Billerud's Board of Directors has decided to not proceed with plans to convert its Escanaba mill to cartonboard production. Instead, the company will target to shift its product mix gradually towards packaging materials in North America with a moderate investment level.
"After in-depth feasibility studies, evaluations, and supplier discussions, we have concluded that the projected return on investment is not sufficiently attractive to proceed with the conversion of Escanaba to cartonboard production," said Ivar Vatne, President and CEO of Billerud.
Billerud began a feasibility study in the latter part of 2022 to examine the potential of converting its paper mill in Escanaba, Michigan, to the production of cartonboard.
In addition, Michigan Governor Gretchen Whitmer on January 31, 2023 signed legislation approving the Michigan Economic Development Corporation's (MEDC) appropriation of up to $200 million in funding to support the company's plans to convert the Escanaba mill.
Vatne continued, "During the process, conditions have changed and the cost of equipment and services necessary to transform the operations have greatly increased. Instead, we will pursue a higher returning and more moderate investment strategy for our North American mills going forward.
"The long-term market outlook for paper and packaging material in North America is promising. With better-than-expected machine flexibility we see great potential to diversify our product portfolio towards packaging grades — fully in line with our strategy," Vatne concluded.
Billerud said that it will continue to serve the North American markets with its high quality cartonboard produced at its European mills.
Costs of around SEK 200 million for the US transformation program will be recognized in the 2024 second quarter result, reported as an item affecting comparability, the company added.
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