Verso Corp., owner of the paper mill in Jay, have entered into an agreement with Canadian paper producers that may well net the company $42 million.
According to a March 20 filing with the Securities and Exchange Commission, Verso has struck a deal with Port Hawkesbury Paper Limited Partnership and Irving Paper Limited, both producers of glossy supercalendered paper, that could result in the return of import taxes paid by the companies. Verso could receive up to $42 million of the total return.
Ironically, the import taxes the Canadian companies paid were meant to make the price of American glossy paper competitive.
Verso filed a request with the U.S. Department of Commerce to indicate its circumstances have changed to “no interest” when it comes to the glossy paper. With that request comes another for Commerce to revoke a countervailing duty order that was issued Dec. 10, 2015, that taxed the glossy paper imported from Canada by Port Hawkesbury and Irving Paper at nearly 20 percent. Specifically, Verso is asking that the order be revoked back to Aug. 3, 2015.
A countervailing duty is an import tax imposed on goods to prevent dumping or to counter export subsidies. In 2015 it was determined that glossy paper produced by several Canadian paper companies was being subsidized.
If Verso’s requests are granted, Port Hawkesbury and Irving agree to pay Verso a percentage of the duties refunded to them, capped at $42 million.
Kathi Rowzie, vice president of communications and public affairs for Verso, on Thursday, said the tariffs were put in place to “offset the impact of Canadian subsidies paid to Canadian producers” and to help U.S. companies. “However, injurious Canadian SC imports continue to enter the United States, even with the tariffs, and imports from other non-U.S. SC producers which are not subject to the tariffs have increased.
“These factors offset the benefits of the tariffs to Verso,” she said.
If the commerce department does revoke the tariffs and Verso does get what could amount to $42 million, the company would “evaluate how to use (it) to best benefit our company and make us an even healthier supplier,” Rowzie said.
“However, there is no assurance that the Department of Commerce will grant our request to revoke the tariffs or that such funds will be provided to Verso,” she said. “We don’t have a timeline on a decision by DOC.”
Rowzie said Verso’s mill in Duluth, Minnesota, continues to manufacture supercalendered paper, the only one of Verso’s mills that manufactures that type of paper. In its SEC filing, the company says that it produces 85 percent of supercalendered paper in the United States.
When Madison Paper Industries closed its mill in May 2016, demand for the glossy paper used in magazines had declined 30 percent to 50 percent since 2000, an industry analyst said.
According to the SEC filing, “There can be no assurance that Commerce will grant the Changed Circumstances Request and revoke the CVD Order retroactively, or at all, and therefore no assurance that Verso will receive any or all of the settlement amount.”
Colin Ellis — 861-9253
cellis@centralmaine.com
Twitter: @colinoellis
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