Durango-Georgia Paperboard Mill To Close

After three troubled years, Mexico's Durango Paper appears to be giving up on its integrated pulp and paper operation in St. Marys, Ga. The company plans to permanently close the 410,00 tons/year bleached paperboard and packaging grades mill by Nov. 15, according to various news and industry sources last week.

The latest news follows a recently planned shutdown of the No. 1 paper machine at the mill--and a boiler explosion Aug. 17 that gravely injured three workers--one of whom later died.

The mill did not reply to inquiries Friday, but local press reports cited an official company statement that gave the mill's 890 workers a federally-mandated 60-day plant closure notification.

The mill’s main union, the Paper, Allied-Industrial, Chemical, and Energy Workers International Union (PACE) also was not available for comment.

Durango Paper entered the U.S. packaging market in late-1999 through the private acquisitions of the St. Marys mill from Gilman Paper and of McKinley Paper--a 180,000 tons/year recycled linerboard mill in New Mexico.

The former Gilman Paper mill was built in 1941 as a pulp supplier to Gilman's Vermont groundwood papers mill. The pulp machine was modified and a second paper machine added in 1955. A third was added in 1960.

It was not clear last week how Durango-Paper's major converting plant in Eastman, Ga., would be impacted by the St. Marys mill closure. Durango-Paper appeared to have a troubled tenure with the St. Marys mill--which then faced $40 million in Cluster Rule upgrades.

Weak markets necessitated regular curtailments and layoffs, and the mill closed its multi-wall bag paper machine No. 1 in late 2000 for ten months. It restarted in October 2001 but the mill said in August it would shut permanently, affecting 42 more jobs.

"Another one bites the dust," commented one Wall Street industry analyst last week. He said the St. Marys mill's capacity of 190,000 tons/year of bleached paperboard and 220,000 tons of packaging/industrial papers represents 3% of North American bleached capacity.

The analyst said Durango Paper's acquisition of the mill from Gilman was widely questioned within the industry. Durango-Georgia's exit should benefit the large remaining players including International Paper, MeadWestvaco, and Potlatch, he said.

The recovery boiler explosion in still being investigated. Other worker injuries in 2000 led to significant OSHA fines exceeding $300,000. In September, a worker was burned after opening a hot water valve. Forestweb