Packaging Corporation of America (PCA) has confirmed that it has discontinued production of uncoated free sheet (UFS) grades on PM3 at its Jackson, AL, mill and will begin preparing for the permanent conversion of the machine to produce linerboard.
In order to meet strong packaging demand and maintain appropriate inventory levels, the machine temporarily began producing linerboard in the fourth quarter of 2020 and continued producing linerboard in the first quarter of 2021. The mill will now begin preparations to permanently convert the 365,000 ton-per-year paper machine to a 700,000 ton-per-year high-performance, kraftliner machine, in a phased approach, over the next 36 months.
Plans are for the machine to run at its current containerboard production rate for the next 12 to 15 months until the scheduled first phase outage is taken in the second quarter of 2022. After the first phase outage, the converted machine is expected to operate at an initial production rate of approximately 75% of capacity. The second phase outage is planned for mid-2023, with the machine reaching its run-rate capacity of 2,000 tons-per-day by the end of 2023.
The key items in the scope of the conversion include installation of an OCC plant, various pulp mill modifications, paper machine modifications to the forming and press sections, headbox, and dryer section of the machine, and winder upgrades.
The capital cost of the conversion is expected to be approximately $440m. Discontinuing paper operations on PM3 will result in pre-tax cash charges of approximately $5-10m and approximately $15-20m of pre-tax non-cash asset impairment and accelerated depreciation charges.
“The phased conversion over the next few years of PM3 at our Jackson Mill will provide much needed internal linerboard supply,” explained Mark Kowlzan, Chairman and CEO of PCA. “This gives us a runway for maintaining an optimal integration level and enables us to further optimize and enhance our current mill capacity and box plant operations.”
