Mondi and West Fraser Timber have entered into a purchase-and-sale agreement for West Fraser's Hinton pulp mill in Canada's Province of Alberta. According to Mondi, the group will buy the unbleached kraft pulp (UKP) mill for a total consideration of US$5m. The acquisition is subject to customary regulatory clearance and is expected to close towards the end of 2023.
As part of the transaction, Mondi will also enter into a long-term fibre supply agreement with West Fraser Timber under which West Fraser will continue supplying the Hinton pulp mill with wood residues from the company's Alberta sawmills.
Mondi's plan for the Hinton pulp mill site goes beyond mere acquisition of the pulp operations. The group intends to invest €400m in the expansion of the site, primarily to install a new 200,000 tpy kraft paper machine. The machine is anticipated to become operational in the second half of 2027, subject to positive pre-engineering and permitting, Mondi explained.
"The acquisition of the mill, and 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," Mondi announced.
Last year West Fraser Timber discontinued pulp production on one of the two NBSK fibre lines at the Hinton pulp mill and switched the second fibre line to unbleached kraft pulp (UKP) production. The transition from a double-line 400,000 tpy NBSK pulp mill to a single-line pulp mill with the production capacity of 250,000 tpy of UKP also resulted in staff downsizing from 345 to 270, the company informed.
West Fraser Timber did not comment on the purchase price for the Hinton mill. The company said it expected 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 $115m and $111m as of 31 December 2022 and 31 March 2023, respectively, the company explained.
Following the divestment of the Hinton pulp mill to Mondi, West Fraser will exit UKP production. The company remains active on the pulp market with three pulp mills and a capacity of 690,000 tpy of BCTMP (bleached thermo-mechanical pulp) and 170,000 tpy of NBSK pulp.