Kruger Packaging will invest C$250m ($188.6m) to convert the newsprint machine at its Trois-Rivières mill in Canada to produce lightweight linerboard.
The project is being backed by a C$190m ($143.3m) funding from the Québec government which includes a $84m loan to finance the cost of the conversion and a $106m ($79.9m) participation, through Investissement Québec, in a new company that combines all of Kruger's Containerboard and Packaging activities.
The Québec government will own a 25% stake in the new company.
Kruger said the project will contribute to secure operations and the 270 jobs at the mill.
Work under the project includes the modernization of PM10 machine to include an advanced containerboard manufacturing technology.
The machine will begin operations in 2017 and will produce 360,000 metric tons of 100% recycled lightweight linerboard annually.
Of the total lightweight linerboard produced by the machine, some will be sold to Kruger Packaging's box plants in LaSalle (Quebec) and Brampton (Ontario), while the remainder will be sold on the market.
The demand for lightweight linerboard is increasing in North America and across the globe, as packaging manufacturers seek to produce increasingly lighter and stronger products.
The Trois-Rivières mill will continue to produce newsprint on PM10 until two months before the end of the conversion project.
Meanwhile, the other newsprint production line, PM7, at the mill will continue to operate.
Kruger's three newsprint production facilities will have an annual output of 600,000 metric tons.
Founded in 1904, Kruger currently operates facilities in Québec, Ontario, British Columbia, and Newfoundland and Labrador, as well as in Tennessee, Maine, New York, Virginia and Rhode Island in the US.
In 2013, Kruger has partnered with Wilsonart to develop recycled saturating kraft that is used in the manufacture of numerous decorative laminate products made by Wilsonart subsidiaries across North America.
Image: Kruger will convert a newsprint machine to manufacture 100% recycled, lightweight linerboard. Photo: courtesy of Kruger Packaging L.P.
