Funding for Escanaba mill expansion gets green light

LANSING — Governor Gretchen Whitmer signed the state’s budget Tuesday, giving the green light to up to $200 million in funding to support a planned expansion at the Escanaba paper mill.

On Jan. 26, state House and Senate both approved $200 million to support the project in the state’s spending bill. Whitmer’s approval of the state budget included the approval of the funds, which are part of the Michigan Economic Development Corporation (MEDC) appropriations for the year.

Billerud, which owns the mill, is considering the mill as the future home of the company’s first North American paperboard operation. The shift to producing the paper product — which is also known as “cartonboard” and is used to produce items like cereal boxes and packaging for pharmaceuticals and cosmetics — would require a $1.06 billion investment from Billerud. The project would result in the retention of at least 1,240 jobs and a substantial increase in material output at the mill.

“We thank Governor Whitmer, the legislature, and the MEDC for their investment support for Billerud’s planned transformation of our Escanaba Mill into a world-class paperboard production facility,” Billerud Americas Corporation President Rob Kreizenbeck said in a press release issued by the company Tuesday. “We look forward to continuing to collaborate with our partners in government to facilitate our investments for the benefit of the Escanaba community, Upper Peninsula and the State of Michigan.”

The maximum support of $200 million assumes an investment of approximately $1 billion from Billerud. The final amount of funding would be relative to the company’s actual investment and is subject to execution of the necessary agreements between the Michigan Strategic Fund and Billerud.

The funding approved Tuesday is in addition to incentives recently approved by the state, Delta County, Wells Township and Escanaba Township through the plant’s designation as a Forest Products Processing Renaissance Zone. The zone will exempt Billerud from paying almost all state and local property taxes at the Escanaba mill. Billerud is expected to save $1.96 million annually between the local and state tax abatements and would see a savings of roughly $29.4 million over the renaissance zone period.

Both the state funds and the tax abatements are designed to make the Escanaba mill a more attractive and feasible location for the paperboard plant, which is not the only plant being considered for the conversion. Also in the running for the shift to paperboard production are the Quinnisec mill, which produces graphic papers and pulp, and the Wisconsin Rapids, Wis. facility, which now is a converting facility but produced graphic paper until 2020. The Wisconsin Rapids facility is supported by hydroelectric plants owned by Billerud on the Wisconsin River.

“This is truly a historic opportunity for the Upper Peninsula,” said Marty Fittante, CEO of InvestUP. “We would like to express our appreciation to Billerud for its consideration in making this generational investment in Escanaba. The mill, when transformed, will not only benefit the region’s economy and the environment with its best-in-class sustainability standards, but provide notice that the U.P. can and will compete in attracting advanced technology opportunities.”

The pre-feasibility study about the conversion of the Escanaba mill to a paperboard production facility if ongoing and is expected to be completed in the first half of the year. After the study is completed, Billerud’s board of directors can make a decision about whether or not to move forward with the investment.


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