AV Group NB will temporarily idle its Nackawic pulp mill in New Brunswick by the end of October, putting hundreds of jobs at risk and raising a bigger question about the economics of producing Canadian dissolving pulp for the global textile industry.

The company cited prevailing market conditions and broader macroeconomic factors, saying it will continue assessing future scenarios for the facility.

Its Atholville mill is not affected.

Unifor says 228 members of Local 219 will lose work, while other reports put the mill’s total workforce at roughly 350 to 400 people. The union is describing the move as a closure, while AV Group and the New Brunswick government continue to use the more cautious term temporary idling.

That distinction matters.

There is currently no announced restart date.

Nackawic does not sell ordinary paper pulp

The market exposure of this mill is unusual.

AV Group NB is part of Aditya Birla Group’s pulp and fibre business. Its Nackawic and Atholville operations produce dissolving-grade pulp or specialty cellulose used to manufacture viscose staple fibre, which ultimately goes into apparel and home textiles.

Aditya Birla says much of the pulp from its Canadian operations is supplied to group viscose plants in India, Indonesia and Thailand.

That makes Nackawic part of a much longer value chain:

forest → dissolving pulp → viscose fibre → textile.

When Aditya Birla first moved into Nackawic in 2005, the strategy was explicit: securing its own dissolving-pulp supply would strengthen its vertically integrated viscose business. The mill was converted away from conventional hardwood market pulp toward higher-purity dissolving grades.

Two decades later, that integration remains strategically valuable.

But integration alone does not guarantee that every individual mill remains competitive.

Atholville remaining open is an important clue

AV Group operates two New Brunswick dissolving-pulp mills.

Only Nackawic is being idled.

That means it would be premature to describe the announcement simply as evidence that the entire dissolving-pulp market has become unviable.

Aditya Birla still requires dissolving pulp for its large viscose operation, and its Atholville mill remains in production. The group also owns dissolving-cellulose capacity in Sweden and has pulp operations elsewhere within its integrated fibre chain.

The more important question is therefore:

Why does Nackawic no longer make sense under current conditions while Atholville does?

AV Group has not publicly provided the cost breakdown necessary to answer that.

Possible variables in any mill-level decision can include:

wood cost,

energy,

chemicals,

freight,

maintenance,

asset condition,

product mix,

and delivered cost into downstream markets.

But without company disclosure, it would be speculation to identify one of those factors as the cause.

What is clear is that management is evaluating Nackawic separately from the rest of its Canadian system.

Warning signs appeared before September

The September announcement was not entirely unexpected.

On August 7, the York-Sunbury-Charlotte Forest Marketing Board said it had been informed that the Nackawic mill would stop accepting wood products until further notice.

Concerns were visible even earlier.

In June, Unifor wrote to the federal government warning about the future of both Nackawic and Atholville.

The union argued that the New Brunswick operations needed a longer-term investment strategy and suggested diversification opportunities including:

xylitol,

other chemicals,

and bioenergy.

Following the idling announcement, Unifor went further, arguing that Nackawic had not received sufficient investment to secure its long-term future while Aditya Birla continued investing in other operations.

That is the union’s position, not an independently established explanation for the idling.

But it puts capital investment firmly into the discussion over what happens next.

The mill’s significance extends beyond 228 union jobs

A pulp mill is also a fibre market.

When a large mill stops buying wood, the effect moves upstream into:

logging,

trucking,

contracting,

forest management,

and local suppliers.

Nackawic’s importance is amplified by the size of the community around it.

Local reporting says the mill and associated economic activity represent a significant portion of the Nackawic-Millville tax and employment base.

New Brunswick Natural Resources Minister John Herron called the operation an important cornerstone of the province’s forest industry and said several government departments are developing a response for affected workers and the region.

The impact therefore cannot be measured solely by the number of people directly on the mill payroll.

Dissolving pulp has a very different end market from packaging pulp

That distinction is particularly relevant in today’s pulp market.

Containerboard producers respond primarily to packaging demand.

Tissue pulp is influenced by hygiene consumption.

Printing and writing pulp faces structural pressure from digitization.

Dissolving pulp ultimately tracks another industrial chain: man-made cellulosic fibres.

Its cellulose becomes viscose, modal, lyocell and related materials used primarily in textile and nonwoven applications.

Aditya Birla itself describes captive dissolving pulp as a major part of the competitive advantage behind its viscose business.

So Nackawic cannot be analysed solely using ordinary market-pulp benchmarks.

Its competitiveness ultimately depends on the economics of converting Canadian hardwood into high-purity cellulose and delivering that material into a global fibre manufacturing network.

“Temporary” now carries a heavy burden

There is an important difference between an indefinite idling and a permanent closure.

An idled mill retains the possibility of restart if:

market conditions recover,

investment improves its cost position,

the product mix changes,

or another strategic option emerges.

New Brunswick still lists Nackawic as an approved dissolving-grade kraft pulp mill, with its current operating approval extending through September 2027.

But restarting a pulp mill is not frictionless.

The longer an operation remains down, the harder it can become to retain:

skilled workers,

wood-supply relationships,

contractors,

customers,

and equipment readiness.

That is why the lack of a defined restart date matters.

The next significant announcement will not be the completion of the shutdown.

It will be whether AV Group identifies a credible economic pathway back into production.

Diversification may now move from union proposal to strategic question

Unifor’s earlier proposals around xylitol, chemicals and bioenergy deserve attention for another reason.

Modern pulp mills are increasingly evaluated as biorefineries, not simply cellulose factories.

Wood contains more than cellulose.

Depending on the process and mill configuration, potential value streams can include:

lignin,

hemicellulose-derived chemicals,

bioenergy,

and other forest-based products.

Aditya Birla’s Swedish Domsjö operation demonstrates that broader model: alongside dissolving cellulose, the biorefinery produces lignin and bioethanol.

That does not mean the same product mix can simply be copied at Nackawic.

Different mills have different processes and would require substantial engineering and capital.

But it explains why the discussion around Nackawic may eventually move beyond the question of when conventional dissolving-pulp production can restart.

The harder question is whether the mill needs to produce more value from every tonne of wood to remain competitive.

The idling exposes the limits of vertical integration

Aditya Birla acquired Canadian dissolving-pulp capacity partly to secure raw material for its downstream viscose operations.

That strategy still has industrial logic.

Captive pulp can provide:

supply security,

quality control,

fibre traceability,

and reduced dependence on third-party pulp markets.

But Nackawic demonstrates that vertical integration does not remove mill economics.

If one asset becomes too expensive relative to alternative pulp sources within or outside the group, corporate ownership alone cannot make its tonnes competitive.

That is what makes this idling important beyond New Brunswick.

The question is no longer whether Nackawic has a customer for cellulose.

It sits inside one of the world’s largest integrated cellulosic-fibre groups.

The question is whether Nackawic can produce that cellulose at an economics that justifies keeping the mill running.

For now, AV Group has decided it cannot under prevailing conditions.

Whether “temporarily idled” eventually means restart, reinvestment, diversification or something more permanent is the next story to watch.

Last Updated on 21/09/2026 by Jota Machinery