Belkorp buys Maryland Deinking Mill

Belkorp Industries Inc. of British Columbia has acquired the bankrupt former 1st Urban Fiber Inc. mill in Hagerstown, Md., for $7.5 million, according to Forestweb.

Belkorp outbid two other suitors at the Nov. 7 auction, including roofing felt producer Maryland Paper Co. L.P., of Williamsport, Md.

Belkorp recently acquired two other troubled pulp and paper mills in the eastern U.S.

Belkorp executive Mark Roseborough said the company has not totally developed its strategy, but that it plans for the mill to produce groundwood specialty pulp, not the printing-and-writing grade pulp for which it was originally designed.

The company hopes to restart the mill next year, depending on market conditions.

According to Roseborough, the mill’s pulp would be partially integrated with the Deferiet, N.Y., groundwood specialty paper mill that the company purchased in August. In addition, a limited amount of pulp would be sold on the market. "We think it’s a viable market pulp mill," he said.

Capacity at the Hagerstown mill is 400 metric tons per day of dried pulp. The mill, which reportedly originally cost $250 million, produced pulp for just a year when market conditions forced its closure in 1997. At the time, it was also set to undergo modifications.

Later in 1997, however, bondholders, who had reportedly put up $180 million toward the cost of the project, seized the mill and put it into receivership. It became known as Hagerstown Fiber Operations.

Roseborough noted that the mill is out of bankruptcy and that Belkorp bought it this week "strictly as an asset sale."

Roseborough described its condition as "absolutely excellent, brand new." He said it would need no modifications for producing groundwood specialty pulp and that the effluent system is correctly designed for treating groundwood.

"It’s a business we know and we’re comfortable with the technology," he said, pointing out the company’s 10 years of experience producing groundwood pulp at its Newstech Recycling L.P. mill in Coquitlam, B.C. "We know exactly what’s required."

Belkorp’s Newstech mill, which has a 400 metric tons per day capacity, supplies regional mills with recycled fiber.

Earlier this year Belkorp acquired the independent Deferiet mill from bankruptcy for about $3 million, one month after an auction failed to produce any bids. It had closed down earlier this year.

One of its three paper machines is set to restart this coming March, and is expected to produce 200 tons per day of machine finished groundwood grades. Belkorp plans to start up the other two paper machines in late 2002 and in 2003, respectively, with expected capacity of 500 tons per day. The wood pulping system will be idled.

Belkorp’s newly acquired Northampton, Pa., MDIP mill, will supply the Deferiet mill with groundwood pulp following its scheduled restart in February 2002.

Until the other two Deferiet paper machines restart, Belkorp will sell the Northampton mill’s excess output on the market. As with the Hagerstown mill, Belkorp is converting the Northampton mill’s fiber furnish from woodfree recovered grades.

The approximately 130,000 metric tons per year greenfield Northampton mill, which started up in 1996 to myriad operational problems, was bankrupt and had been idled since 1998. Belkorp acquired it in August within days of the Deferiet mill acquisition. Forestweb.