Catalyst Paper to Close Arizona Recycled Paper Mill

Catalyst Paper, based in Richmond, B.C., has announced plans to permanently close its recycled paper mill in Snowflake, Ariz. Additionally, the company will be closing its Apache Railway Co., subsidiary. In a news release, the company says the decision to close the mill follows extensive efforts to improve the operation’s financial performance in the face of intense supply input and market pressures. The operation is scheduled to shut production on Sept. 30, 2012.

“The decision to close Snowflake is an extraordinarily difficult one given the exceptional effort that employees, unions and public officials have given to address the unique challenges at this mill, says Kevin Clarke, Catalyst president and CEO. “We understand and regret the difficult impact within the Snowflake community and surrounding region created by closure of the mill. I want to acknowledge and thank all who have given us their unwavering support and cooperation. There were no stones left unturned.”

Since acquiring the mill in 2008, Catalyst has implemented a number of measures to address market challenges and input cost pressures. These steps included the production of higher-value specialty paper grades at what was formerly a newsprint-only mill, capital investment, productivity, quality and service improvements, full leverage of the mill’s environmental attributes and competitive labor agreements. Catalyst has also explored a range of alternatives, including attempting to sell the mill on a going-concern basis.

However, with newsprint demand down more than 10 percent annually since the end of 2008, old newsprint (ONP) price volatility and higher freight costs as procurement and sales have been forced to go further afield to source recycled paper supply and secure product orders, the mill’s profitability could not be restored. ONP prices have increased approximately 163 percent since 2009.

Clarke adds, “Reduced quality of ONP as municipalities moved to single stream waste recovery, combined with ONP price volatility driven by export markets, were obstacles on the input side. Added to these challenges are the protracted demand decline for recycled newsprint and other printing papers. While we did everything possible to prevent this outcome, employees, vendors and customers needed the certainty that today’s announcement provides."