UPM to Shut Miramichi Paper Mill for One Year

UPM to Shut Miramichi Paper Mill for One Year

June 5, 2007 - UPM said that it will close its Miramichi mill operations in August for up to one year. The paper mill is scheduled to close late in August for 9 to 12 months. The nearby groundwood mill will also shut down.

About 600 employees will be impacted by the closure, UPM said.

The Miramichi mill, located in New Brunswick, Canada, has two machines, producing lightweight coated paper, with an annual capacity of 450,000 tonnes.

Despite best efforts, Miramichi has not been able to turn its exports to the U.S. profitable. The mill is suffering from unprecedented strength of the Canadian dollar. Also, market prices for the coated magazine paper have been decreasing in North America. Demand for magazine grades in North America has been stable, but globally, there continues to be overcapacity in magazine paper, suppressing the sales price, UPM explained.

In Europe, UPM has permanently ceased production of 530,000 tonnes of coated magazine paper during 2006-2007 to reduce the structural overcapacity and improve profitability of the business. The Voikkaa mill in Finland was permanently closed and a production line in Jämsänkoski, Finland, was converted to another business area. UPM also closed 150,000 tonnes of coated fine paper capacity at its Kymi mill, Finland last year.

"UPM's target is to improve the long-term profitability of the coated paper business. With today's decision, UPM leaves all options open for Miramichi. We will continue to explore solutions for Miramichi during the shutdown but realize that there needs to be material changes in the business environment for the mill to start up again,” said Jyrki Ovaska, president of UPM's Magazine Paper Division.

"The Miramichi management and employees have succeeded in steadily improving the efficiency of the mill," Ovaska said. "Unfortunately, their efforts could not overcome the challenges in the business environment."

Ovaska said UPM's North American magazine paper customers will continue to be served by the company's other coated groundwood paper mills in North America and Europe during the Miramichi shutdown.

A decision on restarting Miramichi will be made in 2008, based on market conditions, the company added.

SOURCE: UPM