Cascades: Bear Island startup on track for March

Cascades announced during its fourth-quarter earnings presentation Feb. 23 that its Bear Island containerboard conversion project is on track and the mill is expected to start up by the end of March.

Originally, the facility was set to start up by the fourth quarter of 2022, but in August, Cascades reported temporary delays to various construction milestones and announced paper production likely would be delayed to the first quarter of 2023.

The company said during its presentation, however, the project still is aligned for a March startup.

“The key components are all being commissioned right now, so we have a full team focused on that,” said Charles Malo, president and chief operating officer of Cascades Containerboard Packaging. “We also are working on aligning customers and how we’re going to be able to service them. Right now, all of our team on-site is focused on starting up in Q1, and we’re very confident at this point that there won’t be any further delays.”

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Cascades, based in Kingsey Falls, Quebec, announced the conversion of its Bear Island paper mill in October 2020. The facility, which is in Ashland, Virginia, will produce lightweight, 100-percent-recycled linerboard and medium and initially was projected to cost around $380 million. The company now reports the total cost of the project at around $515 million to $525 million, with $396 million invested in the project to date (2018-2022).

The company says 100 percent of its production volume is secured for this year and about 75 percent is secured for 2024 and 2025, and it forecasts a production of 235,000 short tons this year.

“Our near-term focus is on delivering an effective and successful startup of our Bear Island facility at the end of March,” Malo said. “This mill will bring our containerboard operational platform to a new level … in terms of our ability to provide our customers with top-quality, lightweight, recycled solutions.”

Despite widespread labor issues in the sector, Cascades said the facility is fully staffed for a March startup, and Malo added that Cascades viewed the area as “a good area for labor” when it began considering the project.

“We started a year ago to bring people in in phases and we provided training, so we’re well positioned for the startup and everyone is on board,” he said.

“We are still missing a few positions, but they’re normal in a ramp-up because some of the team members we would bring in towards the end—more in the logistics and shipping areas. All the key players were fully staffed and trained.”

Financial results

Cascades reported $1.13 billion in fourth-quarter sales, down from $1.17 in the previous quarter but up from $1.02 billion in the fourth quarter of 2021. The company’s fourth quarter earnings before interest, taxes, depreciation and amortization totaled $116 million.

Both Cascades’ Packaging Products ($567 million) and Tissue Papers segments ($721 million) took losses in sales for the period.

Overall, Cascades reported $4.46 billion in full-year sales, compared with $3.95 billion in 2021.

“Our operations have faced more than $475 million of production, raw material, freight and energy cost headwinds within the span of the calendar year 2022 alone, and our teams have done an excellent job at executing multiple countermeasures,” Cascades President and CEO Mario Plourde said during the presentation. “These have taken longer in our Tissue Papers segment, where price rebalancing takes time to be realized, but we are encouraged by the progress being made and expect continued benefits to be generated from operational and profitability initiatives across our operations.”

The company also provided insight into recycled fiber costs for both old corrugated containers (OCC) and sorted office paper (SOP).

The combination of high season material generation, low export activity and extended containerboard industry downtime resulted in OCC supply far outpacing demand in the fourth quarter. Plourde said Cascades expects the market conditions to normalize in the coming weeks, but does “not expect this to lead to any material pricing movement in the short term given the slow export levels and the macroeconomic environment.”

There were more favorable dynamics in the SOP market, but Cascades anticipates pricing likely will continue to mirror virgin pulp pricing “given structural decline in market supply of these high grade papers.”

“These unrelenting cost headwinds had a significant impact in our tissue result throughout 2022 and we are encouraged to see a stabilizing market,” Plourde said.

“We are remaining prudent in our outlook as macroeconomic conditions continue to be challenging and unpredictable and inflationary pressures on costs, while easing, continue. Despite this, we have started 2023 in a good position to drive growth throughout the year.

The full presentation can be viewed here.