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FI Insights

Resolute Sells Its Thunder Bay Mill - What Opportunities Does It Create?

November 07, 2022

Resolute Forest Products has recently announced plans to sell its Thunder Bay pulp and paper mill located in northwestern Ontario. On October 27, the company said that the move is intended to help accelerate the acquisition of Resolute by the Paper Excellence Group, through its subsidiary, Domtar. The sale of the Thunder Bay mill is contingent on that acquisition, which is expected to close in the first half of 2023, pending shareholder and regulatory approval.

“This is a very hard thing to do, but we believe it is necessary in order to accelerate our strategic combination with the Paper Excellence Group," Remi G. Lalonde, Resolute's President and Chief Executive Officer, said in a statement. "The mill is an exceptional asset…I am confident that the dedicated and talented team in Thunder Bay will have a prosperous future with any company fortunate enough to have them as part of their organization."

What Is Resolute’s Thunder Bay Mill?

Per FisherSolve, the Thunder Bay mill makes a mixture of newsprint and market pulp grades. The mill contains one big 338-inch paper machine and an idled machine, in addition to pulp dryers. The mill’s fiberlines make both mechanical and kraft pulp. In 2013, the mill installed a large 65 MW condensing turbine.

Additionally, there is a power purchase agreement set in place where the power generated from the project is sold to Ontario Power Authority with a contracted capacity of 40MW.

What Opportunities Does This Create?

Resolute’s decision to sell its Thunder Bay mill creates a new opportunity for a new owner. “We expect that it’s going to draw significant interest from potential buyers…Thunder Bay is an amazing asset,” stated Seth Kursman, Resolute’s VP of Corporate Communications, Sustainability and Government Affairs. “It has an incredibly positive, collaborative business environment. The mill has on-site power co-generation, and it has a stable access to a fiber supply.” Resolute also operates a sawmill in Thunder Bay, meaning a new owner should expect to negotiate a sawmill residual agreement for wood utilizing an index like SilvaStat’s Lake State Index.

However, in such a capital-intensive industry, the decisions made, no matter how big or small, can have substantial consequences – which is why it is critical for buyers to be informed and understand their competitive position before buying the mill. Fisher International’s leveraged consulting approach serves clients who must quickly understand their competitive positions and develop asset optimization strategies in advance of major investment decisions. Our consultants use their expert knowledge in combination with our powerful and comprehensive data platform FisherSolve to provide you with the confidence you need to make advantageous decisions.

Fisher International provides unparalleled business intelligence, combined with expert guidance, that enables pulp and paper professionals worldwide to make informed and precise decisions faster, broadly and more efficiently. Some of our business intelligence tools we offer include:

  • FisherSolve: FisherSolve is a powerful, flexible and comprehensive platform that offers pulp and paper professionals the ability to take data-informed decision-making to the next level.
  • SilvaStat360: SilvaStat 360 is our sister company Forest2Market’s convenient, one-stop repository of the datasets and analytical tools that are most important to your success in the forest supply chain. It includes data on pricing, macroeconomics, forest inventory, precipitation and much more.
  • Forecasting Services: Fisher-STE Forecasts offer exceptional capabilities for predicting market behavior, impact of companies’ actions on their markets, and consequently, the ability to optimize strategy for income.
  • Viability Benchmarks: Our Viability Module was created to predict the long-term future of pulp lines and paper machines. Validated against several years of historical data on closures and survival, the result is not just an ability to evaluate the staying power of a given machine, mill or company, but also a powerful tool for understanding each asset’s strengths and weaknesses.
  • Virtual Mills: The Virtual Mills tool allows you to create a confidential, user-defined mill that can represent any greenfield, brownfield, rebuild or grade change project, with the inputs defined by the client and/or with Fisher consultants’ expertise. The virtual mills are modeled with the same rigor of existing sites and the results – such as cash costs, energy consumption or carbon emissions – can be visualized and benchmarked against existing sites and other virtual mills in FisherSolve.

For more information on the extensive insight Fisher’s consulting services can provide for you regarding this massive opportunity, contact us today.

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