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JULY/AUGUST 2016
STORA ENSO SKOGHALL New QCS helps mill shorten run-in periods and grade change times
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PulpScaleControl_Ad_PAPERAGE.indd 1 7/12/16 1:05 PM contents JULY/AUGUST 2016, Volume 132, Number 4
DEPARTMENTS
4 Editor’s Note 24 6 Industry News 16 People 18 Calendar FEATURES 30 Packaging Matters 24 Making the Grade — Change, That Is Demand for retail ready packaging is forecast to increase 5.2 percent annually to $6.2 billion A new quality control system installed on KM 8 at in 2020, outpacing the overall packaging market Stora Enso Skoghall results in faster run-ins and average. Among major retail ready packaging quality changes when moving from one board product types, corrugated boxes, which repre- grade to another. The system, with its more precise sent more than 50 percent of total demand, measurements and controls, has cut the time of will provide the strongest opportunities. grade changes by 25%.
COLUMNS SERVICES 20 Advancing U.S. Paper and Wood 29 Classified Ads Products Sustainability Performance 29 Index of Advertisers Through the Better Practices, Better Planet 2020 initiative, which was established in 2011, AF&PA members are successfully pursuing one of the most extensive sets of sustainability goals established for a U.S. manufacturing industry..
22 Market Grade: Newsprint Newsprint demand contracted further in 2015 and early 2016 as the decline in advertising revenues con- tinue to batter publishers. Prices gained some lost ground following the first increase in several years, but remain low.
JULY/AUGUST 2016 3 editors note
JULY/AUGUST 2016 Made in America . . . by China VOLUME 132, NO. 4 Part II EDITOR IN CHIEF Jack O’Brien PUBLISHER Michael C. O’Brien By John O’Brien, Managing Editor MANAGING EDITOR John F. O’Brien, Jr. [email protected] CONTRIBUTING EDITOR Harold M. Cody
In the May/June issue of PaperAge, I wrote in bringing the project to Arkansas, said Sun CONTRIBUTING WRITER John Yolton about Sun Paper’s proposed fluff pulp mill in Paper is still trying to finalize the paper goods LAYOUT & DESIGN Betsy Gold Designs Arkadelphia, Arkansas and conceivable Chinese/ and “product mix” that the mill will be able to American work culture differences once the mill manufacture once operational. becomes operational. However, any workplace “We are excited about this project coming to SALES OFFICE 20 Schofield Road challenges will have to wait a bit longer because Arkansas, and it will be the most technologically Cohasset, MA 02025-1922 construction of the plant, which was supposed advance mill of its kind in North America and a Phone: (781) 923-1016 to begin in early 2017, has been pushed back at catalyst for other manufacturers looking for an Fax: (781) 923-1389 email: [email protected] least six months because Sun Paper is mulling the (engineering) design that is very friendly to the Web Site: www.paperage.com specifics of product mix for the $1.3 billion mill. environment,” Mullinix is quoted as saying in EDITORIAL OFFICES / SUBSCRIPTION ENQUIRES Maybe this isn’t out of the ordinary for a Brown’s story. 42A Country Way mega-project such as this one, but between From my standpoint, an awful lot has been Scituate, MA 02066-3743 Arkansas Gov. Asa Hutchinson, state officials, thrown at a venture that is still examining the Phone: (781) 536-4925 Fax: (781) 923-1389 and a local lobbying firm, it’s been a rush job feasibility of producing certain products, not to email: [email protected] with more questions than answers — and not mention the use of a proprietary manufacturing Web Site: www.paperage.com so much the doing of Sun Paper. process that has been touted as environmentally Copyright ©2016 by O’Brien Publications, Inc. All rights To put things in perspective, the project is ‘superior’ to all others in North America, reserved. PaperAge (ISSN:0031-1081) is published six times per year with those issues being January/February, receiving $10 million in local incentives for although the people involved with promoting March/April, May/June, July/August, September/October, infrastructure at the site and another $92 mil- and approving the project don’t know exactly November/December by O’Brien Publications, Inc., 20 Schofield Road, Cohasset, MA 02025-1922. lion in local property tax abatement. The state what that process is. Periodicals postage paid at North Reading, MA.
(Arkansas) is providing $12.5 million for site Brown also noted that Arkansas’s Department Canadian Mail distribution information: preparation and equipment, up to $3 million of Environment Quality (ADEQ) and state Publication Mail Agreement #40112731 workforce training funds and a $50 million Economic Development Commission officials Ontrac International P.O. Box 25058, London BRC. fully collateralized loan. Other state incentives said they had expected Sun Paper to be fur- Ontario, Canada N6C 6A8 include cash rebates based on its payroll, sales ther along in the application process, given the tax refunds on construction materials and a aggressive early 2017 construction timetable the POSTMASTER: Please send change of addresses to: PaperAge, 20 Schofield Road, Cohasset, MA 02025-1922. recycling tax credit. Chinese paper goods giant had set in April when In addition, Arkansas state officials also the project was announced at the State Capitol. Subscriptions: PaperAge is mailed without charge in the agreed to expedite the process for approving According to ADEQ spokeswoman Kelly U.S. and Canada (upon written request) to qualified individuals in the pulp, paper, paperboard, and paper the air and wastewater permits necessary for Robinson, large industrial projects can typically converting industries. To all others there is a subscription the project. However, Sun Paper is well behind take from six months up to a year or more to charge of $54.00 in the U.S., $60.00 in Canada, and schedule in the application process. gain final approval under the federal Clean Air $90.00 in all other countries. Single copies may be purchased for $10.00 each. All payments must be made According to a story written by Wesley Act Title V rules for so-called “major sources” in U.S. funds and checks must be drawn from a U.S. bank. Brown, Business Editor for Talk Business & Politics, of air pollution, which is an industrial facility Credit cards are accepted.
the planned construction start for the bioproducts that emits or has the potential to annually emit Reproduction of by any means of the whole or part of mill will likely be pushed back because of ongoing 100 tons of any air pollutant, 10 tons of any PaperAge, without written permission, is prohibited. pre-engineering and feasibility studies. hazardous air pollutant or 25 tons of a combination Mr. Brown noted that Julie Mullenix of of hazardous pollutants. Little Rock-based Mullenix & Associates, a local I’m assuming that Sun Paper is reassessing governmental relations, PR and lobbying firm, quantities and not the actual products. Regardless, whose firm also handled negotiations on behalf they’ve got their hands full before those products of Sun Paper with state government officials are made in America.
4 JULY/AUGUST 2016 16-POW-01 DEKA New Deal PaperAge_Thiele 6/15/16 8:09 PM Page 1
A new deal for deinkers: How three mills cut feed cost and boost quality See for yourself how DEKA 2000 replaces money. DEKA 2000 helped this white top liner expensive surfactants while boosting deinking mill increase brightness, lower dirt count, and performance: slash expense with cheaper furnish. A recycled newsprint mill boosted ONP per- A recycled office paper mill opted for centage to save money. With help replacing the more expensive enzyme. Using from DEKA 2000, brightness gain allowed DEKA 2000, brightness increased 2 points, an ONP increase from 30% to 45%, dirt dirt count is lower, color is improved, and counts decreased, and stickies removal im- chemical cost is reduced. proved 15%. Contact us today for details on how you A recycled paperboard mill added post- might benefit from using DEKA. We’ll be glad consumer and printed waste paper such as to show you more detailed mill results and SWL, MOW and coated white paper to save schedule a trial in your mill.
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NORTH AMERICA Packaging Corp. of America to Acquire TimBar for $386 Million
Packaging Corporation of America fulfillment markets with a focus on multi-color graphics and (“PCA”) on July 6 announced that technical innovation. it entered into a definitive As a result of the acquisition, PCA’s containerboard integration agreement to acquire substantially level is expected to increase by over 200,000 tons or 6% from its all of the assets of TimBar Corpora- current level of 87% and will allow for further optimization tion, a large independent corrugated and enhancement of mill capacity. products producer, in a cash-free, PCA Chairman and CEO Mark Kowlzan said, “Following our debt-free transaction for a cash successful integration of Boise, including the capacity we now have at purchase price of $386 million. the DeRidder, Louisiana mill, this acquisition is an excellent fit, both Under the terms of the deal, geographically and strategically, with substantial benefits and synergies. PCA will acquire five corrugated products plants, two fulfillment “TimBar is a well-capitalized company with a commitment to centers and four design centers located primarily in the eastern continuous improvement, innovation and safety in their operations. and southeastern U.S. This, along with their customer focus, has allowed them to achieve The transaction is structured as a purchase of assets resulting excellent operating margins and consistent results.” in a full step-up of the assets to fair market value. TimBar, with Closing is subject to certain customary conditions and regula- sales of $324 million in 2015, provides solutions to customers tory approval and is expected in the third quarter of 2016. The in the higher margin retail, industrial packaging and display and company expects to finance the transaction with a new term loan.
Cascades to Build $64 Million Tissue KapStone Paper and Packaging Acquires Converting Plant on U.S. West Coast Central Florida Box
Cascades Inc. announced that it will KapStone Paper and Packaging on July 1 com- build a new tissue converting plant in pleted the acquisition of Central Florida Box Scappoose, Oregon. The US$64 million (CFB) Corporation located in Lake Mary, Florida. investment includes new state-of-the- Terms of the deal were not disclosed. art converting lines that are scheduled CFB provides design, graphics, manufacturing, for commissioning at the end of the assembly, fulfillment, warehousing and distribu- first quarter of 2017. tion services to over 400 customers ranging from The new converting plant will manu- small, family-owned companies to large, national facture virgin and recycled bathroom tissue products and paper hand towels corporations. for the Away from Home market. The unit will be supplied by “The acquisition of Central Florida Box enhances KapStone’s the Cascades tissue paper plant located 12 kilometers away in St. footprint in the strategic Southeast market,” said Roger Stone, Chair- Helens, Oregon creating considerable synergies. man and CEO of Kapstone. “In addition, this acquisition further The new plant’s production capacity will be close to six million strengthens our goal of increasing integration, providing additional cases per year, or approximately 53,000 tonnes of finished product. internal opportunities for our Mill Division and Victory Packaging. “This project, which is part of our strategic plan for development, We believe this business acquisition is a wonderful fit to our overall will provide us with a new converting capacity that will improve our business strategy.” integration rate and coverage of the West Coast. The plant will be Jeff Ramsey, President of Central Florida Box Corporation, stated, strategically located to allow us to better serve our customers and “CFB is excited to become a part of the KapStone family. With their continue to grow in a region that offers potential for our company,” ‘Think Big, Act Small’ philosophy, we believe their goals and values said Mario Plourde, President and CEO of Cascades. align perfectly with CFB. We will look to expand our footprint in According to Cascades, construction will begin once the municipal the Florida market and leverage our relationships with existing permit process has been completed. national customers to grow national accounts for KapStone.”
6 JULY/AUGUST 2016 Keep moving forward with BlackBelt
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NORTH AMERICA Verso’s Plan of Reorganization Confirmed by Bankruptcy Court
Verso Corporation on June 23 Verso’s restructuring will reduce the company’s debt by approxi- completed another important step mately $2.4 billion upon emergence. Verso expects to emerge from toward its emergence from bank- bankruptcy with $595 million in exit financing to support ongoing ruptcy when its Chapter 11 plan operations and capital investments. The exit financing will consist of reorganization was confirmed of an asset-based lending facility with borrowing capacity of up to by the U.S. Bankruptcy Court in $375 million led by Wells Fargo Bank, National Association, and the District of Delaware. This con- a $220 million term loan facility with available loan proceeds of firmation, which comes less than five months after Verso and its $198 million led by Barclays Bank PLC. subsidiaries filed for bankruptcy protection under Chapter 11 of The confirmed plan of reorganization requires no material the U.S. Bankruptcy Code, clears the way for Verso to emerge from changes in the ordinary course of business to Verso’s wages and bankruptcy, likely by the end of July. salaries, benefits, pension plans or collective bargaining agreements, “Verso is extremely pleased with this speedy and successful the company said. outcome,” said Verso President and CEO David J. Paterson. “Our “Verso’s restructuring will not change our fundamental oper- smooth path through this critical step in the restructuring process ating strategy. In addition, we anticipate that our unified, highly would not have been possible without the strong support of our de-levered capital structure will allow us to make investments in funded debtholders and the Official Unsecured Creditors Com- Verso’s business that will help mitigate the continuing decline mittee and the affirmative vote on our plan of reorganization by in the demand for coated paper products, to explore strategic our creditors. Their confidence in Verso’s prospects for long-term opportunities that enable profitable growth, and to create value value creation sets the stage as we chart our course to a sustainable for all of our stakeholders,” Paterson explained. financial future.”
Cascades Permanently Closes Deinked Pulp Georgia-Pacific Corrugated Acquires Mill in Maine Reliable Container Cascades Inc. has Georgia-Pacific has acquired Southern California-based Reliable permanently closed Container. The acquisition includes converting plants in Santa Fe its deinked pulp mill Springs, California, and Tijuana, Mexico. located in Auburn, Terms of the deal were not disclosed. Maine. Production “Georgia-Pacific has had a working relationship with Reliable ended on July 8 and Container for many years and now welcomes them as part of our the mill’s doors closed organization, expanding our capability and geographic reach in the on July 15. The pulp important Southern California and Baja region,” said Billy Medof, mill had employed president, GP Corrugated. 45 people. “With this acquisition and following the conversion of our “The rapid erosion La Mirada sheet feeder to a state-of-the-art box plant, we will serve of the printing and writing paper market, the overall deteriora- customers in Southern California and Northern Mexico with a box tion of market conditions for deinked pulp and the low potential plant, two sheet plants, and through our interest in the GoldenCorr for integration with other Cascades activities are all factors that sheet feeder.” have had significant negative consequences for our Auburn plant,” Established in 1979, Reliable Container offers a variety of custom said Luc Langevin, President and COO of Cascades Specialty corrugated containers and point-of-purchase displays, in addition to Products Group. offering consultation, design and inventory services. Their diverse cus- “Despite major efforts to optimize in the past year, the situa- tomer base includes furniture, food and beverage, consumer products, tion at the plant remained extremely difficult. Therefore, we are auto, electronics, fabricated metal products and services industries. unfortunately forced to cease operations,” Langevin added. The approximately 250 employees are now part of Georgia-Pacific.
8 JULY/AUGUST 2016 ALL PAPER IS NOT CREATED EQUAL.
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NORTH AMERICA Weyerhaeuser to Sell Liquid Packaging Rayonier Advanced Materials and Board Business to Nippon Paper Industries Borregaard to Build Lignin Plant in Florida Weyerhaeuser Company in mid-June announced an agreement to Rayonier Advanced Materials (RYAM) sell its liquid packaging board business to Nippon Paper Industries and Borregaard (BRG) at the end of Co., Ltd. for $285 million in cash. Weyerhaeuser expects to use a June concluded a market, technical and substantial portion of the estimated $225 million after-tax proceeds engineering analysis regarding a new for repayment of debt. lignin operation at RYAM’s Fernandina The transaction includes one mill located in Longview, Washington, Beach site in Florida to serve the growing with an annual capacity of 280,000 tons. demand for natural lignin-based products. This announcement concludes a portion of the strategic review The final review of the investment of the company’s Cellulose Fibers business, which was initiated in by the companies’ boards of directors is anticipated during the sec- November 2015. Weyerhaeuser announced the planned sale of its ond half of 2016 upon receipt of final permits and incentives from pulp mills in May 2016. The company’s review of its printing papers government entities. If the companies elect to proceed, operations joint venture is ongoing. are expected to commence approximately 18 months later. “This transaction creates significant value for Weyerhaeuser Cost of construction of the lignin plant is expected to be $135 shareholders and enhances the focus of our portfolio as we work to million over two phases of the project. Phase one, which will have a be the world’s premier timber, land, and forest products company,” lignin capacity of 100,000 metric tons, is estimated to cost $110 mil- said Doyle R. Simons, president and chief executive officer. lion. An estimated incremental $25 million will be required in phase “The employees of our liquid packaging board business have much two to increase the total capacity to 150,000 metric tons. LignoTech to contribute to the future success of Nippon Paper Industries. I want Florida intends to access the debt markets to fund a portion of the to thank our team for continuing to operate safely, and for delivering capital requirements. an exceptional customer experience throughout the strategic review Lignin, a natural component of wood, is a co-product of the sulphite process,” Simons. said. cellulose manufacturing process. The new operation will process the The transaction is subject to customary closing conditions, including lignin into value-added products that provide environmentally friendly regulatory review, and is expected to close in the third quarter 2016. alternatives to fossil fuel-based products used globally in construction, The Weyerhaeuser liquid packaging board mill and Nippon agriculture and other industrial applications. Paper Industries will continue to operate separately until the transac- The new company, LignoTech Florida LLC, is to be owned 55 tion closes. percent by Borregaard and 45 percent by RYAM.
EUROPE UPM Investing EUR 98 Million in Its Kymi Pulp Mill UPM is investing EUR said Heikki Vappula, Executive Vice President, UPM Biorefining. 98 million in Kymi pulp The Kymi mill’s annual pulp production capacity is expected mill in Finland to increase to increase from the current 700,000 tonnes to 870,000 tonnes of the mill’s capacity and bleached northern softwood and birch pulp by the end of 2017. further improve its cost- The investment at Kymi mill will begin immediately and competitiveness and envi- includes upgrades in wood handling, the birch fiber line, recovery ronmental performance. plant and effluent treatment. New machinery will be connected “Over the past three years we have significantly improved the to the process during the next pulp mill shut-down planned for production efficiency of our pulp mills. This EUR 98 million the autumn of 2017. investment in Kymi will strengthen our position on the pulp Besides pulp, the Kymi mill produces biomass based electric- market with competitive costs and low risk. After the completion ity, biochemicals, soap and crude tall oil as a production residue. of this project, we will have increased our annual pulp produc- The mill also generates more energy than it uses. The surplus tion capacity altogether by over 500,000 tonnes since 2013,” electricity is sold to the national grid.
10 JULY/AUGUST 2016 Role: Name: Initials: Date: Order Role: Name: Initials: Date: Order: Deadlines GCD Offline Producer Internal: Writer Online Producer Maureen Client: Print/Ship: Art Director Art Buyer BW’s to: ACD Account Exec. Colors to: PDF to: Proofi ng Senior Level AE Package to: Production Lead Jeff Other 1 2 3 4 5 6 7 Production Artist Ashley Other 8 9 10 11 12
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EASTMFBR5063_Dimensional_Stability_PaperAge.indd 1 1/28/16 4:03 PM industry news
EUROPE Stora Enso Investing EUR 26.5 Million to Holmen Completes Sale of Spanish Increase Fluff Pulp Production Newsprint Mill to International Paper Stora Enso will invest EUR 26.5 mil- Holmen announced that the sale lion in Skutskär pulp mill in Sweden of its newsprint mill in Madrid, to increase its fluff pulp capacity to Spain to International Paper (IP) meet the growing demand in the has been completed. The deal was hygiene market. previously announced in mid- According to the company, the March of this year. investment will enhance Skutskär IP has plans to convert produc- Mill’s profitability and long-term competitiveness by increasing tion at the mill to recycled containerboard production, but will fluff production by approximately 160,000 tonnes per year (tpy). continue to produce newsprint at the mill until the second half of The mill’s softwood pulp capacity is expected to be reduced by 2017. During this period, Holmen will sell the newsprint produced 160,000 tpy, starting from year 2018. at the mill and continue to serve its customers. The total fluff pulp capacity of the mill after the investment “During this period we will maintain our service and deliveries of will amount to 415,000 tpy. today’s products. Our customers will not be affected,” commented “Both hygiene and non-woven products are a fast-growing mar- Nils Ringborg, CEO of Holmen Paper. ket. This investment will enable us to support the growth of our IP said that after the conversion to recycled containerboard, the customers and further develop this business together with them,” expected annual capacity of the mill would be 380,000 metric tonnes. says Juan Carlos Bueno, EVP, Stora Enso’s Biomaterials division. Included in the deal is the recycled paper collector Cartón y Papel The investment is expected to be completed during the second Reciclado S.A. (Carpa) and Holmen´s 50 percent shareholding in quarter of 2018. the energy producer Peninsular Cogeneración S.A.
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12 JULY/AUGUST 2016 Manage your wet end more effectively for improved paper machine profitability
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CHINA Stora Enso Inaugurates New Consumer Board Mill in China
In mid-June, Stora “We are delighted to announce the official opening of Enso inaugurated the Stora Enso consumer board mill in China. This is a very its new consumer important milestone for us,” said Stora Enso’s chief executive, board mill in Bei- Karl-Henrik Sundström. “China is a market with high potential hai, China. The mill and the start-up of our consumer board mill is crucial to meet started up in May the growing demand for high-quality and safe fiber-based food and it is expected packaging in China and the Asia Pacific region.” to reach full produc- The consumer board mill is located in the Tieshangang tion within 18 to 24 industrial zone of the Guangxi region, 40 miles outside of months. With an investment of EUR 800 million, this is the largest Beihai city. Nordic direct investment in China, and a significant investment Stora Enso’s operations in the Guangxi region also consist in the history of Stora Enso, the company said. of tree plantations with around 85,000 hectares of land leased The Beihai consumer board mill has an annual capacity of since 2012. The plantations have been certified to the Forest 450,000 tonnes of high-grade carton board products. One of Stewardship Council (FSC) and the China Forest Certification the key end products is liquid packaging board, of which more Council (CFCC), and they will provide a sustainable, cost- than 80 percent today is imported to China. competitive and self-sufficient fiber base for the mill.
INDUSTRY SUPPLIERS Valmet to Supply New Tissue Machine to Voith to Rebuild Board Machine for Grigeo Papel San Francisco Klaipëdos Kartonas
Valmet will supply an Voith announced Advantage DCT 100TS that it will rebuild tissue production a board machine machine to Papel San for Grigeo Klaipë- Francisco in Mexico. dos Kartonas AB in The new machine will Klaipeda, western be installed at the com- Lithuania. pany’s mill in Mexicali. According to The value of the Voith, the primary order was not disclosed. focus of the rebuild project is to increase the machine’s capacity by The new tissue machine will have a width of 2.8 meters and a 30% and improve product quality. design speed of 2,200 m/min and will add 30,000 tons tissue paper The rebuild of the board machine is the first step of a three-phased per year to Papel San Francisco’s current production of toilet tissue, investment program to double the company’s production capacity kitchen towels and napkins. within the next three to five years. Valmet’s scope of delivery includes an Advantage DCT 100TS Voith will rebuild the wire section and deliver new drives for the tissue machine equipped with OptiFlo headbox and cast alloy Yankee dryer section. cylinder. The machine will also feature Valmet’s “Advantage” tissue Voith expects to complete the project in the third quarter of 2016. technology including ViscoNip press, AirCap hood and WetDust After the rebuild, the board machine will have the capacity to dust system. produce 130,000 tonnes per year of corrugated medium and testliner Start-up and commissioning are also included in the order. Start- in a basis weight range of 90 – 200 g/m2. up is planned for the second half of 2017. Machine furnish will be OCC, Voith noted.
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