Cascades noted in its second quarter report that its strategic investment in a paper machine conversion project at its Bear Island paper mill in Ashland, Virginia, is progressing well despite the current environment of important cost inflation and delays in the completion of certain construction milestones due to labor and material availability.
The project involves converting an idled newsprint machine (PM 1) at the mill to produce containerboard for the North American market.
Upon completion of the machine conversion, PM 1 will produce recycled linerboard and medium grades with a basis weight range of 88-176 g/m2 and have an annual capacity of 465,000 short tons.
Cascades revised its initial total investment of $475 million (US$380 million) upward in the first quarter of 2022 to a range of $530 - $565 million (US$425 - US$450 million) following continued inflationary pressure on costs.
"The persistence of these factors and short-term construction interruptions caused by delivery delays of construction materials, have further impacted the total cost of the project, which is now forecast to total $595 - $615 million (US$470 - US$485 million)," Cascades said.
The announced start-up date of the facility is December 14, 2022. However, the timing of some critical construction milestones may be at risk due to labor, supply chain and material availability which may in turn delay the start-up of paper production to the first quarter of 2023, Cascades added.
Cascades said it is working closely with contractors to mitigate the potential delay caused by these elements in order to meet the targeted mid-December 2022 start date.
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