West Fraser to sell pulp mill in Alberta through fibre supply agreement with Mondi Group
by CM staff
West Fraser will continue to supply fibre to the Hinton mill under a long-term contract, via residuals from West Fraser's Alberta sawmills.
Hinton Pulp Mill (Photo: CNW Group/West Fraser Timber Co. Ltd.)
VANCOUVER — West Fraser Timber Co. Ltd., signed an agreement to sell its unbleached softwood kraft pulp mill in Hinton, Alberta to Mondi Group plc, a business in sustainable packaging and paper.
The transaction establishes a long-term partnership between the two companies in the region. Pursuant to the transaction, West Fraser will continue to supply fibre to the Hinton mill under a long-term contract, via residuals from West Fraser’s Alberta sawmills. Mondi’s intention, subject to pre-engineering and permitting, is to invest €400 million in the expansion of the Hinton mill, primarily for a new 200,000 tonne per annum kraft paper machine, anticipated to be operational from the second half of 2027.
“This transaction creates a sustainable long-term future for the pulp mill, while maintaining the integrated fibre supply chain in place with West Fraser’s operations in the region,” said Ray Ferris, West Fraser’s President and CEO. “The relationship with Mondi puts the Hinton pulp mill in the hands of a global industry leader, with the vision and experience to maximize opportunities for local employees and the community. We look forward to a mutually beneficial long-term relationship with Mondi and our other stakeholders in Alberta.”
Mondi is an integrated packaging and paper company employing 22,000 people across 100 production sites in over 30 countries. Mondi has a premium listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange.
“We are delighted to be making this investment in Canada and look forward to working with our Hinton colleagues, West Fraser as a long-term partner, and other local stakeholders towards improving the mill’s environmental footprint and securing its sustainable future,” said Andrew King, CEO, Mondi Group.
West Fraser expects to record a significant impairment loss in connection with the disposal of the Hinton pulp mill given the nominal proceeds. The estimated carrying value of the assets and liabilities being disposed of were $115 million and $111 million as of December 31, 2022 and March 31, 2023 respectively.
The transaction is anticipated to close following successful completion of customary regulatory reviews and satisfaction of customary conditions. West Fraser will provide a further update during its second quarter results conference call.
