Pratt to build 360,000 tons/yr recycled containerboard mill next to big Valparaiso box plant in a $260 million project

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Pratt to build 360,000 tons/yr recycled containerboard mill next to big Valparaiso box plant in a $260 million project

September 20, 2013 - 11:25

OAKLAND, Sept. 20, 2013 (PPI Pulp & Paper Week) -Pratt Industries announced plans to build a 360,000 tons/yr recycled containerboard mill adjacent to its massive Valparaiso, IN, box plant for completion by July 2015. The company must still complete the approval process for the new mill, but hopes to break ground by March.

Pratt last started up a new containerboard mill in the USA in Shreveport, LA, in 2009 -- the company's third US containerboard operation.

In Valparaiso, the $260 million facility would be the fourth greenfield lightweight recycled containerboard mill Pratt has built in the USA since 1995. With completion of the Valparaiso mill, the company's total capacity would reach 1.5 million tons/yr or about 4% of North American containerboard capacity.

"This new facility will allow us to better service the needs of our expanding customer base not only in the Midwest, but throughout the US," said Pratt Industries owner and chmn Anthony Pratt. "And Indiana is a perfect fit for us."

The Valparaiso project is among seven that could be done from 2013 to 2015 in North America. Of the seven, four would be conversions and three new PMs. So far, Norampac started a new lightweight containerboard machine in Niagara Falls, NY, and Atlantic Packaging and SP Fiber Technology converted newsprint machines to containerboard in Whitby, ON, and Dublin, GA, respectively.

Pratt has looked for a new mill location because it needs additional containerboard to supply growing demand from its network of about 38 box plants (including 12 corrugator plants and 15 sheet plants plus a sheet feeder), according to contacts. With its integration today now above the 100% level, the company buys increasing amounts of containerboard from outside producers.

The firm's box shipment growth has been in the mid to high single-digit range "from customers seeking to reduce packaging weight and use packaging based on 100% recycled fiber to improve sustainability," one contact said.

'World's biggest' box plant.Valparaiso has long been seen as a potential site for the mill because of the company's existing 500,000 ft2box plant where two 110-in corrugators operate that are capable of cutting up about 900 tons/day of containerboard. "Valpo," which company officials call "the largest box plant in the world," runs about a dozen box converting lines and sells some sheets to Pratt's existing plants in the Midwest. The Valparaiso plant was built around 2000.

Pratt's strategy focuses on establishing board mills, corrugator plants, and sheet plants (the latter often acquired) in a "hub-and-spoke" model for each region, according to contacts. In what would appear to be a related move, the company announced plans recently to install a 110-in. corrugator and new building for its large Lewisburg, OH, sheet plant. The plant would be another outlet for containerboard output from the planned Valparaiso mill and possibly allow Pratt to add more box converting lines at the Valpo plant.

In addition to the onsite integration, the economics of building a mill in Valparaiso are also attractive because of reduced logistical costs in the company's box plant system, contacts said. Pratt now ships containerboard into Valparaiso from its Staten Island, NY, and Shreveport, LA, containerboard mills at a transport cost of $50-60/ton, one contact said.

'Lightest' weight focus.The new PM for the Valpo mill is ordered but Pratt Industries did not name the supplier. The machine is to be capable of producing both recycled linerboard and corrugating medium "in the lightest weights if future demand develops for them in the US market," a contact said.

The company's last machine installed at Shreveport in 2009 produces 20- to 40-lb containerboard.

Furnish for the new mill's machine is expected to be a combination of mixed office paper and old corrugated containers (OCC) similar to the company's other mills that use a majority mixed waste furnish. Pratt manages 13 recycling centers in the eastern US market.

State and local incentives.Anthony Pratt told a local newspaper that the company looked at many potential sites for the mill and narrowed potential locations to two in Indiana and one in Ohio before selecting Valparaiso.

To help close the deal, the state of Indiana offered the company various tax incentives. The City of Valparaiso offered tax abatement and tax increment financing as well as conduit financing for $200 million in revenue bonds for the mill and equipment.

The Indiana Economic Development Agency offered Pratt Paper (Indiana) LLC up to $1.2 million in conditional tax credits and up to $200,000 in training grants based on the company's job creation plans. Pratt expects to create 137 new jobs at the mill by 2018 in addition to the 311 already employed at its Valparaiso box plant.

The Northwest Indiana Regional Development Authority is adding another $1.4 million, which can be spent on capital improvements and infrastructure. NIPSCO, the local utility, is offering $15 million in energy and infrastructure incentives.

'Revolutionary concept.'Pratt Industries is the sixth largest US containerboard producer. Together with his two sisters, Anthony Pratt also owns Visy, Australia's largest containerboard/box producer. Visy was created and developed by 'his late father Richard Pratt, whose initial foray into the US market to buy a virgin containerboard mill in Macon, GA, in 1987 and two box plants turned out be a "nightmare," one contact recalled.

But after selling off the original assets, the Pratts returned to build a new company based on the "then revolutionary concept" of installing the latest technology paper machines based on recycled fiber and closely integrating them with corrugators (company officials called the concept the "milligator") -- basically staying true to the company's original business strategy in the Australian market.

"Pratt, like (General Douglas) MacArthur vowed that he would return and he did," the contact said.

Pratt Industries started up its first new mill in Conyers, GA, adjacent to an existing corrugated sheet feeder in 1995, followed by the Staten Island mill in New York City in 1997 and Shreveport in 2005. The trims on the three machines are 200-220 in with speeds of 3,200-3,450 ft/min. The first two PMs were Voith Sulzer gap formers, while the latest Shreveport PM, was a Carcano fourdrinier -- and all were equipped with size presses and shoe presses.

Display division expansion.Pratt has expanded its display division's manufacturing and fulfillment services in the US Northeast point-of-purchase market. It recently acquired a 115,000 ft2facility in Reading, PA, that brings the division's "high-end" manufacturing locations to three plants, according to a company official. Die-cutting, litho laminating, and 4/color flexographic printing is done at the Reading plant. In addition, the Northeast regional offices moved to a new location in Totowa, NJ, and added seven employees, according to Pratt Display's VP sales and marketing David Connors.

Recycling milestone.Pratt Industries said it has recycled five million tons of recovered paper at its Staten Island, NY, mill since it opened in 1997. "About half of all the paper New Yorkers recycle is shipped here and recycled through the Pratt Staten Island mill," said Mayor Michael Bloomberg at a press conference. Bloomberg said the mill will help the city fulfill its goal of increasing the 'recycling rate 30% by 2017 from 2011.