By Austin Arceo, The Tribune-Star

TERRE HAUTE - A longtime Terre Haute mill will be shutting down later this year.

International Paper will be closing the mill near the Wabash River by the end of December. Company officials publicly announced and informed workers of the closure Wednesday.

The company reviewed possibly selling the mill, but ruled that out as an option. The small mill had limited production capacity, resulting in higher manufacturing costs than "what they need to be in order to be competitive over the long term," company spokeswoman Amy Sawyer said.

"The bottom line is the size of the mill creates those concerns, and so the same issues that we're experiencing would have come into play for any buyer," she added, "and that's what made it impossible for us to sell."

About 170 people work at the Terre Haute mill. International Paper will provide severance pay and benefits to salaried employees and negotiate with the union representing other workers at the mill, Sawyer said.

The mill had been under review since July 2005, when International Paper officials began evaluating several mills across the country and determining their future.

The closure is expected to take place in the fourth quarter of this year, or between October and December. Sawyer said that, in the coming months, International Paper will prepare for the closure.

Each year, the mill creates about 200,000 tons of medium, a kind of paperboard used in corrugated packaging, the news release reported.

Terre Haute Mayor Kevin Burke learned of the closure Wednesday afternoon, when a local mill official informed him. Burke was disappointed with the announcement, but said that he and Steve Witt, president of the Terre Haute Economic Development Corp., would work to ensure the mill remains a viable part of the Terre Haute economy.

"This is part of business, the ebb and flow, and this comes under business retention," Burke said. "We're going to see if we can retain this business."

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