Packaging Corporation of America (PCA) has discontinued production of uncoated freesheet (UFS) grades on the No. 3 paper machine at its Jackson, Alabama mill and will begin preparing for the permanent conversion of the machine to linerboard.
In order to meet strong packaging demand and maintain appropriate inventory levels, the machine temporarily began producing linerboard in the 4Q 2020 and continued producing linerboard in the 1Q 2021. The mill will now begin preparations to permanently convert the 365,000 ton-per-year No. 3 UFS paper machine to a 700,000 ton-per-year high-performance, virgin kraft linerboard 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 2Q 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 $440 million. Discontinuing paper operations on the No. 3 machine will result in pre-tax cash charges of approximately $5 - $10 million and approximately $15 - $20 million of pre-tax non-cash asset impairment and accelerated depreciation charges. The mill’s No. 1 paper machine will continue to produce UFS products.
PCA is the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America.
