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Sharp decline in newsprint sales forces Kruger to convert Quebec paper machine

MONTREAL – The sharp decline in newsprint sales as a result of the growing switch to digital technology is forcing another Canadian paper producer to switch products.

Kruger Packaging plans to invest $250 million to convert one of the newsprint machines at its plant in Trois-Rivieres, Que., to recycled lightweight linerboard.

The company said the investment will maintain 270 jobs at the mill, which will continue to make newsprint with its other machine.

The Quebec government is providing $190 million in financial support, including an $84-million loan and $106 million through its investment agency that will give it a 25 per cent ownership interest in a new company that will combine Kruger’s containerboard and packaging operations. The company will have $600 million in assets and 800 employees.

The machine in Trois-Rivieres will make 360,000 tonnes of linerboard a year as of 2017, which will be sold to Kruger packaging box plants in Quebec, Brampton, Ont., and on the open market.

The conversion follows moves by other companies to close newsprint mills or convert to other paper grades in the wake flagging demand that has seen shipments down 13.5 per cent in July from a year earlier and off five per cent from June. Exports, which account for nearly one-third of total shipments, declined 11 per cent.

Resolute Forest Products (TSX:RFP) reduced its newsprint capacity by 465,000 tonnes last year by closing a newsprint mill in Iroquois Falls, Ont., and permanently idling paper machines at two Quebec mills as it sheds 300 jobs.

Paper Excellence announced in July the permanent closure of its mill in Howe Sound, B.C., that would remove 200,000 tonnes of capacity and 180 jobs.

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