Turning Papermaking Waste into Energy
Anyone who’s picked a cereal box off the shelf, carried out a fast-food meal or brought a 12-pack of soda to a picnic has likely held a product made by Graphic Packaging International, a vertically integrated, consumer-facing packaging company that’s enjoying a growth trajectory fueled by increasing demand for sustainable packaging.
GPI is one of the largest paperboard manufacturers in the world, producing four million tons of varied grades of paperboard in its eight paper mills. With seven mills in five states and one in Canada, the company creates both virgin pulp, principally from farmed Loblolly pines, and recycled paperboard, using reclaimed trimmings and other sanitary scraps. The pulp content for each application is determined by the end-use of the paperboard: virgin paperboard is stronger than recycled, and heavier contents like a case of cans need a more resilient paperboard holder than a box of dry goods or an order of French fries.
“We make all three primary grades of paperboard and so we’re able to use the best paperboard to meet each customer requirement,” said GPI Treasurer Brad Ankerholz. Adding significant value to its manufacturing output, GPI is also a leading paperboard converter, turning raw paperboard into final products: printed, folded and glued packaging for big-name household brands. Through its 119 converting facilities across the globe, including 57 in the U.S., the company converts 72% of its paperboard into value-added packaging for its numerous clients, and it would like to convert even more.
“We earn more integrated profits from converted packaging than selling raw paperboard, so we’re always on the lookout to acquire more converting capacity,” said Ankerholz. “Each acquisition brings a new set of customers, entry into new product categories, or penetration into new territory.”
Renewable and recycled source material aren’t the only sustainable aspects to GPI’s operations: biomass and black liquor energy generation at all its mills puts waste material to effective, environmentally beneficial use. The biomass material primarily consists of branches and other trimmings from the lumber harvest, and the black liquor comprises the removed biomaterial from the papermaking process; combined, the waste-to-energy equipment generates 214 megawatts of power.
CoBank has been a member of GPI’s lending syndicates for almost a decade, and in 2021, with a large European acquisition on the horizon, was tapped to lead two Farm Credit syndications that provided a total of $675 million of liquidity. The funds helped finance a smaller strategic acquisition in the U.S. while refinancing legacy debt and paying off a previous bond issuance.
“We’ve known the team at CoBank for years, so when they said they could provide this level of financing and lead the syndication, we knew we could trust that the transactions would close smoothly,” said Ankerholz.