Cascades reports temporary delays to Bear Island mill construction

In its second-quarter financial report, Kingsey Falls, Quebec-based packaging producer Cascades Inc. has announced its Bear Island conversion project in Ashland, Virginia, has been impacted by the "current inflationary environment."

The company says higher costs combined with labor and material availability constraints have led to temporary delays in certain construction milestones and have increased the total cost of the project to $470 million to $485 million. The conversion originally was projected to cost approximately $380 million when the project first was announced in October 2020.

"Our team is working closely with contractors to mitigate any potential delay caused by these elements in order to meet the targeted mid-December 2022 start date," Cascades President and CEO Mario Plourde says. "However, it is important to note that the timing of some critical construction milestones may be at risk due to these issues and, as a result, the start-up of paper production may be delayed to the first quarter of 2023."

Cascades says capital investments into the Bear Island project totaled $81 million in the second quarter of 2022 and year-to-date investments are at $145 million.

When completed, the conversion of the White Birch Bear Island paper mill to a containerboard machine will have an annual production capacity of about 465,000 tons of lightweight 100-percent-recycled linerboard and medium for the North American market.

The company also reported its second quarter 2022 financial results, posting $1,119 million in sales compared with $956 million in the same period last year.

"Our packaging businesses delivered good sequential performances in the second quarter, with improved pricing and sales mix, higher volumes and lower raw material costs in the case of containerboard outweighing the impact of continued cost inflation," Plourde says.

He adds, "Sequentially, results in our Tissue Papers business highlight the momentum being generated by the profitability initiatives underway. While pricing and mix improvements realized to date helped to mitigate the unprecedented headwinds on the cost side, these initiatives are trailing the pace of the current high inflation environment. These initiatives remain on track to generate important contributions in the back half of 2022 and are being closely monitored and regularly adapted to address the changing cost environment."