Update: OCC, mixed paper to feed Nine Dragons mills

By Ken McEntee

Updated from previous post

ND Paper, a subsidiary of China-based Nine Dragons Paper, will invest $300 million into its recently purchased mills in Wisconsin and Maine, including for the addition of three unbleached recycled pulp lines that will add 3,400 short tons of daily pulp capacity.

About 2,640 tons of pulp per day will be shipped to China for use in Nine Dragons containerboard mills. The remaining 770 tons per day will be used to feed a converted containerboard machine at the Biron, Wisc. mill.

Brian Boland, vice president of government affairs and corporate initiatives for ND Paper, said feedstock for the mill will consist of a mixture of old corrugated containers (OCC) and mixed paper, sourced from nearby municipalities and industrial locations.

“Our parent company, Nine Dragons Paper (Holdings) Inc., also owns America Chung Nam, the largest U.S. exporter of any product by container volume,” he said. “ACN is in the business of collecting and selling scrap paper. We’ll leverage our relationship to provide feedstock for our facilities.”

With ACN assistance, ND Paper said, the Biron mill will source largely from the Milwaukee, Minneapolis and Chicago metro areas. The Rumford mill will draw upon Portland, Maine, Boston, and the greater New England geography.

Construction on all projects at the Rumford, Maine and Biron, Wisc. mills is anticipated to begin in late 2018 or early 2019, with completion targeted in the fourth quarter 2019 to the first quarter 2020.

NP Paper said the Rumford Division will receive an injection of $111 million to finance two significant projects, namely:

  • Construction of a greenfield recycled pulp facility. The pulp line will add about 1,320 air dried short tons per day of manufacturing capacity to the site. The dried pulp will be made for external consumption, primarily to be shipped to Nine Dragons mills in China.
  • Installation of a shoe press on the R15 paper machine, which increases the machine’s production capacity by about 20 percent.

The Rumford mill produces coated paper, specialty papers and market pulp. ND Paper didn’t specify what type of pulp will be produced on the new line.

In Wisconsin, the Biron Division will commission several major projects at a cost of $189 million, including:

  • Conversion of the B25 coated groundwood paper machine to containerboard products – specifically lightweight corrugated medium and linerboard.
  • Construction of a two-line greenfield recycled pulp facility. These pulp lines will add almost 2,100 short tons of pulp manufacturing capacity to the site.
  • One of the pulping lines will produce up to 770 tons per day. The line will not have a dryer, and the pulp will be used to feed the converted containerboard machine. The other pulp line will have a 1,320 ton per day capacity and will have a pulp dryer. The pulp will be made for external consumption, primarily to be shipped to Nine Dragons mills in China.
  • Construction of a water treatment and fiber recovery plant, a package boiler to provide energy, storage facilities for raw materials and a finished good warehouse.

Currently, the Biron mill operates two paper production lines with a combined annual production capacity of 374,000 tons. It manufactures primarily coated groundwood grades for the North American market.

ND Paper gave three objectives for the investment.

  • “First, these moves are consistent with our goal of environmentally-sustainable papermaking and further support Nine Dragons’ company-wide fiber sourcing requirements,” the company said. “The addition of recycled pulp lines will provide a stream of supply to our Asian mills, as well as support internal requirements in the U.S.”
  • Second, diversifying the product mix reduces exposure to secular declines in demand. “Many of our core markets are contracting anywhere from 5 to 15 percent annually,” ND Paper said. “By doing nothing we would eventually shut down machines. Instead, we’re moving into growing markets with which Nine Dragons has existing expertise. We are excited about a strong future in containerboard.”
  • Third, the company said, “We want our mills to be sustainable for the next 100 years. Greater production volume improves our cost performance for all products, ensuring our mills are sustainable through difficult downturns in the market. With mills performing in the top quartiles of the cost curve, we reinforce our ability to provide uninterrupted supply and service for existing and new customers alike.”

“We invest for the long-term,” said Ken Liu, ND Paper’s chief executive officer. “While strongly supporting our global fiber strategy, this suite of projects also dramatically improves the sustainability of these historic mills. Not only are we developing a U.S.-based containerboard business, we’re also reinforcing our commitment to existing printing and writing and specialty customers with world-class, cost-competitive assets.”

In Maine, Gov. Paul R. LePage said the investment will lead to the creation of 50 new jobs. In Wisconsin, State Sen. Patrick Testin said the projects will help retain 350 jobs and create another 27 new jobs.

Upon finalizing the purchase of the mills from Catalyst Paper in June, ND Paper executed a strategic review of investment options to further enhance the long-term sustainability of the facilities, the company said. The investigation led the company to a multi-faceted investment strategy that diversifies the U.S. mills’ product mix, increases their overall production capacity and fundamentally improves their viability “for generations to come.”

The company said it is working in collaboration with both the Wisconsin Economic Development Corporation and the Maine Department of Economic Development on various options to support the strategic projects.

“These investments ensure the ND Paper team can operate these mills safely, efficiently and sustainably now and into the future, and reinforces ND Paper’s commitment to its core customers and the economic viability of the communities it serves,” the company said in a statement.

ND Paper is a wholly-owned subsidiary of Nine Dragons Paper (Holdings) Limited, the largest containerboard producer in China and Asia, and a leading paper product manufacturer globally.

The Rumford and Biron mills are fully-integrated paper and pulp mills with about 1,000 employees and the capacity to produce 990,000 short tons of pulp and paper annually.

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