International Paper Co said it will close its Courtland, Alabama, paper mill by early next year, laying off 1,100 workers.
The mill has an annual production capacity of 950,000 tons.
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"This decision to permanently close capacity is primarily being driven by demand decline for uncoated freesheet paper products in the United States," Chief Executive Officer John Faraci said in a statement.
The decision to close the mill took months and was finalized at a meeting of IP's board of directors on Tuesday.
Salaried workers will be eligible for severance, and IP said it would work with union officials to offer assistance programs to hourly employees.
IP, based in Memphis, Tennessee, plans to take a $675 million charge related to the closure, and will record it later this year and into 2014.
Shares of IP slid 0.2 percent to $49.16 in early trading.