running in Europe, where an online multi-roll Janus calender is operating at Palm in Ettringen, Germany. Irving’s St. John, N.B., mill has an online Valmet Optiload calender with six rolls.
In the Donnacona mill’s stock prep area screens were supplied by Valmet, fractionation by Noss, two high consistency refiners by Andritz, while post refiners are from Valmet. The disk filter is from GL&V Celleco, and Kvaerner supplied a screw press. Voith Sulzer supplied the paper machine, which includes a dilution control headbox, TQ former, and press section with a shoe press in the third position. The dryer section has four uni-run and two standard sections. Nash provided the vacuum pumps, and ABB/Bailey provided the machine drive, power transformers, DCS, and quality control system. The machine reel is Voith’s first North American installation of its Sirius reel. The machine winder is by Valmet, and the new finishing and wrapping line is by Lamb Canada Ltd.
Donnacona is also adding a new $12.5 million peroxide bleach plant, giving the mill the capability to manufacture high brightness grades on both machines.