By: Jim Rosenberg Montreal-based Abitibi-Consolidated Inc., North America's largest newsprint producer, said Wednesday that it will indefinitely idle two mills on Sunday. Together with greater operating efficiencies, the actions are expected to reduce operating costs by at least $125 million (Canadian).
Mills to be idled are in Lufkin, Texas, with 580 employees and capacity for 150,000 metric tons of newsprint and 234,000 metric tons of other grade paper, and in Port-Alfred, Quebec, with 640 employees and capacity for 382,000 metric tons of newsprint and 36,000 metric tons of other grade paper.
Of Port-Alfred's newsprint capacity, Abitibi said further that one already-idled 90,000-ton machine will be permanently closed down, as will a previously idled 140,000-ton machine at its Sheldon, Texas, mill.
Though the decision will bring the company's market-related downtime to more than a million tons, Wednesday's announcement stated that Abitibi "anticipates selling as much, if not more, product in 2004 than in 2003."
Besides coping with oversupply, said Abitibi CEO John Weaver, high cost at Port-Alfred was "exacerbated by the rapid rise of the Canadian dollar, while energy-related costs have jeopardized the cost position of our Texas paper mill operations." He called the latest actions "essential" to bringing Abitibi "back to a sustained level of profitability as quickly as possible."
An after-tax provision of $42.4 million for closure costs and an after-tax write-down of $42.8 million to reflect permanent closure of the already-idled machines will be taken in the fourth quarter of 2003.
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