Billerud Will Not Proceed with Plans to Convert Escanaba Mill to Cartonboard Production

May 21, 2024 - Billerud's Board of Directors has decided to not proceed with plans to convert its Escanaba mill to cartonboard production. Instead, the company will target to shift its product mix gradually towards packaging materials in North America with a moderate investment level.

"After in-depth feasibility studies, evaluations, and supplier discussions, we have concluded that the projected return on investment is not sufficiently attractive to proceed with the conversion of Escanaba to cartonboard production," said Ivar Vatne, President and CEO of Billerud.

Billerud began a feasibility study in the latter part of 2022 to examine the potential of converting its paper mill in Escanaba, Michigan, to the production of cartonboard.

In addition, Michigan Governor Gretchen Whitmer on January 31, 2023 signed legislation approving the Michigan Economic Development Corporation's (MEDC) appropriation of up to $200 million in funding to support the company's plans to convert the Escanaba mill.

Vatne continued, "During the process, conditions have changed and the cost of equipment and services necessary to transform the operations have greatly increased. Instead, we will pursue a higher returning and more moderate investment strategy for our North American mills going forward.

"The long-term market outlook for paper and packaging material in North America is promising. With better-than-expected machine flexibility we see great potential to diversify our product portfolio towards packaging grades — fully in line with our strategy," Vatne concluded.

Billerud said that it will continue to serve the North American markets with its high quality cartonboard produced at its European mills.

Costs of around SEK 200 million for the US transformation program will be recognized in the 2024 second quarter result, reported as an item affecting comparability, the company added.

Editor's note: In March of 2022, Billerud acquired Ohio-based Verso Corporation. The acquisition included Verso's production operations in Escanaba and Quinnesec, Michigan, and Wisconsin Rapids, Wisconsin.

About the Escanaba Mill

The Escanaba Mill, with 860 employees, has the capacity to produce 660,000 tons per year of coated sheets, coated web, coated digital and inkjet, and label paper. The mill's 2,000-acre site has a kraft pulp mill, a refiner mechanical pulp mill, three paper machines, a pulp dryer, three off-machine blade coaters, six supercalenders and six winders.

Escanaba is a fully integrated mill, producing its own wood chips, pulp and power.

Billerud provides paper and packaging materials that challenge conventional packaging for a sustainable future. The company has production units in Sweden, USA, and Finland.

SOURCE: Billerud