Cascades Investing 275 Million to Lease, Upgrade Va. Newsprint Mill

The Hanover, Va., USA, based Bear Island newsprint mill was idled in June 2017. Cascades will be investing in equipment as part of a lease agreement making the companies at least temporary partners. White Birch due to what Cascades believes is a temporary undersupply of newsprint. Mill still for sale as a full independent asset when / if Cascades concludes production as market correction are expected due to the ongoing and consistent decline of regional newsprint demand. 

According to a report published yesterday (July 11, 2018) by Richmond Times, Richmond, Va., in what should be little more than a year after it was closed, the state’s Bear Island newsprint manufacturing mill in Northern Hanover County appears to be reopening as part of a temporary partnership between two N.A. paper companies. The motivation to re-open is said to be due to a supply-demand imbalance in large shipments of affordable newsprint available to primarily mid-Atlantic east coast U.S. states surrounding Hanover County, Va.

Cascades, based in Canada, said the company plans to invest $275 million to open a newly designed pulp production facility inside of the Hanover mill, according to the initial reporting of the deal by The Mechanicsville Local, published earlier this week. The Local is a directly owned small-town sister publication produced by the Richmond Times-Dispatch. By yesterday (July 11) the Times-Dispatch was able to confirm the initial reports and supply more details about the new deal moving forward.

The first official written confirmation from Gov. Northam was published in the Times-Dispatch article:

"This major investment and the 140 jobs it will create is a major win for Hanover County and the Commonwealth of Virginia," said the governor’s initial statement last night. "International companies continue to choose the commonwealth for its world-class workforce and outstanding infrastructure. The location in Hanover County offers Cascades a turnkey facility ready for the company to install equipment and put a shuttered asset back into use, creating good jobs for Virginia workers in the region."

A commercial real estate firm that has been handling various efforts to sell the factory for Connecticut-based White Birch Paper Co., announced yesterday that the company plans to restart operations at the Bear Island mill hopefully at some time during the coming months, likely by the end of October 2018, if the new pulping unit upgrade and restarting preparations are successful as the operational partnership hopes they can be.

That announcement included comments from Chris Brant, president and COO of White Birch, who explained that the company had decided to pursue such a plan to reopen the recently and still somewhat easily restarted, shuttered mill because of "a temporary state of undersupply" in the newsprint market that can be profitable but due to the ongoing decline of newsprint demand overall, is unlikely to sustain itself long-term without further conversion of mill machinery, although the companies invested have not confirmed that this type of "lease" agreement is being made so as to meet market conditions existing with newsprint grade. 

JLL’s Richmond-area office had declined to comment to the newspaper beyond what the announcement had already said, declining questions by reporters curious of how many employees would be hired after the Connecticut-based White Birch, idled the factory in June 2017, costing about 165 employees their jobs.

When White Birch announced the closure this past year, the company blamed it on "difficult market pricing, challenging cost fundamentals and declining demand" in newsprint.

The company said it would supply customers from its three other paper mills in Canada.

"This step allows us to help reinvigorate the mill, foster new momentum for the mill," Brant said in a statement. "While the long-term trend for the consumption of newsprint is assuredly on the decline, short to medium term market conditions will accommodate, if not welcome, some relief from recent shortages in supply. White Birch is a long-term player in this market, and we are dedicated to supplying continuity to those consumers with that same long-term outlook."

The Bear Island mill has the capacity to produce about 215,000 metric tons of newsprint annually. The plant opened in 1979 and underwent an expansion in 1994 that added a recycling plant that turns old newspapers into pulp to make newsprint.

The JLL announcement said that White Birch continues to market the 600,000-sq.ft. mill.

Cascades, founded in 1964, produces, converts, and markets packaging and tissue products that are composed mainly of recycled fibers.The company employs 11,000 at nearly 90 production units in North America and Europe