Scott Hayes | [email protected]
Local Journalism Initiative Reporter
West Fraser announced last week that it is selling the Hinton Pulp Mill to the Mondi Group, a Europe-based global leader in sustainable packaging and paper products.
Part of the deal includes Mondi entering into a long-term fibre supply agreement with West Fraser.
“This transaction creates a sustainable long-term future for the pulp mill, while maintaining the integrated fibre supply chain in place with West Fraser’s operations in the region,” said Ray Ferris, West Fraser’s president and CEO, in a prepared press release.
“The relationship with Mondi puts the Hinton pulp mill in the hands of a global industry leader, with the vision and experience to maximize opportunities for local employees and the community. We look forward to a mutually beneficial long-term relationship with Mondi and our other stakeholders in Alberta.”
With major offices in both the United Kingdom and Austria and key operations located in Europe, North America and Africa, Mondi describes itself as an integrated packaging and paper company whose workforce reaches approximately 22,000 people across 100 production sites in more than 30 countries. It had 2022 revenues of €8.9 billion.
The deal solidifies a long-term partnership between Mondi and West Fraser, which will continue to supply fibre to the Hinton mill under long-term contract, via residuals from its Alberta sawmills.
According to Mondi’s own press release on its newsroom page, the purchase price is US$5 million (approximately $6.6 million).
Mondi intends to invest €400 million (approximately $591.6 million) in the expansion of the Hinton mill for its part of the deal.
“We are delighted to be making this investment in Canada and look forward to working with our Hinton colleagues, West Fraser as a long-term partner, and other local stakeholders towards improving the mill’s environmental footprint and securing its sustainable future,” stated Mondi Group CEO Andrew King.
That investment will primarily go toward a new 200,000 tonne per annum kraft paper machine that is anticipated to be operational by mid-2027. The expansion is subject to pre-engineering and permitting, the press release states.
Within the last year, the mill successfully transitioned from a two-line Northern bleached softwood Kraft pulp mill to a single-line unbleached Kraft pulp mill.
Those changes were necessary to simplify its operation, reduce capital requirements and greenhouse gas emissions and better align with consumer expectations, according to an April 2022 statement by company president and CEO Ray Ferris.
“The announced sale of Hinton Pulp coupled with Mondi’s plan to install a paper machine is good news for our employees, for the Town of Hinton, and for Alberta,” said Paul DiJulio, general manager of Hinton Pulp, in an email to the Fitzhugh.
“Mondi’s investment plan will significantly improve the mill and help secure its future for decades to come.”
Mondi is committed to sustainability and the implementation of best available techniques standards and the modernization of its energy and manufacturing facilities help it to reduce emissions to water and air, run resource-efficient operations, avoid disturbances and protect the rights of neighbours and other stakeholders, according to an email to the Fitzhugh by Judith Wronn, Mondi’s head of communication.
“Standard chemicals, such as starch, are used in the production of unbleached kraft paper and are reported in detail as part of the environmental permitting process,” she said.
Mondi’s newsroom page offers this statement about its practices: “Sustainability is at the centre of our strategy, with our ambitious commitments to 2030 focused on circular driven solutions, created by empowered people, taking action on climate.”
Joyce Wagenaar, West Fraser’s director of communications, indicated that all current employees will be offered employment.
Wronn said that the company will need to recruit additional employees when the new kraft paper machine is operational from the second half of 2027.
Once the new kraft paper machine is operational, it will produce the full range of brown sack kraft qualities including high porous grades and will also be capable of producing brown MF speciality kraft paper.
“The acquisition of the mill, and planned investment in the paper machine, will fully integrate operations in the Americas and enable Mondi to secure the long-term supply of high quality, cost competitive kraft paper into its network of 10 paper bags plants in the region, better positioning Mondi to support the growing market demand for industrial and mailer bags,” Wronn said.
West Fraser expects to record a “significant impairment loss” in connection with the disposal of the Hinton pulp mill given the nominal proceeds.
The estimated carrying value of the assets and liabilities being disposed of were $115 million and $111 million as of Dec. 31, 2022 and March 31, 2023 respectively.
The transaction is anticipated to close “following successful completion of customary regulatory reviews and satisfaction of customary conditions.
West Fraser will provide a further update during its second quarter results conference call on July 27.
