The largest paper mill in Minnesota is now churning out a type of pulp used to make textiles.
In a hopeful sign for the state’s forest industries, Sappi Fine Paper in Cloquet announced Wednesday that its $170 million conversion from making pulp for paper to making pulp for clothing has been successful. The mill reached its production goal of 1,050 tons per day of what’s known as chemical cellulose -- in September. 
The new pulp, which is the hottest forest industry product on the market, is generally sold to textile mills in Asia, blended with other materials and made into thread. Fast-growing demand for the product has outlined one possible future for a forestry industry struggling with the terminal decline of the paper market.
“What it really is is a new beginning for Minnesota forests,” said Rick Dwyer, Sappi’s plant manager in Cloquet. “It’s something that clearly is headed in the opposite direction of paper.
The project began in 2011 and the plant’s customers first started receiving chemical cellulose -- also known as dissolving pulp -- in August. The mill will continue to make high-end paper using pulp from other mills and the conversion was designed so the mill could still swing back to producing kraft pulp itself. But Sappi but has no plans to shift back to making kraft pulp, Dwyer said.
At peak construction, over 1100 workers were working at the mill, with 41 contractors totaling over 550,000 man hours, the company said.
City, county and business leaders in Cloquet will tour the plant Wednesday afternoon.
Commodity dissolving pulp is used in the making of Rayon and results in a drapy fabric used in some dresses, for instance, or the lining of suit jackets.
“The clothing companies have gotten very good at making blends,” Dwyer said. “That’s what we’re going to see a lot of.”
The shrinking amount of land available for agriculture has put a cap on the amount of cotton that can be produced worldwide, and Sappi, a South African firm, is counting on a growing middle class in the developing world to drive demand for clothing made ultimately from trees. It has another large pulp mill in South Africa producing dissolving pulp for textiles.
UPM Blandin, the Finnish company that runs the paper mill in Grand Rapids, Minn., has pilot projects working on alternative products in Europe.
“This is really the first step into a new generation of products, converting wood fiber into another product,” said Wayne Brandt, executive vice president of Minnesota Forest Industries, a trade group. “We may look back in 10 or 15 years and say this was the jumping off point.”
One concern in the industry is an investigation by the Chinese government into allegations of “dumping” by North American and Brazilian pulp producers in the Chinese market. 
The suit, brought by Chinese pulp producers, could ultimately result in a 15 percent duty tax on imports to China of dissolving pulp. Sappi is not named in the suit but its Cloquet operation would still get stuck with the tax on exports to China.
Dwyer said that’s less of a concern for Sappi, since it produces dissolving pulp in South Africa as well, and could direct production there toward the Chinese market and send pulp produced in Minnesota to other markets, such as Indonesia.
Another worry is that the price for dissolving pulp has dropped signficantly in the past few years, as more paper companies shift more mills into cellulose production. Fortress Paper is eyeing the market, and contemplating switching one of its dissolving pulp-producing mills in Canada back to making pulp for paper.
But demand for the stuff produced in Cloquet is growing between 6 and 8 percent each year, Dwyer said, and any worries about overcapacity are near-term.
“Our customers are building capacity to consume our product,” Dwyer said.
(Photo courtesy of Sappi, cranes raise the log conveyor to its new elevation at the mill in Cloquet, Minn.)