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Catalyst Paper closes newsprint mill in Arizona

Published by
Simon Matthis - 02 Aug 2012

Catalyst Paper yesterday announced the permanent closure of its Snowflake recycle mill located in northeastern Arizona (USA) and its subsidiary the Apache Railway Company. The operations currently employ 308 salaried and hourly workers..

The operation is scheduled to shut production on September 30, 2012.

"The decision to close Snowflake is an extraordinarily difficult one given the exceptional effort that employees, unions and public officials have given to address the unique challenges at this mill, said President and CEO Kevin J. Clarke. "We understand and regret the difficult impact within the Snowflake community and surrounding region created by closure of the mill. I want to acknowledge and thank all who have given us their unwavering support and cooperation. There were no stones left unturned."

Catalyst implemented a number of measures since acquiring the Snowflake operation in 2008, to address market challenges and input cost pressures. These included production of higher-value specialty paper grades at what was formerly a newsprint-only mill, capital investment, productivity, quality and service improvements, full leverage of the mill's environmental attributes, and competitive labour agreements. Catalyst has also explored a range of alternatives, including attempting to sell the mill on a going concern basis.

However with newsprint demand down more than 10 per cent annually since the end of 2008, old newsprint (ONP) price volatility and higher freight costs as procurement and sales have been forced to go further afield to source recycled paper supply and secure product orders, the mill's profitability could not be restored. ONP prices have increased approximately 163% since 2009. A US$5 per ton increase in ONP price has a negative impact of approximately US$2 million on EBITDA and approximately US$1 million on net earnings. Snowflake generated negative EBITDA since 2009.