Resolute Forest Products declares indefinite idling of Thorold newsprint mill

Resolute Forest Products declares indefinite idling of Thorold newsprint mill

The significant drop in North American newsprint consumption coupled with rising raw material cost has forced the company to go ahead with indefinite idling of the mill.

MONTREAL (Scrap Monster): The Montreal-headquartered Resolute Forest Products has announced indefinite idling of its newsprint mill located in Thorold, Ontario. According to company press release, the decision is effective immediately. The mill had been undergoing temporary idling of operations since mid-December last year.

The news release issued by the company stated the decision as a ‘difficult’ one. The significant drop in North American newsprint consumption coupled with rising raw material cost has forced the company to go ahead with indefinite idling of the mill. The company had earlier stated that the demand for newsprint on the continent has recorded sharp decline from 5.4 million tonnes in 2010 to as low as 3.7 million tonnes in 2015. Incidentally, the cost of recovered paper, used as raw material, has skyrocketed during recent times.

According to sources, there are still hopes that the plant could once again begin production of other paper products at a later date. Resolute noted that it is in talks with an independent third party to convert the newsprint mill to an alternative product. The company spokesperson did not mention what the alternative product could be, but clarified that it would not be newsprint. The talks in progress with Stone House Investments Holdings Inc., if successful, could provide more sustainable future for the operation, around 100 employees at the facility and the neighboring community. The collaboration is expected to give a new life to the idled mill, sources said.

The Thorold newsprint mill on Highway 58 had an annual production capacity of nearly 197,000 metric tons of top-quality newsprint, including grades manufactured with up to 100% recycled fiber, mainly used for newspapers, advertising inserts, flyers, brochures, circulars, telephone directories and commercial guides. The plant was one of Thorold’s largest employers for a long time. This was the company’s last 100% recycled newsprint mill in operation in the entire North American region. The company had closed a 100% recycled newsprint mill in South Korea.

The preliminary Q4 and full-year 2016 results announced by the company last week had indicated that the newsprint segment generated operating income of $1 million in Q4 2016 as compared with an operating loss of $8 million in Q3. The ongoing weakness in demand resulted in overall transaction price dropping by $3 per metric ton to $512 per metric ton. However, the shipments increased by 23,000 metric tons during the quarter. EBITDA more than doubled to touch $19 million.

For the full year 2016, the newsprint segment reported an operating loss of $15 million, as compared with an operating loss of $23 million during 2015. The year-over-year transaction price has declined by $8 per metric ton. The shutdown of a paper machine at Augusta, Georgia newsprint mill facility during the year resulted in 7% overall decline in shipments.

Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, wood products, tissue, newsprint and specialty papers. The company owns or operates over 40 pulp, paper, tissue and wood products facilities in the United States, Canada and South Korea, as well as power generation assets in Canada and the United States.

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