Resolute Forest Products, Montreal, QC, announced Nov. 6 the permanent shutting of paper machine No. 10 at its Laurentide mill in Shawinigan, QC, effective Nov. 26. The shutdown comes after a major drop in demand and an increase in market capacity of the paper grade produced on the machine.
Laurentide has 388 employees and produces over 350,000 tonnes/year (t/y) of commercial printing papers on two machines: No. 10 produces 125,000 t/y and accounts for nearly 111 jobs. PM 11, which produces nearly 225,000 t/y, will continue in operation.
Resolute president and CEO Richard Garneau also noted that the strong Canadian dollar, rising freight and fuel costs and the continuing high cost of fiber factored into the decision.
As well, on Nov. 20, Resolute announced the indefinite idling of the kraft mill and PM 5 at Fort Frances, ON. The move takes off the market about 200,000 t/y of market pulp and 105,000 t/y of groundwood specialty printing papers.
Said Garneau, “The markets for these products are challenging and are expected to remain so. The kraft mill situation is particularly difficult given Fort Frances’ operating configuration and the recent decision by a key customer to stop consuming the pulp supplied by Resolute to its mill. Our kraft mill’s drying capacity is limited to about 40% of its production capacity, making it impossible to continue operating the mill in a profitable manner.” The pulp mill will be idled in a manner that will protect the equipment.
The idling of PM5 is because of the decrease in consumption and the high value of the Canadian dollar. The shut-down of the two operations is expected to be completed by late November. Some 239 employees will be affected.
Resolute expects to incur, on an accounting basis, a charge of about $12 million for severance and other termination benefits and $5 million in other closure costs. Future cash expenditures associated with these items are expected to be about $14 million. Resolute expects to incur about $32 million of non-cash asset impairment charges to reduce the carrying value of the assets to their estimated fair value.
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