Packaging Corp. of America (PCA) has decided to idle the No. 2 paper machine at its DeRidder, La., mill and will produce containerboard on its No. 3 machine. The company, headquartered in Lake Forest, Ill., will convert its No. 3 newsprint machine at the DeRidder mill to produce what it calls lightweight linerboard and medium. By idling one machine and converting the other to containerboard, PCA will exit the newsprint business.
PCA will continue to produce newsprint for its customers through mid-September 2014, at which time the company says it will shut down and convert the No. 3 machine to containerboard production. The company expects the reconfigured paper machine to restart by Nov. 1, 2014.
PCA estimates that the capital cost of converting the No. 2 machine would have been about $160 million and would have resulted in annual containerboard capacity of about 300,000 tons. The cost of converting machine No. 3 is estimated to be around $115 million and will have an annual containerboard capacity of 355,000 tons.
The company says that by discontinuing newsprint production about 100,000 tons of what it calls low-cost, virgin fiber will become available for containerboard production, reducing the amount of old corrugated containers (OCC) that will be required.
“The D3 conversion project provides us needed capacity with a much higher return than the D2 project,” says Mark Kowlzan, PCA CEO. “Without the D3 project, we estimate that our outside purchases of containerboard would be about 250,000 tons in 2015 in order to support PCA’s total containerboard demand. We will also be able to supply more containerboard to our long-term export customers as we have had to withdraw some tons from this market the past several years to support our domestic demand. We regret the impact this decision may have on our newsprint customers, but we are committed to providing them a competitive product and outstanding service until the machine closure.”