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SP Fiber Technologies debuts in Pulp & Paper Week

SP Newsprint’s two mills in Dublin, GA, and Newberg, OR, will have a fresh focus and a new lease on life as SP Fiber Technologies (SPFT) — a newly-minted company created by the closing this week of the insolvent newsprint maker’s sale to a creditors group led by GE Capital, according to an upcoming article in Pulp & Paper Week. The new owners said this week that they are pressing ahead with plans to convert one paper machine at each of the two mills to specialty packaging grades, while continuing to supply their newsprint customers. They are also looking into bringing converting capacity to the Dublin mill, where a 750,000 ft2 building stands ready and waiting for the operations. SPFT’s head office in Atlanta will also move to Dublin. SPFT’s 100% recycled Dublin mill is already making kraft paper and lightweight recycled linerboard on one of its two machines, and Newberg has also experimented with packaging grades including paper for bags and corrugating medium.

“While newsprint will remain the foundation of the business for the foreseeable future, the company is looking forward to aggressively developing an innovative value-added packaging component to service the paperboard, containerboard, and converting marketplaces,” SPFT chmn and pres/CEO Jay Gurandiano said in a release Tuesday. “SPFT will focus on customer service, environmental stewardship, and technological innovation.”

Gurandiano is a packaging industry veteran in North America, the founder and former CEO of St. Laurent Paperboard, which was spun off from Avenor in 1994 and through a series of acquisitions under his leadership became the eighth-largest North American containerboard producer before being acquired by Smurfit-Stone Container in 2000 for $1.4 billion. Five years ago, Gurandiano spearhead- ed a $50 million project to buy Abitibi- Bowater’s idle Fort William newsprint and uncoated mechanical specialties mill in Thunder Bay, ON, and convert it to make a lightweight specialty recycled container- board grade. The plan stalled. “We have had several dry runs and spent significant sums of money on studies and product development that have validated the process,” Gurandiano told PPI Pulp & Paper Week this week.

“(Newsprint machines) are easy to convert but if you run standard quality grades you will have problems. I have always believed there is a significant market in higher-value and specialty and these are areas we would like to pursue,” he said. SPFT is at least the seventh firm in the last three years to push into or try producing US paper packaging or board grades. Six of the seven — Boise Paper, Domtar, FutureMark, NewPage, SPFT, and Verso — succeeded at making grades such as for flexible packaging, kraft bags, container- board, and packaging labels. Domtar announced last month that it will make paper for flexible packaging at its mill in Marlboro, SC, as part of specialty production that will include base paper for thermal paper producer Appleton Papers. Also, Resolute tested containerboard production at its Coosa Pines, AL, newsprint mill before dropping its production for pulp.

For SPFT, Gurandiano said in the interview with P&PW that in terms of the capital cost required for converting the Dublin and Newberg mills are “an entirely different animal” from Fort William, which had been idle for the best part of a year. But he acknowledged that “there will be millions of dollars spent” and said he was confident that this financing would be forthcoming. He said the project would proceed in a series of steps, with initial engineering studies expected to take 60-90 days, because “when you have been starved for capital, you have to be careful how you spend it.”

At the same time, Gurandiano was clear that the company intends to keep its newsprint business, where it has “a franchise of customers who used to own these mills.” Prior to its acquisition by the principals of White Birch Paper in early 2008, SP Newsprint was jointly owned by US daily newspaper publishers McClatchy Newspa- pers, Media General, and Cox Enterprises. Gurandiano declined to immediately disclose which of the company’s four PMs are prime candidates for conversion.

The crowning jewel in SPFT’s assets is Dublin’s 290,000 tonnes/yr Valmet twin-wire PM 2, in- stalled in 1989 and last rebuilt in 1998. PM 2 has a trim width of 328 inches and a maximum speed of 5,560 fpm — making it not so long ago the fastest newsprint PM in North America. The 100% recycled Dub- lin mill is already making about 150,000 tons/yr of bag paper and 250,000 tons/yr of lightweight recycled containerboard on its 1979 Beloit twin-wire PM 1, which has a trim width of 301 inches and maximum speed of 4,300 fpm. That machine was last rebuilt in 1998. Newberg has also experimented with packaging grades on its 170,000 tonnes/ yr PM 5, a 1968 Beloit fourdrinier machine that was rebuilt in 1984, and has a trim width of 237 inches and top speed of 3,950 fpm. With a maximum speed rating of 4,600 fpm, Newberg’s 205,000 tonnes/yr 1980-vintage Voith twin-wire PM 6 is not quite so fast as Dublin’s PM 2, but it has a 300 in trim width and an online coater.

In addition to machine conversions, SPFT will pursue input cost savings, particularly for recovered paper. The Dublin mill fully runs on recovered paper, mainly groundwood grades such as old newspapers (ONP) as well as old corrugated containers. The Newberg mill makes recycled furnish from recovered paper ONP as well as other groundwood grades and OP. Also, the Newberg mill produces thermomechanical pulp (TMP). “We will aggressively target fiber — how we acquire and optimize our recycling,” Gurandiano said of the company’s Atlanta-based recycling operations, which collect, process, and ship recovered paper, and other recovered commodities in the Southeast and Pacific Northwest from 21 processing facilities in nine states.
The higher cost of recycled fiber — driven mainly by increased demand from China — made Blue Heron’s newsprint mills in California and Oregon, and Catalyst’s Snowflake mill in Arizona, uncompetitive and forced their closure. It also helped drive SP Newsprint into Ch 11 last year.

The diminishing quality of recovered fiber due to single-stream collection has also caused issues for newsprint makers. Many suppliers machine-sort recycled paper, resulting in a dirtier mix of ONP and other papers. Sources say quality issues led the Dublin mill to start sorting ONP from other recycling plants by hand at the mill door about a year ago, and selling what it discards as mixed paper to the Pratt recycled containerboard mill in Shreveport. This extra sorting added to Dublin’s input costs, but sources say good quality recovered fiber for packaging grades should be easier to source at a reasonable price than ONP is for newsprint.

Guarandiano also said energy will figure in SPFT’s development plans, but declined to give details other than saying the company is bringing in consultants. The Dublin mill has 75 MW of co-generation capacity but still relies on coal for 45% of its fuel demands and needs to purchase almost 60% of its electrical power. In contrast, Newberg installed a $70 million 130 MW co-gen facility in 2003 that is fueled 80% by bark/biofuel, 15% by sludge, and 5% by natural gas, making the mill more than self-sufficient in electrical requirements.

“The main thing is to maximize the assets. If these conversions happen, it can be complementary and it’s not going to happen overnight. The bottom line is the company is no longer in BK and it’s business as usual,” one mill contact said. Whether or not the conversions materialize, the capacity ranking for North American newsprint producers has changed markedly from a year ago, with Kruger and White Birch switching the No. 2 and No. 3 spots, SPFT entering the list at No. 4, and Catalyst dropping from fourth place to join Tembec in ninth position.

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