Duluth paper mill asking for $2 million state loan to stave off closure

DULUTH – The Verso paper mill is looking for a $2 million forgivable loan from the state to help pay for upgrades that could save the plant from shutting down and shedding hundreds of high-paying jobs.

"The demand for paper has dropped significantly in recent years," reads a city resolution supporting the loan application. "Unless a significant investment is made, the Duluth mill will thus be a likely candidate for permanent closure."

Verso plans a $34.5 million conversion at the Duluth mill that would allow it to produce bag, medium, liner and specialty-grade papers that would "ensure the future viability and success" of the plant, according to the resolution.

The Duluth City Council voted unanimously Monday to kick in $242,000 as a local match to the Minnesota Investment Fund dollars.

"The city of Duluth stands 100 percent behind this plan," said Council President Gary Anderson, adding that Verso holds "an important position in our community."

Ohio-based Verso, which has owned the Duluth plant since 2015, employs about 240 people here and pays an average annual salary of $63,000, according to the city. The mill first opened in 1987.

In the past five years the price of the Duluth mill's products has dropped about $150 per ton, reflecting "dire financial challenges … as a result of industry trends," the city wrote.

Last year, Verso closed a plant in western Maryland and laid off 675 workers as "the continuing decline in demand for the grades of paper manufactured there left us no choice but to close this facility that has struggled with profitability for a number of years," Verso Interim Chief Executive Officer Leslie T. Lederer said in a statement in April.

In November, the company announced it was selling two mills in Wisconsin and Maine for $400 million; the sale still needs shareholder approval.

Verso went through bankruptcy proceedings in 2016, cutting its debt by $2.6 billion.

Brooks Johnson • 218-491-6496