AV Group NB plans to temporarily idle its Nackawic dissolving-pulp mill in New Brunswick, Canada, around the end of October, citing difficult market conditions and broader macroeconomic factors. The company's Atholville mill is also facing the same external challenges, although no idling has been announced there.

The Nackawic facility employs approximately 350 people and has annual dissolving-grade pulp production capacity of around 190,000 tonnes. No restart date has been announced.

AV Group NB is a Canadian joint venture in which Grasim Industries, part of India-based Aditya Birla Group, holds about a 45% stake. The company operates two dissolving-pulp mills in New Brunswick, Nackawic and Atholville, with combined capacity of approximately 332,000 tonnes per year. Nackawic therefore represents around 57% of the joint venture's total dissolving-pulp capacity.

According to AV Group, the decision follows a careful assessment of continuing challenges from prevailing market conditions and broader macroeconomic factors. The company will continue to monitor market and business conditions and assess future scenarios for the Nackawic facility.

Market and cost pressures

AV Group spokesperson Mike Legere said the dissolving-pulp market is facing surplus supply, with prices not keeping pace with production costs.

The company is also competing with lower-cost producers in regions including South Africa, South America and Indonesia, where production costs can be significantly lower. At Nackawic, deferred maintenance and limited year-over-year strategic investment have added to the challenges facing the facility.

The mill is not directly affected by tariffs, but AV Group has indicated, in comments reported by local media, that tariffs on downstream textile and viscose products can indirectly weaken demand for Nackawic's pulp.

The planned idling follows an earlier adjustment to the mill's fibre supply. In August 2026, AV Nackawic stopped accepting roundwood, chips and biomass from suppliers, saying it had sufficient inventory to meet its near-term operating requirements. The company described the move as an inventory adjustment, with the reduction in incoming fibre also helping to manage cash flow given the time between purchasing wood, producing and shipping pulp, and receiving payment.

Atholville faces same challenges

The Nackawic decision has also raised concerns over AV Group's Atholville mill in northern New Brunswick.

AV Group confirmed on September 19 that Atholville is facing "the same external challenges" as Nackawic. However, the company has not announced an idling or closure at Atholville and said it is looking at ways to address the challenges so that the facility does not find itself in a similar situation.

Atholville is a major employer in the region, with roughly 200 unionized workers.

Union calls for investment and diversification

Unifor, which represents approximately 228 workers at Nackawic, has attributed the mill's difficulties in part to what it describes as long-term underinvestment.

The union has called for investment and modernization at the facility and has been discussing potential investment options with provincial and federal officials. It has also proposed diversification opportunities, including xylitol, chemicals and bioenergy, as possible avenues for the future of the operation.

These diversification proposals come from Unifor and are not announced AV Group projects.

The union's position differs from AV Group's emphasis on current market conditions, including surplus dissolving-pulp supply and the gap between market prices and production costs. Unifor has argued that investment and modernization could help address the longer-term challenges facing the mill.

Government prepares support measures

The New Brunswick government is preparing support measures following the Nackawic announcement.

The departments involved include Natural Resources; Post-Secondary Education, Training and Labour; and Opportunities NB. Premier Susan Holt has also said the province is in contact with community leaders and Unifor and is working on a support plan for affected workers and families.

The announcement has prompted concern across Nackawic-Millville, where the mill has been an important economic anchor for decades. The impact is expected to extend beyond the direct workforce to forestry contractors, suppliers and local businesses linked to the operation.

A mill with a history of closure and reopening

The Nackawic facility has already undergone a major closure and restructuring.

The original St. Anne-Nackawic pulp mill opened in 1970. It closed in September 2004 after its owner declared bankruptcy, putting hundreds of workers out of work. The federal and provincial governments subsequently provided funding to help preserve and secure the mothballed facility while a buyer was sought.

In 2005, the New Brunswick government announced a partnership between Tembec and the Aditya Birla Group to reopen the facility. The mill restarted operations in January 2006 under the AV Nackawic name

The partnership initially gave the Aditya Birla Group a 75% interest and Tembec 25%. The facility was subsequently converted from market-grade hardwood kraft pulp to dissolving-grade pulp, with the conversion involving modifications including new digesters and changes to the recovery boiler and bleaching sequence.

The facility also experienced a production curtailment in late 2025 and early 2026, which ended on January 5, 2026, when wood and biomass deliveries resumed.

In August 2026, AV Nackawic subsequently stopped accepting roundwood, chips and biomass from suppliers, saying it had sufficient fiber inventories to meet its near-term operating requirements. The company said the move would help balance inventories and manage cash flow, given the time between purchasing fiber, producing and shipping pulp, and receiving payment.