CRB machine, which will have an annual capacity of approximately 500,000 tonnes, will produce the highest quality coated recycled board product with the lowest-caliper capabilities
US-based packaging solutions provider Graphic Packaging has approved a $600m (£495m) investment in a new coated recycled board (CRB) machine in the Midwest.
The new CRB machine, which will have an annual capacity of approximately 500,000 tonnes, is either planned to be commissioned at its facility in Ohio or Michigan.
The decision is subject to a number of conditions, including environmental permitting and negotiations currently underway relative to government incentives and labour relations.
Designed to be the largest and lowest-cost producer of CRB in North America, the CRB machine is will be equipped to produce the highest quality coated recycled board product with the lowest-caliper capabilities in the industry.
The investment is expected to support Graphic Packaging’s commitment to sustainable packaging.
New machine contributes to the firm’s commitment to sustainable packaging
The firm expects the investment to deliver an incremental $100m (£82.4m) in annualised EBITDA upon full ramp-up scheduled in 2022, as result of cost savings from significantly increased scale production, reduced raw material consumption, and lower fixed costs.
Graphic Packaging president and CEO Michael Doss said: “This is a unique opportunity to make a highly strategic investment in sustainable packaging, exceptional product quality and an unmatched cost position for producing CRB.
“Importantly, the investment will be capacity neutral as we expect to reduce production at other higher cost CRB facilities after we ramp up production of this highly productive CRB machine starting in early 2022.
“Increasing consumer preference for sustainable packaging is expected to drive steady, long-term demand for packaging solutions manufactured from 100% recycled fiber.
“We are confident the investment will deliver returns well above our cost of capital, and remain fully committed to executing our balanced approach to capital allocation as we continue to build a growing, highly integrated, low cost paperboard packaging platform.”
Following final negotiations, Graphic Packaging plans to provide an update on the status of the investment, including the location, in late September 2019.
In July this year, Graphic Packaging signed a deal to acquire Artistic Carton Company, a US-based producer of folding cartons and coated recycled paperboard, for an undisclosed sum.
As per the terms of the deal, Graphic Packaging subsidiary agreed to acquire all the assets of Artistic Carton, including one coated recycled paperboard (CRB) mill and two converting facilities.