Duluth mulls how to help paper mill grow - Duluth News Tribune | News, weather, and sports from Duluth, Minnesota

DULUTH — Less than a year after taking over a once-idled mill, the Sofidel Group, an Italian multinational papermaker, hopes to grow its local operations substantially.

Sofidel aims to invest at least $180 million in its new Duluth mill and probably closer to $250 million when all is said and done, said Chad Ronchetti, director of Duluth’s planning and economic development division.

That expansion promises to bring another 160 jobs to Duluth on top of the approximately 80 the mill employed when Sofidel bought the mill from ST Paper in January.

ST Paper installed a new paper machine at the plant in 2023, bringing the mill back to life after it had gone dark.

But Sofidel will need some help to realize its vision for the Duluth mill.

The city is considering a tax-increment financing plan that could provide more than $20.5 million in aid for the project.

The Duluth Planning Commission will hold a special meeting at noon Monday to consider a package to support Sofidel’s expansion.

Tax-increment financing is a form of government subsidy that captures new property tax revenues generated from a development and uses them to cover certain qualifying expenses for a period, after which those tax revenues flow entirely uninterrupted to local government units, including the county, school district and city.

In the case of Sofidel, the proposed Duluth expansion would begin in 2025, and the TIF agreement would expire by 2035, if not sooner.

The Duluth mill currently produces massive “parent rolls” of tissue paper weighing about 4,000 pounds. These jumbo reels of paper are then sent to other facilities that cut them down into consumer products of considerably smaller scale, such as packages of toilet paper, facial tissues, napkins and paper towels.

Sofidel hopes to build a conversion facility and an automated warehouse in Duluth that will enable it to ship finished products directly from their point of production. The expansion will add two new connected buildings to the mill’s layout, adding nearly 589,000 square feet of space to its footprint.

Duluth’s paper mill has experienced many ups and downs, including several ownership changes over the past few decades. The mill once produced supercalendered paper, a stock commonly used in catalogs, corporate reports and advertising circulars. But as demand for these products waned in recent years, market conditions proved rocky for the plant.

Verso idled the plant in 2020, putting more than 220 people out of work. It remained dark until ST Paper agreed to buy the facility and shift its downscaled production to tissue — a much more stable paper market.

Sofidel is the second-largest producer of tissue paper in Europe. In 2012, it leaped into the U.S. market, where it has continued to grow as a producer of private-label products for domestic retailers. The company now has seven U.S. mills.

In an earlier interview with the News Tribune, Sofidel CEO Luigi Lazzareschi said he expects his team to make a long-term play in Duluth, ending the revolving door of ownership the community has witnessed in the past.

“I think the people of Duluth are going to see Sofidel’s name on the wall of that mill for many, many years,” he said.