TISSUE

Tissue growth stays strong through 2002

Installation of new tissue paper machines in North America is expected to slow during 1999-2002 but growth overall remains strong, according to a comprehensive review of global tissue projects by Pulp & Paper Project Report. Twelve new tissue PMs are slated for startup in North America during the four-year survey period, including four that began production in 1999. This is a 25% decline from the 16 new PMs tallied for the 1998-2001 period last year. However, there is only a 12% decline in capacity of scheduled new PMs, equivalent to approximately 101,000 tons. Total capacity of these 12 machines is 736,000 tons, for an average annual machine capacity of approximately 61,000 tons. Eight of these machines have a rated capacity of 65,000 tpy or higher, including multiple installations by Procter & Gamble Co. and Kimberly-Clark Corp.

The restart of two machines at the tissue mill in Augusta, Maine, owned by American Tissue Corp. was not included in the new machine tally. The company is also considering installing a used machine at the mill, possibly from the company's idled Lockland, Ohio, mill.

Tissue producers settle for $56 million

On September 18, lawyers in Philadelphia settled a class action lawsuit which had alleged price-fixing by major U.S. producers of commercial tissue products. The case provides for a settlement fund valued at $56.2 million, $18 million to be paid in cash and $38.2 million to be paid in coupons redeemable for tissue products over a three-year period. The defendants in the case are Bay West Paper Corp., Wisconsin Tissue Mills Inc., Encore Paper Co. Inc., the former Fort Howard Corp., Georgia-Pacific Corp., the former James River Corp., Kimberly-Clark Corp., Marcal Paper Mills Inc., the former Scott Paper Co., and Cascades Industries Inc. The settlement relates to direct purchasers of commercial tissue products during the period from Jan. 1, 1993, through July 22, 1998.

K-C to build product testing facility

Kimberly-Clark Corp. will construct a $6 million product testing facility in Neenah, Wis. The facility will be used to test improvements to personal care and tissue products, according to a company representative. K-C has allotted $3 million for construction of the facility, which will be built on a 7.7 acre parcel of land in Neenah's Southpark Industrial Center. The other $3 million will be used to purchase equipment. The company did not release details about the purchase or suppliers of the equipment.

Florida tissue mill bankrupt, for sale The Edwards Paper Co., which is under Chapter 11 protection, has put its Florida tissue mill and Arizona converting plant up for sale. Edwards Paper is a 100% recycled fiber milling-converter producer of tissues, towels, wipes, and dispensing systems with a mill in Miami, Fla., and converting operations in Miami and Tucson, Ariz. The paper mill has been listed with capacity of about 11,000 tpy. A company representative said there are unidentified interested parties and did not comment on the mill's value. The company is also selling tissue converting machinery from its Tucson plant.

 

U.S. TISSUE MACHINE PROJECTS 1999-2002
Company	Location	Project	Start Date
Marcal Paper Mills	Elmwood Park, N.J.	New PM	1Q/99
CityForest	Ladysmith, Wis.	PM shut	2Q/99
CityForest	Ladysmith, Wis.	New PM	3Q/99
Encore Paper	South Glens Falls, N.Y.	PM shut	3Q/99
Encore Paper	South Glens Falls, N.Y.	New PM	4Q/99
Procter & Gamble	Cape Girardeau, Mo.	New PM	4Q/99
Perkins Paper	Rockingham, N.C.	New PM	2Q/00
Procter & Gamble	Cape Girardeau, Mo.	New PM	1H/00
Georgia-Pacific	Zachary, La.	New PM	3Q/00
PCDI Oconto Falls	Oconto Falls, Wis.	New PM	3Q/00
Tissue
Kimberly-Clark	Jenks, Okla.	New PM	3Q/01
Kimberly-Clark	Loudon, Tenn.	New PM	3Q/01
Procter & Gamble	Mehoopany, Pa.	New PM	3Q/01
Procter & Gamble	Mehoopany, Pa.	New PM	2001-02
e = estimate; n.a. = not available. Source: Pulp & Paper Project Report.

 

MERGERS/ACQUISITIONS

Stora completes Consolidated buy

Stora Enso completed its $4.8 billion acquisition of Consolidated Papers Inc. in September. The merger creates the world's second-largest paper and board producer with an annual capacity of 15 million mtpy. According to Consolidated, 77% of approximately 5,300 of the company's shareholders approved the deal, most voting by proxy. The merger needed approval by two-thirds of shareholders. Consolidated Papers is now part of Stora Enso's new North American division. The combined company will employ about 7,600 workers and includes 12 factories in Wisconsin, Minnesota, and Nova Scotia.

Badger Paper Mills resists buyout

Bomarko Inc.'s has threatened to sue Badger Paper Mills Inc. in an effort to buy out the company. Bomarko, a paper converting company based in Plymouth, Ind., has reportedly made a tender offer of $5/share, or $6/share merger offer, to buy 51% of Badger Paper's common stock. Badger Paper is resisting the offer, its general counsel saying an official offer was never made. Bomarko pres. and Badger stakeholder James Azzar made an offer to buy Badger Paper during a May 9 shareholders meeting. Azzar claims that under Badger Paper's bylaws the company must respond within 90 days of receiving an acquisition offer. The deadline is more than overdue, said Azzar. The legal threat comes at a difficult time in the Badger Paper organization following the death of the Badger's president, Thomas Cosgrove on Sept. 10. The company has not yet named a successor.

 

CAPITAL SPENDING

Weyerhaeuser to invest C$167 million

Weyerhaeuser Co. plans to invest C$167 million over the next two years to introduce oxygen delignification and upgrade its water treatment program-allowing a future increase in capacity-at its 310,000 mtpy Grande Prairie, Alta., market pulp mill. A company spokesman said the new system will reduce lignin content going into the nearby Wapiti River by about 50%. The project will be completed during regularly scheduled maintenance downtime in 2001 and 2002. The mill, which uses 57,000 m3/day of water from the Wapiti, plans to replace some equipment with equipment that injects oxygen into the water during the bleaching process. Projected new capacity has not yet been determined. The mill produces bleached and semi-bleached kraft pulp. The two-year project will involve some 150 people working during two weeks of downtime beginning the last week of May 2001.

Glatfelter continues $49 million IT project

The P. H. Glatfelter Co. approved the second phase of Project IMPACT, a $49 million initiative to "redefine the way that the company will do business in the future." Part of the company's plan to enhance its information technology system includes the installation of an enterprise resource planning (ERP) system. Once implemented, the ERP will enable P. H. Glatfelter to respond to customers in a timely, more cost-effective manner, the company said. Project IMPACT began in July 2000. During that initial phase, preliminary design work was completed that focused on identifying necessary changes to Glatfelter's organization and its business processes, and the role that technology will play in enhancing those new processes. The second phase of Project IMPACT is underway and is expected to extend over several years.

G-P plans $17 million installation, upgrade

Georgia-Pacific Corp. will invest $17 million at its Port Edwards, Wis., uncoated free-sheet mill to install a new woodchip processing plant and make environmental upgrades. Construction of the $10 million woodchip processing plant is expected to begin this fall and be completed by October 2001. The new plant is expected to add 22 employees.

The $7 million in planned digester and environmental upgrades are related to the new chip plant and are expected to occur over the next two years. G-P said the new plant will allow it to process wood into chips at its own facility to decrease costs and increase flexibility. The mill has capacity to produce 174,000 tpy of uncoated free-sheet on four paper machines.

Fletcher plans emissions project

Responding to British Columbia air emissions requirements and to U.S. Cluster Rules regulations, Fletcher Challenge Canada Ltd. plans to spend C$12.2 million over the next 16 months on a project to reduce odor coming from its 840,000 mtpy Crofton, B.C., pulp and newsprint mill by up to 85%. The odor at Crofton is primarily being caused by the mill's pulp cooking lines, which have undergone several modifications since they were built. The emissions include chemically reduced sulphur gases and lime kiln, which have been a long-standing complaint of nearby residents. Once the project's first phase is completed in mid-December-at an estimated cost of C$9.7 million-emissions should be re-duced by 70%. The Crofton mill is located relatively near the U.S. border, and is required to meet the more-stringent U.S. Cluster Rules regulations. The company has until 2006 to meet those requirements. Once the new system is in place, Fletcher Canada plans to start a second phase of improvements, hoping to reduce emissions to 15% of current levels. The company estimates the cost of the second phase will be about C$2.5 million, and will be finished by the end of 2001.

 

CORPORATE STRATEGY

G-P confirms sale of market pulp assets

Georgia-Pacific Corp. confirmed plans to sell off its core market pulp business and outlined a plan to sell eight U.S. tissue mills and converting operations that exceeds originally announced intentions. The move was seen as a preemptive concession toward U.S. Dept. of Justice approval of G-P's $11 billion acquisition of Fort James Corp. to create the world's largest tissue producer. In addition, G-P said it was nearing startup of the world's largest tissue machine at its Port Hudson mill in Zachary, La. The new unit will have capacity for 80,000 tpy. At its Port Hudson mill, G-P is nearing completion of a $90 million project to replace a former market pulp drying line with a new tissue machine. The 300-in. Valmet Crescent former machine is the world's widest. Details on the startup plan were not provided. It is the uncoated free-sheet mill's only tissue unit.

Abitibi closing in on sale of Quebec mill Abitibi-Consolidated Inc. has received several bids for its Wayagamack paper mill near Trois-Rivieres, Que. Abitibi has been looking for a buyer for the mill since announcing the closure of the No. 1 machine in July. The company characterized conversations with the potential buyers as "serious." Earlier this year Abitibi shut down paper machines Nos. 8 and 9 at the mill, which together produce 10,000 mtpy of carbonizing tissue. With all five machines up and running the mill has the capacity to produce 100,000 tpy of directory paper and 95,000 tpy of other specialties. Industry sources are reporting that Kruger is negotiating to buy the mill and rebuild two of its machines at a capital cost of more than $300 million. Kruger would also add coaters and calendering units and produce high-grade magazine papers, according to sources.

 

CONTAINERBOARD

Solvay plans $125 million paper machine Solvay Paperboard L.L.C. plans on adding a 180,000 tpy recycled corrugating medium machine by summer 2002 to its containerboard mill in Syracuse, N.Y. Plans for the $125 million project call for a Valmet Corp. machine along with a Black Clawson and Voith Sulzer stock prep system, and for adding 160,000 ft2 of building space at the mill for the machine including warehouse space and rail siding. The new unit would boost total containerboard capacity at Syracuse by 40% to more than 600,000 tpy. The machine would produce 23- to 26-lb medium, but could produce as light as 20-lb medium if needed. Solvay Paperboard is in the middle of engineering work and equipment procurement for the machine project. Some site work will be done at the mill this fall with groundbreaking planned for spring 2001. The third machine will make Solvay the 16th largest containerboard producer in North America.

Southern starts up $30 million box plant

Southern Container Corp. is starting up a new sheet feeder and corrugated box plant in Devens, Mass. The $30 million project includes a 110-inch BHS corrugator that can produce up to 200 million ft2 as a sheet feeder along with four flexos and two United Die Cutters. The company believes the Devens plant will help it be the major sheet supplier to box makers in a 200-mile area stretching from roughly Montreal down to eastern New York. The 225,000-ft2 plant is on a former U.S. Army base, about 30 miles west of downtown Boston. The company plans to hire about 130 workers for the plant. While starting up the plant in Devens, Southern said it will curtail operations at its Westbrook, Maine, box plant. The operation in Maine is expected to remain as a sheet plant and warehouse serving the local market.

Langston and Marquip in Chap. 11

Two leading U.S. corrugated container equipment suppliers-Langston Corp. and Marquip Inc.-have filed for Chapter 11 bankruptcy protection. Marquip of Phillips, Wis., filed in April in Wisconsin and received bankruptcy court approval Sept. 14 for selling most of its business to Barry-Wehmiller Cos. Inc. of St. Louis. Langston, of Cherry Hill, N.J., filed for bankruptcy protection in September in Delaware. In both cases, the companies were moving to reorganize while under the auspices of the bankruptcy court. Terms of the Marquip and Barry-Wehmiller deal were not disclosed. Marquip has 6,400 machines in plants worldwide and offices in 21 countries. Barry-Wehmiller planned to continue operating Marquip plants in Phillips and Madison, Wis., based on the deal. The privately-held Barry-Wehmiller expected to increase its annual revenue to more than $360 million with the addition of the Marquip assets.

Norampac to acquire Armor Box Corp.

Norampac Inc., a joint venture owned by Cascades Inc. and Domtar Inc., has entered into an agreement to acquire the assets of Armor Box Corp. Armor Box operates a corrugated products converting plant with an annual production capacity of 600 million ft2. The plant is located in Buffalo, N.Y. In a statement Norampac said the Armor Box acquisition is a perfect fit with the company's development strategy and will increase its level of vertical integration and will help the company break into the American corrugated products market. With annual production capacity of more than 1.4 million tons, Norampac is the largest containerboard producer in Canada and the ninth largest in North America. Norampac is also the largest Canadian manufacturer of corrugated products.

 

COATED PAPERS

Newton Falls mill sold to Empire Group

Appleton Coated LLC, which operates as part of the fine, specialties, and coated papers division of Arjo Wiggins Appleton is selling its coated paper mill in Newton Falls, N.Y. The buyers are composed of an Illinois investment group which includes the principal owners of paper distributor Murnane Paper Co. and the paper brokerage firm Marquette Paper Co. of Elmhurst, Ill. The new owners, Empire Paper Group LLC, will pay $20 million in cash for the assets and working capital of the 106-year-old mill. To attract a buyer, New York state officials offered a package of property, wage, and sales tax credits. The new owners are also eligible to apply for a $450,000 capital grant for machinery and equipment upgrades. The Newton Falls mill has capacity to produce 140,000 tpy of coated free-sheet grades on two paper machines, complemented by an off-machine coater and two supercalender units. The mill will do business under the name Newton Falls Paper Co.

 

SPECIALTY PAPERS

FiberMark to sell business to Ahlstrom FiberMark Inc. has agreed to sell a portion of the company's filter media volume manufactured at its Richmond, Va., paper mill, together with some production equipment, to Ahlstrom Paper Group. FiberMark said it plans to close the Richmond mill during 2001 and transfer the remaining production volume of filter media to other production sites. FiberMark said it remains committed to the filter market, which will continue as a core, strategic market for the company. FiberMark expects the transaction to have a neutral impact on earnings. Filter media comprises the largest product group for FiberMark, accounting for 31% of the company's 1999 sales revenue.

 

RECYCLED PAPERBOARD

Caraustar curtails production Caraustar Industries Inc. said that it will operate its Buffalo Paper Board mill in Lockport, N.Y., only about 10 days a month for the remainder of the year. During the other two to three weeks each month, most of the mill's 90 employees will be laid off. The Buffalo mill primarily produces gypsum wallboard facing paper and has daily production capacity of about 250 tpd. The company cited slow demand for gypsum wallboard this year. In addition, Caraustar has suffered a shortfall of orders from a major gypsum wallboard customer. Caraustar is suing Georgia-Pacific Corp. for alleged breach of contract to purchase all of its gypsum paper requirements from Caraustar. G-P disputes the interpretation of the long-term supply contract, but its purchases from Caraustar have fallen by more than 80% from the 7,000 tons/month level that prevailed during the first half of the year.

 

TIMBERLANDS

Packaging Corp. to sell 385,000 acres

Packaging Corp. of America (PCA) has entered into an agreement to sell approximately 385,000 acres of timberland to Southern Timber Ventures, LLC. PCA expects to receive from the sale approximately $250 million in cash and a 33 1/3% equity ownership interest in Southern Timber Ventures. Financing for the sale will be provided by the John Hancock Bond and Corporate Finance Group. The company said the sale will accomplish three important objectives for PCA; the provision of approximately $250 million in cash, to be used to pay down debt; the provision of a long term fiber supply agreement for the PCA Counce, Tenn., mill; and PCA will retain a portion of the potential long term appreciation of these timberland assets. PCA is the sixth-largest producer of containerboard and corrugated packaging products in the United States, with sales of $1.7 billion in 1999.

 

ENVIRONMENT

Westvaco mill cited in EPA crackdown

The U.S. Environmental Protection Agency's Region III began a crackdown on mid-Atlantic area kraft pulp mills allegedly violating the Clean Air Act (CAA), and has taken legal action against one of eight pulp mills initially included in the investigation.

On Aug. 28, EPA filed a complaint against Westvaco Corp. in Federal District Court in Baltimore over alleged air pollution violations from the company's 450,000 tpy fine papers mill in Luke, Md., and a lime kiln and wood yard facility in Beryl, W.Va.

The complaint cites several CAA violations, including causing large increases in nitrogen oxides, sulfur dioxide, and particulate matter emissions by expanding the Luke mill without obtaining permits required under state and federal regulations; failing to install necessary pollution controls, violating limits on visible emissions; and, failing to meet pollution standards for brown-stock washer systems. The EPA is seeking a court order requiring Westvaco to comply with the CAA, including requirements for permits and air pollution control equipment. The company could be penalized up to $27,500 a day for each violation. Westvaco said it "strongly disagrees" with the EPA allegations, saying it cooperated fully with the EPA for three years in an effort to resolve the agency's claim. The company went on to say it would "vigorously defend its environmental performance" and expects the courts to repudiate "EPA's misguided claims."

New kraft pulp line for Bowater Catawba Bowater Inc. has begun developing a new, $175 million kraft pulp line at its Catawba, S.C., pulp and paper mill. The addition, which is required to meet Cluster Rules emissions and water use requirements, follows Bowater's enrollment in EPA's Voluntary Advanced Technology Incentives Program (VATIP). Bowater joins International Paper Co. and P.H. Glatfelter Co. as VATIP participants.

By joining VATIP, Bowater is buying time to design and construct its new mill, which will consist of a single continuous digester for kraft pulp production, with an oxygen delignification stage added to the process. The existing recovery boiler will not be replaced. The Cataw-ba mill's existing line, consisting of 10 batch digesters, produces about 269,000 tpy of bleached softwood kraft market pulp. Bowater will keep its current workforce after the transition. The Catawba mill also produces 356,000 tpy of coated groundwood and 261,000 tpy of newsprint.

EPA investigates Southeastern mills

In an effort to review any possible violations of all environmental rules and regulations covering pulp and paper mills in the Southeast, the Environmental Protection Agency's (EPA) Region IV office has indicated that it will launch a full-scale investigation that is expected to take at least a year to complete. The Southeast region's investigation follows a similar crackdown on pulp mills in the Mid-Atlantic for possible violations of the Clean Air Act's (CAA) New Source Review (NSR) regulations.

According to the EPA, only a few of approximately 60 pulp and paper mills in the region's eight southeastern states are being investigated, although the agency declined to release their names. However, other pulping facilities are expected to be included before the inquiries are completed, probably sometime at the end of fiscal year 2001.

 

INTERNATIONAL NEWS

Copamex in $25 million partnership

Mexican paper manufacturer Copamex will invest $25 million in Venepal, a financially troubled Venezuelan producer of printing/writing paper and containerboard. The money will be spent over the next two years at Venepal's Moron mill. The company shut down two paper machines at the Moron mill and closed its Valencia site when it hit financial difficulties in 1998. With this investment, Copamex holds an option to buy 60% of Venepal, which the company can exercise at any time before the end of June 2001.

Copamex manufactures tissue paper, hygiene products, office papers, notebooks, bleached pulp, and sack kraft paper which the company converts into multiwall sacks, plans to expand its packaging products range by moving into the corrugated container market. Through this alliance, Copamex has access to the Venepal's testliner and corrugating medium output.