UPDATE: June 15, 2018: In an apparent reversal of its previous position, WestRock now says it’s “open to all options” for selling its mothballed paper facility, reports the The Portland Tribune.
WestRock director of corporate communications John Pensec said that the original sale failed to materialize because KBD Enterprises could not secure financing for a $8.25 million purchase by the May 29 contract deadline. He also said the $15-million offer from businessman Rahul Kejriwal — who has ties to the Indian paper industry — was rejected because WestRock was already under contract with KBD.
Now that the KBD deal is off, WestRock is seeking alternative options and has since received multiple offers. “At this point, we're evaluating all options for the site,” Pensec told the paper, adding that a bidder seeking to reopen the facility as an operating paper mill would need to offer a higher purchase price.
There is potential for a Chinese buyer to offer a higher bid, as an ongoing pulp shortage in China forces suppliers to seek feedstock abroad. The Portland Tribune talked to Mu Lin, the son of the owner of Chinese packing material manufacturer Forest Packing Group. In their conversation, Lin said that he had spoken to WestRock about a possible purchase, saying that his father’s company could afford to pay more than $15 million for the facility. It is unclear whether Forest Packing is in the list of potential buyers and whether or not purchasing all-new equipment for the facility would be cost prohibitive for investors.
- The owner of a shuttered Oregon paper mill, Atlanta-based WestRock, rejected a $15-million offer to sell the plant, according to the Portland Tribune. In April, the potential buyer expressed intent to reopen the mill to process Oregon's mounting scrap paper supply.
- WestRock reportedly accepted an $8.25-million deal in January to sell the facility, but only if the paper machinery inside was destroyed and used for scrap metal.
- The mill was engineered to process almost entirely recovered paper, but WestRock idled it a couple weeks after acquiring the facility, and closed it just months later, in 2016.
Paper stockpiles have been growing since China issued its paper and plastics materials ban, with the Western U.S. taking the greatest hit. As Dylan de Thomas, VP of industry collaboration at The Recycling Partnership, told Waste Dive earlier this year, additional domestic infrastructure is needed to increase both paper and plastics recycling capacity, but for "paper facilities that is a much larger and longer term investment that is required, so it needs to move a lot slower."
The greater domestic demand has some in the industry calling for U.S. paper mills to reopen because that's much more economical than starting from scratch with bringing a brand new facility online. Still, reopening an existing mill is no easy task. Restoring a mothballed facility to working status involves a hiring spree and ensuring the existing equipment receives the proper maintenance to overcome years of sitting idle without attention. With contamination standards tightening, the Oregon facility, for example, might have to retrofit equipment or tweak operations to meet those standards.
That being said, the whole process requires significantly less time, labor and capital than designing and constructing a new plant. Reopening an old mill could take weeks or months, as opposed to the years needed for a new operation.
With Oregon's recycling programs in crisis mode and municipalities temporarily ceasing certain collections as material stockpiles grow, many in the industry are looking for new markets to replace China, especially domestic markets. Oregon, for example is examining solutions such as setting up a secondary MRF for cleaner plastics processing.
So why wouldn't WestRock want to capitalize on the need and reopen its Oregon mill instead of scrapping the paper equipment? Industry experts claim it's a move to squeeze out competition and manipulate the market by driving up stock and product prices. That's a tough pill to swallow for those who see a clear partial solution to Oregon's increasing recycling woes, but encounter corporations unwilling to collaborate.