Billerud: Decision on Escanaba mill’s future still months away
ESCANABA — A proposed conversion of the Escanaba paper mill to produce paperboard was given a vote of support by the state Legislature this week, but a firm decision on whether or not the project will move forward is still months away.
The state House and Senate both approved $200 million to support the project in the state’s spending bill Thursday. The bill now heads to Gov. Gretchen Whitmer’s desk for final approval, likely within the next two weeks.
Billerud, which owns the mill, is considering three sites for its future paperboard making operations. Also in the running for the shift to paperboard production are the Quinnesec mill, which produces graphic papers and pulp, and the Wisconsin Rapids, Wis., facility that now is a converting facility but produced graphic paper until 2020. The Wisconsin Rapids facility is supported by hydroelectric plants owned by Billerud on the Wisconsin River.
This is not the first time the government has stepped in to make the Escanaba mill more appealing for the conversion. Late last year the state, county, and both Wells and Escanaba townships designated the mill property as a Forest Products Processing Renaissance Zone. The designation allows the mill to abate taxes on the 1,932 acres for the next 15 years, at a rate of roughly $1.96 million annually between local and state taxes. Over the course of the renaissance zone period, this will result in a savings for the mill of $29.4 million.
Local school districts, Bay College, the Delta-Schoolcraft Intermediate School District, and local libraries will not be affected by the abatements, as the state will be reimbursing these taxing units. It is unclear how much, if any, of the $200 million in the state spending bill is slated to be used for these reimbursements.
Billerud indicated in December that an announcement as to which of the three mills would be home to the company’s first paperboard machine in North America would be made this month. However, a news release issued by Billerud on Friday suggests it could be months before a decision is made.
“A pre-feasibility study about Billerud’s planned conversion of the Escanaba mill to paperboard production is ongoing and planned to be completed during the first half of 2023, after which the company’s Board of Directors can make an investment decision,” the release read in part.
If Escanaba is selected, the new machine and mill expansion would result in a $1.06 billion investment from Billerud, largely possible due to the tax abatements and state funding. The project would result in the retention of at least 1,240 jobs, and a substantial increase in material output at the mill.
If the Escanaba mill is not selected for the project, the outlook for the mill is grim. In a memo issued Dec. 13, Interim Managing Director, Business Development Projects Jermey Webb wrote, “If the Quinnesec or Wisconsin Rapids facilities were selected for the investment, the Escanaba plant would very likely not survive long-term.”
Webb further stated loss of the mill would affect $3.6 billion in direct economic activity over a 10-year period. Driving the mill’s eventual closure would be changes in market conditions and the loss of demand for graphic paper products like those used to produce magazines.
Paperboard, also known as “cartonboard,” is a common but more technologically advanced paper product than the paper currently produced by the mill. It is composed of multiple layers, with two stiff, coated outer plies sandwiching a bulky middle layer. Paperboard is used in a variety of packaging applications from cosmetics and healthcare to food packaging, like cereal and pasta boxes.
The most critical component to produce the right board stiffness, bulk and caliper is a high-yield pulp used for the middle section known as Bleached Chemi-ThermoMechanical Pulp or “BCTMP.” Billerud has a history of working with the product, as it operates one of the largest board machines in the world at a mill in the company’s home country of Sweden. The same technology would be brought to the Escanaba mill.