DULUTH, Minn. (From news reports) -- Once again, it looks like the name on the front of the local paper mill is about to change.
At 2:30 p.m. Wednesday, Dec. 3, employees at ST Paper's Duluth mill were informed of a likely pending sale of the facility to Sofidel, a privately-held Italian multinational company that ranks as the world's seventh-largest manufacturer of tissue paper.
Bill Broydrick, a spokesman for ST Paper, expressed optimism that government support provided to help restart the shuttered plant will hold steady through the anticipated transaction, noting that Sofidel intends to not only maintain the 80-person workforce currently employed at the mill but to build on that number, as the facility expands its production in the future.
Sofidel, which already ranks as the No. 2 producer of tissue paper in Europe, has been making steady inroads into the U.S. market in recent years, drawn in part by the fact that Americans consume more tissue paper products per capita than any other nation on earth.
The paper mill was shuttered by its previous parent company, Verso, in summer 2020.
It reopened in January 2023, after ST Paper converted it from the production of graphic papers often used for magazines and catalogs to the manufacture of tissue paper stock that goes into products such as paper towels, napkins, and a variety of toiletries.
ST received help in the form of a $3 million forgivable loan from the Minnesota Investment Fund, tied to its commitment to preserve at least 80 jobs at the Duluth mill for at least 10 years.
The city of Duluth and St. Louis County each agreed to offer $600,000 in tax abatement assistance, also tied to jobs. Then, the city topped that off with an additional $242,000 forgivable loan.
Chad Ronchetti, Duluth's director of planning and economic development, said there is good reason to hope those funding sources will remain secure, so long as Sofidel can continue to deliver on the jobs front.
"The city of Duluth has been working collaboratively with the Minnesota Department of Employment and Economic Development and the county to transfer those agreements to Sofidel. So, we've done a financial review of Sofidel and feel comfortable with that at this point," he said.
If all goes according to plan, Ronchetti said an agreement with Sofidel could be ready for consideration by the Duluth City Council by Jan. 22.
District 8A Rep. Liz Olson, DFL-Duluth, said she, too, believes state support for the mill should remain intact if Sofidel fulfills the commitments its predecessor, ST Paper, made.
"This isn't the first time we've had to deal with a change of ownership of that mill," Olson said. "But I'm encouraged by the prospect of more jobs. So, I'm cautiously optimistic."
Olson noted that the mill not only provides manufacturing jobs but also supports loggers and myriad other suppliers.
Ronchetti remained bullish as well.
"I'm not an expert in this at all," he said. "But from what I understand, the industry that ST Paper pivoted that plant into has a high market demand, and I don't think that demand is going to fade any time soon. And I think attracting a major player like Sofidel to buy that facility is a testament to ST's progress and its ability to pivot that plant.
"If it's Sofidel or ST Paper, as long as they're paying good wages and providing good benefits to their workers and they're helping to spur secondary and tertiary economic activity within the city and the region, I really don't care who the operator is," Ronchetti said.
Broydrick said ST Paper, led by the Tak family, financed about $50 million of the cost to purchase and convert the Duluth paper mill to tissue production. But he said the pending sale is not a product of duress.
"Both partners feel it's a favorable deal, and it's a pleasure Sofidel can come to Duluth to expand their operations," he said.
Broydrick said he was not at liberty to disclose any financial details of the transaction.
ST Paper continues to operate mills in Oconto, Wisconsin, and Franklin, Virginia.
Although based in Italy, Sofidel has its U.S. headquarters in Philadelphia. It also has domestic operations in Circleville, Ohio; Hattiesburg, Mississippi; Green Bay, Wisconsin; Inola, Oklahoma; and Las Vegas.
In a letter to employees in Duluth issued Wednesday, ST Paper management wrote: "Thank you for your hard work and commitment. our journey has been remarkable, and I believe the future is even brighter. Together, we've revitalized this mill and impacted our community positively. Now. we pass the torch to hands that are eager to continue this legacy and take it to new heights."
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Press release issued Jan. 4 by Sofidel:
Sofidel, a world's leading manufacturer of paper for hygienic and domestic use, is once again accelerating its growth path in the United States.
The paper manufacturing group, best known in Italy and Europe for its Regina brand, has acquired from ST Paper a paper mill in Duluth, in Minnesota, in the Upper Midwest. The plant has a production capacity of 65 thousand metric tons per year and has eighty employees.
With advanced technology throughout the plant the new Andritz machine was started up last January and is highly efficient and fully operational.
"This is an important acquisition, allowing us to immediately meet the growing demand, which saw a significant upturn in 2023. What we are acquiring is a technologically advanced plant that further improves our geographic coverage and creates the conditions to strengthen and sustain growth in what is our main market" said Luigi Lazzareschi, Sofidel CEO.
The new investment comes a few months after Sofidel made an organic growth investment to expand its integrated plant in Circleville, Ohio. The project, which has already been launched, involves the construction of a new building to house a new machine (with a production capacity of 70,000 metric tons per year), which is scheduled to come into operation in the third quarter of 2025. By that time, with 200 thousand metric tons of annual capacity, Circleville will become Sofidel's largest production site worldwide.
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