Montreal-based Domtar Corp. has announced it plans to enter the linerboard market with the conversion of an uncoated freesheet printing and writing paper machine line in Kingsport, Tennessee. The converted line will make 600,000 tons per year of recycled-content linerboard and medium.
Domtar says the conversion project is scheduled for completion by the first quarter of 2023 and will involve an investment of between $300 million and $350 million.
“Repurposing the Kingsport mill provides Domtar with the best strategic entry point into a growing market with a very competitive, low-cost asset and represents a first step to building a large and cost-competitive business,” says Domtar President and CEO John D. Williams. “Kingsport is well-positioned to be the go-to supplier to independent converters for quality, service and innovation as the mill is less than a day’s drive from over 60 customers representing an addressable 3.9 million tons of annual containerboard demand.”
The conversion project was announced along with Domtar’s second-quarter 2020 financial results and a strategic initiatives update that included mill capacity adjustments.
In addition to the Kingsport mill conversion project, Williams says Domtar will stop uncoated freesheet manufacturing permanently at its Port Huron, Michigan, mill, and at a paper machine at the Ashdown, Arkansas, mill. The company also will close a converting center in Ridgefields, Tennessee.
The combined actions will reduce the company’s annual uncoated freesheet paper capacity by approximately 720,000 tons.
In Ashdown, Arkansas, Domtar says it will convert its former printing and writing paper mill to one that produces “100 percent softwood and fluff pulp, which will require $15 to $20 million of capital investments and will take 12 to 14 months to implement.” Although that project does not appear to have any scrap paper aspects to it initially, Domtar says the initial conversion to 100 percent softwood production is “necessary for an eventual expansion into containerboard.”
For the second quarter of 2020, Domtar has reported net earnings of $19 million compared with net earnings of $5 million for the first quarter of 2020 and net earnings of $18 million for the second quarter of 2019. Domtar’s sales for the second quarter of 2020 were $1 billion.